The deadline had been pushed back to July 21, Reliance Communications said in a statement. Discussions began late May aiming to build a telecoms giant stretching from Asia to Africa and the Middle East.
"RCom and MTN have agreed to continue their negotiations in relation to such potential business combination, and have extended the period of exclusivity until 21st July 2008,"
the statement said.
"There is no certainty either on completion, or the timing of the said proposal,"
the statement added.
The merged firm would be worth up to 70 billion dollars, but it remains unclear if the deal will go through, with the previous deadline expiring on July 8.
Anil Ambani, the chairman of Reliance Communications and one of the world's richest men, had offered to take a 51 percent stake in MTN through a cash and share swap, India's Business Standard newspaper said on Tuesday.
MTN was scrutinising the proposed deal, the newspaper said, citing sources close to the negotiations.
Last month, India's billionaire Ambani brothers threatened legal action against each other over the merger.
Older brother, who heads Reliance Industries, told MTN he had first right of refusal to buy a controlling stake in Anil's Reliance Communications. But Anil Ambani strongly refuted the claim.
Reliance Communications shares rose 18.4 rupees or 4.43 percent to 433.8 at the Mumbai stock exchange on Wednesday.
The firm is the flagship of Anil Ambani's group and has 48 million subscribers. MTN, which has 68 million subscribers, is Africa's largest cellular operator.