Japanese telecom major NTT DoCoMo on Monday said that it has filed a request for arbitration with the London Court of International Arbitration against Mumbai-based Tata Sons, which has failed to find a buyer for DoCoMo’s stake in Tata Teleservices Ltd (TTSL).
The Japanese telecom major, in its filing on Tokyo Stock Exchange on Monday said that its request for arbitration against Tata Sons is “pursuant to the shareholders agreement regarding the exercise of DoCoMo’s option to sell its stake in Tata Teleservices.”
NTT DoCoMo entered Indian market in March 2009 by acquiring a 26.5% stake in Tata Teleservices for $ 2.7 billion, after the latter was allowed licenses to offer GSM services in addition to its CDMA services.
However, in April 2014, the Japanese company decided to sell its entire stake after it failed to make a major impact in the Indian telecom sector.
According to the shareholder agreement between the companies, DoCoMo, TTSL and Tata Sons, the Japanese company had the right to exercise the option to sell its stake which would make Tata Sons entitled to buy out its shares or find a buyer for the same at Rs 7,250 crore or fair market price.
“Under the terms of the shareholder agreement between DoCoMo, TTSL and Tata Sons, DoCoMo exercised on July 7, 2014 its right (option) to request that a suitable buyer be found to purchase its TTSL shares for 50% of the acquired price, amounting to 72.5 billion Indian rupees (Rs 7,250 crore), or a fair market price, whichever is higher,” NTT DoCoMo said in a statement on Monday.
“Thereafter, pursuant to the shareholders agreement, DoCoMo submitted its request for arbitration to ensure that its right be exercised after Tata Sons had failed to fulfill its obligation, despite DoCoMo’s repeated negotiations with Tata Sons regarding the sale of its entire stake in TTSL.”
A Tata Teleservices spokesperson said that the company has written to the Reserve Bank of India and is currently awaiting for the central bank’s response.