Tata Group is resigned to acquiring NTT Docomo’s 26.5% holding in their joint venture Tata Teleservices, which operates as Tata Docomo, and is reported to have set the funds aside to purchase the stake.
The Japanese incumbent has a put option that can…
Tata Group is resigned to acquiring NTT Docomo’s 26.5% holding in their joint venture Tata Teleservices, which operates as Tata Docomo, and is reported to have set the funds aside to purchase the stake.
The Japanese incumbent has a put option that can require Tata to acquire its shares in Tata Teleservices for 50% of what NTT paid if it fails to perform.
Last month NTT indicated it would exercise its option this month and expected Y125.4bn (US$1.2bn) or a fair market price – whichever is higher – for its stake.
Tata Group has been thinking about offloading Tata Teleservices but does not expect to find an investor prepared to pay an acceptable price before NTT’s option deadline arrives, according to a report in the Economic Times.
Tata is reported to have held talks with Vodafone India about selling the operator, which is India’s seventh in terms of market share.
However the JV’s debt pile – reported to be around US$4.6bn – is seen as a stumbling block as it makes the companies net worth negative. Therefore Tata may have to assume some of the operator’s debt to get a deal done.
NTT and Tata formed the JV in late 2008 and 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.
In India’s last spectrum auction in February Tata Teleservices was the only participant which failed to acquire frequencies.
Tata Teleservices 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 fixed line services.
