Stocks of Tata Teleservices surged during intra-day trading on Tuesday after reports emerged that Tata Sons Limited will pay a penalty of $1.17 billion (approximately Rs 7,000 crore) to NTT DoCoMo in connection with the termination of a joint venture. At 12.50 pm, the stock touched an intra-day high of Rs 7.90.
The Tata Group has reportedly agreed to pay the amount after both the companies opted for an out-of-court settlement, reported Moneycontrol. The joint venture, Tata Teleservices, was announced in 2009. According to the terms of the deal, DoCoMo was guaranteed the higher of either half its original investment, or its fair value, reported Reuters.
In 2014, DoCoMo decided to exit the venture. However, the Tatas could not to find a buyer for the 26.5% stake and offered to buy it for half of DoCoMo’s $2.2 billion (Rs 14,000 crore approximately) investment. But the Reserve Bank of India barred Tata’s move, arguing that foreign investors could not sell stakes in Indian companies at a pre-determined price.
In June last year, DoCoMo had moved an arbitration court in London that ruled against the Tata Group. The Japanese firm had alleged a breach of contract on the grounds that Tata Sons had neither found a buyer nor bought back the Japanese partner’s 26% stake.
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