Tata Teleservices shares gain more than 15% intraday as NTT DoCoMo plans to sell stake

Written by fe Bureau | Mumbai | Updated: Apr 25 2014, 22:35pm hrs
Tata DocomoJapan's NTT DoCoMo will sell its stake in its loss-making Indian mobile phone joint venture Tata DoCoMo.
Tata Teleservices (TTSL) shares gained more than 15% intraday on the BSE on Friday after NTT DoCoMo announced that its board of directors have decided to exercise option for the sale of the company's entire stake (124 crore shares or about 26.5% of outstanding shares) in TTSL.

Docomo, TTSL along with promoters Tata Sons concluded a shareholder agreement when DoCoMo entered into a business alliance with TTSL in March, 2009. Under the agreement, DoCoMo holds the right to require that its TTSL shares be acquired for 50% of the acquisition price, which amounts to Rs 72.5 billion (or 125.4 billion yen) or a fair market price, whichever is higher, in the event that TTSL fails to achieve certain specified performance targets.

DoCoMo in its press release further added that DoCoMo plans to exercise the option for its stake sale if TTSL fails to achieve these performance targets by the end of the fiscal year ended March 31, 2014.

"It is uncertain how the option will be performed, however, and DoCoMo is not able to predict how events will unfold. The effect on DoCoMo's corporate earnings for the fiscal year ending March 31, 2015 cannot be forecast at this time due to these uncertainties," Japan's largest mobile service provider said in its press release.