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NTT DoCoMo may raise Tata stake
28 March 2012
NTT DoCoMo in discussions to exercise call options and raise stake in Indian partner Tata Teleservices
Japanese operator NTT DoCoMo is discussing raising its 26% stake in Indian operator Tata Teleservices, while the latter may be considering buying back DoCoMo’s shares, according to local reports.
The joint venture — which trades as Tata DoCoMo — was formed in 2008, with Docomo buying a 26% equity stake in Tata Teleservices for about $2.7 billion.
DoCoMo’s call options give it the right to raise its stake in Tata Teleservices, if the Indian partner fails to meet particular performance requirements, reports India’s Financial Express. These options can be exercised in March 2012 and March 2014.
On the other hand, the deal allows Tata Teleservices to buy out DoCoMo’s entire stake in 2014, if the latter fails to identify a strategic investor, or Tata Teleservices cannot meet performance parameters, said the report. These parameters include achieving certain profits and revenues for the company by particular deadlines, and hitting a target subscriber base and yearly subscriber additions.
Sources told the Financial Express that Tata Teleservices had not been able to meet the requirements so far, and market conditions and tight margins make it unlikely that the Indian firm will be able to do so by 2014.
Spokespersons from DoCoMo and Tata Teleservices declined to comment on the report. GTB
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