Tata Sons, group companies seek CCI nod to buy Docomo's stake in TTSL

MUMBAI: Tata Group companies and promoter Tata Sons have sought a nod from the Competition Commission of India ( CCI) to buy Docomo’s 21.6% stake in Tata Teleservices (TTSL).

Besides Tata Sons, the group companies include Tata Steel, Tata Industries, Tata Communications and Tata Power. In its proposal to CCI, the group companies said the buyout will not affect or change the competitive landscape of telecommunications market in India.

The application comes less than a month after Delhi High Court allowed Tata Sons to pay NTT Docomo a $1.18 billion arbitration award upon termination of their telecom joint venture, likely ending a prolonged corporate battle that had cast a shadow on Indo-Japanese economic ties.

Docomo has been fighting Tata Sons over the right to sell its stake in the Indian wireless venture for at least half the original value, as per the terms of the 2009 agreement.

In April 2014, Docomo decided to sell its entire 26.5 per cent stake in Tata Teleservices and withdraw from mobile telephony in India.

Under the agreement, Docomo had the right to sell its stake at a fair market price or 50% of the acquired price, amounting to Rs. 7,250 crore, whichever was higher. But the Tatas couldn’t find a buyer and said they couldn’t pay the Japanese company due to RBI rules.

Docomo initiated arbitration proceedings in January 2015 against Tata Sons in the London Court of International Arbitration, which directed the Indian company to pay $1.17 billion to the Japanese company as compensation for breaching the shareholder agreement.

The Tatas have consistently maintained they were willing to pay the award, but Indian rules prohibited it on the grounds that valuation must be based on present fair value. Sale of shares at a pre-determined price, as laid down in the Tata-Docomo agreement, violated foreign exchange norms.

Last year, Docomo moved the Delhi High Court to enforce the arbitral award. In February this year, after the new chairman of Tata Sons took over, both companies reached a settlement and sought the court’s permission to transfer funds.