Japanese telecom giant DoCoMo set to exit India

Japanese telecom giant NTT DoCoMo Inc on Friday said it will exit its lossmaking mobile phone joint venture with the Tata Group by selling its entire stake in the company, probably at a deep discount.

NTT DoCoMo had acquired a 26.5 per cent stake in Tata Teleservices for a total payment of $ 2.61 billion.

In a press statement, DoCoMo said its " board of directors resolved today to exercise the company's option for the sale of its entire 26.5 per cent stake in Tata Teleservices Ltd ( TTSL).'' Under the March 2009 agreement between DoCoMo and the Tata Group, the Japanese firm holds the right to hand over 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, in the event that TTSL fails to achieve certain specified performance targets.

In the event that TTSL fails to achieve these performance targets by the end of March 31, 2014, DOCOMO is likely to exercise the above- mentioned right in or before June 2014, the statement said.

The Tata group is expected to buy back these shares.

" We invested in India because we saw excellent growth prospects in emerging countries and we wanted to be involved there," DoCoMo chief executive Kaoru Kato told reporters in Tokyo on Friday after the company announced its earnings for the financial year ended March 31. " We came to this decision ( to sell) because the growth we've seen in five years is not what we expected," he said.

Tata Sons, the holding company of the Tata Group, confirmed DoCoMo's plans to sell its stake in Tata Teleservices.

"As also stated by NTT DoCoMo, it is not possible to predict how events will unfold; however, Tata Sons is cognizant of its responsibilities, and will act keeping in mind the interests of all stakeholders and in accordance with law," Tata Sons said.

Vodafone is rumoured to be interested in picking up the stake, though the company declined to offer any comments.

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