Tata Sons told to pay $1.17 bn in damages to Japan’s DoCoMo

By June 24th, 2016 AT 9:19 PM

In a setback for Tata Sons, The London Court of International Arbitration has ordered the Indian conglomerate to pay NTT DoCoMO $1.17 billion in compensation for breaching an agreement on India telecom joint venture, Tata Docomo. The court ruled in favour of DoCoMo over price it was entitled for exiting the Indian joint venture, the Japanese firm said in a statement.

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According to the arbitration award, Tata Sons will receive or designate a recipient for DoCoMo’s entire stake in TTSL. NTT Docomo had filed a request with a London court for arbitration against Tata Group holding company Tata Sons in January 2015. It had claimed that Tata Group latter failed to fulfil its obligation to find a buyer for Docomo’s stake in Tata Teleservices Ltd.

In April 2014, Docomo had decided to exit after the joint venture struggled to grow subscribers in the highly competitive Indian market, and had accordingly sought Rs 58 per share or Rs 7,200 crore from Tatas to buy out its 26.5 per cent stake in the loss-making Tata Teleservices for Rs 23.34 a share.

The Japanese company said that the investment in 2008 was made with an understanding that it would get at least 50 per cent of its acquisition price if it exits the Indian company in five years.

Docomo in a statement said that the award orders that Tata Sons pay damages to Docomo in the amount of approximately $ 1,172 million for Tata Sons’ breach of the shareholders agreement, upon Docomo’s tender of its entire stake in Tata Teleservices to Tata Sons or its designee.

The Japanese company said it is uncertain whether Tata Sons will pay the awarded damages. “As of today certain matters remain uncertain, including whether Tata Sons will pay the awarded damages and when the delivery of Tata Teleservices’ shares will be made,” it said, adding that Docomo is not able to predict how events will unfold.

“The effect on Docomo’s corporate earnings for the fiscal year ending 31 March 2017 cannot be forecast at this time due to these uncertainties. Docomo will update this information in a timely fashion regarding any matters requiring disclosure,” Docomo said.

According to media reports, Tata Teleservices, which operates under the Tata Docomo brand witnessed its complete network go down two years ago. It posted a loss of Rs 3,846 crore on a revenue of Rs 10,944 crore in 2014-15 fiscal

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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