The two companies have agreed for a 45-day exclusivity to work out the details for merging their businesses.

The development comes just two days after South African company deviated from agreed terms with India's largest telecom player Bharti Airtel [Get Quote], who pulled out of 3-week long negotiations.

Commenting on the development, Anil Ambani said "negotiations are on to achieve global platform for exponential growth."

The company has also informed the stock exchange about the development and said that further announcement would be made when appropriate.

If the negotiations are successful, the combination of MTN and Reliance Communications would create a global wireless juggernaut, larger even than developed-market giants such as AT&T.

Last week, Bharti Airtel had decided to pull out as MTN had proposed a structure which would have made the Indian telecom giant a subsidiary of South African company, contrary to the agreed terms between the two firms prior to entering the discussions.

The valuation of MTN has been put at about $50 billion. Bharti Airtel had also claimed to have arranged funds of over $60 billion from over a dozen of international reputed banks for the deal.

Although no official figures have been given by the company but sources have put MTN between $45-50 billion.

Asked about the possible structure of the deal between Reliance Communications and MTN, sources said it is too early to say but they indicated that it would be in the direction of merging the two entities.

Reliance Communications is the second largest private telecom company in India offering a variety of telecom services both on CDMA and GSM platforms. It is looking for growth avenues both in the domestic and overseas markets and the current negotiations with MTN are also in that direction.