Vodafone on Tuesday completed its purchase of a controlling stake in Hutchison Essar, India’s fourth largest mobile operator, but said it would pay $10.9bn rather than the $11.1bn originally envisaged.

The reduction of $200m is mainly the result of Vodafone agreeing to bear the full cost of exercising options over a 15 per cent stake in Hutchison Essar held by two Indian businessmen and a finance company.

That 15 per cent stake was the subject of intense scrutiny by Indian regulators who approved Vodafone’s deal last month.

Vodafone said on February 11 it would pay $11.1bn to Hutchison Telecommunications International, a unit of Li Ka-shing’s Hutchison Whampoa, for a 67 per cent economic interest in Hutchison Essar.

Vodafone is replicating the shareholder arrangements for Hutchison Essar put in place by HTIL.

While it will own 52 per cent of Hutchison Essar directly, it will have options over another 15 per cent held by Asim Ghosh, managing director of Hutchison Essar, Analjit Singh, chairman of Max India, a healthcare group, and a company called Infrastructure Development Finance Company.

In a letter to India’s finance ministry on April 9, HTIL said Vodafone, Mr Ghosh and Mr Singh had agreed that, assuming an equity valuation for Hutchison Essar of $25bn, the two men’s stakes would be worth $430m.

HTIL originally agreed to pay up to $350m if Vodafone exercised the options over the men’s stakes, said people familiar with the matter.

However, these people added Vodafone had since agreed to assume HTIL’s liability, and so the deal’s value had been reduced to reflect this.

Vodafone would pay $350m less for the controlling stake in Hutchison Essar, offset by $140m of interest due to HTIL since the deal was announced in February.

Arun Sarin, Vodafone’s chief executive, last night expressed delight at completing the Hutchison Essar deal. “I am confident that the Hutch Essar business will make a major contribution to the Vodafone group over the coming years,” he said.

Indian regulators approved Vodafone taking a 52 per cent stake in Hutchison Essar last month, but said it would need additional authority to exercise the options over the other 15 per cent stake.

Hutchison Essar’s shareholder structure was put in place by HTIL to enable it to comply with rules that prevent foreign groups owning more than 74 per cent of Indian telecoms companies.

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