Antitrust authority the Competition Commission of India (CCI) has approved Tata Group’s proposal to purchase NTT DOCOMO’s 26.5% stake in Tata Teleservices Ltd (TTSL), the Economic Times reports. The development follows a decision by the Delhi High Court earlier this month which rejected objections from the Reserve Bank of India (RBI), potentially clearing the path for DOCOMO to exit the company.
As previously reported by TeleGeography’s CommsUpdate, 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 the company, 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 further resistance from the RBI, and despite Tata’s agreement to cooperate on the ruling, DOCOMO moved the Delhi High Court to enforce the arbitral award.