"The Hutchison deal, the exclusivity is over. We are free to discuss with others," Srinivasan told Reuters, adding that the Sistema deal was also subject to approval by Russian and Indian authorities.
A market source said Sistema had signed a preliminary agreement last December to buy 49 percent of ATVL from its owner Sterling Infotech, a company with Indian telecoms assets.
Aircel Televentures is the holding company of Aircel Ltd and Aircel Cellular Ltd, which have licences to provide mobile services in 12 of 23 areas that make up India's telecoms sector. Aircel Group has 1.65 million GSM users in the south of the country.
The source said Sistema planned to set up a subsidiary in India to buy the ATVL stake through an injection of $450 million in the equity capital of the firm, and had an option to increase the stake to 51 percent.
On Wednesday, the Indian government met a long-standing industry demand by increasing a cap on foreign investment in telecoms firms to 74 percent from 49 percent.
Wireless services have been the main driver for telephone growth in India over the past three years. The number of mobile users has overtaken fixed-line customers in the country. The 48-million-strong wireless market is growing by about 2 million users a month as prices as low as $0.02 a minute attract customers. The market is widely expected to cross 80 million by December 2005.
In Russia, with a population of over 140 million, the penetration rate is currently 51 percent and analysts and firms say 2005 will be the last year of strong market growth."Sistema is very much interested in expanding outside Russia," said Alfa Bank analyst Andrei Bogdanov.
"The Indian market fits their business strategy very well - a large market, low penetration, relatively low competition. And Sistema has always been good at setting up local partnerships."
AFK Sistema's biggest asset is Russia's top mobile phone company, Mobile TeleSystems (MTS).
Bogdanov said the rate of about $800-900 per subscriber implied by the tentative acquisition price for ATVL was about the same as MTS paid last year for a firm in Uzbekistan.
"It looks like this is a common price for entering a new market with a high growth potential," Bogdanov said.
But he pointed to the risk of Sistema - which plans to channel funds from its IPO to buy Russia's national telecoms holding company Svyazinvest - diverting some of its warchest into buying the Indian firm. The Russian government plans to sell 75 percent minus one share in Svyazinvest, which controls seven regional telecom services and long-distance monopoly Rostelekom, this year.
Sistema also holds more than 50 percent of dominant Moscow fixed-line service provider MGTS, with Svyazinvest holding 28 percent.
Sistema has long wanted to issue American Depositary Receipts for MGTS's shares, but Svyazinvest opposed the plan.