Vodafone buys majority share in Indian Essar

Vodafone is once again flashing its cash but it better beware the tax man.

It’s Indian arm has decided to buy out its partner Essar from its Indian mobile venture for $5.46 billion.

The deal, which will see Vodafone acquiring the company’s 33 percent share, means that the UK mobile operator will now have a 74 percent shareholding in the company.

In a statement Shashi Ruia, chairman Essar Group  said that he was pleased that Vodafone Essar had “grown to become one of the premier telecom companies in the country with over 140 million subscribers.”

However, we hope that this transaction goes a little bit smoother than the last one. Back in November Vodafone was ordered to pay 25 billion rupees ($553 million) by the Indian Supreme Court over outstanding taxes owed from an acquisition of  telco Hutchinson Essar –  now known as Vodafone Essar.

The tax man decided that Vodafone had racked up a massive 112.18 billion rupees ($2.5 billion) in tax over its acquisition of a majority share of 67 percent the company, which it bought in 2007.

But that hasn’t stopped the company from buying. As well as the Indian acquisition the company has also splashed its cash over in Mauritius where it’s bought the 22 percent share of  Essar Com Limited.

Vodafone paid  $3.32 billion, after deduction of withholding tax of $0.88 billion under the agreements signed in Port Louis, Mauritius.