Vodafone and Essar agree to play nice

As anticipated, Vodafone and Essar announced an agreement Thursday under which they will jointly manage fourth placed Indian mobileco, Hutchison Essar.

Under the terms of the partnership, Vodafone will have operational control of the company, to be renamed Vodafone Essar, and Essar will gain proportionate board representation.

Ravi Ruia will be appointed chairman of Vodafone Essar and Arun Sarin will be appointed vice chairman.

The move quashes rumours of a fall out between the two companies, following Vodafone’s $11.7bn agreement last month to acquire Hutchison Telecommunications International Limited’s controlling interest in Hutchison Essar.

Essar will continue to be a 33 per cent shareholder, although the business will eventually market its products and services under the Vodafone brand.

Between the third and fourth anniversaries of completion, Essar will also gain an option to sell its 33 per cent shareholding in Vodafone Essar to Vodafone for $5bn.

Vodafone has already indicated its interest in buying Essar out.

Ravi Ruia, vice chairman of Essar, said: “Essar was a founding partner in Hutchison Essar and played an active role in building the company, including extending network coverage into several profitable regional markets.  By partnering with Vodafone we expect to create further value in the business.”