The Abu Dhabi royal family-owned Dhabi Group and Essar Group are in talks for an equity investment by Essar in the Dhabi Group's African telecommunications business.

In the Asian sub continent, the Dhabi Group has a presence in Pakistan, Bangladesh, and in Africa in Congo, Cote d'Ivoire and Uganda through its subsidiary Warid Telecom. In Congo and Uganda, it has more than a million subscribers.

According to the Essar Group, its portion of the equity in exchange for the stake, would create growth capital for the African telecom busines, for which Essar Group chief executive Prashant Ruia had signed a preliminary agreement with Dhabi group chairman Sheikh Nahayan al-Nahayan in Abu Dhabi.

A statement from Essar said the company was in ''exclusive discussions in relation to an investment by Essar Group into the telecommunications portfolio of Dhabi Group's African assets. The transaction will involve an equity infusion into these businesses as growth capital and will be the basis of a partnership to create a significant presence in Africa.''

In Kenya it already has a presence through Essar Telecom Kenya Holdings, which offers mobile services through its telecom operating arm. Essar Telecom Kenya has recently launched Kenya's fourth mobile cellular network through Econet Wireless Kenya under the brand ''yu''. Earlier, Essar had also received a license for operations in Uganda.

Vikash Saraf, Essar Group director (strategy and planning), has said the group may take 8-12 weeks to reach a decision.

Apart from Essar, many other Indian telecom firms have an interest in the still developing African telecom market. These include Bharti Airtel which is in talks with the MTN group of South Africa, and Reliance Communications which has a license in Uganda.

In India Essar holds a one-third stake in Vodafone Essar and runs the mobile retail chain MobileStore. It also holds a stake in Loop Mobile, which was earlier BPL Mobile.

The Abu Dhabi Group, comprising members from the ruling royal family and businessmen, and its chairman, HH Sheikh Nahayan Mabarak Al Nahayan, lead a consortium of investors composed of private equity and family offices in the region. The group has diversified business interests with a focus on emerging market opportunities in financial services, telecommunications and real estate.

Standard Chartered Bank will act as an exclusive financial advisor to the Dhabi Group.