Indian prize snags new problem for Vodafone

Reports suggest that the Vodafone Group is walking into a complex legal battle involving 1 million Mumbai-based mobile phone customers as part of its £5.7bn ($11.7bn) takeover of Hutchison Essar.

UK newspaper, The Daily Telegraph said Friday, without naming its source, that Essar Group – set to become Vodafone’s partner in India – has moved to prevent the joint venture from buying BPL Mumbai, another firm in which an Essar company is a major investor.

Essar has objected to the BPL deal with Hutchison Essar which was agreed in December 2005. The Mumbai High Court recommended an arbitration panel be set up to deal with the issue.

A decision in Essar’s favour could, according to the Telegraph, oblige the firm to pay a sum of up to £200m to Hutchison Essar.

Last week it emerged that Essar wants to run Hutchison Essar in a partnership of equals with the British mobile giant.

Earlier, Essar confirmed that Vodafone had approached the group with regards to a possible partnership over the running of the company. Local press reports said that Essar was open to increasing its existing stake beyond 33 per cent to run the operator on an equal footing with Vodafone.

Vodafone then offered to buy Essar out on the same terms as Hutchison but Essar appears keen to maintain its interest in the company.

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