Tata to buy Docomo's stake in Tata Tele
The Tata Group had made a proposal to buy-out NTT Docomo's shares for Rs 23.34 per share. RBI conceded to Tata's valuations for DoCoMo buy-out. The pre-agreed valuation of Rs 58 a share was turned down and it insisted on a fair-maket value. This spelled a lower valuation in the stake and a fractional value due to depreciated Yen valuations against Dollars for Docomo.
NTT Docomo Inc. is a Japanese mobile-phone operator with phone, video phone, internet and mail services. Docomo emerged in 1991 from Nippon Telegraph and Telephone (NTT) and took over the mobile cellular operations. NTT Docomo created the W-CDMA technology and the mobile-i mode service. The giant was also a founding member of the Symbian Foundation.
In 2008, Docomo came-up with the "Area Mail Disaster Information Service" that broadcasted Early Earthquake Warnings. It had an unique ring-tone and the services were not charged.
NTT Docomo acquired a 26% stake in Tata Teleservices for $2.7 Billion. Docomo also made an open joint-tender offer with Tata Sons to buy-up 20% in a Tata Tele listed unit as per compliance. A commitment to get 50% of the acquisition price if Docomo exited within 5 years was also formulated. JP Morgan advised Docomo while Lazard advised Tata Teleservices.
Docomo nominated three executives for Tata Tele's board of directors to enhance their values, and joint activities. It had also proposed an additional investment in Tata Tele, which was eying expansion and enhanced revenue in the Indian market. Docomo and Tata came-up with Tata Docomo, i-Channel and Docomics, a mobile manga service and 3G services.
Docomo proposed to exit the deal due to falling performance. Tata group accumulated funds to buy-out NTT Docomo's stake as it failed to find a new investor. This paved way for at least Rs 7250 crore payment, the half of Docomo's investment or a market-linked value. The deal was a dampener for new investors due to Tata Tele's negative net-worth and accumulated debts.
NTT DoCoMo filed arbitration request in London to find investor for its Tata Tele stake as Tata failed to meet the deadline on 3 December. Since the proposed "put option" scheme was incongruous with RBI norms, Tata looked for solutions. The group also assured that "divestment" was not a choice "Tata Sons will continue its endeavour to find an amicable solution," said a spokesperson.