New Delhi, March 31 (IANS) Britain-based Vodafone Group Thursday said it would buy out its Indian joint venture partner Essar Group's stake in India's leading telecom company Vodafone Essar Limited for $5 billion.

Essar Group holds a 33 percent stake in Vodafone Essar Limited. After this deal, the global telecom giant will have a 75-percent stake in the Indian mobile operator.

"The Essar Group has exercised its under-written put option over 22 percent of Vodafone Essar Limited (VEL)," said Vodafone Group in a statement.

"Following the exercise by the Essar Group of its put option, Vodafone has exercised its call option over the remaining 11 percent of VEL owned by the Essar Group, resulting in a total cash payment of $5 billion," it added.

The final settlement is expected by November 2011.

However, Indian norms do not allow foreign companies to hold more than 74 percent stake in a telecom company. So, Vodafone will have to offload the excess holding.

"Vodafone Group's published net debt figure already includes this $5 billion," the company said.

Vodafone Essar is the Indian subsidiary of Vodafone Group, Vodafone holding 67 percent and Essar Group 33 percent. The telecom company had bought a 67-percent stake in Hutchison Essar for $10.7 billion in 2007.

The operator is the third largest service provider by number of subscribers in India with over 130 million customers as on February 2011.