Tata DoCoMo JV set to end as Japanese partner heads for exit door

Apr 26 2014, 13:52 IST
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NTT DoCoMo, Japan's top operator of mobile phone services, invested 266.7 billion yen in Tata Teleservices in 2009. (Reuters) NTT DoCoMo, Japan's top operator of mobile phone services, invested 266.7 billion yen in Tata Teleservices in 2009. (Reuters)
SummaryNTT DoCoMo wants to sell 26.5 pct stake in Tata Teleservices it had bought for $61 bn in 2009-2011.

the growth we've seen in five years is not what we expected," he said.

Tata Group and Tata Teleservices officials were not immediately available to comment.

Kato blamed the joint venture's poor performance on a delay in introducing 3G mobile networks that can carry high-margin data services, as well as an alleged corruption scandal that saw several companies, including Tata Teleservices, losing some or all of their zonal operating permits.

DoCoMo is one of several Japanese companies struggling with their investments in India, a rapidly growing market these firms had hoped would offset the effects of an ageing, and declining, population at home.

Pharmaceutical company Daiichi Sankyo Co agreed this month to sell its stake in drugmaker Ranbaxy Laboratories Ltd to India's Sun Pharmaceutical Industries Ltd after quality glitches led to its drugs barred from the United States, halving the value of its initial investment.

Japanese carmakers including Toyota Motor Corp and Suzuki Motor Corp 's unit Maruti Suzuki India have also experienced labor unrest at their factories in India, leading to production losses.


DoCoMo, Japan's biggest telecom network by subscribers, said it would exercise the option to sell its stake by June if Tata Teleservices' financial results for the fiscal year that ended March 31 failed to meet targets specified under an initial shareholder agreement.

DoCoMo did not specify the targets, and unlisted Tata Teleservices is not obliged to publicly disclose its results. A DoCoMo executive who declined to be named told Reuters Tata Teleservices was not expected to meet the targets, but also declined to specify what they were.

Tata is due to reveal its finalised results to DoCoMo within weeks, the executive added, declining to be named because of the confidentiality of the matter.

New Indian rules do not allow a telecommunications carrier with operations in India to buy a stake in a rival carrier, although two carriers can merge their operations.

Some Indian media reports have said Vodafone is a likely suitor for Tata Teleservices. Any deal, however, would require Tata Teleservices to be merged with Vodafone's Indian unit, with Tata Group either fully exiting the business or taking a minority stake in the merged entity.

Singapore state investor Temasek and Indian businessman C. Sivasankaran also own small stakes in Tata Teleservices.

Tata Teleservices expanded into lucrative GSM-based mobile phone services after the deal with DoCoMo and amassed subscribers by offering a cheaper per-second billing plan, but it subsequently failed to build

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