Aircel, the largest cellular service provider in Tamil Nadu, is close to buying a 79.24 per cent stake in RPG Cellular, the second largest player in Chennai, from RPG Enterprises.

The C Sivasankaran-promoted Aircel bought a 20.7 per cent stake in RPG from Vodafone earlier this year.

It is also understood that KPMG, which was mandated by the RPG group to find a buyer for its stake in RPG Cellular, will visit the company for auditing next week.

Aircel CEO K V P Bhaskar declined to comment, but sources close to the deal told Business Standard that talks were on.

An RPG source in Kolkata said, "KPMG has been asked to find a buyer for the licence, but no final picture has emerged. Several buyers are in the fray, including Aircel."

"Sivasankaran is obviously interested in RPG Cellular because he has picked up a 20 per cent stake in the company. Aircel is working on its expansion plans in Tamil Nadu, and we will be investing close to Rs 180 crore (Rs 1.80 billion) to beef up our operations in the state," a source close to Sivasankaran said.

The source pointed out that Aircel was facing some discomfort because Tamil Nadu was divided in two circles, Chennai and the rest of the state.

Aircel operates throughout the state, except Chennai, which has a separate licence being a metropolis.

After the acquisition, Aircel would be able to match the Bharti group in offering seamless cellular services across the state, market watchers said.

RPG Cellular earned a revenue of about Rs 180 crore for the year ended March 31, 2003, while Aircel earned about Rs 225 crore (Rs 2.25 billion).