NTT DoCoMo wants to unload its investment in India’s seventh-largest cellular carrier, Tata Teleservices (TTSL), in a retreat from India’s challenging market.
Japan’s largest mobile telecommunications firm by subscribers said it wants to sell the entire 26.5 percent stake acquired in 2009, citing a range of negative factors.
“Intense price competition with many carriers, slow growth of 3G services, confusion in the licensing policies and regulations made it difficult for DoCoMo to use its know-how in the carrier business for the growth of TTSL and we couldn’t generate business synergies with them,” a DoCoMo spokesman said Friday.
The Japanese company has yet to find a potential buyer, but it has decided to exercise its option to sell the stake if TTSL didn’t meet performance targets in the fiscal year to March 31, 2014.
Under a deal struck with Tata Sons, the holding company of the Tata Group, DoCoMo will receive at least 50 percent of what it paid for the stake in TTSL, which would be ¥125.4 billion (US$1.2 billion), DoCoMo said.
TTSL had over 63 million mobile subscribers in February compared to the over 203 million subscribers of the largest player, Bharti Airtel, according to data from India’s telecom regulator.
The decision to sell its India stake comes as DoCoMo announced Friday that its net profit slid 5.4 percent to ¥464 billion for the year to March 31.
Operating profit marked a second straight year of decline for DoCoMo despite the carrier’s launch of iPhone sales last September after years of resisting Apple products.
“The main reason for this result is that we were not able to achieve the target for new subscribers and smartphone sales, and costs to bring in new subscribers from other carriers grew from February,” the spokesman said.
DoCoMo also announced it would buy back some of its shares.
Compared to the late 1990s and early years of this century, when it was adding some 10 million subscribers every two years, DoCoMo’s growth has slowed significantly over the past decade.
The company claimed 63.1 million subscribers as of the end of March, up from 61.5 million a year earlier.