7:59 p.m. | Updated

Vodafone, the British mobile phone giant, said Thursday that it would pay $5 billion in cash for the Essar Group’s one-third stake of an Indian joint venture.

The deal will increase Vodafone’s exposure to one of its most important and fastest-growing markets.

“We’re adding about three million customers a month,” said Ben Padovan, a Vodafone spokesman. “India has a population of 1.2 billion, and penetration is about 60 percent, so there’s a lot of market share to go for.”

The move resolves many months of conflict between the companies, as Essar, a conglomerate with interests in steel, power and shipping, sought to determine the value of its interest and explored the possibility of an initial public offering for its shares.

This year, the two partners argued over Essar’s plans to reverse-list its stake in the venture by merging some of its shares into India Securities, already a public company — a deal that Vodafone said would have inflated the value of its stake.

Vodafone currently has a direct equity interest in 42 percent of the company, and the Essar deal will give it 75 percent, Mr. Padovan said.

The rest is in the hands of entities controlled by Indian partners. Indian regulations prohibit foreign investors from owning more than 74 percent of domestic telecommunications companies, and Vodafone plans to divest itself of about 1.3 percent of its stake to comply with the law.

Vodafone has also been embroiled in a lengthy tax dispute regarding its initial stake in the joint venture, which it bought in 2007 from Hutchison Telecommunications International, a company controlled by the Hong Kong billionaire Li Ka-shing.

The case is to come before the Supreme Court of India in July, and could leave the company liable for up to $2.5 billion in capital gains, in a deal where, paradoxically, it was the buyer.

Last year in May, Vodafone took a $3.5 billion write-down on the value of its Indian business, which has been battered by fierce competition from rivals like Bharti Airtel and Reliance Communications.

The Indian mobile telecommunications market is the second-largest in the world, after China’s, and one of the fastest growing. But the sector is crowded, with more than a dozen companies vying for customers and driving down prices.

Most countries have between three and four major telecommunications operators, and if Indian law were changed to let rival telecoms to conduct takeovers, the sector might see a wave of consolidation.

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