The promoters of Spice, in which Telekom Malaysia (TM) holds a 39.2 percent stake, are in final stages of selling their 40.8 percent stake to Idea, they said.
The move is the latest chapter of takeover talks in the telecom industry following France Telecom's $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 on Tuesday.
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 Plc which bought a controlling stake in the third-largest local cellular firm in 2007.
India has 269.30 million wireless users at end-April, up 57 percent from a year earlier, according to the telecoms regulator.
Shares in Idea closed down 2 percent at 104.95 rupees while shares in Spice closed down 3 percent at 51.95 rupees on the weak BSE sensex.
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