Without official word from any of the parties involved, interest in Hutchison Essar seems to have escalated into a bidding war -- with reports that Vodafone Group plc (NYSE: VOD) is now circling the company.

According to the Financial Times, Vodafone’s board met today to consider putting in a bid of around $13.5 billion for India’s fourth largest mobile operator. India's Business Standard reports that the meeting was "inconclusive" and the board will continue to mull over how to approach an offer.

Rival operator Reliance Communications Ltd. (RCom) has already been linked with a group of private equity firms and banks, which now includes Citigroup and UBS AG , who would finance a $15 billion offer. Maxis Communications Bhd. 's and Orascom Telecom 's names have also been thrown into the mix. (See Private Equity Targets Hutch.) None of the companies involved have offered public comment.

Just Tuesday, Vodafone divested its stake in Swisscom Mobile AG , a sign that the carrier is now looking to boost its holdings in rapidly-expanding emerging markets rather than the mature markets of Europe. (See Vodafone Sells Swiss Stake and Vodafone Updates on EMAPA.) It holds a 10 percent stake in India’s largest mobile operator, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), and although it has expressed interest in a larger share of the company neither Bharti owner Sunil Mittal nor Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), another major investor, have been prepared to reduce their stakes. (See Vodafone Buys Bharti Stake.)

Ovum Ltd. analyst John Delaney writes in a research note: “It would be a striking coup if Vodafone were to bid for control of Hutchison Essar. It's hard to think of any bigger way for Vodafone to demonstrate its commitment to emerging markets.”

Hutchison Essar’s fate is largely in the hands of Essar Teleholdings, which owns 33 percent of the joint venture and has first right of refusal on Hutchison Telecommunications International Ltd. (NYSE: HTX)'s stake. Foreign ownership in Indian telecom companies is limited to 74 percent, meaning Vodafone or any other suitor from abroad would have to team with Essar or find another local partner. Vodafone could also be required to sell its shares in Bharti.

Hutchison Essar has more than 22 million subscribers and is in expansion mode having received letters of intent from the Indian government for six new licenses. (See Hutch Essar Expands, Scraps IPO.) Analysts have valued the carrier at around $13 billion and warn that the eventual winner of a bidding war is likely to overpay.

Delaney writes that there are two dangers in Vodafone pursuing a deal: “The first danger would be the temptation to pay too much for Hutchison Essar. Emerging market assets are generally over-valued at present, and Hutchison's management are world-class drivers of a hard bargain.”

On that note, a source told Reuters today that Hutchison has declined expressions of interest so far as being too low and would likely refuse a bid of $13.5 billion.

“The second danger is failure to complete the deal. That would be the second such high-profile failure of Arun Sarin's term as CEO (following AT&T Wireless in the U.S.), and would almost certainly make his position untenable.” (See Sarin Survives and Vodafone CEO Faces Showdown.)

The news sent Vodafone’s share price down as much as 2.6 percent on the London Stock Exchange . It closed the day at 143.75 pence, down 2.25 pence (1.5%).

— Nicole Willing, Reporter, Light Reading