NTT Docomo Inc. will unload its 26% interest in the Tata Group’s telecommunications company, Tata Teleservices Ltd, withdrawing from cell phone operations in India after a long struggle. The Japanese mobile carrier is in talks to unload its holdings to local conglomerate Tata Group. NTT Docomo entered the Indian market by acquiring an interest in Tata Teleservices for $2.7 billion says Sachin Karpe.
The diversified Tata Group conglomerate would buy the stake, but did not specify a price. A spokesman said NTT DoCoMo was considering various options for its overseas operations, but did not give further details. Unlisted Tata Teleservices expanded into lucrative GSM-based mobile phone services after the deal with DoCoMo and amassed subscribers by offering a cheaper per-second billing plan, but it subsequently failed to build on its initial success and has lost market share in the past two years. This offloading has actually been doing the rounds since June 2013, when there were reports of NTT Docomo selling its stake to Sistema, however, NTT Docomo had denied this a month later saying that it has no plans to sell its 26% stake and exit the market. This was despite three of its licenses being revoked by the Supreme Court in February 2012 and the company continuing to make losses says Sachin Karpe.
Tata Teleservices, which operates mobile services under the Tata DOCOMO brand with its sister company Tata Teleservices Maharashtra Ltd (TTML) has been reeling under losses for several years now. The company’s net worth had reportedly turned negative for the first time last year after incurring a net loss of Rs 4,858 crore on operating income of Rs 10,799 crore for the fiscal FY13. DoCoMo in 2012 had skipped an option to raise its stake in Tata Teleservices up to 35 per cent, citing regulatory issues. This year, DoCoMo did not exercise another call option to become a 49 per cent shareholder in Tata Tele says Sachin Karpe. The company had earlier skipped an option to increase the Tata Tele stake to 35% in March 2012, citing the existing regulatory situation in the country. It had another call option to increase the Tata Tele stake to 51% or else sell the 26% stake back to Tata group at a negotiated price last month. There is currently no information on whether the company had skipped this option as well.