Vodafone India in talks to buy Tata Group's stake in Tata Teleservices: report
04 January 2014
British telecom major's Indian arm Vodafone India is in talks to buy Tata Group's controlling stake in Tata Teleservices, The Economic Times yesterday reported, citing two persons familiar with the development.
The Tata Group holds a 59.45-per cent stake in the Tata Teleservices joint venture, while its Japanese partner NTT Do-CoMo holds 26.5 per cent and others own the rest.
But the right of first refusal rests with NTT Do-CoMo and if the Japanese company refuses to buy out the Tatas, then the Indian partner has the right to exercise its 'drag along' rights and force NTT DoCoMo to sell its shares to the buyer of its choice, the report said.
The Tatas had recently reportedly offered to sell their entire stake in Tata Teleservices to NTT Do-CoMo, but its Japanese partner is yet to decide on whether to wholly own or exit the business.
"NTT DoCoMo might take a decision after Vodafone makes an offer. If it finds Vodafone's offer attractive, it might decide to sell along with the Tata's. But if the Vodafone offer is conservative, it might exercise its right of first refusal over the Tata shares," one of the persons told the paper.
With 63 million subscribers across India, Tata Teleservices holds a 7.25-per cent market share, while Vodafone India has 185 million subscribers and holds around 18 per cent.
A completed deal would catapult Vodafone India to India's largest telco by subscribers, overtaking Bharti Airtel's 196 million users.