Mumbai: UAE's Emirates Telecommunications (Etisalat) is vying with Mexican telecom firm Telcel and Russian operator Altimo for a $1-billion stake in Tata Teleservices Ltd, media reports said.

Tata Tele is evaluating options to sell a 10 per cent stake in the company, and reports say the UAE firm is likely to emerge the highest bidder as the firm is evaluating several options to invest in India.

Etisalat chairman Mohammad Omran has also expressed interest in investing in India.

At $1 billion for a 10 per cent stake, Tata Teleservices is assessed at an enterprise value of over $10 billion.

Sources, however, said Etisalat's Pakistan connection may hinder a deal. The West Asian telcom operator has a significant presence in Pakistan, which may open up security-related issues.

Etisalat owns 26 per cent stake in state-owned Pakistan Telecommunications and has recently acquired a 16.5 per cent stake in another Pakistani telecom firm, PT Excelcomindo Pratama.

State-owned Etisalat has lined up $4 billion for investments in India, either for buying into a telecom provider or getting a fresh licence. The company had also held talks with Spice Communications for a possible investment.

Telcel, controlled by Carlos Slim, had made a late entry into the bidding process. Telcel runs Mexico's largest telecom network.

Altimo, the telecom investment vehicle of Russian oil-to-banking billionaire Mikhail Friedman, has been trying to gain a foothold in India, the world's fastest-growing telecom market, for over a year-and-a-half now.

Tata Tele hopes to use the money for launching operations as well as for branding and marketing exercises. The company is set to roll out CDMA services in Jammu & Kashmir, Assam and North-East circles. It has also received start-up GSM spectrum in Tamil Nadu (including Chennai) and Orissa.

Temasek and Chennai-based tycoon C Sivasankaran currently hold 9.9 per cent and around eight per cent, respectively, in Tata Teleservices.

Sivasankaran bought his stake for Rs1,200 crore from Tata Sons in March 2006 while Temasek paid around Rs1,500 crore for its equity.