Vodafone confirms interest in buying Indian network

British mobile services operator Vodafone Group has confirmed its interest in acquiring a controlling interest in Indian mobile services company Hutchison Essar.

Vodafone and India's Reliance Communications, another mobile services company, are seen as the front runners in a bidding war for the large Indian mobile services operator, which operates GSM (Global System for Mobile Communications) services under the brand "Hutch."

The board of Vodafone continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutchison Essar, the company said Friday. Such a transaction would be consistent with Vodafone's stated strategy of seeking selective acquisition opportunities in developing markets, the company said, while cautioning that the process is at an early stage, and may not lead to a transaction.

Hutchison Essar's majority stakeholder Hutchison Telecommunications International, a subsidiary of Hutchison Whampoa, is said to be interested in selling its stake in the company. Hutchison Essar is a joint venture between Hutchison and India's Essar Group.

Indian government rules limit foreign holdings in mobile services companies to 74 percent. If Vodafone's bid is successful, it will have to retain Essar Group as a partner or find another Indian partner that will buy out the Essar Group's stake in Hutchison Essar. Essar was not immediately available for comment.

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