DoCoMo finally exits Tata Teleservices
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Japan’s NTT DoCoMo has finally completed its exit from Indian joint venture Tata Teleservices, following the acquisition of Tata Teleservices’ consumer mobile business by Bharti Airtel.
DoCoMo disclosed it has received the payment awarded by the Delhi High Court in the legal dispute with the Reserve Bank of India over DoCoMo’s planned exit from the venture. The company has received 144.9 billion yen ($1.27 billion).
The dispute was related to DoCoMo’s original agreement when it first invested in Tata Teleservices back in 2008. The investment had the condition that DoCoMo was entitled to sell its stake in the venture at a predetermined sum if it chose to.
DoCoMo first attempted to exercise the option in 2014 after being unsatisfied with the performance of the venture, but the RBI blocked the transaction on the grounds that it violates Indian regulations restricting the sale of shares at a price higher than market value.
DoCoMo entered international arbitration with Tata Sons and Tata Teleservices over the dispute, and the court awarded DoCoMo with $1.17 billion in damages. But the RBI again objected to the transaction, prompting DoCoMo to file a case with the Delhi High Court.
With the court finding in DoCoMo’s favor and Tata Group having now sold off Tata Teleservices’ consumer mobile business to Airtel, DoCoMo was finally able to collect on the settlement.
The 144.9 billion yen payment included the original damages awarded as well as interests earned and other cots awarded. DoCoMo has now transferred all its shares in Tata Teleservices to Tata Sons and companies designated by Tata Sons.
Due to the payout DoCoMo has adjusted its forecast for the financial year ending in March 2018 to predict net income of 740 billion yen, up from the initial forecast of 655 billion yen.
Questions & Answers
Q.What prompted DoCoMo to initially try and sell its stake in Tata Teleservices?
What prompted DoCoMo to initially try and sell its stake in Tata Teleservices?
DoCoMo first attempted to sell its stake in the venture in 2014. This was because the company was unsatisfied with the performance of the joint venture at that time.
Q.Why did the Reserve Bank of India object to DoCoMo's initial attempt to sell its shares?
Why did the Reserve Bank of India object to DoCoMo's initial attempt to sell its shares?
The Reserve Bank of India blocked the transaction because it believed it violated Indian regulations. These regulations restrict the sale of shares at a price higher than their current market value.
Q.How much payment did DoCoMo receive for its exit from Tata Teleservices?
How much payment did DoCoMo receive for its exit from Tata Teleservices?
DoCoMo received 144.9 billion yen ($1.27 billion) as payment. This amount included the original damages awarded, along with earned interest and other awarded costs.
Q.How has the payment from Tata Teleservices affected DoCoMo's financial forecast for March 2018?
How has the payment from Tata Teleservices affected DoCoMo's financial forecast for March 2018?
Due to the payout, DoCoMo has adjusted its net income forecast for the financial year ending March 2018. It now predicts 740 billion yen, an increase from the initial forecast of 655 billion yen.
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