Vodafone Group plc (NYSE: VOD) has won the battle for a controlling interest in India's fourth largest mobile operator, Hutchison Essar , having agreed a deal that values Essar at $18.8 billion. (See Vodafone Buys Hutch Essar.)

Vodafone is paying Hutchison Telecommunications International Ltd. (NYSE: HTX) $11.1 billion in cash for its 67 percent stake in Hutchison Essar, a GSM network operator with more than 24 million subscribers, about 16 percent of the rapidly growing Indian mobile market. (See India Mobile Subs Soar in 2006.)

In the six months to June 30, 2006, Hutchison Essar reported revenues of $908 million and an operating profit of $226 million. Vodafone says the acquisition, which is set to close during the second quarter of this year, will be neutral to its earnings in the first year and accretive thereafter.

Vodafone says it will offer to buy the other 33 percent of Hutchison Essar from the Essar Group for $5.55 billion.

Vodafone has repeatedly stated its intention to acquire assets in emerging markets, where it believes the potential for growth is generally three times greater than in developed markets. India currently has 150 million mobile users, but is adding about 6.5 million new subscribers each month. India has a population of more than 1.1 billion.

But while the market growth is enticing, some shareholders have expressed concern about the value of a major acquisition in India. Vodafone addressed this concern by promising its investors it wouldn't overpay for Essar if it won the bid. The company said today in its announcement that the terms met its "stated financial investment criteria." (See Vodafone Tops 200M, Talks M&A and Vodafone Unveils Convergence Plans.)

The announcement comes less than two days after the bid deadline closed. Other companies that had expressed an interest in Essar include Reliance Communications Ltd. (RCom) , India's second largest mobile operator with 31 million mostly CDMA subscribers, giving it about 21 percent of the market. It has plans for a $7 billion GSM network rollout. (See Essar Bid Deadline Looms and Reliance Plans $7B GSM Build-Out.)

Bharat Sanchar Nigam Ltd. (BSNL) , which is planning a $4.8 billion expansion of its GSM network, is the country's third largest mobile operator, just ahead of Essar with more than 24 million customers. (See Moto Stalls BSNL's Wireless Tender.)

India's biggest mobile operator is Bharti Airtel Ltd. (Mumbai: BHARTIARTL), which, with 34 million GSM subscribers, has a near 23 percent market share. Vodafone currently owns a 5.6 percent direct stake in Bharti Airtel, but has struck an agreement to sell that holding to Airtel's parent, Bharti Group, for $1.6 billion.

But that doesn't end Vodafone's relationship with Bharti Airtel. Vodafone retains a 4.4 percent indirect stake in the carrier, and the two companies have signed a Memorandum of Understanding (MOU) "relating to a comprehensive range of infrastructure sharing options in India," with a particular emphasis on sharing infrastructure in rural areas, Vodafone said in a statement.

Vodafone has just recently announced a couple of network sharing deals with Orange SA (London/Paris: OGE) in Europe. (See Mobile Eurobites.)

News of the Indian acquisition wraps up a busy week for Vodafone, which, ahead of the 3GSM industry conference and exhibition in Barcelona, announced a series of new services in partnership with some of the world's biggest online brand names. (See Vodafone Takes EBay Mobile , Vodafone Takes MySpace Mobile, and Vodafone Offers Mobile YouTube.)

— Ray Le Maistre, International News Editor, Light Reading