Vodafone pays $1.9 billion for buying Ruias' stake in Essar

UK-based Vodafone on Wednesday paid $1.9 billion to Essar as first tranche for buying 22 per cent stake, held by offshore entities belonging to Ruias in their telecom joint venture Vodafone-Essar .

The 22.03 per cent stake, held in the JV by offshore entities of the Ruias-led Essar, is valued at $3.8 billion.

"We have made the first tranche of payment to Essar," a Vodafone spokesperson said.

Of Essar's 33 per cent stake in the JV, 22.03 per cent is owned by the company's overseas entities, while the remaining 10.97 per cent is held by the group's Indian firms and is valued at $1.2 billion.

According to sources, Vodafone has now paid $1.9 billion to Essar and the remaining $1.9 billion would be paid in November.

To sell the remaining 10.97 per cent in the telecom joint venture, Essar has approached the Reserve Bank of India (RBI) for approval.

When contacted, Essar spokesperson declined to comment.

In March, Vodafone had said it would exercise the option to purchase Essar's entire 33 per cent stake, valued at $5 billion.

Once the deal is complete, Essar would completely exit from the joint venture, which is offering nationwide mobile services in India.

Vodafone had entered Indian market in 2007 when it bought Hutchison's stake in the joint venture for over $11 billion and after that it had entered into an agreement with Essar for a call and put option for its stake.