The Competition Commission of India (CCI) on Thursday said that it has approved Tata Sons proposal to acquire Japan’s NTT DoCoMo’s sake in Tata Teleservices (TTSL), thus bringing their deal a step closer to completion.
Last month, the Delhi High Court paved way for the settlement of the $1.17 billion dispute between the Tatas and NTT DoCoMo with regard to the latter’s exit from the joint venture, TTSL, as per the terms agreed between both the parties.
This was after the court rejected Reserve Bank’s intervention plea opposing the payment by Tatas on the ground that it violated the Foreign Exchange Management Act and required the central bank’s prior approval. NTT DoCoMo had entered into a joint venture with TTSL in 2009 for $2.7 billion (Rs12,740 crore at Rs117 per share) for a 26.5% stake. In April 2014, DoCoMo decided to sell its entire 26.5% stake in TTSL because the agreed-upon parameters could not be met.
Under the terms of the agreement between the two parties, either the Tatas found a suitable buyer for DoCoMo’s stake or TTSL would have to buy its stake for 50% of the acquired price, which worked out to Rs7,250 crore (Rs58 per share) or a fair market price, whichever was higher.
The agreement could not be enforced as according to the RBI’s guideline, any such sale could not take place at a predetermined rate but should reflect fair market valuation. Based on advice from the Prime Minister’s Office (PMO), the RBI said that the Tatas could only offer DoCoMo a price based on an independent valuation which worked out to Rs2,915 crore ( 23.34 per share). DoCoMo then moved the LCIA in London in January 2015, which passed the order in its favour in June 2016.