DoCoMo enters India with $2.7 bn Tata deal

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New Delhi, November 12:: NTT DoCoMo will pay $2.7 billion for a 26 per cent stake in Indian telecom Tata Teleservices, giving Japan's top mobile operator a foothold in the world's fastest-growing major mobile market.

DoCoMo's deal with Tata Teleservices follows a $350 million investment in Bangladesh's No.3 cellphone carrier, as it speeds up its expansion beyond a mature home market, and adds to the record $63 billion of overseas acquisitions by Japanese firms this year.

But as DoCoMo expands, salt-to-software conglomerate Tata Group -- the parent of unlisted Tata Teleservices and the flagbearer for corporate India's recent overseas expansion -- has put its plans for acquisitions on hold due to the global credit crisis. DoCoMo will also make an open joint tender offer with Tata Sons, the holding firm of the group, to buy up to 20 per cent in a listed unit of India's No. 6 mobile operator, as required by Indian law.

Ahead of the announcement, shares in the unit, Tata Teleservices (Maharashtra), closed up 7.6 per cent in a Mumbai market that fell 3.1 per cent while shares in DoCoMo ended up 1.3 per cent in a Tokyo market down more than 1 per cent.

DoCoMo did not rule out the possibility of taking a majority stake in Tata Tele in the future.

Shinji Moriyuki, a telecoms analyst at Mitsubishi UFJ Securities, said DoCoMo's recent acquisitions in Asia would be positive, especially with the company's extensive knowledge of third-generation (3G) network services to which many developing countries are now moving.

"Many people have voiced concerns because of its overseas investment spree in the early 2000s and failures afterward, but business conditions are totally different now," Moriyuki said.

"This time, the acquisition value should not be too large because of sluggish stock markets, it can count on growth in developing markets, and both parties should be able to find synergies because of the current timing that 3G services are about to be launched."

POTENTIAL

India is the world's second-biggest mobile market, trailing only China. More than 10 million users signed up in September, taking the total customer base to 315.3 million, more than the population of the United States, and almost three times the size of Japan's market of 109 million subscribers.