More reports on: Tata Group, Telecom

RBI rejects Tata proposal to buy NTT DoCoMo stake

news
25 March 2015

The Reserve Bank of India (RBI) has rejected a proposal by Tata Sons to acquire Japanese telecom firm NTT DoCoMo's entire 26.5 per cent in loss-making telecom operator Tata Teleservices Ltd (TTSL). Tata Sons, the holding company for all Tata group firms, had sought the central bank's approval in November 2014 to buy the stake.

Tata Sons offered to buy the stake at Rs58.045 per share, totalling to about Rs7,250 crore, which was half the price NTT DoCoMo paid in 2009.

Docomo, TTSL and Tata Sons (Tata Group's holding company) had entered into a shareholder agreement in March 2009. Under the agreement, Docomo holds the right to seek acquisition of its TTSL shares for 50 per cent of the acquisition price, which amounts to Rs 7,250 crore, or a fair market price, whichever is higher.

"Tata Sons had made an application to RBI for a special permission to pay Docomo as per the shareholders agreement, at a price that was higher than the current fair value of the TTSL shares. The RBI has conveyed that it cannot accede to this request as the same is not in conformity with the extant FEMA regulations, and has advised that any such purchase of shares be at current fair value of shares," media reports quoted a Tata Sons spokesperson as saying.

This issue will now have to be resolved in the arbitration between the parties, he said, adding, steps towards initiating arbitration have been taken.

In April 2014, NTT Docomo, Japan's largest telecom network by subscribers, resolved to exercise option for the sale of the company's entire stake in TTSL.

TTSL and its listed subsidiary Tata Teleservices (Maharashtra) Ltd (TTML) provide both CDMA and GSM services in the country.





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