India’s Essar Group has confirmed it is in talks with Vodafone about a possible IPO of its stake in the two firms’ local joint-venture, Vodafone Essar, India’s third-largest mobile operator. A listing is being reportedly considered as an alternative to Essar selling its 33 percent stake in the company to Vodafone via a put option. “It’s in preliminary discussions,” Essar’s CEO Prashant Ruia told reporters yesterday when asked about the potential listing, reports Dow Jones Newswires. “We have time until May on our put option. We have all the options – an IPO is one.” Vodafone acquired its 67 percent stake in the operator – then known as Hutchison Essar – for US$11.2 billion in 2007, with Essar retaining its 33 percent stake. The deal gave Essar the option to sell its stake for US$5 billion by May 2011 or at a market-determined price, whichever was higher. However, under current Indian foreign ownership rules, UK-based Vodafone is barred from holding more than 74 percent, making an IPO a more viable option. 

Vodafone CEO Vittorio Colao gave nothing away on the future of the group’s relationship with Essar. “We have a partner [Essar] here. We will discuss together what to do, and we will decide together what to do,” he told reporters. However, Colao did comment on Vodafone’s long-running dispute with the Indian tax authorities over an alleged US$2.6 billion outstanding tax bill relating to its 2007 acquisition. “We have confidence in the court process. India has a very solid legal system and we will just go on and on until our reasons are heard,” Colao said. The latest chapter of the legal saga is to be heard in a Bombay court in August.