* DoCoMo: to sell Tata Teleservices stake if performance
targets not met
* DoCoMo spent $2.6 bln for 26.5 pct stake, could sell for
half that amount
* DoCoMo CEO blames licensing issues, delayed 3G penetration
for low growth
(Adds Tata statement)
By Sophie Knight and Devidutta Tripathy
TOKYO/NEW DELHI, April 25 Japanese telecoms
giant NTT DoCoMo Inc is seeking to sell its stake in a
loss-making Indian joint venture with conglomerate Tata Group,
likely at a deep discount, bowing out of the world's
second-biggest mobile phone market.
DoCoMo's exit from India after just five years highlights
the difficulties both foreign and local telecom companies face
in a fiercely competitive market, where carriers rely on
cut-throat pricing to attract subscribers.
DoCoMo paid 266.7 billion yen ($2.61 billion) for a 26.5
percent stake in Tata Teleservices in 2009. Under the joint
venture agreement with Tata, DoCoMo could sell its stake for
about half of what it originally paid for the stake or at a
"fair market price", whichever was higher.
"We invested in India because at the time we saw excellent
growth prospects in emerging countries and we wanted to be
involved there," DoCoMo Chief Executive Kaoru Kato told
reporters on Friday after the company posted its earnings for
the financial year ended March 31.
"We came to this decision (to sell) because the growth we've
seen in five years is not what we expected," he said.
Tata Sons, the holding company of the Tata Group, confirmed
DoCoMo's plans to sell its stake in Tata Teleservices.
"As also stated by NTT DoCoMo, it is not possible to predict
how events will unfold; however, Tata Sons is cognizant of its
responsibilities, and will act keeping in mind the interests of
all stakeholders and in accordance with law," it said in a
DoCoMo's Kato blamed the joint venture's poor performance on
a delay in introducing 3G mobile networks that can carry
high-margin data services, as well as an alleged corruption
scandal that saw several companies, including Tata Teleservices,
losing some or all of their zonal operating permits.
DoCoMo is one of several Japanese companies struggling with
their investments in India, a rapidly growing market these firms
had hoped would offset the effects of an ageing, and shrinking,
population at home.
Pharmaceutical company Daiichi Sankyo Co agreed
this month to sell its stake in drugmaker Ranbaxy Laboratories
Ltd to India's Sun Pharmaceutical Industries Ltd
after quality glitches led to its drugs being barred
from the United States, halving the value of its initial
Japanese carmakers including Toyota Motor Corp and
Suzuki Motor Corp's unit Maruti Suzuki India
have also experienced labour unrest at their factories in India,
leading to production losses.
DoCoMo, Japan's biggest telecom network by subscribers, said
it would exercise the option to sell its stake by June if Tata
Teleservices' financial results for the fiscal year that ended
March 31 failed to meet targets specified under an initial
DoCoMo did not specify the targets, and unlisted Tata
Teleservices is not obliged to publicly disclose its results. A
DoCoMo executive who declined to be named told Reuters Tata
Teleservices was not expected to meet the targets, but also
declined to specify what they were.
Tata is due to reveal its finalised results to DoCoMo within
weeks, the executive added, declining to be named because of the
confidentiality of the matter.
New Indian rules do not allow a telecoms carrier with
operations in India to buy a stake in a rival carrier, although
two carriers can merge their operations.
Some Indian media reports have said Vodafone is a
likely suitor for Tata Teleservices. Any deal, however, would
require Tata Teleservices to be merged with Vodafone's Indian
unit, with Tata Group either fully exiting the business or
taking a minority stake in the merged entity.
"TTSL (Tata Teleservices Ltd) continues to be an integral
part of the Tata group," the Tata Sons statement said on Friday.
Singapore state investor Temasek and Indian
businessman C. Sivasankaran also own small stakes in Tata
Tata Teleservices expanded into lucrative GSM-based mobile
phone services after the deal with DoCoMo and amassed
subscribers by offering a cheaper per-second billing plan, but
it subsequently failed to build on its initial success and has
lost market share in the past two years.
It currently ranks seventh in terms of subscriber numbers
among the 12 firms that operate in India.
($1 = 102.2350 Japanese Yen)
(Additional reporting by Yoshiyasu Shida in TOKYO and Sumeet
Chatterjee in MUMBAI; Editing by Miral Fahmy and Pravin Char)