The board of NTT Docomo has decided to exercise its option to pull the Japanese incumbent out of its Indian joint venture with Tata Group.
NTT holds 26.5% of Tata Teleservices, which operates as Tata Docomo, and has the right to force Tata to acquire…
The board of NTT Docomo has decided to exercise its option to pull the Japanese incumbent out of its Indian joint venture with Tata Group.
NTT holds 26.5% of Tata Teleservices, which operates as Tata Docomo, and has the right to force Tata to acquire its shares in the JV for 50% of its acquisition price if it fails to perform.
The Japanese telco said that amounts to Y125.4bn (US$1.2bn), or a fair market price – whichever is higher – should it transpire that Tata Docomo fails to meet its performance targets for the end of the fiscal year that ended on 31 March.
NTT expects to sell its shares following the results, but said it is unsure how the option will be performed and noted it is not able to predict how events will unfold. It plans to exercise its option by June 2014 at the latest.
NTT and Tata formed the JV in late 2008 and it launched GSM services the following year. The Japanese group made an initial investment of Y252bn (US$2.47bn) in the operator and then injected a further Y14.4bn (US$141m) in 2011.
Reports earlier in the year suggested Tata was looking to sell its stake in the venture to Vodafone. In India’s last spectrum auction in February Tata Docomo was the only participant which failed to acquire frequencies.
Tata Docomo says it serves over 84 million customers in more than 450,000 towns and villages across India. It primarily offers mobile services, but also provides wireless desktop phones, public booth telephony and wireline services.
