The Tata group and Japan's NTT DoCoMo are a step away from a settlement to their over two-year-old dispute on the latter's stake sale in Tata Teleservices. Both sides' arguments have been heard in London and an award is awaited, two people familiar with the matter said.
The crux of the argument presented by NTT DoCoMo was that during the timeframe in which its contract was enforceable, preventive rules from the Reserve Bank of India were either not in place or were lifted.
The Tata group has maintained it hasn't breached contract but couldn't pay its joint venture partner because central bank regulations prevented it from doing so, the people said. While timeline for the final decision isn't know, lawyers say it usually takes up to two months to deliver the verdict.
Sources say attempts at an out of court settlement didn't work out. "Valuers were appointed at a time to ascertain Tata Teleservices' value. Sale attempts have been made to get a value for NTT DoCoMo.
However, none has worked out, some due to regulatory hurdles others due to disagreement on pricing," said a person familiar with details. Both groups declined comment as the matter is sub-judice. In 2008, NTT DoCoMo had picked 26.5% in Tata Teleservices for $2.7 billion agreeing that after three years, the Japanese company could exit selling its stake to a buyer, in a public listing or a sale back to Tata group.
Sale price was safeguarded at half of DoCoMo's original investment, the price the Tata group would pay in case the asset deteriorated. However, in 2014 when DoCo-Mo tried to exercise its option to sell back stake to the Tata group for Rs 7,250 crore, or Rs 58.045 a share - half its original investment - it was opposed by RBI.
Equity value of the privately held mobile service operator had turned negative by 2014. RBI stipulated that no pre-agreement on price was acceptable for stake sales at a later date. The central bank then said the price of any such a sale must be at a market determined rates