DOCOMO considering international arbitration over India exit

17 Nov 2014

NTT DOCOMO is considering arbitration from an international court to force Tata Group to buy back the Japanese firm’s stake in loss-making wireless operator Tata Teleservices (TTSL), Business Standard writes, without giving its source. DOCOMO confirmed in April this year that it wanted to exercise its put option to exit the venture by selling its 26.5% stake back to Tata. The process has been delayed by a disagreement between DOCOMO and Tata over the valuation of the stake. As previously noted by CommsUpdate, following a ruling from India’s central bank, 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 INR5.6 billion (USD90.84 million) in the year to end-March 2014. With the exception of the 2010-2011 financial year, Tata has booked a net loss every year for a decade. Explaining its decision to leave the Indian market earlier this year, a spokesperson for the Japanese group commented: ‘We thought things were moving very, very smoothly in the beginning… but the spectrum administration in India was so confusing and was beyond our expectation and totally unpredictable.’

India, NTT DOCOMO, Tata Teleservices (TTSL, incl. TTML, Tata Tele Broadband)