Britain's Vodafone Group and Idea Cellular agreed on Monday to merge their Indian operations in a $23 billion deal, creating the country's biggest telecoms business after the entry of a new rival sparked a brutal price war.
The combined entity would have almost 400 million customers, overtaking market leader Bharti Airtel to account for about 40 percent of revenue of the world's second-biggest mobile phone services market by users after China.
The deal shows how India's mobile industry is being transformed by the launch of Reliance Jio Infocomm's 4G mobile broadband network last year.
Built at a cost of more than $20 billion by India's richest man, Mukesh Ambani, Jio has offered free services for months.
That has forced India's three biggest operators - Bharti, Vodafone and Idea - to slash prices and accept lower profits, and sparked a wave of consolidation.
Vodafone, the world's second-largest cellphone operator, had previously sought to leave joint ventures it did not control but Chief Executive Vittorio Colao said the group had to be realistic in such a challenging market.