Tata Sons gets RBI nod to buy NTT Docomo’s stake in TTSL

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Reserve Bank of India (RBI) has given an in-principle approval to Tata Sons’ proposal to buy Japanese telecom firm NTT DoCoMo's stake in their struggling joint venture, Tata Teleservices Limited (TTSL) for Rs 7,250 crore. Overall, Docomo holds 26.5 percent in TataTeleservices.


Earlier this month, Japanese telecom firm had dragged TTSL to an international court of arbitration in London. A month ago, RBI had informed the Finance Ministry that it was "inclined to accept" the proposal of Tata to buy NTT DoCoMo's 26.5 percent stake at Rs 58 per share, half the rate which the Japanese firm originally paid in 2009.

The proposal will now be sent to the Ministry of Finance for the final approval, following which Tata Sons would be permitted to buy back the stake from DoCoMo. The NTT DoCoMo had stated that as per the 2009 agreement that formed TTSL, NTT Docomo can sell the shares if the joint venture fails to meet performance targets in the fiscal year that ended on March 31 last year.

Also Read : TATA Docomo revamps its 3G network using Nokia Networks

NTT Docomo, TTSL and Tata Sons had in March 2009 signed shareholder agreement for business alliance. The Japanese Company picked up 27.31 percent stake in TTSL for Rs 12,924 crore and 20.25 percent in Tata Teleservices (Maharashtra) Ltd - the listed arm of TTSL - for Rs 949 crore.

Though the transaction is not in line with the central bank’s 2014 order, it has accepted Tata Sons’ proposal in order to maintain India’s strategic relationship with Japan, according to RBI.

According to the order passed in June 2014, the central bank has agreed to link options to market rates rather than return on equity. Tata Sons had sought RBI’s permission to purchase the shares at the higher valuation to honour the commitments under the agreement.

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