Vodafone was warned the heady prices being talked about in the auction of India's Hutchison Essar could clash with its internal rules, a Daily Mail report said.
The Daily Mail report quoted Gildman Sachs and JP Morgan as saying that Vodafone boss Arun Sarin will have to tread carefully to avoid breaching rules introduced last May governing the returns he has to achieve on acquisitions.
As a result, the UK mobile firm might be forced to cut back its ambitions and team up with rival Essar, which already holds a minority stake, the report said.
Reports have suggested a bid by Vodafone could value the firm up to $9 billion, though it has steadfastly refused to comment on price.
The Daily Mail report also said Sarin is gearing up for a heated battle over Hutchison Essar, as he vies with India's Reliance and private equity to gain a foothold in the world's fastest growing mobile market. Hutchison has already put its 67% stake in the company up for sale.
Essar, which owns the remaining 33%, has lined up financing to buy out the rest of the company, creating a serious headache for rival bidders.
It also enjoys a right of first refusal over any other Indian bidder for the remainder of the company.Observers argue that Vodafone could avoid overpaying for the Indian operator by accepting a 55% stake in Hutchison Essar and allowing Essar to raise its stake to 45%.