Vodafone will buy out Indian partner Essar in a $5 billion deal that ratchets up its exposure to a mobile market that has proved challenging despite its rapid growth.

Vodafone, which has faced a host of problems since entering the fiercely competitive Indian arena in 2007, will take over Essar’s 33 per cent of Vodafone Essar, giving it direct ownership of 75 per cent of the country’s third biggest operator.

The move came about after Essar exercised its put option.

However, the deal also suits Vodafone as it brings an end to their highly fractious relationship, which had spilled over into the open in recent months.

It also highlights just how much money Vodafone, the world’s largest operator, has spent in Asia’s third largest economy and the fastest-growing mobile market in the world.

Vodafone paid $11.1 billion in 2007 for control of the carrier in what remains the largest foreign direct investment to be completed in India. – Reuters