Japan's NTT DoCoMo could soon finally get its wish of exiting its unprofitable Indian joint venture.
The Reserve Bank of India (RBI) has cleared a proposal by Tata Group to buy back Japan's NTT DoCoMo's 26.5% stake in Tata DoCoMo, Business Standardreported.
The RBI has approved a pre-determined price of 58 rupees ($0.93) per share, which translates to a total purchase price of 72.5 billion rupees ($1.16 billion). This is more than double the 23.34 rupee per share valuation given by PwC.
As part of the two companies' 2009 agreement to form the joint venture, DoCoMo was entitled to require Tata to buy back the stake at market value or 50% of the price the Japanese operator paid for the 26% stake.
DoCoMo decided to exit the joint venture last April, but Tata Group has so far not bought back the stake.
As a result, DoCoMo pursued international arbitration in January, and won a ruling that DoCoMo was entitled to pursue a foreclosure of the assets if Tata did not honor its agreement.
Tata DoCoMo reported a record loss of 61.66 billion rupees for the 2013-14 financial year, prompting DoCoMo to pursue an exit from the JV.