The payment of the arbitration award is in accordance with the Delhi high court's decision regarding Docomo's stake in Tata Teleservices, says NTT Docomo
Mumbai: Japan’s NTT Docomo Inc. said on Tuesday that it had received from Tata Sons Ltd the 144.9 billion yen ($1.27 billion) it was awarded by an international arbitration court last year for its stake in Tata Teleservices Ltd (TTSL).
The payment marks the exit of the Japanese company from TTSL and brings the curtain down on a dispute that broke out after Docomo’s 2014 decision to exit from the venture in which it had purchased a stake in 2009.
“Concurrent with the receipt of the above amount, all shares in TTSL held by DOCOMO have been transferred to Tata Sons and companies designated by Tata Sons," the Japanese company said in a filing with the Tokyo Stock Exchange.
Following the transfer of shares, Docomo no longer accounts for its investment in TTSL under the equity method, it said. The Japanese telco expects to include a loss on transfer of investments in affiliates of 29.8 billion yen ($0.26 billion) under other expenses on its consolidated financial statement for the three-month period ending 31 December 2017, it said
A Tata Sons spokesperson declined to comment.
On 26 May, fair trade regulator Competition Commission of India (CCI) approved Tata Sons’s purchase of a 21.63% stake in Tata Teleservices from Docomo, taking the long-pending settlement a step closer to completion.
In a 28 April ruling, the Delhi high court upheld the validity of the arbitration award and directed the parties to proceed with the consent terms flowing from it.
The Reserve Bank of India (RBI) had opposed the transfer of funds under a settlement between the companies and contended that transfer of funds violated provisions of the Foreign Exchange Management Act (Fema), 1999, and was against public policy.
On 28 February, the two companies told the Delhi high court that they had reached an agreement over enforcement of the arbitration award on the issue.
In January 2015, Docomo initiated arbitration proceedings against Tata Sons, claiming the latter had failed to fulfil its obligation to find a buyer for the company’s stake in TTSL. The settlement with the Japanese partner paved the way for the larger restructuring of the telecom business and allowed Tata Sons to take a tough call on the haemorrhaging entity.
On 13 October, Tata Sons announced the sale of its consumer mobile business to India’s largest telecom operator, Bharti Airtel Ltd, virtually for free. The transaction was part of Tata Sons chairman N. Chandrasekaran’s strategy of exiting businesses that have been a prolonged drag on the group’s finances and have little visibility of future profits.
Smaller operators such as Tata Teleservices had been caught on the back foot by an intense price war that erupted since the entry of Mukesh Ambani-backed Reliance Jio Infocomm Ltd in September last year.
As part of the deal with Bharti, the latter will assume Rs2,000 crore of the Rs10,000 crore that the Tata group companies owe the Department of Telecommunications, Mint reported on 13 October, citing a person with direct knowledge of the matter. All other liabilities and dues will be settled by the Tata group, Tata Sons’s statement had said.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!