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India’s Essar group hopes to hammer out over the next month a shareholder agreement with Vodafone, the UK mobile group, which is set to buy a controlling stake in Hutchison Essar.

The agreement should ease the way for Vodafone, the world’s biggest mobile operator by revenue, to complete its takeover of India’s fourth-largest mobile operator.

Essar executives want an agreement that enshrines “joint management” arrangements over Hutchison Essar, and are also interested in the possibility of increasing the Indian group’s 33 per cent stake in the mobile operator.

However, the executives recognise that Vodafone would be the controlling shareholder in Hutchison Essar, with day-to-day operational responsibility for the mobile operator.

Essar’s conciliatory tone, after it announced last Thursday its intention to retain its minority stake in Hutchison Essar, is likely to be greeted with relief by Vodafone.

Nevertheless, the coming talks are likely to be tough. If they do not result in a satisfactory shareholder agreement, Essar is retaining the option of seeking to enforce its claimed right of first refusal over the 67 per cent of Hutchison Essar it does not own.

Vodafone last week announced it had agreed to buy companies controlling a 67 per cent stake from Hutchison Telecommunications International, a Hong Kong listed company, in a deal that gave Hutchison Essar an enterprise value of $18.8bn (£9.6bn).

Vodafone trumped three bidders, including Essar, which made an offer that valued Hutchison Essar at $18bn.

Prashant Ruia, an Essar director, said Vodafone was a “great brand” but that it “does not have that much experience in emerging markets. We have been in emerging markets, especially India, for the last 11 years.”

“We are delighted that the Essar group have signalled their intention to remain a shareholder,” it added.

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