UPDATE 2-SAfrica minister cautious over MTN, Bharti proposal

* Communications minister cautious over planned deal

* Wants a tie-up with South African interests in mind

* COSATU will judge deal on its effects on jobs

(Adds COSATU union comment, background)

By Gugulakhe Lourie

JOHANNESBURG, Sept 13 (Reuters) - A South African minister expressed caution over the proposed tie-up between South African MTN (MTNJ.J) and Indian Bharti Airtel (BRTI.BO), casting doubt over whether the deal will get a nod from government.

Any deal should take into account MTN as a "South African company with a footprint in Africa" and "we are interested that it should remain" here, communications minister Siphiwe Nyanda told the Sunday Times newspaper in an interview.

Analysts have said Pretoria's backing was crucial if the transaction is to go ahead. MTN's biggest shareholder, with 21 percent, is the Public Investment Corporation, a state pension fund owned by the government.

Nyanda said the government "had not come out in support" of a deal, adding it would wait until any deal was concluded because "it would still have to come (to us) for ratification or support". He noted that MTN had expanded into Africa "through government help".

Bharti has increased the cash component of its offer for a 49 percent stake in MTN to $10 billion from a proposed $7.6 billion, two people familiar with the matter told Reuters on Thursday. On top of that, Bharti would pay $4 billion in stock for a total package of $14 billion, 7 percent more than the earlier $13 billion proposed deal, they said.

"The South African government will ensure that the family silver (MTN) is not sold for a pittance," an analyst who declined to be named for compliance reasons, told Reuters earlier this month.

MTN, the country's second-biggest mobile operator and the only one still owned by South Africans, was set up with government help in 1994 as the country's first black-owned group.

South Africa's top operator Vodacom (VODJ.J) was sold to Britain's Vodafone (VOD.L) and listed on the Johannesburg bourse in May. That deal narrowly escaped being blocked by powerful trade union COSATU, which feared job losses [nLI236905].

"We will obviously judge it (MTN/Bharti deal) on its merits, particularly its effects on jobs and the conditions of workers," Patrick Craven, COSATU spokesman, told Reuters on Sunday.

Both MTN and Bharti have extended exclusive talks twice and given themselves until the end of the month to decide whether to join forces.

But some investors see the deal as being "like a dead horse" because of the long delay in finalising the transaction, while others say they are being short-changed despite Bharti's recently sweetened offer. The company needs approval from three quarters of shareholders to approve the deal. (Additional reporting by Michael Georgy; Editing by ; Editing by Dan Lalor)