DoCoMo to exit India – Tata Teleservices | Could sell for half the amount what it originally paid for
DoCoMo to sell Tata Teleservices stake if performance targets not met
Japanese telecoms giant NTT DoCoMo Inc is seeking to sell its stake in a loss-making Indian joint venture with conglomerate Tata Group, likely at a deep discount, bowing out of the world’s second-biggest mobile phone market.
DoCoMo paid 266.7 billion yen ($2.61 billion) for a 26.5 percent stake in Tata Teleservices in 2009. Under the joint venture agreement with Tata, DoCoMo could sell its stake for about half of what it originally paid for the stake or at a “fair market price”, whichever was higher.
DoCoMo spent $2.6 bln for 26.5 pct stake, could sell for half that amount
“We invested in India because at the time we saw excellent growth prospects in emerging countries and we wanted to be involved there,” DoCoMo Chief Executive Kaoru Kato told reporters on Friday after the company posted its earnings for the financial year ended March 31.
“We came to this decision (to sell) because the growth we’ve seen in five years is not what we expected,” he said.
DoCoMo CEO blames licensing issues, delayed 3G penetration for low growth
Tata Sons, the holding company of the Tata Group, confirmed DoCoMo’s plans to sell its stake in Tata Teleservices.
Vodafone and Tatas have been known to be negotiating since January this year. However, the two sides haven’t been able to reach a conclusion as the British Telecom major is believed to have found the valuation that the Tata Group seeking way too high for an unprofitable company, the person said. Tata Teleservices posted a loss of close to $100 million in the financial year ended March 2013.
DoCoMo was sceptical that the deal might fall through and this might mean that the company would have to continue staying invested or exit the investment at an even lower price.