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Vodafone, Essar In Joint Venture Talks

Vodafone, the world's largest mobile telephone company, will continue talks with India's Essar Group about jointly running mobile phone operator Hutchison Essar, the Britain-based company's chief executive said on Thursday.

Britain-based Vodafone Group PLC is in the process of acquiring Hutchison Essar, India's fourth-largest mobile phone operator with about 23.3 million customers and 16.4% of the market.

It has agreed to pay $11.1 billion for a 67% stake in the mobile operator held by Hutchison Telecom International, a holding company of Hong Kong-based Hutchison Whampoa, and its associates.

Essar Group owns the remaining 33%.

Vodafone's Chief Executive Arun Sarin said the two companies were negotiating how best to run the mobile operator together.

"We are talking about a partnership for the future, but partnerships take a little while ... to make sure we understand aspirations and everything else. We'll work it out in time," Sarin told reporters in Mumbai after a meeting with Essar Group's Vice Chairman Ravi Ruia.

Sarin said there was no timeframe for completing the talks.

With European markets fully saturated with mobile telephone operators, Vodafone sees India as a key area for potential growth. Recently Indian mobile telephone companies have been adding 6.5 million users per month.

Sarin earlier told reporters in New Delhi that Vodafone would invest $2 billion in India in the next few years.

It also has offered to buy the remaining shares in Hutchison Essar from Essar Group "at the equivalent price per share" it agreed to with Hutchison Telecom. Essar, however, said it had no plans to give up its stake.

"There is no thought whatsoever for us to exit either this company or the business," Ruia told reporters in Mumbai.

Essar is a major Indian conglomerate with businesses ranging from shipping to energy.