We never objected to an IPO by Essar: Vodafone

MUMBAI, INDIA: British telecoms firm Vodafone said on Sunday it had not blocked Essar from conducting an initial public offer (IPO) of the latter's stake in Vodafone Essar, India's third-largest telecoms company by subscribers.

"We have no objection if Essar wishes to go for an IPO of its stake in Vodafone Essar," the British company said in a statement.

Vodafone and Essar have locked horns in recent days over the Indian group's move to merge a firm that owns an indirect 11 per cent in their mobile joint venture with another Essar group firm, India Securities Ltd (ISL).

Essar has said that last year it wanted to list Vodafone Essar by offering its shares through an initial public offer but Vodafone "ensured that the IPO did not go through and no market value could be established".

Essar group also accused the British telecoms giant of trying to force it out of their joint venture.

Shares in ISL, which is Essar group's financial arm, have risen more than tenfold in the past 12 months.

Vodafone had objected to the merger between the two Essar group firms on Jan. 18, saying ISL's value may be inaccurately used to calculate the value of its Indian telecom joint venture Vodafone Essar.

Vodafone continues to believe that material information has not been provided to the market regarding the merger scheme and it has raised objections with the Madras High Court, the Bombay Stock Exchange and stock exchange regulator Sebi, it said in a statement.

Vodafone paid $11.1 billion in 2007 for a 67 percent stake in the firm.

The deal gave Essar the option to sell its entire 33 percent stake for $5 billion by May 2011, or part of it at a market-determined price.

Vodafone has an agreement with Essar that gives it first option to buy out the latter's stake if some or all of the holding is put up for sale.

The decision to exercise either put option on or before May 8, 2011, is entirely the choice of Essar, Vodafone said in a statement.

Shares of India Securities closed at 63.35 rupees on Friday, down 3.58 percent in a weak Mumbai market.