Bharti had sought clarifications from the regulator on Indian takeover rules that require an acquirer of 15 per cent equity stake or more to make an open offer for another 20 per cent from other shareholders.

“MTN and/or its shareholders would be required to comply with the requirements of (open offer) only upon conversion of the GDRs into equity shares with voting rights,” the Securities and Exchange Board of India (Sebi) said. A New Delhi-based fund manager said the clarification removed uncertainty and would help the companies reach a deal.

“Good for Bharti. Better for MTN. Quite a breather for them, otherwise they would have to cough up more money for the open offer,” said R K Gupta, managing director at Taurus Asset Management. “It has to be seen how long MTN and its shareholders would like to continue with GDRs. They don’t get voting rights. I think this is a development which needs to be watched,” he said.

The Sebi letter, which was dated June 22 but made public on Tuesday, also said Bharti had proposed to acquire a 49 percent holding in the South African firm directly or through its affiliates.

“This is more from a safety perspective for Bharti,” said a banker with direct knowledge of the deal, referring to the open offer clarification. “The conversion to shares will not take place soon, unless everything is worked out between the two firms,” said the banker, who did not want to be named due to the sensitivity of the issue.

Banking sources had earlier said the open offer could be done away with by issuing GDRs to MTN, or the South African firm could acquire stake in Bharti Airtel’s parent unlisted Bharti Enterprises or holding company Bharti Telecom.

Bharti Airtel, which has agreed to exclusive talks with MTN until the end of July, did not immediately respond to Reuters query regarding the regulators’ statement.