NTT DOCOMO is considering increasing its stake in Tata Teleservices Limited (TTSL) from 26 per cent to 35 per cent, say news reports. Currently the Tata Group holds about 60 per cent stake in the telecom venture. Singapore-based Temasek and Chennai-based C Sivasankaran are minority investors with 7 per cent and 6 per cent stake, respectively.
The company is looking at exercising the ?call? option included in the agreement signed between both entities four years ago.
Call option gives an investor the right but not the obligation to buy shares at a pre-determined price. In 2008 NTT DOCOMO had acquired 26 per cent stake in TTSL for $2.7 billion.
NTT DOCOMO has a month?s time to exercise the option of increasing its stake in TTSL. In case the company decides to exercise the ?call? option, it will obtain the additional stake in TTSL at the share price decided between the two companies in 2008. Otherwise, NTT DOCOMO can exercise this option in March 2014 but the selling price of shares will be renegotiated between the two parties.
NTT DOCOMO also has the discretion of not exercising the call option and instead selling its entire stake back to TTSL in case the company is unable to achieve certain performance related goals.
