The London-headquartered company, that submitted a formal bid to the Hutchison Whampoa group midnight Friday, had earlier offered to pay $19 billion for the entire 100 percent-stake in Hutch-Essar. Vodafone has also agreed to take over a debt worth $2 billion.
The remaining 33 percent stake in the mobile phone company is with the Ruias of Essar. Vodafone has offered to buy that stake as well.
"Vodafone announces it has agreed to acquire companies that control a 67-percent interest in Hutch Essar from Hutchison Telecom International Ltd. (HTIL) for a cash consideration of $11.1 billion," a Vodafone statement said.
For Vodafone, the acquisition will make India their third largest mobile phone market after Germany and the US with over 23 million subscribers and a 16.4 percent national market share, industry sources said.
"This announcement is clear evidence of how we are executing our strategy of developing our presence in emerging markets," said the India-born chief executive of Vodafone Arun Sarin.
"We have concluded this transaction within our stated investment criteria and we are confident it will prove to be an excellent investment for our shareholders. Hutch Essar is an impressive, well run company that will fit well into the Vodafone Group."
According to industry experts, the mobile telecom giant, which has considerable expertise in third-generation (3G) mobile telephony segment, will have an edge over others once the new policy is rolled out later this in year or early 2008.
Vodafone, which also had 10 percent stake in rival Bharti Airtel, said it will share the infrastructure with the company, based on a pact signed with the Sunil Bharti Mittal group.