Reliance Communications, India’s second-largest mobile company, wants to forge a grand strategic alliance with MTN, Africa’s largest wireless group, that would cover a third of the world’s population but fall short of a full merger of the two emerging markets groups.

The companies said yesterday that they had entered exclusive talks, “with respect to a potential combination of their businesses”. Between them they have a customer base of more than 116 million subscribers, annual revenues of $14 billion and strong footholds across India, Africa and the Middle East. Combined, the pair would form the fourth largest operator in the world – behind China Mobile, Vodafone and China Unicom.

Sources say that Reliance, which is controlled by Anil Ambani, the Indian billionaire, has ruled out raising any new debt or issuing fresh equity to fund a takeover of MTN.

They also played down speculation of an equity swap between the two businesses. Instead, Reliance hopes to agree a “closely-knit contract” under which the two groups will work closely on issues such as sharing their infrastructure resources, which currently cover about 2 billion people.

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