Japanese telecom major NTT DOCOMO Inc. has initiated arbitration proceedings against Tata Sons, seeking the court’s directive for sale of its stake in Tata Teleservices Ltd (TTSL), as per conditions in the shareholder agreement.
DOCOMO, on Monday, announced that it had submitted a request for arbitration with the London Court of International Arbitration against Tata Sons on Saturday.
Under the terms of the shareholder agreement between DOCOMO, TTSL and Tata Sons, DOCOMO had on July 7, 2014, exercised its right, asking the Tatas to find a suitable buyer for its stake in TTSL for 50 per cent of the acquired price, amounting to Rs.7,250 crore or a fair market price, whichever is higher.
DOCOMO had in March, 2009, picked up 26.5 per cent stake in TSSL for $2.22 billion, and during that time it was agreed that DOCOMO would be paid 50 per cent of its investment in case TTSL failed to meet certain performance targets.
In April last, both partners amicably agreed to part ways as DOCOMO announced its plans to exit the joint venture. On July 7, 2014, DOCOMO exercised its sale option and as per conditions, Tata Sons was to find a buyer for DOCOMO’s stake in 90 working days for at least Rs.7,250 crore ($1.15 billion), which ended on December 3, 2014.
The matter was escalated to arbitration as Tata Sons failed to fulfil its obligation, “despite DOCOMO’s repeated negotiations with Tata Sons regarding the sale of its entire stake in TTSL” NTT DOCOMO said.
“Yes, we have learnt that DOCOMO has filed for arbitration. From the outset, Tata Sons has been committed to honouring its obligations to DOCOMO, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with law,” a Tata Sons spokesperson said.
“Tata Sons has made the necessary application to the Reserve Bank of India, and is awaiting a response. Tata Sons will continue with its endeavour to find an amicable solution,” the spokesperson added.
Meanwhile, TTSL continues to be an integral part of the Tata group.
