CORRECTED - Idea Cellular posts smaller-than-expected second-quarter loss

(Corrects headline to say "smaller-than-expected", not "bigger")

By Arnab Paul

REUTERS - Idea Cellular reported a fourth straight quarterly loss on Monday as intense competition in the telecom sector continued to hurt, and said it would sell its tower business to reduce debt.

The tower business will be sold at an enterprise value of 40 billion rupees ($613 million) to ATC Telecom Infrastructure Pvt Ltd, a unit of American Tower Corp, Idea Cellular said in a statement. (http://bit.ly/2Azc5CR)

"In the long term, we have a positive view on Idea and the deal could be viewed as a positive move with the 40 billion rupee-transaction value aiding Idea in cutting down its balance sheet debt," said Gaurang Shah, Head Investment Strategist at Geojit Financial Services.

Idea and Vodafone Group's India unit are on track to merge operations in a deal valued at $23 billion, possibly creating the country's biggest telecom player. The deal is expected to close in 2018.

Vodafone India has also agreed to sell its standalone tower business to ATC Telecom for an enterprise value of 38.50 billion rupees.

India, the world's No.2 mobile phone market, has been rattled by the aggressive pricing of Jio, the telecoms arm of billionaire Mukesh Ambani-controlled Reliance Industries. Jio's pricing strategy has hurt rivals' profits as they try to match low tariffs and also pushed some carriers to consolidate operations.

QUARTERLY LOSS

Idea, India's No. 3 wireless carrier posted a loss of 11.07 billion rupees ($169.45 million) in the quarter ended Sept. 30, compared with a profit of 915 million rupees a year earlier. (http://bit.ly/2i9WwuO)

Analysts on average expected the company to post a loss of 11.25 billion rupees, according to Thomson Reuters data.

Shares in Idea fell 3.1 percent on Monday morning following the quarterly results.

"The stock decline this morning is only sort of a knee-jerk reaction to the quarterly loss," Geojit analyst Shah said.

($1 = 65.2825 Indian rupees)

(Reporting by Tanvi Mehta and Arnab Paul in Bengaluru; Editing by Amrutha Gayathri)