Vodafone buys out partner Essar

By Kate Holton,Paul Sandle
Saturday 22 October 2011 21:21
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Vodafone yesterday sealed a long-awaited deal to buy out its partner Essar from their Indian mobile joint venture for $5.46bn (£3.4bn), ending a highly fractious relationship.

The telecoms giant will purchase the 33 per cent stake owned by a collection of Essar companies, giving it a majority 74 per cent shareholding in the venture.

The price includes an $880m payment for Indian taxes, which neither Vodafone nor Essar believe is due and will be returned to Essar if they are proved correct.

The deal is part of Vodafone's strategy to own only assets where it has control, and follows the sale of its stake in the Polish operator Polkomtel on Thursday.

Andrew Hogley, an analyst at Espirito Santo, said the deal was in line with expectations once the tax fee was taken into account. "The price is a bit higher than we had expected but we think that is because they have transferred some tax issues to Essar rather than deal with it themselves – which, given their experience, is understandable," he added.

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