Tata seeks green light from CCI for DOCOMO buyout

19 May 2017

Tata Group has sought approval from the Competition Commission of India (CCI) to buy the 26.5% stake in Tata Teleservices Limited (TTSL) held by its Japanese partner DOCOMO, the Economic Times reports. In its proposal to the antitrust watchdog, Tata claimed that the buyout would not affect the competitive landscape of India’s telecoms market. The announcement follows a ruling earlier this month from the Delhi High Court which rejected the previous objections from the Reserve Bank of India (RBI).

As noted by TeleGeography’s GlobalComms Database, DOCOMO sought to exit TTSL in early 2014 via its 2009 shareholding agreement, the terms of which stated that DOCOMO would be entitled to either 50% of its acquisition price or the fair market price of the shares, whichever is higher. After failing to find another buyer for the shares, Tata agreed to buy the shares itself but was denied permission by the RBI. The RBI blocked the transaction on the basis that it is illegal for a foreign company to exit investments at a pre-determined price or with assured return, noting that the pre-agreed price of INR58 (USD0.9) for each of NTT DOCOMO’s shares was substantially higher than the INR23 per share valuation determined by independent assessors.

DOCOMO sought arbitration on the matter, and in June 2016 the London Court of International Arbitration ruled in favour of DOCOMO, ordering Tata to pay the Japanese firm damages of USD1.2 billion for breaching the terms of their shareholding agreement. Under the decision, DOCOMO would release its shares in TTSL to Tata Group. Following the decision, DOCOMO moved the Delhi High Court to enforce the arbitral award.

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