Caught in the middle of the Indian billionaire Ambani siblings' feud, South African telecom giant MTN is mulling walking away from talks for a possible amalgamation with Anil Ambani-led Reliance Communications [Get Quote], a report said on Monday.

"South Africa's MTN is considering walking away from a tie-up with Reliance Communications of India because of fears, an acrimonious spat between the Indian telecom operator's owner and his brother could leave the deal open to legal action," UK daily Financial Times reported.

Quoting an unnamed person familiar with the talks as saying that MTN and RCOM could extend their exclusive talks for another two to three weeks after the 45-day period expires tomorrow, the report said, 'there is no indication that extra time alone would be sufficient to resolve the feud' between Anil and Mukesh Ambani.

The deal, if fructifies, could create a combined entity worth about $70-80 billion, which would be one the world's biggest emerging market telecom firm.

While MTN and RCOM are said to be working on various deal structures, the FT report said there were 'mounting fears' that 'none of the myriad deal structures under discussion would insulate the combined company from Mukesh's lawyers.'

MTN would have to get the legal assurances (from RCOM) that they are in a position to defend themselves against a move from Mukesh-led Reliance Industries [Get Quote], the report quoted Morgan Stanley's telecom analyst Sean Gardiner as saying. 

The deal has been clouded under uncertainties since RIL claimed right of first refusal in any controlling stake in RCOM and wrote letters to MTN and RCOM threatening legal action if its rights were breached. However, these claims are being contested by the Anil Ambani group.