Vodafone has given the green light to Indian joint venture partner Essar Group to conduct an IPO (initial public offering) of Vodafone Essar if desired.
"We have no objection if Essar wishes to IPO its stake", Vodafone said in a statement on Sunday. An Essar spokesman declined to comment on the statement, which came as the two companies battle over the valuation of Essar's stake in the joint venture.
Vodafone bought a 67 percent stake in Vodafone Essar in 2007 from Hutchison Telecommunications International. Essar holds the remaining 33 percent, of which one third is held by its Essar Telecommunications Holdings (ETHPL) unit.
Under an agreement between Vodafone and Essar that was signed at the time, Essar has an option to sell its 33 percent shareholding in Vodafone Essar to Vodafone for US$5 billion, or an option to sell between $1 billion and $5 billion worth of Vodafone Essar shares to Vodafone at an independently appraised fair market trading value.
Essar has until May to exercise the option.
The British mobile operator is trying to prevent Essar from merging Essar Telecommunications Holdings, the company that holds part of the joint venture stake, with listed company India Securities Ltd (ISL), as it could artificially increase the price Vodafone may have to pay to buy out Essar's stake in the joint venture.
Essar said on Friday that it had taken the merger decision to determine the true market value of its stake in Vodafone Essar, as Vodafone had blocked an IPO of Vodafone Essar last year.