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Mobile & Wireless
NTT DoCoMo takes 26% stake in Tata Teleservices
Another global telco invests in fast growing Indian market
by Ek Heng, Asia Pacific correspondent
Japanese telco giant NTT DoCoMo, Inc. has forged an alliance with Tata Teleservices Ltd (TTSL) paying INR130.7 billion (US$2.7 billion) for a 26 percent stake in this sixth-placed Indian telco.
The transaction marks DoCoMo’s entry in the world’s faster growing cellular phone market, after China, and places the value of the unlisted TTSL at INR502.7 billion (US$10.38 billion).
TTSL has 29.3 million cellular subscribers which works out to a value of INR17,271 (US$354) per subscriber. The cellular operator offers CDMA-based service and has a license to operate GSM services in many circles in India. It recorded a loss of INR18.13 billion (US$371 million) for 2007-08.
It is understood the transaction involves DoCoMo buying 6 percent from Tata Sons and other companies within the group, with the remaining 20 percent in new shares to be issued by TTSL. Based in Mumbai, TTSL is a telecommunication business unit of the Tata group which has interests in energy, steel, automobiles, tea and hotels as well as information technology and communications. A DoCoMo spokesperson in Tokyo said the company will have the right to appoint three directors on the Tata Teleservices board.
DoCoMo is the sixth international telco in the last 18 months to invest in India’s telecommunications market which topped 313 million mobile subscribers by September this year and is expected to grow to 500 million by 2010.
With its domestic market reaching saturation, the Japanese telco has been looking beyond its shores for growth and its investment in TTSL is the biggest in eight years. It has taken minority stakes in telcos in Bangladesh, Malaysia, the Philippines, Hong Kong, South Korea and Taiwan.
3G is Japanese partner’s strength
There is the added attraction of an impending 3G auction by India’s telecom authority by early next year. The Japanese partner’s reputation for breaking new grounds in 3G technology puts TTSL in good stead to meet the needs of more sophisticated and discriminating users when data-rich services associated with 3G are launched in India.
As one of the world’s largest cellular operators, DoCoMo has a customer base of 53 million. Out of this, 46 million are FOMA subscribers, the brand name used by DoCoMo in launching the world’s first 3G WCDMA mobile service.
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