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Essar warns Vodafone of action

india Updated: Feb 13, 2007 18:16 IST
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Indian conglomerate Essar may start a legal battle against Vodafone, which is replacing Hutchison Telecom in the Indian mobile venture Hutch-Essar, on account of it being ignored in taking key business decisions, British media reported on Tuesday.

Quoting unnamed sources, The Times reported that Essar is concerned over Vodafone's move to forge ahead with plans like network sharing without consulting it first.

Essar, who have long claimed legal rights including a right of refusal over Vodafone's bid, is understood to be considering taking legal action, the paper reported.

The Times report quoted unnamed sources close to the group as saying Essar was unhappy about the way Vodafone was treating the acquisition as a done deal when their position is yet to be resolved.

When contacted, an Essar Group spokesperson said from Mumbai that "Essar is awaiting an official communication from Hutchison relating to Hutchison's proposed agreement to sell its stake to Vodafone as reported."

"On receiving the same, Essar will evaluate all its options in the coming weeks and will take necessary steps in the best interest of the company," he added.

The plan to share network with India's leading mobile player Bharti Airtel was central to Vodafone's strategy to maximise returns from Hutch-Essar, The Times report said.

Essar is yet to decide whether to sell out of the venture or accept Vodafone's offer of a partnership. 

The report added that Vodafone believes its acquisition of the 67 per cent stake in Hutchison Essar was not conditional on Essar's movements and the company CEO Arun Sarin has questioned any right of refusal over its bid by the Ruias.

The group (Vodafone) has not said anything publicly about Essar's alleged operating rights but it is thought to question those too, it added.

"Vodafone, which is also facing questions about the alleged full price it paid for the asset, is likely to want to avoid any embarrassing public wrangles over its acquisition," the report added.

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