Vodafone Group has sealed a long awaited deal to buy out its partner Essar from their Indian mobile joint venture for US$5.46 billion, ending a highly fractious relationship. The company will purchase the 33 percent stake owned by a collection of Essar companies, giving it a majority 74 percent shareholding in the venture. The sum is US$460 million more than initially expected when the plan was announced in March.

The price includes an US$880 million payment for Indian taxes, which neither Vodafone nor Essar believe is due and will be returned to Essar if they are proved correct. The Indian authorities have argued that Vodafone should have withheld a sum to cover tax when it acquired the Vodafone Essar stake from Hutchison Whampoa in 2007. Vodafone has noted that due to the structure of the companies involved, the deal was done outside India by two foreign businesses. “Whilst Vodafone and Essar continue to believe that no tax is due on this transfer, it was viewed as prudent to pay withholding tax on a without prejudice basis,” Vodafone said in a statement Friday. Vodafone Essar is the third-largest operator in India with around 140 million connections. Following the transaction 26 percent of the telecoms business will be majority owned and controlled by Indian shareholders.