The race to acquire the pan-African and Middle Eastern operator MTN has taken a new twist as India’s Reliance group confirmed this week it has entered into exclusive merger talks with the Johannesburg-based group. The development comes after MTN ended talks with Bharti, Reliance’s rival Indian operator, which has been locked in negotiations with MTN over the last few weeks. Bharti had reportedly been pursuing an acquisition of a majority stake and is said to have rejected the idea of becoming an MTN subsidiary. According to a statement from Reliance, the new talks are subject to a 45 day exclusivity period and are aimed at evaluating “a potential combination of their businesses.”

The development received a lukewarm response from the investment community with shares in both MTN and Reliance dropping as a consequence. MTN investors were reportedly disappointed at the group losing the significant premium Bharti would have paid for a majority stake: analysts had speculated that Bharti was engineering a deal that valued MTN at up to US$50 billion, compared to a market capitalisation of around US$38 billion. Meanwhile, analysts monitoring Reliance have questioned if the Indian company has the financial clout to make a deal. According to Reuters, Reliance has a market cap of US$28 billion and has 48 million subscribers compared to MTN’s customer base of 68.2 million. If a merger went ahead the new company would become the seventh largest telecoms group in the world, Reuters said.