NTT DoCoMo bowing out of India, to sell stake in Tata

NTT DoCoMo bowing out of India, to sell stake in Tata
NTT DoCoMo, Japan’s largest wireless carrier, is divesting its stake in Tata DoCoMo, India’s 6th largest provider, with roughly 70 million customers, in the wake of significant losses for the fiscal year that ended in March.

The company currently owns 26% of Tata DoCoMo, with the remainder held by Tata Sons Limited, a large multi-industrial conglomerate. At the time of NTT’s investment in 2008, it spent about $2.7 billion. The idea was to bring class leading Japanese technology to the fray to give the venture an edge.

With that investment, Tata DoCoMo was created, launched service, and started a price war with the dozen or so other carriers in India. The competition kept prices down however, so Tata struggled to generate any profits on the plan, despite adding millions of customers every month. To pour salt on that wound, the Indian Supreme Court yanked more than 100 wireless licenses in 2012, citing corruption in their disbursement back in 2008.

As a result, several foreign invested operators pulled out of the market, and carriers like Tata DoCoMo, Telnor (Uninor), and Sistema (MTS) had to scale down operations. Tata had added pressure because it operates across multiple wireless standards (GSM/HSPA, CDMA/EV-DO, WiMAX) which many have argued has hindered growth and revenues because it essentially amounted to double the relative overhead to operate the different standards.

Tata DoCoMo was also racking up debt, more than $4 billion in the time NTT DoCoMo was in the picture, and that is usually a harbinger of an eventual requirement for having to spend even more money on the money losing venture.

What is significant about the whole thing is that India is considered a “growth market” or “developing market,” and while the mobile industry is largely considered to be booming, this development proves that it is indeed possible to see plans go sideways even in the face of upward pointing indicators.

NTT DoCoMo’s board of directors voted to exercise the option for sale of the company’s entire stake in Tata DoCoMo. At the time of NTT’s acquisition, performance conditions were put in place for Tata. The exact amount of money NTT will get out of its sale is not yet known due to some of the financial performance factors. The sale will be complete before the end of June.

source: Light Reading

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10 Comments

1. Ishmeet

Posts: 111; Member since: Sep 16, 2013

They could have made huge profits if only their signal availability was higher. While their plans and offered speed was quite good, my mobile always had 2-3 bars out of 4 for the signal strength, and battery stats always showed yellow at the most, which made me switch to idea cellular, whose prices were also good enough for my taste.

2. souvikroy1111

Posts: 16; Member since: Apr 27, 2014

Idea sucks.. Aircel and Vodafone are best.. They both have cheap plans with very good signal quality Although no one can come close to Airtel when it comes to coverage and excellebt signal quality but its the most expensive

10. tusshharish

Posts: 342; Member since: Oct 23, 2012

Tata docomo prepaid 3g plans are very cheap.......... 1gb 3g for only rs153/-...........other packs are also cheap and most of 3g plans can be activated direct through phone if you have enough balance....... I like the 500/-combo pack it gives you talk time of 499/- + 2gb 3g data for 2months.............and after 2gb you can activate 153/-pack again from mobile.........

3. SeanContra

Posts: 82; Member since: Mar 24, 2014

Agreed. BSNL, Idea and AirTel have better network coverage than Tata Docomo and that is pretty much why all my friends jumped ship after college. The only reason why they used Docomo was because they had the cheapest data plans. : D And true, Docomo signals go painfully down when travelling out of town.

4. Teja171 unregistered

Dude, BSNL is the worst service provider in the country.

5. SeanContra

Posts: 82; Member since: Mar 24, 2014

Perhaps. I wouldn't know any better. But this much I know; they have network coverage all over the country. At least more than the competitors. Went for a trip to Keylong (Himachal Pradesh) from Kochi (Kerala) and back, about a month ago. A journey that pretty much covers the length of the country (almost... maybe not, but still,... Hey I CAN HAZ BRAG RIGHTS! :P ) And I had to rely on my friends' BSNL SIMs to make phonecalls. My Docomo was pretty much useless from the north of Chandigarh and onwards. So what good is quality of service in areas where there is no coverage at all? Surely, it all boils down to perspective and requirement. So yeah.... What's my point again? O_o?

6. Teja171 unregistered

I'm highlighting the network speed. Even the BSNL Broadband connection is the most slowest one I've ever used.

7. SeanContra

Posts: 82; Member since: Mar 24, 2014

I repeat. Slow speed is better than no connectivty at all. A personal preference. It's logically "okay" sounding too, I guess. And the broadband internet speeds vary from provider to provider agreed, BUT also from location to location. Where I live, BSNL is pretty shoddy in broadband services (or so I'm told and even you attest) but many of my friends from other states claim that my provider (Reliance, with whom I have no beef with... except for the PING!!!! DUDE! REALLY? 200ms? REALLY???) is way below standard and that BSNL is king. Quality of service is relative and not the same everywhere. Just like service availability. It's a big country ^_^ And aren't we going a wee bit off-topic here?

9. eisenbricher

Posts: 973; Member since: Aug 09, 2012

Vodafone is hands down the best in coverage. I've pretty much tried every carrier here and settled on a Dual sim Vofadone--AirTel combo. Never fails.

8. iluvsonynokia

Posts: 161; Member since: Aug 27, 2013

tata to docomo

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