Essar fires salvo at Vodafone as battle hots up

The Ruias-led Essar Group on Friday launched a scathing attack on Vodafone PLC, saying that the British company is trying to gain 100-per cent control of their telecom joint venture Vodafone-Essar at an "artificially depressed value".

A day after Vodafone complained to the Securities and Exchange Board of India to probe allegations of insider trading in India Securities Ltd, a listed company of the Essar group, the Ruias said the British company's allegations are baseless.

Essar has proposed to merge Essar Telecommications Holdings Pvt Ltd (ETHPL), which has an 11-per cent stake in Vodafone-Essar, with India Securities Ltd in order to discover the 'fair market value' of its stake in the joint venture.

Vodafone-Essar is the third largest telecom operator in India with over 124 million mobile subscribers. Vodafone had bought a nearly 67 per cent stake from Hutchison in 2007, while Essar holds the remaining stake.

"The merger scheme between India Securities Ltd and ETHPL is fully compliant with all applicable Indian laws, capital and financial sector regulations," Essar said in a statement.

Vodafone, which has sought to intervene in the proceedings governing the merger scheme in the Madras high court, is neither a shareholder nor a creditor of any of these companies and has no legal capacity to challenge this merger, it said.