Shares of Idea Cellular dropped over 4 per cent in Wednesday’s trade after the telecom major said it had not held any talks with Vodafone, as widely speculated, on a possible merger with the second largest operator.

The news item is absolutely untrue and preposterous, the company informed the stock exchanges.

Following the development, the stock sank 3.77 per cent to hit a low of Rs 97 on BSE. The stock had jumped 6.72 per cent in the previous session amid reports of a possible merger.

There were hopes that the merger between the second and third largest operators by subscriber base will help the merged entity take on the leader, Bharti AirtelBSE 0.48 %, and would help fend off emerging competition from Reliance Jio, which is set commercially start operations later this year.

But any such deal would have faced tough regulatory scrutiny. Analysts told Reuters that the probability for any such approval was unlikely, as the companies would breach the 50 per cent revenue market share limit in many regions of the country.