Unpredictable India market gives second thoughts to DoCoMo

Dec 02 2013, 08:20 IST
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SummaryStruggling with sales at home, Japans largest telecom operator NTT DoCoMo

of South Koreas KT Corp, 4.7% of Taiwans FarEasTone Telecommunications, and 8.6% of Philippine Long Distance Telephone.

With its India venture not turning out to be predictably profitable, there have been strong market rumours that DoCoMo, which has the right to sell back its shares to the Tata Group, is currently looking at exit options. Under the shareholder agreement, DoCoMo can raise stake if its Indian partner (Tata Teleservices) meets certain performance parameters.

However, the agreement also allows Tata Teleservices to mandatorily buy out the entire stake of DoCoMo in 2014 if the Japanese company is unable to find a strategic investor or the Indian partner is unable to meet certain performance parameters which include achieving a target subscriber base and subscriber additions every year and attaining minimum revenues and profits for the company in specified time-frame, among others.

According to reports, Tata Teleservices and Russias Sistema JSFC are in exploratory talks for a merger in which NTT DoCoMos stake as well as part of the Tata Groups holding would be transferred to Sistema.

However, despite the rumours, DoCoMos president Kaoru Kato, in an interview to The Wall Street Journal earlier this year, said, we plan to hold on to our stake. He had added we are aware that growth may take time.

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