Johannesburg/Mumbai: The proposed tie-up between South African telecom firm MTN Group Ltd and Bharti Airtel Ltd needs cabinet-level approval in South Africa, a senior official said on Monday, as the deal enters a critical week.

Close call: An MTN employee at the firm’s headquarters in Johannesburg. South African treasury director general Lesetja Kganyago says, ‘a transaction of this magnitude is not a decision you just take on your own’. Nadine Hutton / Bloomberg.

A top South African treasury official said the government was in talks with Indian authorities.

“As far as we are concerned we would like to promote South-South relations. The relationship between South Africa and India is a very important relationship," treasury director general Lesetja Kganyago told journalists.

“The decision will be taken by the executive...A transaction of this magnitude is not a decision you just take on your own," Kganyago said.

South African authorities have made it clear in recent days that the transaction faces close scrutiny.

Earlier on Monday, the country’s communications regulator said the deal may face public hearings.

“MTN’s licence is clear, if the transaction involves change in shares it needs to notify the authority before the transaction is concluded," said Sekgoela Sekgoela, Independent Communications Authority of South Africa spokesman.

The government said earlier this month it supports the deal in principle because it was in line with a trilateral economic development initiative between South Africa, India and Brazil, which promoted so-called South-South relations.

The deal, which would create the world’s third largest mobile group by subscribers, is subject to an end-September deadline. However, the firms have extended talks twice before, and a person with direct knowledge of the matter said it was possible the talks could be further extended by a few days into October.

On Sunday, South African communications minister Siphiwe Nyanda expressed caution over the proposed transaction.

Any deal should take into account MTN as a “South African company with a footprint in Africa" and “we are interested that it should remain" here, said Nyanda.

MTN, the country’s second biggest mobile operator and the only one still owned by South Africans, was set up with government help in 1994 as the country’s first black-owned group.

“I think that government probably more indirectly does have the influence to stop this deal," said Jan Meintjes, a telecom analyst at Cape Town-based Gryphon Asset Management, which holds MTN shares.

“They don’t have to rattle any cage to do that. If they come out and say they are dead against this deal I guarantee it won’t happen," Meintjes said.

Bharti has increased the cash component of its offer for a 49% stake in MTN to $10 billion (Rs48,700 crore) from a proposed $7.6 billion, two people familiar with the matter said last week.

On top of that, Bharti would pay $4 billion in stock for a total package of $14 billion, 7% more than the earlier $13 billion proposed deal.