British wireless giant Vodafone called on India’s market regulator this week to investigate a proposed reverse listing by partner Essar Telecommunications in which Essar would merge 11% of its indirect stake in the Vodafone Essar joint venture into India Securities (ISL), the financial services arm of the Essar Group. The dispute between Vodafone and Essar arises as Vodafone continues its legal fight against government efforts to collect $2.5 billion in back taxes accruing from Vodafone’s $11 billion acquisition of Hutchison Essar in 2007. Stiff price competition in India’s wireless phone sector has also eroded profit margins for Vodafone’s Indian operations, which experienced a 9% drop in EBITDA between the 2007-2008 and 2009-2010 earnings periods. Essar Group, the parent of Essar Telecommunications, holds a 33% stake in the Vodafone Essar venture and has the option to sell its stake to Vodafone by May of this year. Describing ISL as a “highly illiquid vehicle,” Vodafone voiced concern that the value of the combined ISL-Essar “could be misinterpreted” to indicate the “fair market value of Vodafone Essar.” A spokesman for Essar indicated that his company was aware of Vodafone’s concerns and would “respond appropriately.”