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Japanese telecom firm NTT DoCoMo Inc today said it will exit its loss-making mobile phone joint venture with Tata Group by selling its 26 per cent stake.
Japan's largest wireless carrier by subscribers wants to sell the entire 26.5 per cent stake in Tata Teleservices it had bought for 266.7 billion yen (USD 2.61 billion) in 2009 and 2011.
Tata Group is likely to buy the stake.
In a press statement, DoCoMo said "its board of directors resolved today to exercise option for the sale of the company's entire stake (124.9 crore shares, or about 26.5 per cent stake) in Tata Teleservices Ltd (TTSL)."
Under the March 2009 agreement between DoCoMo, TTSL and Tata Sons Ltd - Tata Group's holding company, the Japanese firm "holds the right to require that its TTSL shares be acquired for 50 per cent of the acquisition price, which amounts to 72.5 billion Indian rupees (or 125.4 billion yennotice1) or a fair market price, whichever is higher, in the event that TTSL fails to achieve certain specified performance targets."
"In the event that TTSL fails to achieve these performance targets by the end of the fiscal year ended March 31, 2014, DOCOMO plans to exercise the above-mentioned right in or before June 2014," the statement said.
DoCoMo expects to sell its TTSL shares in accordance with the agreement.
DoCoMo heads for India exit as competition, regulation take toll
(Reuters) Japanese telecoms giant NTT DoCoMo Inc said on Friday it was seeking to sell, likely at a deep discount, its stake in a loss-making Indian joint venture with diversified conglomerate Tata Group, bowing out of the world's second-biggest mobile phone market.
DoCoMo's exit from India after just five years highlights the difficulties both foreign and local telecom companies face in a fiercely competitive market, where carriers rely on cut-throat pricing to attract subscribers.
DoCoMo paid 266.7 billion yen ($2.61 billion) for a 26.5 per cent 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.
"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 Kato told reporters after the company posted its earnings for the financial year ended March 31.
"We came to this decision (to sell) because