Vodafone to pay $5bn to buy out India business

Vodafone sign in Bhopal, India
Image caption Vodafone has expanded quickly in India, in part by buying rivals' operations

Vodafone is to pay its local partner, Essar Group, $5bn (£3.1bn) to buy them out of their Indian joint venture.

The phone giant's decision to exercise its option to purchase Essar's 33% stake was widely expected.

It leaves Vodafone holding 75% of the business, giving it a majority stake for the first time, although Indian foreign ownership rules will force the UK firm to reduce that to 74%.

It also ends a relationship with Essar that had become increasingly strained.

The two firms had clashed publicly over plans by Essar to reorganise its ownership of the Indian business in a way that Vodafone claimed would not value the company correctly.

Vodafone has faced a string of problems since entering the Indian market in 2007, including a £2.3bn write-down - 25% of the business's value - due to rising spectrum costs, and a disputed $2.5bn tax bill from the Indian authorities.

The buyout will be completed by November, according to a statement on Vodafone's website.

The company will need to reduce its stake before then, in order to comply with Indian rules, and may do so via a partial stock flotation.

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