Johannesburg: South African mobile group MTN’s biggest shareholder supports revived merger talks with India’s Bharti Airtel in principle but believes there is “room for improvement” on the price.

Brian Molefe, chief executive of South Africa’s state pension fund Public Investment Corporation, told Reuters the fund was still undecided on whether to vote for an initial proposed $23 billion cash and share swap with Bharti.

He said in a phone interview that the PIC, which owns 13.5% of MTN according to the company’s 2008 annual report and is its biggest shareholder, “appreciated MTN’s attempt to diversify its revenue” but said the details still had to be “bedded down”.

Two of the main issues that would determine whether it supports a deal are the price -- which some MTN investors say is too low -- and the issue of how much influence over a merged entity MTN would retain.

“Because of the strategic imperative, yes we will support the deal, but it depends on how they are going to negotiate, how the final details are going to look,” Molefe said.

“I would say there is room for improvement on the price.”

MTN shares extended gains after the comments, trading 2.75% higher at 123.30 rand by 12.06 GMT, still well below the 132-134 rand price tag which analysts say the complex deal gives MTN shares.