Japanese telecom major NTT DoCoMo has the opportunity to increase its stake in Tata Teleservices over the next month.
Additional stake
NTT DoCoMo can take its share holding from 26 per cent at present to up to 49 per cent under a call option agreed between the two parties four years ago.
Call option gives an investor the right but not the obligation to buy shares at a pre-determined price.
NTT DoCoMo had acquired the 26 per cent in Tata Teleservices in 2008 for $2.7 billion. If it exercises the call option now, the Japanese company will be able to get the additional stake at the same price per share, according to sources.
“DoCoMo has over a month to decide its next course of action but given the current gloom in the telecom sector it will be surprising if the Japanese major increases its stake,” said a source.
Under the shareholders agreement, DoCoMo can also exercise this option two years later in March 2014 but at that stage the selling price will be renegotiated.
‘Milestones Missed'
On the other hand, it can also decide to not exercise both the options and sell the entire stake back to Tata in 2014, in case the company is unable to achieve certain performance related milestones.
According to sources, Tata Teleservices may have missed these milestones giving the Japanese major reasons to exit.
The Tata Group currently owns about 60 per cent stake in the telecom venture. Singapore-based Temasek and Chennai-based Mr C Sivasankaran are minority investors with 7 per cent and 6 per cent stake each.