Telenor moves in to acquire TTSL stake from DOCOMO

2 Jan 2015

According to a report by Hindu Business Line, Norway-based Telenor Group is mulling the acquisition of NTT DOCOMO’s 26.5% stake in loss-making Indian wireless operator Tata Teleservices (TTSL). The paper suggests that both sides have been holding a series of meetings to consider a range of options, although it did not provide any specific details of what these may be. It is not the first time that Telenor and DOCOMO have held talks over the venture. Negotiations in 2012 faltered amid concerns over matters including spectrum pricing and M&A rules.

TeleGeography notes that in November last year, NTT DOCOMO was considering international arbitration to force Tata Group to buy back its stake in TTSL. DOCOMO confirmed in April 2014 that it wanted to exercise its put option to exit the venture by selling its 26.5% stake back to Tata, but the process became mired in disagreement between DOCOMO and Tata over the valuation of the stake. 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 last 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, Tata Teleservices (TTSL, incl. TTML, Tata Tele Broadband), Telenor Group