India's Idea's Cellular is close to buying a majority stake in Spice Communications, Indian newspapers, quoted by a Reuters report, said.
The promoters of Spice, in which Telekom Malaysia holds a 39.2% stake, are in final stages of selling their 40.8% stake to Idea, the papers said.
The move is the latest chapter of takeover talks in the telecom industry following France Telecom's â‚¬25.9 billion (US$41 billion) bid for Nordic group TeliaSonera and India's Reliance Communications talks with South Africa's MTN.
Spice Communications is open to selling a stake and is waiting for a proposal from TM before it takes a decision, its chairman said earlier.
Spice has operations in two out of a total 23 telecom circles and has a customer base of more than 3 million while Idea is present in 11 circles and has a customer base of over 26 million.
India, the world's fastest-growing mobile services market and the second-largest market after China, has lured foreign firms like Vodafone which last year bought a controlling stake in the third-largest local cellular firm.
India has 269.30 million wireless users at end-April, up 57% from a year earlier, according to the telecoms regulator.