Tata agrees to DOCOMO arbitration award

28 Feb 2017

India’s Tata Sons has withdrawn its objection to the USD1.17 billion international arbitration award won by erstwhile partner NTT DOCOMO over the latter’s exit from their joint venture Tata DOCOMO. The Economic Times reports that Tata has agreed to pay the Japanese company the full sum, but the deal will still need to navigate past the Reserve Bank of India (RBI), which had previously deemed DOCOMO’s exit agreement illegal.

As previously reported by TeleGeography’s CommsUpdate, under the 2009 agreement that saw DOCOMO take a 26.5% stake in Tata Teleservices (TTSL), the Japanese group was given the option of exiting the partnership if TTSL failed to meet certain financial targets, in which case DOCOMO would receive either a fair market value for its shares or 50% of the original purchase price. DOCOMO chose to enact this option in March 2014, but the matter quickly stalled. Tata was unable to find another buyer for the shares but, as existing laws stipulated that no foreign investor could exit its investment at a pre-determined price or with assured return, the RBI denied it permission to pay the previously agreed price of INR58 (USD0.86) per share – INR72.5 billion for the entire stake – instead of the INR23.34 per share valuation determined by independent assessors.

In June 2016 a London arbitration court ordered Tata to pay damages of USD1.172 billion to DOCOMO for breaching their shareholding agreement, and DOCOMO will release its entire stake in TTSL to Tata Sons, or an affiliate.

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