NTT DoCoMo to exit Tata Tele joint venture
25 April 2014
Japan's NTT DoCoMo Inc is looking to unload its 26.5 per cent stake in loss-making Indian mobile phone joint venture Tata Teleservices Ltd and exit the country amidst mounting losses and tough price competition, the Nikkei business newspaper reported quoting sources familiar with the matter.
DoCoMo, which bought its stake in Tata Tele joint venture in 2009, booked related impairment charges of about $489 million (50 billion yen) in the year ended 31 March 2014, the newspaper said.
NTT DoCoMo, Japan's largest mobile-phone operator, had invested ¥250 billion ($2.6 billion) for a 20.25-per cent stake in Tata Teleservices in March 2009 and raised it to 26 per cent in March 2011 when it subscribed to Tata Teleservices Rs3,000 crore ($670 million) rights share issue. (See: NTT DoCoMo to subscribe to Tata Tele's $670 million rights issue, raise stake to 26 per cent)
The report said the Japanese mobile giant is in talks to unload the stake to the Tata Group, but did not elaborate.
NTT DoCoMo is expected to make a formal decision at a board meeting on Friday, the report said.
The joint venture, operating under the Tata DoCoMo brand, had 63 million mobile customers as of end-March 2014, ranking in No7 in the Indian market.
The company reported a net loss of Rs4,858 crore in the year ended March 2013 while in fiscal 2012, its net loss was Rs4,228 crore.
The report quoted an NTT DoCoMo spokesman as saying that the company was considering various options for its overseas operations although nothing had been finalised.
NTT DoCoMo is expected to book about ¥80 billion ($780 million) in related losses in the financial year ended 31 March 2014.
TataDoCoMo has already held talks with several rivals including Norway-based Telenor to merge its operations.
Tata Group, which has invested equity capital of around Rs3,250 crore since the past five years in Tata Tele, holds 59.29 per cent stake in the company, while DoCoMo holds 26 per cent, and 4 per cent is held by C Sivasankaran, chairman of Siva Group, and the rest is held by investors.
Indian telecom companies have been under pressure since 2010 due to stiff competition, price cuts and fallout of the 2G airwaves allocation scam.