Japanese operator NTT Docomo will reportedly keep its 26% stake in Indian telco Tata Teleservices under a business plan agreed with its JV partner, conglomerate Tata Group.
In early January, local reports suggested that Tata Group was in talks with…
Japanese operator NTT Docomo will reportedly keep its 26% stake in Indian telco Tata Teleservices under a business plan agreed with its JV partner, conglomerate Tata Group.
In early January, local reports suggested that Tata Group was in talks with rival Vodafone India to sell its 60% stake in the telco.
NTT Docomo has the right of first refusal to Tata’s stake in the mobile unit. But the group can reportedly exercise its ‘drag along’ rights by forcing NTT Docomo to exit Tata Tele.
NTT bought its 26% stake in the mobile JV for approximately US$2.7bn in 2009.
Under the shareholder agreement, the Japanese company also has two put and call options. The first one expired in March 2012 and the second one is scheduled for this month and allows NTT to either become Tata Tele’s largest shareholder or exit the business altogether.
According to the business plan which is being finalised, NTT Docomo would remain invested in Tata Tele as the JV is now faring better following a restructuring, according to the Economic Times.
The companies were not immediately available for comment.
In India’s crowded mobile market, Tata Teleservices has been faced with a declining subscriber base. In early December last year, its parent Tata was reported to be preparing a Rs40bn (US$646m) capital injection into the mobile operator after failing to secure financing from lenders. Banks had declined to renew Teleservices’ loans until it could fund its annual losses, reports said.
In addition, the mobile operator was the only bidder that failed to secure spectrum in India’s latest spectrum auction.
Tata close to selling Neotel stake
Separately, Tata Communications, another subsidiary of the Tata Group, is reportedly close to sealing a deal with Vodacom to sell its 68.5% stake in South African fixed-line operator Neotel.
On news of an imminent transaction, Tata Com’s shares jumped almost 5% yesterday.
South Africa’s largest mobile player Vodacom, owned by Vodafone, entered exclusive discussions with the owners of Neotel last September to buy 100% of the company.
Earlier that year, Tata had acquired a 2.5% stake for Rs922.4m (US$14.9m), boosting its stake to 68.5% and valuing Neotel at US$596m.
The remaining shares are held by Black Economic Empowerment entity Nexus Connexion (19%), and CommuniTel (12.5%).
Citing people familiar with the matter, the Economic Times wrote today that the discussions are at an advanced stage but that regulatory hurdles remain.
