Tata Sons has paid 144.9 billion Yen ($1.26 billion), including interest cost, to NTT Docomo to settle the long-pending dispute with the Japanese telecom major over their Indian joint venture in telecom, said a statement from NTT Docomo.
It added that concurrent with the receipt of the amount, all shares in Tata Teleservices Limited (TTSL) held by Docomo have been transferred to Tata Sons and companies designated by Tata Sons.
Tata Sons’ telecom arm TTSL had been entangled in a legal tussle since April 2014, when partner NTT Docomo decided to sell its 26.5% stake in TTSL and withdraw from mobile telephony in India.
In November 2009, Docomo acquired 26.5% stake in TTSL for ₹12,740 crore at ₹117 per share with the understanding that if it exited the venture within five years, it would be paid at least 50% of the purchase price.
But in 2014, when Docomo decided to exit the venture seeking a price ₹58 per share, or ₹7,200 crore, from Tata Sons, the latter denied the claim. The company, then under the chairmanship of Cyrus Mistry, offered ₹23.34 per share in line with the RBI guidelines which state that an international firm can only exit its investment at a valuation “not exceeding that arrived at on the basis of return on equity.”
The Japanese firm then dragged the Tatas to international arbitration where it won the $1.18 billion award. It had also filed a plea in the Delhi High Court seeking enforcement of the ruling.
Earlier this year, Tata Sons, following the induction of N. Chandrasekaran as chairman, had reached an agreement with NTT Docomo “on a joint approach to enable enforcement” of a compensation award granted by the London Court of International Arbitration (LCIA) in 2016 in favour of the Japanese company.
Resolving the telecom business was the top priority for the Tata Group after Mr. Chandrasekaran took charge in February as within a week of his appointment, the Tata Sons board decided to withdraw its objections in the Delhi High Court to the enforcement of the award in India.
The RBI had objected to the transfer but was overruled by the Delhi High Court in April, clearing the decks for the payment.
Debt-laden TTSL last month said it would sell its consumer mobile business to Bharti Airtel, thereby exiting from mobile telephony market in India.