pBarcelona, Feb 12: Britain's Vodafone Group Plc has won the battle for Hutchison Essar, In

Barcelona, Feb 12: Britain's Vodafone Group Plc has won the battle for Hutchison Essar, India's fourth-biggest mobile phone operator, with a bid that values it at around $18.8 billion including debt.

Vodafone, the world's biggest mobile operator in terms of subscribers outside China, said it would pay $11.1 billion for the 67 percent stake in Hutchison Essar owned by Hong Kong-based Hutchison Telecommunications International Ltd.

The deal, Vodafone's biggest since its record-breaking 180 billion-euro ($231 billion) purchase of Germany's Mannesmann in 2000, saw Vodafone fight off competing interest from India's Reliance Communications and the Hinduja and Essar groups, the latter of which owns 33 percent of Hutchison Essar.

Earlier, a source close to the matter told Reuters that Vodafone had won the auction with a bid that gave Hutchison Essar an enterprise value of just under $19 billion.

The deal will give the British group the opportunity to bring its brand into the world's fastest-growing and second-biggest mobile market.

The Essar group said it was evaluating a proposal from Vodafone to stay on as its partner.

''$19 billion shows just what value has been created ...Vodafone has invited us to be its partner in Hutchison Essar, an offer we are evaluating,'' Essar group Vice Chairman Ravi Ruia said in a statement.

Vodafone, which as a foreign company is barred by Indian law from owning more than 74 percent of a local telecoms operator, currently has a 10 percent stake in Bharti Airtel Ltd., India's No. 1 player.

Vodafone Chief Executive Arun Sarin told reporters that the group would sell a 5.6 percent stake in Bharti Airtel to Bharti for $1.6 billion.

Prabal Banerjee, chief finance officer for the Hinduja group, told an Indian television channel that Vodafone had offered a ''top-notch value'' for Hutch Essar.

''We were never agreeable for a price that was not backed by fundamentals. I'm sure Essar and Vodafone will tie up pretty well and create much more valuation for the organisation,'' Banerjee said.

Crucial Move:

The deal is a crucial move by Vodafone's Sarin, who is under pressure to expand the business amid slowing growth in the group's core European markets, while at the same time not overpaying for acquisitions.

Sarin, who was born in India, vowed last month not to pay ''over the top'' for Hutch Essar and said yesterday that the deal kept to a strict set of acquisition criteria set by the company.

Early reactions from analysts, some of whom had braced for bids as high as $20 billion, were positive. They are looking forward to cost savings through sharing telecom networks between Indian operators and Vodafone cashing in on other Indian investments.

''It is now important to understand Vodafone's plans for the business including any initiatives such as network sharing, the exit terms from Bharti,'' said Dresdner Kleinwort analyst Robert Grindle.

Vodafone bought its stake in Bharti stake for $1.5 billion in 2005 and had been keen to raise it, but Bharti's main shareholders -- Chairman Sunil Bharti Mittal and Singapore Telecom -- had been reluctant to sell.

With 24.4 million subscribers, Hutch Essar will give Vodafone a 16 percent share in the fast-growing Indian mobile market, which has around 150 million subscribers and is adding 5 million to 6 million customers each month.

With a mobile penetration of around 15 percent, India still offers operators a lot of opportunities for growth.

The deal would also be a lucrative exit for Hong Kong billionaire Li Ka-shing, whose Hutchison Whampoa conglomerate ultimately controls the Indian operator through its majority holding in Hutchison Telecom Li, Asia's richest man and the chairman of Hutchison Whampoa, is famed for his market timing, having sold mobile group Orange to Germany's Mannesmann during the telecoms boom in 1999 for a $15 billion profit.

Reuters