Bharti Airtel will issue a statement on Tuesday on its tie-up talks with South Africa's MTN, a source with direct knowledge of the matter said, although there was little clarity yet on the likely outcome.

Three other sources with knowledge of the deal said the firms could extend exclusive talks for a third time or may call off talks if some terms were not agreed to by the South African government.

The deal would appear to be in the hands of the South African government, one of the sources said, adding the outcome was not clear.

The South African government is eager to retain MTN's national character and has approached Indian authorities for a dual listing of the combined firm.

The deadline for exclusive talks between the two companies runs until Wednesday, although it has been extended twice.

"There have been problems in the deal. You will get more clarity about it next week," one of the sources said.

On Tuesday, finance secretary Ashok Chawla said there had been no formal approach about a dual listing.

"We will have to see what the South African side or the Indian company comes up with, and when that happens is difficult to say," he told reporters.

Under the proposed deal, Bharti would use cash and shares to buy a 49 percent stake in MTN, and the South African firm and its shareholders would pay cash and shares for a 36 percent interest in the Indian firm.

"It could swing either way, it's not clear at the moment," said a third source briefed on the deal.

Bharti and MTN had revived their talks in May, a year after previous talks broke down over who would control a merged entity. A merger would create an emerging markets giant with more than 200 million customers across India, Africa and the Middle East.

Indian laws currently do not allow dual listing and Finance Minister Pranab Mukherjee has said there were legal issues to be sorted out and the rupee needed to be made fully convertible before dual listing could be allowed.

Mukherjee said in a media interview run on Monday neither of the firms were not looking at an immediate dual listing.

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