India's Reliance Communications Ltd, along with investors, including Middle East sovereign wealth funds, may buy a majority stake in MTN rather than merge operations as planned earlier, newspapers reported on Thursday.

A consortium controlled by Reliance Communications' Anil Ambani would take a 51 percent stake in South Africa's MTN in order to avoid any legal disputes from a claim of first right of refusal from his elder brother Mukesh Ambani, who runs Reliance Industries, the Financial Times said on Thursay, citing a person familiar with the deal.

A spokesman for Reliance Communications declined comment.

Reliance Communications, India's No. 2 mobile operator controlled by Anil Ambani, the estranged brother of Reliance Industries' chairman Mukesh, said in May it was in exploratory talks with MTN for a possible business combination.

The 45-day exclusivity period ends on July 8.

The Wall Street Journal said a deal could be announced this weekend, citing two people familiar with the situation.

Analysts and sources had suggested the outcome may be a share swap, with the Ambani group emerging the largest shareholder in MTN and Reliance Communications becoming a subsidiary of MTN.

"That plan has not been junked, but RCOM is also examining the option of directly acquiring a 40 percent stake in MTN," India's Economic Times newspaper said, citing sources close to the development.

A Middle East-based sovereign wealth fund could team up with Reliance Communications for buying the stake in MTN, it added. 

A Middle East-based sovereign wealth fund could team up with Reliance Communications for buying the stake in MTN, it added.

Since a stake purchase of more than 35 percent in a South African firm would require a tender offer, Reliance will buy a stake smaller than that and then seek MTN's shareholders' approval to waive their right to the offer, it said.

If MTN shareholders agreed to such a proposal, Reliance Communications will up its stake to 40 percent; otherwise, it will hold just under 35 percent, it said.

Such a deal would be routed through a special purpose vehicle in which Reliance will hold majority stake, it said.

Source:Reuters