Tata Sons ordered to pay NTT DoCoMo $1.2 bn by international arbitration court
24 Jun 2016
Tata Sons Ltd has been ordered by the international arbitration court to pay NTT DoCoMo Inc $1.2 billion to buy the Japanese telecom operator's stake in their now-ended joint venture.
DoCoMo paid ¥266.7 billion ($2.22 billion) for 26.5-per cent of Tata Teleservices Ltd in 2009 (See: Tata Communications sells Rs424-crore worth stake in Tata Tele to NTT Docomo). Under the agreement, holding company Tata Sons would sell the stake for at least half of the purchase price if certain performance targets were not met or fair market price, whichever was higher.
DoCoMo requested the sale in July 2014. That gave Tata Sons 90 business days to find a buyer for Rs7,250 crore ($1.15 billion).
The share price of Tata Teleservices had fallen by 2014, and the independently determined 'fair value' of Tata Teleservices was Rs23.34 a unit, less than half of what DoCoMo wanted.
But the Reserve Bank of India rejected Tata's offer to buy the stake on the ground that foreign investors are barred from selling their stake in Indian firms at a pre-determined price.
As a buyer was not found, DoCoMo filed an arbitration request in January last year with the London Court of International Arbitration to ensure the stake is sold.
A Tata Sons spokesperson said that it is currently studying the order and added ''We will not be able to comment further at this stage, beyond maintaining our consistent position that Tata Sons has always been and continues to be committed to discharge its contractual obligations in a manner consistent with the law.''