Both companies declined to comment. Bharti on Monday said it had started "exploratory talks" with MTN.
Under South African exchange law, a mandatory offer is required to minority shareholders if Bharti acquires more than 35 per cent in the company. It will require a minimum of 25 per cent to block special resolutions.
Buying MTN, which has operations in 21 countries and 68.2 million subscribers, could be a complex operation given its shareholding structure.
MTN's largest shareholder with 23 per cent is the Alpine Trust, which is controlled, in turn, by two shareholders that have pooled their shares in the trust.
One is Newshelf664, a company floated by MTN staff and management and the other is M1, controlled by the Makati family. The other major shareholder is PIC, a South African government-owned pension fund, which has 13.5 per cent. The rest of the shareholding is widely dispersed.
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MTN is listed on the Johannesburg stock exchange.
M1 has more than doubled the value of its investment since it was issued shares in May 2006. Newshelf664 is largely debt funded and can sell its shares from December 2008 as part of the agreement.
Sources in banking circles said an initial entry in the company might be through the buyout of the Alpine Trust stake. Alpine has a market capitalisation of around $33 billion. If Bharti considers buying 51 per cent, the bill will be over $20 billion (Rs 80,000 crore).
According to a Financial Times report, Deutsche Bank AG and Merrill Lynch & Co are advising MTN. Goldman Sachs is believed to have agreed to provide debt of up to $12 billion, while the remaining will be taken care of by Stanchart by issuing Bharti's equity to MTN shareholders.
Experts say Bharti could leverage its low-cost telecom model perfected in India in many of the countries in which MTN operates, such as Nigeria. With a combined subscriber base of over 100 million, the two companies would also be able to leverage their global position with vendors, especially at a time when more telecom players are coming to India.
Bharti Airtel's stock, however, closed more than 5 per cent down on the Bombay Stock Exchange to Rs 846.60 a share.
Meanwhile, there were also reports of UK-based telecom major Vodafone believed to be interested in MTN. Vodafone spokesperson Bobby Leach said: "Vodafone remains committed to its partnership in South Africa with Telkom, in Vodacom, in which Vodafone holds a 50 per cent stake."