As announced on Thursday, Vodafone will buy the Essar conglomerate for $5 billion from the UK group’s Indian business. For the $5 billion, which will be paid in cash, Essar will sell 33% of its stake in Vodafone Essar. Back in January, Vodafone didn’t agree with Essar’s plans to put 33% of its stake into India Securities because they feared it would create an inflated market value.

Arun Sarin, who was Chief Executive of Vodafone at the time, thought the deal would give the UK group another significant source of growth. However, it turns out that India was actually an unpredictable and expensive project to take on. In fact, authorities in India are going after Vodafone to pay $2.5 billion in tax that they claim is due from the teal that took place in 2007, although Vodafone says they don’t owe any taxes.

According to Indian law, Vodafone is not allowed to own more than 74% of Vodafone Essar, and the United Kingdom-based company said they would still comply with these regulations once the transaction had been complete, since 35.6% of Vodafone Essar is already locally owned.

After the Essar transaction takes place, Indian partners of Vodafone will be able to increase their shareholding, and there could even be a public offering take place.