Sistema holds talks with Reliance Communication over possible India JV

Company owner Yevtushenkov however said he had no plans to sell his Indian telecoms business Sistema Shyam Teleservices

Russian billionaire Vladimir Yevtushenkov, owner of conglomerate Sistema, said on Friday he has held talks with tycoon Anil Ambani's Reliance Communications about a possible joint venture in India.

Yevtushenkov said he had no plans to sell his Indian telecoms business Sistema Shyam Teleservices, one of the market's smallest players with nearly 9 million customers and less than a 1% market share.

With nearly 970 million mobile phone accounts, India is the world's second-biggest cellular market after China.

But the market of over 10 players is highly competitive, leaving little pricing power for carriers and squeezing margins. Industry watchers have long called for a market consolidation.

Sistema Shyam TeleServices scaled back its operations in 2013 when it had to buy new telecommunication permits after its earlier permits were cancelled by a court order linked to a broader licensing scandal.

"We've been talking to different people regarding business expansion," Yevtushenkov told Reuters, in response to a query about a media report. "Honestly, there is nothing much to say."

Reliance Communications had no immediate comment.

Yevtushenkov said talks with several parties were ongoing, but gave no details. Media reports have linked the Sistema unit with rivals Tata Teleservices and Aircel for a possible merger.

Sistema Shyam is the one of the three carriers in India to offer services based on the Code Division Multiple Access (CDMA) technology in a market where rival GSM technology dominates.

Reliance Communications and Tata Teleservices are the two other CDMA providers, but they also have GSM-based services.

Reliance Communications is the market's fourth-biggest mobile phone carrier by customers but has been outpaced by bigger rivals Bharti Airtel, Vodafone and Idea Cellular in operating metrics.

Reliance has nearly $6 billion of debt, making it the most-leveraged listed Indian telecoms player. It has had little success in its plans to cut debt by selling assets and revived a plan to monetise mobile masts recently.

Bloomberg reported on Friday that Reliance Communications was in talks to buy Sistema's Indian wireless business.