TATA’s ordered to Pay $1.2 Billion to DOCOMO

Mumbai: Tata Sons may have to pay $1.17 billion to buy its Japanese partner NTT DoCoMo’s stake in the mobile phone service venture following an international arbitration court order. In January 2015, DoCoMo had moved the London Court of International Arbitration after Tata Sons failed to find a buyer for or buy the former’s 26.5% stake in Tata Teleservices.

Tata Sons couldn’t buy the Japanese company’s equity stake as rules prevented Indian companies from buying foreign partners in local units at a pre-determined price. According to the agreement between Tata Sons and DoCoMo, if any of them decided to exit the venture, then the other had to buy the partner’s stake at 50% of the original price or at fair market price, whichever was higher.

In April 2014, DoCoMo announced plans to exit the loss-making mobile phone service venture.

On Friday, DoCoMo said that it has received an arbitration award that directs Tata Sons to pay damages for breaching shareholder agreement over Tata Teleservices. This means that either Tata Sons could buy or designate a buyer for the entire stake of DoCoMo in Tata Teleservices. However, the Japanese carrier added that certain matters remain uncertain, including whether Tata Sons will pay the awarded damages.

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