The Telegraph
Thursday , November 29 , 2012
Since 1st March, 1999
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Telenor eyes DoCoMo stake

New Delhi, Nov. 28: Norwegian mobile major Telenor could weigh the possibility of buying the 26 per cent stake of Japan’s NTT DoCoMo in Tata Teleservices, investment bankers said.

The deal could involve a call option similar to the one that Tata Teleservices has with DoCoMo that involves increasing the Japanese firm’s stake to 49 per cent over a two-year period, bankers added.

The strategic partnership, however, hinges on a relaxation in merger and acquisition norms, which is under government consideration. Under the new laws, aimed at encouraging consolidation, a merged entity can own up to 25 per cent of spectrum in a given circle and have a combined market share of up to 60 per cent.

This year, NTT DoCoMo skipped an option to raise its stake in Tata Teleservices up to 35 per cent, citing regulatory issues. DoCoMo has another call option to become a 49 per cent shareholder in Tata Tele in early 2014. Call option gives the investor the right but not the obligation to buy shares at a preset price.

The Japanese conglomerate can also sell its 26 per cent stake back to Tata Teleservices at a negotiated price, if it does not exercise these options and if the Indian operator is unable to reach certain performance-related milestones, including certain targets related to revenue, profit and subscriber base in a specified time.

Sources said Tata Teleservices lost more than 10 million subscribers since June 2011, giving the Japanese firm a reason to exit.

NTT DoCoMo has, however, said they “are going to maintain our stake (in Tata Teleservices) for the time being”.

Telenor has signed up Sudhir Valia-owned finance firm Lakshdeep Investments & Finance Pvt Ltd as its 26 per cent Indian partner for domestic operations. Telenor’s Indian unit, Telewings Communications, won spectrum in six circles in the recently concluded auctions, which was given a miss by Tata Teleservices.

Tata Teleservices, which operates in all 22 circles and provides both GSM and CDMA technology, has been granted 4.4MHz of start-up GSM spectrum in the Delhi circle at no additional cost.

Yesterday, reports suggested that Telenor was in talks with Tata Teleservices to combine their operations in India.