CHENNAI: The Tata-DoCoMo issue moved one step closer to resolution on Tuesday with both companies announcing that they have reached an agreement to settle their long-pending dispute over NTT DoCoMo’s efforts to exit the Tata Teleservices joint venture. Both firms approached the Delhi High Court on Tuesday to request that the court accept the settlement agreement.
While Tata Sons’ statement did not specify how the firm would get around the RBI norms that prevent any pre-determined valuation of shares, the settlement, if accepted by the courts, will open up opportunities for Tata to either merge the debt-laden venture with another player or exit the business entirely. NTT DoCoMo has been demanding that it be paid $1.17 billion in cash to exit its 26.5 per cent stake in Tata Teleservices as per the original joint-venture agreement.
In its statement, Tata Sons said it had reached the agreement to preserve a fair investment environment in India and that it would jointly work towards the enforcement of the June 22, 2016, London Court of International Arbitration decision to award DoCoMo $1.17 billion.
“As a gesture of good faith and in accordance with the Tata group’s long-standing record of adherence to contractual commitments that it has always enjoyed both in India and abroad, the Board of Tata Sons has decided to withdraw its objections to the enforcement of the Award in India,” it said.
There is no clarity, though, on how Tata Sons will get around the existing guidelines that prevent it paying DoCoMo the entire settlement in cash, as demanded by the latter. Last year, RBI had approached the finance ministry to consider clearing the transaction. However, the ministry refused.
If the Delhi HC accepts the two companies’ agreed-upon terms of settlement, analysts say a merger would be on the cards. “It is just a question on who and when. Tata has already been in talks with both Vodafone and Airtel previously regarding a hive-off and there are indications that the Reliance Communications-Aircel-MTS combine is interested in a deal to take-over the company,” said an analyst.
Another industry source said it’s unlikely that Tata would try to go forward on its own. “They have fallen too far behind in the game, despite the spectrum and subscriber base that they still hold. The only viable option would be to either sell the entire firm to another player or go for a merger as a junior partner.”