Down and dirty

19 January 2011 By Una Galani Follow @ugalani

The teleco giant has fallen out with its Indian partner over plans to back part of the Vodafone Essar joint venture into a closelyheld investment firm. The move appears aimed at inflating the stake’s value ahead of the expiry of Essar’s option to sell it back to Vodafone.

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Vodafone said on Jan. 18 that it objected to a move by its Indian partner Essar Telecom to list an 11 percent stake in their Indian mobile joint venture, Vodafone Essar. The UKbased mobile operator has written to the Bombay Stock Exchange and the Securities and Exchange Board of India to express its concerns.

Essar owns a total 33 percent of Vodafone Essar. It holds 11 percent of that stake through Essar Telecommunications, a privatelyheld Indian vehicle.

The Indian group has an option which expires on May 7 to sell all or part of its 33 percent stake in the joint venture back to Vodafone for up to $5 billion. Essar can sell the entire stake for that amount or sell between $1 billion and $5 billion worth of Vodafone Essar shares to Vodafone at an independentlyappraised fair value.

Vodafone granted the option to Essar in 2007 as part of its acquisition of a 67 percent stake in Hutchison Essar, for which Vodafone paid $10.9 billion in cash. The operator has since been rebranded Vodafone Essar.

At 1230 GMT Vodafone shares were flat at 178.5 pence.

Reuters story: Vodafone objects to Essar Telecom's reverse listing

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Essar owns a total 33 percent of Vodafone Essar. It holds 11 percent of that stake through Essar Telecommunications, a privatelyheld Indian vehicle.

At 1230 GMT Vodafone shares were flat at 178.5 pence.

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