NTT Docomo Says It Won $1.17 Billion Ruling in Dispute With Tataby
Japanese carrier says it’s uncertain whether it will get paid
Case involves Docomo’s purchase of Tata Teleservices
Tata Sons, the holding company of India’s largest conglomerate, has been ordered by the London Court of International Arbitration to pay that amount to Japan’s Docomo for breaching an agreement over Tata Teleservices Ltd., Docomo said in a statement on Friday. In return, Tata Sons will receive or designate a recipient for Docomo’s entire stake in Teleservices, according to the statement.
A Tata representative didn’t immediately respond to a request for comment. Docomo said it’s uncertain whether Tata Sons will pay the awarded damages and that the Japanese carrier is unable to factor the verdict into its earnings forecasts.
While the ruling -- representing about half of the purchase price -- is a victory for Docomo, it would only cushion what’s turned out to become one of the company’s worst overseas investments. The case went into international arbitration last year amid Indian restrictions on foreign investors ability to sell out of their investments in the country.
Docomo shares fell 0.9 percent to 2,690 yen as of 10:26 a.m. in Tokyo, dropping in line with Japan’s Nikkei 225 Stock Average index.
The Japanese phone operator paid 266.7 billion yen ($2.6 billion) in 2009 and 2011 in exchange for a 26.5 percent stake in the Indian cellular service provider. In July 2014, Docomo said it exercised its right to request a suitable buyer at a fair market price or 50 percent of the acquired cost, whichever is higher. As Tata Teleservices continued to post losses, the 50 percent was higher.
Docomo filed the arbitration request in January 2015 after saying the Indian conglomerate failed to fulfill its obligation to find a buyer for Docomo’s stake in Tata Teleservices despite repeated negotiations.