Can Vodafone and Essar's wireless venture deal succeed?

Vodafone Group, the world's biggest mobile-phone company, reached an agreement with Essar Group over their wireless venture in India. Essar Group Vice Chairman Ravi Ruia will become chairman of the venture, to be renamed Vodafone Essar, while Vodafone Chief Executive Officer Arun Sarin will be vice chairman.

The agreement moves England-based Vodafone closer to completing its $11.1 billion purchase of a 67 percent stake in Hutchison Essar, India's fourth-largest mobile-phoneoperator. Both companies said that the acquisition will be completed in the coming weeks.

Between the third and fourth years, Essar Group gets the option to sell its stake in Vodafone Essar to Vodafone for $5 billion. Essar also gets the option to sell between $1 billion and $5 billion of Vodafone Essar shares to Vodafone at a price determined by an independent appraiser.

Essar's "risk is capped and they can take advantage of the upside from the telecom business, which is growing in India at a phenomenal rate," said Jon Thorn, who manages $350 million in Indian stocks at India Capital Fund in Hong Kong.

Vodafone will be getting eight board seats while Essar will have four. The company will be named Vodafone Essar, and the venture will market its products and services under the Vodafone brand. The companies said they will take advantage of Essar's “deep understanding" of the Indian market and Vodafone's wireless expertise to expand services.

Vodafone had previously valued Hutchison Essar at $18.8 billion. When the company announced the transaction, it also said it planned within weeks to offer to buy Essar's stake at the same price per share being paid to Hutchison Telecom. With the acquisition finalised, will it be a bane or a boost for both organisations? What are your thoughts?