Tata Sons agrees to pay $1.18 billion to Docomo

Tata Sons agrees to pay $1.18 billion to Docomo

Tata Sons agrees to pay $1.18 billion to Docomo
Tata Sons has agreed to pay $1.18 billion in damages to NTT Docomo, its Japanese partner in the telecom venture, paving the way for settlement of a long standing dispute between the two companies.

The settlement marks the first big decision under new Tata Sons chairman N Chandrasekaran, who took charge on February 21.

“The parties have jointly applied to the Delhi High Court, requesting that it accept their agreed terms of settlement, subject to such further orders as the court sees fit. The settlement terms, if approved by the Delhi High Court, clear the way for the $1.18 billion already deposited by Tata Sons with the Delhi High Court to be paid to Docomo, and would allow Docomo to transfer its shares in Tata Teleservices,” Tata Sons said in a statement.

As part of this joint application, and in anticipation of the matter being finally resolved in India, Docomo has agreed to suspend its related enforcement proceedings in the United Kingdom and the United States for a period of time, Tata Sons added.

Japan’s NTT Docomo had acquired a 26.5% stake in Tata Teleservices for nearly Rs 12,700 crore (nearly $2.5 billion) in 2009. As per the agreement, Docomo was to be paid 50% of the acquisition price if it exits within five years.

Docomo exercised on July 7, 2014 its right (option) to request that a suitable buyer be found to purchase its TTSL shares for 50% of the acquired price, amounting to Rs 7250 crore (or 125.4 billion yen), or a fair market price, whichever is higher.

But the Tatas offered Docomo only Rs 23.34 per share according to the Reserve Bank guidelines following which the Japanese telecom major invoked arbitration.

Docomo  won the arbitration proceedings following which the Tatas deposited $1.17 billion with the Delhi High Court.

Docomo also hoped that Tuesday’s development will pave the way for a resolution between the two parties.

Significant step

“This joint application is a successful result from recent discussions between Docomo and Tata Sons under the leadership of Ratan Tata, the former chairman of Tata Sons, which are ongoing. The agreement is a significant step towards resolution of this dispute, and Docomo is hopeful that the two parties will continue to work together constructively to achieve a resolution,” Docomo said.

Full satisfaction of the award through the Delhi High Court’s judgment will enable Docomo  to consider reinvestment of an amount in India, under a new cooperative relationship with Tata Sons.

Docomo believes that such relationship could become a paradigm for India-Japan economic ties.