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NTT DoCoMo considers raising India stake
15 December 2011
NTT DoCoMo plans to raise stake in Indian operator Tata Teleservices from 26% to 35%
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NTT DoCoMo plans raise its stake in Tata Teleservices to 35% over the next four months. According to the Times of India, the Japanese operator will hold discussions over the matter to increase the stake from the current 26%. The move is part of the firm’s plans that allow it to increase its stake if the Indian mobile operator — which uses the Tata DoCoMo brand — achieves certain parameters.
DoCoMo has two call options in March 2012 and then in 2014 that will enable it to own a controlling stake in Tata, according to the newspaper report. It can, however, refuse the options and offload the stake back to the Indian operator if specific benchmarks are not met.
Tata Group owns around 60% in Tata Teleservices via several units and DoCoMo will not be able to compel a repurchase on Tata, if it raises the stake to 35%. According to the newspaper, the Japanese operator can purchase more shares at a fair market value, while Tata is required to buy shares back at the higher of fair value or half of the amount paid to acquire the 26% interest.
Earlier in 2011 DoCoMo pumped in $176 million in Tata Teleservices allowing it to maintain its 26% stake. The shareholding deal between the firms requires Tata to repurchase the stake if DoCoMo opts to offload its shareholding in the venture. However, if DoCoMo sells shares at a lower price, then a compensation for the difference in the price and the fair value must be paid, according to the Times of India. GTB
Further reading from Global Telecoms Business:
India to soften operator merger rules 04 Nov 2011
Tata to merge GSM, CDMA operations 27 Jul 2011
Tata Teleservices plans $670m rights issue 30 Mar 2011
Huawei wins Tata Teleservices 3G contract 03 Sep 2010
Tata Teleservices selects NSN to supply 3G 24 Aug 2010
Tata Docomo GSM service goes live in Kolkata 09 Oct 2009