Japan's NTT DoCoMo has decided to pull out of the Indian market completely and this would involve selling its entire stake in its Tata Teleservices joint venture.
NTT DoCoMo's board of directors resolved today to exercise option for the sale of the company's entire stake (1,248,974,378 shares, or about 26.5% of outstanding shares) in Tata Teleservices Limited (TTSL), a DOCOMO-affiliated company accounted for by the equity method, as soon as the conditions for such exercise are met.
Both The Nikkei are reporting that DoCoMo is planning to offload its entire stake in the joint venture with Tata Group from India.
DOCOMO, TTSL and Tata Sons Limited (Tata Sons), Tata Group's holding company, concluded a shareholder agreement when DOCOMO entered into a business alliance with TTSL in March 2009.
Under the agreement, DOCOMO holds the right to require that its TTSL shares be acquired for 50% of the acquisition price, which amounts to 72.5 billion Indian rupees.
The Nikkei claims DoCoMo plans to exercise its option to have Tata Group buy back the stake. But, according to Reuters report, DoCoMo will make a formal decision to divest the stake today.
A DoCoMo spokesperson told Reuters that nothing had yet been decided regarding the stake and that the company is considering various options for its overseas operations.
Tata Teleservices has around a 7% share of India's mobile market, and has been struggling with hefty debt to its credit.
DoCoMo is uncertain how the option will be performed as per its Blogpost. The company further added, "The effect on DOCOMO's corporate earnings for the fiscal year ending March 31, 2015 cannot be forecast at this time due to these uncertainties."
As per stock market reports, NTT Docomo came down 0.12% at 1,579 yen.
