Mumbai, March 1 :     The Tatas and the Birlas have come together. The country's top two business houses have decided to merge their cellular telephone businesses, proving that India's family-owned corporate empires can be fleet-footed enough to be counted among the leaders of the new economy of information technology and communications. The entity to be created with the merger of Birla AT&T and Tata Communications will command a fourth of the cellular phones market of 1.8 million subscribers. A joint statement issued by the two houses said: 'The Aditya Birla Group, AT&T and Tata Industries Limited today signed a memorandum of understanding expressing their intent to merge the cellular properties owned by Birla AT&T Communications Limited and Tata Communications Limited.' The collaboration includes AT&T since it already partners Kumarmangalam Birla, head of the Aditya Birla Group, in the existing venture. AT&T is one of the world's largest telecom service providers. This is the first time two of India's oldest and best-known business groups are tying a business knot. Kumarmangalam Birla is already on the board of Tata Steel and the Birlas have held a small stake in the company for long. Ratan Tata, chairman of the Tata group, said: 'The Tata, Birla and AT&T combine brings together three strong and committed partners. This alliance marks a significant step in the process of consolidation in the telecom sector, in which we intend to be a major player.' Sending the telecom industry into a tizzy, his new partner Kumarmangalam Birla said: 'Telecom services are a focus business for our group and have significant growth potential. This strategic alliance with the Tatas is a forward step that will help take this business ahead. Most important, it offers a powerful platform for growth in a sector that is rapidly consolidating.' Sources close to the Tatas and the Birlas said the new relationship has been developing over time. 'Ratan and Kumarmangalam have worked together in the Prime Minister's advisory panel. They have high regard for each other,' said a source. The merger will throw up a company in which each of the three partners will have 33.33 per cent holding. It will provide cellular services in Maharasthra (excluding Mumbai), Gujarat, Andhra Pradesh and Goa. Analysts expect the merger to have a major impact on the industry which is going through a process of churning as many companies are selling out while those remaining consolidate their place in the market. The Tata-Birla combine will operate in a what is considered a lucrative market. The shakeout in the industry started because most cellular operators were and still are bleeding with few signs of approaching break-even.