Sunil Bharti Mittal, founder of Bharti Enterprises, said the company's acquisition of Tata Teleservices is a step towards "further consolidation"

Mumbai (AFP) - Indian telecom giant Bharti Airtel is to acquire rival Tata Teleservices’s struggling mobile business, the companies said Thursday, the latest move towards consolidation in the country’s hyper-competitive phone market.

In a joint statement the pair said Bharti would take on Tata’s 40 million subscribers, boosting its customer base, and add network coverage as it tries to fend off the rise of Reliance Jio, owned by India’s richest man.

“This is a significant development towards further consolidation in the Indian mobile industry,” Bharti Airtel chairman Sunil Bharti Mittal said in the statement.

”(It) reinforces our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio,” he added.

India’s multi-billion-dollar telecoms industry has been rushing to consolidate since Mukesh Ambani launched Jio in September 2016, sparking a price war by offering free voice calls for life and drastically reduced tariffs.

Its arrival left competitors scrambling to match the deep pockets of Jio which is backed by Ambani’s hugely wealthy energy-to-chemicals conglomerate Reliance Industries.

In March, British mobile behemoth Vodafone announced the merger of its India unit with Idea Cellular in a long-expected move that saw it overtake Bharti as the South Asian nation’s largest telecoms operator.

It came a month after Bharti declared that it was buying the local operations of Telenor to enhance its spectrum coverage as the Norwegian firm decided to exit the Indian market.

The Bharti-Tata deal – which requires regulatory approval – will be done on a “debt-free cash-free basis”, Thursday’s statement said.

Tata Sons chairman N Chandrasekaran – who is working to trim the portfolio of the tea-to-steel Tata Group conglomerate, of which Tata Teleservices is a part – welcomed the latest deal.

“We believe today’s agreement is the best and most optimal solution for the Tata Group and its stakeholders,” he said in the statement.

Tata Teleservices, in a tie-up that turned sour with Japanese mobile carrier NTT Docomo, became the first to offer 3G data services in India.

The agreement, signed in 2008, failed to attract enough customers and Docomo triggered an option to sell its stake six years later after incurring losses.

A court case followed and in June 2016 an international arbitration court ordered Tata to pay $1.17 billion in damages. In February this year, Tata said it had reached an agreement to pay Docomo.