DOCOMO facing hurdles in Tata exit

10 Jul 2014

Japanese firm NTT DOCOMO will exit Tata Teleservices by selling its 26.5% stake in the cellco to Indian conglomerate Tata Group through a put option, the Economic Times writes. A spokesperson for Tata Group confirmed that it has received formal communication from DOCOMO, paving the way for the duo to negotiate a price for the Japanese-held stake. Under the original joint venture agreement between DOCOMO and Tata, DOCOMO is entitled to either half the investment it has made or the fair market value of the stake from Tata. The deal may face regulatory hurdles, however, following a ruling from India’s central bank stating that put options must be exercised based on prevailing return on equity at the time the option is exercised – a poor prospect for DOCOMO given that Tata Teleservices is currently running at a loss, having registered net losses of nearly INR20 billion (USD334.47 million) in the year to end-March 2014.

India, Japan, NTT DOCOMO, Tata Tele Business Services (TTBS, previously TTSL/TTML)