Idea’s consolidated loss went up from Rs 328 crore for the three months ended March 31, 2017, to Rs 1,107 crore for the September quarter — thanks to increased competition from Reliance Jio, which is offering free voice calls to its customers.

“In any merger, it may not be in the interest of shareholders of one company if the other is merged with higher-than-projected losses after a year of delay. The closing adjustments in any merger deal will have provisions to make up for any higher-than-projected losses,” said a banker, requesting not to be named.

The negotiations would centre on Idea’s losses and how to fund them, said a source close to the development.

When contacted, a Vodafone Group plc spokesperson said the company was not renegotiating the terms of Idea merger announced in March. “As you will have seen in our recent results announcement, we are making good progress in securing regulatory approvals for our merger with Idea, which we expect to complete in the first half of calendar year 2018. We also recently announced the sale of Vodafone India’s and Idea’s standalone towers to American Tower for Rs 7,850 crore, which will enable us to strengthen the balance sheet of the combined company and is exactly in line with the strategic intent conveyed in our original merger announcement in March,” he said.

An Aditya Birla Group spokesperson declined to comment on “market speculation”.

The merger got the nod from the Competition Commission of India in July, and a hearing in the National Company Law Tribunal for merger clearance is scheduled for later this month.

The merger will create India’s largest wireless telephony network with a 41 per cent market share. According to the announcement made in March, Idea would acquire Vodafone India, excluding its 42 per cent stake in Indus Towers, by issuing 3.6 billion new shares to Vodafone PLC, making it a 50 per cent owner in the merged company.

The shareholding of the Aditya Birla Group will fall to 21.2 per cent after the 50 per cent dilution of equity. Subsequently, the group is to buy 4.9 per cent equity from Vodafone at the rate of Rs 110 a share, or Rs 3,874 crore in cash, taking its holding to 26.1 per cent in the merged company and becoming a co-promoter as compared to 45.1 per cent owned by Vodafone.

Later, to equalise shareholdings at 35.6 per cent in the merged entity, the Birla group has a call option to buy additional 9.5 per cent from Vodafone at Rs 130 a share, or Rs 8,900 crore in cash, over a three-year period post-closing in 2018.

In case of a shortfall, the Birla group can buy more shares from Vodafone at the market price within 12 months, or else Vodafone would be required to reduce shareholding over next five years to enable parity. Notwithstanding unequal holdings, the Birla group and Vodafone would exercise joint control and have equal voting rights.