India's Bharti Airtel and South Africa's MTN have revived merger talks to create a $61 billion telecoms giant spanning Africa, Asia and the Middle East a year after their previous attempt foundered on who would control the combined entity.

Bharti and MTN are mulling an initial deal worth over $23 billion, they said on Monday, under which Bharti would pay cash and shares to end up with 49 percent of MTN after MTN pays cash and stock for an effective 36 percent stake in the Indian firm.

They hope that would lead to a full merger creating the world's third biggest cell phone group by subscribers through the combination of India's biggest operator and MTN, which does business across 21 markets in Africa and the Middle East.

Analysts said a merger would yield cost savings, provide the financial muscle for further expansion and allow for technology sharing.

Bharti's shares closed down 5.4 percent at 811.40 rupees, valuing the group at $34.49 billion, while shares in MTN were up 5.84 percent at 126 rand by 1211 GMT, valuing the company at $28.5 billion, according to Reuters data.

"The broader strategic objective would be to achieve a full merger of MTN and Bharti as soon as is practicable to create a leading emerging markets telecom operator, which today would have combined revenue of over $20 billion and a customer base of over 200 million," the companies said in separate statements.

If the deal goes ahead it would be the world's biggest non-pharmaceutical transaction so far this year, according to Thomson Reuters data. It would also be India's largest cross border deal, almost twice the size of Tata Steel Ltd's near $13 billion acquisition of Britain's Corus in 2007.

The stake-swapping deal would give both firms immediate access to new revenue streams. MTN has been eyeing India for some time, while the transaction would give Bharti exposure to markets with high potential such as Iran, Afghanistan and Sudan.

"There are some tangible benefits for both: bigger market exposure, access to innovative products and better buying power," said Khulekani Dlamini, a fund manager at Cape Town's Afena Capital.

However some analysts voiced doubt as to whether a deal would be done after similar talks collapsed last year. Bharti and MTN said the talks are at an early stage and have set an exclusivity deadline of July 31.

"There is a long road to travel for the deal to actually go through," Jan Meintjes, a telecoms analyst at Gryphon Asset Management. "I think there are serious issues in terms of the spheres of influence of the two companies and their management."  - Reuters