Tata Sons, the promoter of Tata Teleservices has received approval from the Competition Commission of India (CCI), to buy back 21.6% stake owned by Japan’s NTT Docomo. NTT Docomo and Tata Teleservices (TTSL) runs the Tata Docomo brand in India. After their joint venture, started posting continuous losses, TTSL was ordered to pay $1.17 (~Rs 7,538.89 crore) billion in damages to NTT by a London court in June last year. NTT paid Rs 12,924 crore in 2009 for an initial 26% stake in TTSL.

According to Tata’s proposal made to the CCI, it will “acquire equity shares of TTSL comprising 21.63% of the paid-up equity share capital” owned by “Docomo pursuant to certain consent terms entered into between Tata Sons and Docomo.” Tata did not expand about consent terms set between it and NTT Docomo in the proposal.

The stake buy-back is a settlement for the lengthy legal battle between Tata Sons and NTT Docomo. The terms of the agreement between Tata and NTT Docomo had an option for the acquirer (NTT Docomo) to request a suitable buyer for at least 50% of the acquired price, in case the joint venture turns non-profitable. Tata, however, ran into trouble with RBI regulations over foreign exchange trade when it tried to settle ts payment. RBI told the HC in March that Tata’s payout of $1.17 billion in damages to the Japanese telco cannot be approved, and is illegal since it involves the transfer of shares to a foreign company. However, Tata used the CCI route to settle its dispute by buying back shares owned by NTT Docomo.

Tata is trying to revive its telecom business

Tata is also trying to revive TTSL (telecom business) and trying to keep up with completion by launching unlimited calling packs and other 3G offers. How it does not have any 4G service currently. It had paid Rs 4,500 Cr to DoT last year for renewing its spectrum holding in the 1800 MHz band (meant for 3G/4G) in Mumbai circle, according to this PTI report. The spectrum purchase also came at a time when reports said that Tata plans on closing down its CDMA business in all 22 circles including Mumbai. Apart from this, TTSL’s shareholders have also approved a proposal to raise Rs 10,000 crore via issue of convertible preference shares.