British mobile phone giant Vodafone is taking full control of its Indian joint venture by buying out its local partner Essar Group, a statement said, ending a troubled relationship.

Vodafone, which has sought to make India a crown jewel in its expanding emerging markets portfolio, said it will pay Essar Group companies $5.46 billion for the one-third holding in Indian mobile-phone services provider Vodafone-Essar.

'The settlement marks the end of a four-year partnership between Vodafone and Essar in India, during which Vodafone Essar has grown to reach almost 140 million subscribers,' the British firm said. Vodafone had announced plans for the buyout in March after friction between Vodafone and the Essar Group, founded by billionaires Shashi and Ravi Ruia, became more public over the valuation of Essar's minority stake.

The deal caps a process which began when Vodafone bought a 67pc stake in Hutchison Essar from Hong Kong-based Hutchison Whampoa for $11.1bn in 2007, marking its first foray into India.

Vodafone's pact with Essar gave the Indian conglomerate an option to sell its stake in Vodafone Essar to the British firm for $5bn.

The figure of $5.46bn to be paid to the Essar Group is higher than the $5bn initially announced and reflects tax on the transaction.

However, Vodafone has insisted it doesn't have to pay tax on the initial 2007 deal with Hutchison Whampoa that gave it control of Vodafone-Essar.

It argues the deal was between two companies based outside India while Indian authorities counter that tax must be paid on the transaction because it involved an asset based in India. India's Supreme Court is slated to hear the dispute over the Vodafone-Hutchison transaction on July 19.