NTT Takes $2.7B Stake in Tata

NTT DoCoMo Inc. (NYSE: DCM) is the latest international operator to succumb to the lure of the fast-growing Indian mobile market: The Japanese giant is to buy a 26 percent stake in fixed and mobile operator Tata Teleservices Ltd. , currently owned by Tata Sons Ltd. (the Tata Group), for 130.7 billion rupees (US$2.65 billion), the two companies announced today.

As part of its deal with Tata Sons, DoCoMo also intends to buy a stake of up to 20 percent in publicly traded Tata Teleservices (Maharashtra) Limited (TTML), an affiliate of Tata Teleservices that provides services in the Maharashtra region of India (which includes Mumbai).

DoCoMo's move, part of a strategic alliance with Tata Teleservices, comes only weeks after Norwegian powerhouse Telenor Group (Nasdaq: TELN) announced a $1 billion investment in Indian GSM startup operator Unitech Wireless. (See Telenor Takes Mobile Stake in India.)

Tata Teleservices, which (including the Maharashtra business) provides fixed and wireless CDMA services in 20 of India's 23 telecom circles, has 29.3 million mobile customers and 821,600 wireline customers (at the end of September). (See A Guide to India's Telecom Operators.)

Tata is India's sixth largest mobile operator by subscriber numbers, with a 9.3 percent market share (at the end of September). In total, India has more than 315 million mobile connections (GSM and CDMA), and is activating about 10 million additional lines each month.

In a joint press release issued today, DoCoMo and Tata said they plan to "expand mobile communication operations in the fast-growing Indian mobile market, aiming to increase operating revenue and achieve steady business growth."

The move pitches DoCoMo against one of the other leading global mobile operators, Vodafone Group plc (NYSE: VOD), which bought its way into the Indian mobile market last year. Vodafone India is India's second largest mobile operator with 54.6 million customers (at the end of September). (See Vodafone Wins Battle to Buy Essar and Vodafone Completes Buy.)

DoCoMo's experience with advanced mobile technologies, handsets, and services will be especially useful to Tata when India finally auctions and awards the 3G licenses for which India's mobile carriers have been waiting for so long. The auction is expected to take place early in 2009. DoCoMo, which has more than 54 million mobile customers in Japan, will also be able to advise Tata on any plans to deploy so-called 4G technologies. (See India Edges Closer to 3G, DoCoMo Takes LTE to 250 Mbit/s, and DoCoMo, Google Partner.)

The Tata deal is DoCoMo's latest move into international markets. In September it acquired a 30 percent stake in Aktel, a GSM mobile operator in Bangladesh that is majority owned by Malaysian carrier TM International Bhd. for an undisclosed sum.

— Ray Le Maistre, International News Editor (at the end of September), Light Reading

lrmobile_kumaramitabh 12/5/2012 | 3:27:09 PM
re: NTT Takes $2.7B Stake in Tata The NTT move should be seen as entering 3G marketsin the near future, with 30 million customers available to target for new services.
Its success in mobile applications has been dependent on FOMA and 3G networks in Japan.
The valuation which TTSL has been given gives a new dimension to the upcoming 3G auction which the existing players have been trying to undermine in various ways. This includes 3% fees for spectrum won in auction against 2% for GSM given virtually free. It also shows that some companies may not find it a cakewalk to go with low prices due to liquidity conditions. These are deeper and more experienced players in the fray and this might spoil the game for some free riders.
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