Putting an end to the round of speculations, Japan’s NTT DoCoMo has announced that it is putting its entire 26.5% stake in Tata Teleservices mobile network up for sale.
It may be recalled that NTT DoCoMo bought the stake in Tata Teleservices (TTSL) in the year 2009, and had an options in which enables it to force a sale of its stake if certain performance targets are not met in a timely fashion.
According to a statement issued by DoCoMo, “Under the agreement, DOCOMO holds the right to require that its TTSL shares be acquired for 50% of the acqisition price, which amounts to 72.5 billion Indian rupees 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 the fiscal year ended March 31, 2014, DOCOMO plans to exercise the above-mentioned right in or before June 2014. DOCOMO expects to sell its TTSL shares in accordance with the agreement. It is uncertain how the option will be performed, however, and DOCOMO is not able to predict how events will unfold. 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,” the statement adds.
It becomes important to note that the mobile network has struggled in recent years, even though the performance figures are not publicly known, experts close t the industry believe that they were missed by a very large margin.
Additionally, there has been a general rumor in recent times that Vodafone, the second largest operator in India, could seek to take advantage of the situation and buy the mobile network.
