NTT DoCoMo set to exit India’s TTSL

NTT DoCoMo has announced that it is placing its entire 26.5 per cent stake in Indian mobile network operator Tata Teleservices (TTSL) up for sale.

NTT DoCoMo bought the stake in TTSL in 2008, and had a number of put-options in place, one of which enables it to force a sale of its stake if certain performance targets are not met.

The mobile network has struggled in recent years, and while the performance targets are not publicly known, it is widely thought that they were missed by a very large margin.

NTT DoCoMo said in a statement today that it will exercise the option to sell the stake, although at the moment it is unsure how that will proceed.

Under the terms of the agreement, it can force the mobile network to buy back its stake for 50 per cent of the acquisition price, which amounts to INR 72.5 billion (US$1.2 billion ) or a fair market price, whichever is higher.

However, the debt laden and poorly performing TTSL is unlikely to be in a strong enough position to be able to buy the shares back without negatively impacting the mobile network’s long term prospects.

NTT DoCoMo paid US$2.7 billion for its 26.5 per cent stake in 2008 and paid a further US$176 million in 2011 to maintain its holding when the company carried out a fund raising exercise.