NTT DoCoMo receives $1.27-billion arbitration award from Tata Sons

MUMBAI: Japan’s NTT DoCoMo on Tuesday said it has received from Tata Sons Ltd payment of the award amount of 144.9 billion yen ($1.27 billion) in accordance with the Delhi High Court’s decision regarding DOCOMO’s stake in Tata Teleservices Ltd.

“Concurrent with the receipt of the above amount, all shares in TTSL held by DOCOMO have been transferred to Tata Sons and companies designated by Tata Sons,” it said in a filing to the Tokyo Stock Exchange.

Upon the transfer of DOCOMO’s shares in TTSL, DOCOMO no longer accounts for investments in TTSL under the equity method, it said. Accordingly, DOCOMO expects to include a loss on transfer of investments in affiliates of ¥29.8 billion, equal to the reclassification adjustments of foreign currency translation adjustments, in other expense on its consolidated financial statements for the three-month period ending December 31, 2017, it said. A Tata Sons spokesperson declined to comment for the story.

The move marks an exit of the Japanese partner from Tata Teleservices and also brings curtains down on the dispute between the holding company of Tata group and the Japanese telecom firm.

On 26 May, fair trade regulator Competition Commission of India (CCI) approved Tatas’ purchase of 21.63% stake in group firm Tata Teleservices from DoCoMo, taking the long-pending billion-dollar deal a step closer to completion.

In its April 28 ruling, the Delhi High Court upheld the validity of the arbitration award and directed the parties to proceed with the consent terms flowing from it. The RBI had opposed the transfer of funds under mutual settlement between the firms and contended that permitting transfer of funds violated provisions of the Foreign Exchange Management Act (FEMA), 1999, and was against public policy. On February 28, the two companies told the Delhi High Court that they had reached an agreement concerning enforcement of an arbitration award on the issue.

In January 2015, NTT initiated arbitration proceedings against Tata Sons, claiming the latter failed to fulfil its obligation to find a buyer for Docomo’s stake in Tata Teleservices Ltd.

The settlement with the Japanese partner paved way for the larger restructuring of the business and allowed Tata Sons to take a tough call on the haemorrhaging entity.

On October 13, Tata Sons announced selling its consumer mobile business to India’s largest telecom operator Bharti Airtel Ltd virtually for free, as part of the group chairman’s strategy to exit businesses which have been a prolonged drag and have little visibility of future profits.