Vodafone mulling Tata Teleservices acquisition?

3 Jan 2014

UK telecoms giant Vodafone Group is reportedly in the early stages of a negotiation with the Tata Group over the potential acquisition of the latter’s controlling stake in Tata Teleservices, according to India’s Economic Times. A person familiar with the matter was cited as saying: ‘Discussions are at an early stage. It is difficult at this stage to say what the outcome of these talks will be.’

At present the first right of refusal related to the Tata Group’s 59.45% stake in Tata Teleservices belongs to Japan’s NTT DOCOMO, which currently holds just over 26.27% in the Indian operator. However, should NTT DOCOMO refuse to buy out the Tatas then the Indian group has the right to exercise its ‘drag along’ rights and force the Japanese firm to sell its shares to the buyer of its choice, according to two persons familiar with the development. Further, the report notes that according to the shareholders agreement between Tata Sons, the holding company of the Tata Group, and NTT DOCOMO, should certain performance parameters and other conditions not be met by 31 March 2014, and should the Japanese firm opt to exit, Tata Sons is obligated to find a buyer for its shares; should it fail to find another buyer, Tata Sons would have to acquire NTT DoCoMo’s stake.

Meanwhile, another unnamed source was claimed to have said that Vodafone wants to buy out the entire company, stating: ‘Apart from the Tatas and DOCOMO, Vodafone will also look to make an offer to other shareholders.’ Should Vodafone succeed in acquiring the operator it would leapfrog the current mobile market leader, Airtel, which had 193.46 million subscribers at end-September 2013 according to TeleGeography’s GlobalComms Database, as a combined Vodafone India-Tata Teleservices would have 219.09 million customers at that same date.