comscore NTT Docomo drags Tata Sons to court over Tata Teleservices stake sale
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NTT Docomo drags Tata Sons to court over Tata Teleservices stake sale

Japanese telecom giant NTT Docomo has dragged Tatas to an arbitration court, alleging that the Indian firm failed to honour commitment to buy its Rs 7,250 crore stake in their joint venture Tata Teles

  • Updated: January 5, 2015 4:02 PM IST
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Japanese telecom giant NTT Docomo has dragged Tatas to an arbitration court, alleging that the Indian firm failed to honour commitment to buy its Rs 7,250 crore stake in their joint venture Tata Teleservices Ltd. Also Read - Telecom customer base edges up to 119.2 cr in Oct; BSNL, RJio gain users

Docomo had in April last year announced plans to exit the joint venture by selling its 26.5 percent stake. Tata Sons by virtue of their first right of refusal agreed to buy the Japanese company out as per the shareholders agreement. However, the deal has not been concluded over the differences between the two sides and Docomo today said it filed for arbitration with Tata Sons on January 3, 2015 with London Court of International Arbitration. “…Pursuant to the shareholders agreement, Docomo submitted its request for arbitration to ensure that its right be exercised after Tata Sons had failed to fulfill its obligation, despite Docomo’s repeated negotiations with Tata Sons regarding the sale of its entire stake in TTSL,” NTT Docomo said in a statement. Also Read - Kyocera’s KY-O1L is a credit card-sized mobile phone that weighs just 47 grams

It further said: “Under the terms of the shareholder agreement between it, TTSL and Tata Sons, Docomo exercised on July 7, 2014 its right (option) to request that a suitable buyer be found to purchase its TTSL shares for 50 percent of the acquired price, amounting to Rs 72.5 billion (or 125.4 billion yen), or a fair market price, whichever is higher.” Also Read - Airtel may regain top position in terms of revenue within 2-3 quarters: Report

When contacted, a Tata Sons spokesperson said,”Yes, we have learnt that Docomo has filed for arbitration. From the outset, Tata Sons has been committed to honouring its obligations to Docomo, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with law.” Tata Sons said it has made the necessary application to the Reserve Bank of India, and is awaiting a response. “Tata Sons will continue with its endeavour to find an amicable solution,” the spokesperson added.

According to industry sources, liquid funds are available with the Tatas, which can be repatriated immediately once RBI approval is obtained. NTT Docomo had in April last year announced plans to exit the loss-making joint venture with the Tata Group by selling its 26.5 percent stake. The Japanese firm had bought the stake for 266.7 billion yen ($2.61 billion) in 2009 and 2011. The Japanese firm had said that as per the 2009 agreement that formed Tata Teleservices, Docomo can sell the shares if the joint venture fails to meet performance targets in the fiscal year that ended on March 31 last year.

Docomo, TTSL and Tata Sons had in March 2009 signed shareholder agreement for business alliance. Docomo picked up 27.31 percent stake in Tata Teleservices for Rs 12,924 crore and 20.25 percent in Tata Teleservices (Maharashtra) Ltd – the listed arm of TTSL – for Rs 949 crore. Overall, Docomo holds 26.5 percent in Tata Teleservices.

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  • Published Date: January 5, 2015 3:12 PM IST
  • Updated Date: January 5, 2015 4:02 PM IST



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