JOHANNESBURG (Bloomberg) — Bharti Airtel Ltd., India's biggest mobile-phone company, and South Africa's MTN Group Ltd. reached a $24 billion preliminary accord to buy each other's shares, the first step in a planned merger, three people familiar with the matter said.

Bharti sweetened its bid to buy 49 percent of MTN by raising the cash portion of its $14 billion offer, the people said, asking not to be identified before an announcement this month. Minority shareholders of Africa's biggest wireless company can opt for an all-cash payment, they said. MTN and its shareholders are set to buy 33 percent of Bharti for about $10 billion, the people said. The world's biggest cross-border deal this year would pave the way for the creation of a mobile-phone carrier with annual sales of $20 billion and 200 million wireless subscribers from Johannesburg to Mumbai. The accord would need the approval of 75 percent of MTN's shareholders, some of whom have said Bharti should raise its offer from a bid disclosed in May.

"We wanted all cash and we wanted a higher price," said Pallavi Ambekar, a Cape Town-based analyst with Coronation Asset Management, which holds about five percent of MTN. "An all-cash offer is great, but it doesn't address the price issue." Singapore Telecommunications Ltd., which owns about 30 percent of Bharti, agreed to invest as much as $3 billion to buy Bharti shares, according to the people.

SingTel said in an e-mail that it doesn't comment on "market speculation". Marina Bidoli, a spokeswoman at Johannesburg-based MTN, declined to comment, as did Ranjana Smetacek, a Bharti spokeswoman. In an e-mailed statement yesterday Bharti said the two companies haven't reached an agreement and that discussions with MTN are continuing.

MTN rose as much as 5.1 percent in Johannesburg, closing 1.9 percent higher to 127.00 rand. Bharti fell 3.5 percent to 409.35 rupees in Mumbai, trimming its gain this year to 14 percent.