Asia Bizz: UK-based telecommunications company Vodafone has agreed to buy out some stake at Essar group for an amount of around $5 million in their Indian joint venture. The venture turned sour a few month ago and Vodafone India will buy 33 percent stake at Essar’s.
The problem that Vodafone faces now is that Essar’s stake will be nil and Vodafone will move ahead from 42 percent to 75 percent; this violates the Indian law of a foreign-owned telecom company. The rule says that no foreign owned telecom company can exceed 74 percent.
Essar also has a stake of 1.5 percent in an Indian telecom company called Loop.
Vodafone payed $11 million to Hutchison Essar in the year 2007 and owned 67 percent. Since then, the company has been having a hard time with the infamous $2 million tax bill, more competitors, and sky-high licensing fees. Vodafone is also the third largest service provider in the Indian market in terms of subscribers and often invests heavily on their mainstream advertising withÂ a lot of creativity.