Japan-based telecom operator NTT DOCOMO has sent a formal communication to Tata Sons that it would sell its 26.5 per cent stake in their joint venture (JV) Tata Teleservices Limited (TTSL) by exercising the put option. The option is part of the agreement signed between the two JV partners in 2008.
As per the agreement, the Japanese operator has the option to sell its stake at 50 per cent of the price paid for stake acquisition in 2008, which amounts to Rs 72.50 billion or the stake?s current market price, in case TTSL fails to achieve the performance targets. The two JV partners are likely to commence talks for calculating the final price of the stake.
The Tata Sons have selected Harish Salve, law firm Amarchand Mangaldas, UK-based firm Freshfields, and Mumbai-based AZB Partners as their legal adviser. Meanwhile, NTT DoCoMo is likely to appoint Khaitan & Co and US-based law firm Skadden, Arps, Slate, Meagher & Flom.
The deal will need to be approved by the Reserve Bank of India. However, Tata Group, which has already sought the central bank?s approval, is expecting regulatory issues. As per RBI?s regulations, put options must be exercised based on the prevailing return on equity at the time the option is exercised. With TTSL?s worth being negative, NTT DOCOMO may not receive the requisite price.
NTT DOCOMO had bought stake in TTSL in two installments in 2009 and 2011 for a total consideration of $2.7 billion.
