News
Japanese operator transfers Tata Teleservices shares to ex-India partner; raises full-year forecast
NTT DoCoMo on Tuesday confirmed it has received a ¥144.9 billion (€1.09 billion) damages payment from Tata related to their Indian joint venture, Tata Teleservices Limited (TTSL).
In return, the Japanese telco said it has transferred its shares in the venture, which offers services under the Tata DoCoMo brand, to Tata.
"DoCoMo expects to include the award amount of ¥144.9 billion in other income on its consolidated financial statements for the three-month period ending 31 December 2017," NTT said in a statement.
As a result, NTT has raised its full-year net income guidance to ¥740 billion (€5.58 billion) from ¥655 billion, and its free cash flow guidance to ¥855 billion from ¥710 billion.
Tata was ordered to pay NTT DoCoMo damages in June 2016 by the London Court of International Arbitration for breaching the pair’s shareholder agreement with regard to TTSL.
That agreement gave NTT the option to exit the joint venture in return for either fair market value or for at least half of what it invested in the company in March 2009, which came to 72.5 billion rupees, or around $1.17 billion; the exchange rate was based on a 2014 figure.
NTT exercised its option to exit TTSL in July 2014. It was up to Tata to find a buyer for the 26.5% stake but it failed to do so, prompting NTT to seek arbitration in January 2015.
The final withdrawal of NTT DoCoMo from its Indian venture could also be a stepping stone to TTSL shutting down altogether.
The Economic Times reported earlier this month that Tata plans to lay off most of its 5,000-strong workforce and close down its mobile operation by the end of this year or early 2018.
A separate report claimed that Tata has also made India’s telco regulator, the Department of Telecommunications (DoT), aware of its intentions.
Tata DoCoMo is one of the country’s smaller players, with a customer base of 42.1 million, giving it a market share of 3.55%, according to the Telecom Regulatory Authority of India (TRAI).
It has struggled to remain competitive, even before the fierce price war sparked by aggressive newcomer Reliance Jio Infocomm.
According to the ET, Tata plans to begin a 60-day closing down process within a month.
