RCom will offer shares in the company to Sistema Shyam Teleservices in return for acquiring spectrum and customers in nine telecom circles or service zones.
"Reliance Communications and AFK Sistema have entered into exclusive discussions on a potential merger between the Indian telecom business of Sistema Shyam TeleServices Ltd (SSTL) and RCOM through a stock swap," RCom said in a statement.
Reacting to the announcement made by RCom, SSTL spokesperson said "SSTL concurs with the statement released by Rcom."
According to industry sources involved in the deal, SSTL is pushing to have about 10 percent stake in the resultant entity while RCom wants to settle it at around 7-8 percent.
When contacted, spokesperson of both the companies declined to comment on share holding pattern.
"The discussions are indicative and non-binding in nature, and remain subject to due diligence, definitive documentation and approvals, as may be necessary. There is no certainty that any transaction will result," RCom said.

SSTL operates in nine telecom circles -- Delhi, Kolkata, Rajasthan, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh (West), Kerala and West Bengal.

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