MTN Group, Africa's largest mobile phone operator, has entered into talks with Reliance Communications, India's second-largest wireless operator, over a potential merger of the emerging markets telecoms giants.

The combination would have a customer base of more than 116 million, annual revenue of around $14 billion (£7 billion) and footholds in some of the most attractive territories in the global mobile market across Africa, the Middle East and India.

In a statement today, Reliance said it and MTN have agreed to enter into exclusive negotiations for a period of up to 45 days "with respect to a potential combination of their businesses."

It added: "It is to be noted that there is no certainty either on completion, or the timing of the said proposal. In the meantime, shareholders are advised to exercise caution in their dealings in the companies' securities dealings until a further announcement is made."

A possible merger with Reliance emerged after discussions between MTN and Bharti Airtel, India's largest mobile operator, collapsed last week.

Bharti claimed that MTN, which has courted several suitors in recent years without reaching a deal, had reneged on agreed terms at a late stage in the pair's negotiations and had demanded that the Indian company become a subsidiary of its African peer.

MTN, whose shares have risen more than 20 per cent this year, has a market value of about $38 billion and more than 68 million customers across 21 countries in Africa and the Middle East. It is targeting more than 80 million customers by the end of the year.

Reliance, which is valued at just under $30 billion, has about 46 million customers. The group is owned by the Reliance Anil Dhirubhai Ambani Group, the industrial conglomerate run by Anil Ambani, which posted net profits of about £1 billion last year.

Any combination of the two would have to negotiate political concerns in South Africa over the fate of one of the country's most highly-valued companies.

MTN has close ties with the South Africa's ruling ANC party. The company's chairman is Cyril Ramaphosa, one of an influential set of former ANC politicians turned businessmen.

Last year, Vodafone, the London-listed mobile giant, failed in its efforts to expand its presence in Africa by securing absolute control of Vodacom, another leading South African mobile company, after talks broke down.

The British group's attempt to acquire the 50 per cent of Vodacom it does not already own from Telkom, the former state monopoly, had rested on MTN buying Telkom's fixed line business.

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