Tata Teleservices, Docomo opt for arbitration route to settle issue

Tata Sons will look at the arbitration route to solve its dispute with Japanese telecom major Docomo because Reserve Bank of India (RBI) did not clear the proposal to buy back 26.5 percent stake in Tata Teleservices from NTT Docomo in the Indian ailing telecom venture at a pre-determined price.

RBI did not permit Tata Sons to buy back the equity stake from NTT Docomo at a pre-determined price, according to a report in Times of India. In January, RBI had said it is inclined to accept the proposal of Tata Sons and sought finance ministry’s view on the controversial issue.

Tata Docomo post-paid scheme

Docomo had invested $2.2 billion to purchase 26.5 percent stake in Tata Docomo in 2009. As per the deal, Docomo was supposed to get 50 percent of $2.2 billion or fair market price, whichever is higher, if the Japanese telecom giant decides to exit from Tata Docomo. In 2014 April, Docomo decided to exit from Tata Docomo due to growing losses.

Since Tata Sons could not rope in a buyer for the 26.5 percent after discussing with Telenor, MTS, etc. Docomo moved the London court of International Arbitration in January this year. Both Tata Sons and Docomo will try to solve the issue at the arbitration court.

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