Japan's NTT Docomo to Exit India's Telecoms Market

Japan's NTT Docomo to exit India telecoms joint venture.Reuters

Japan's biggest mobile carrier NTT Docomo plans to exit its loss-making Indian mobile phone joint venture and could sell its 26.5% stake to partner Tata Group or to Vodafone's Indian unit by June, according to media reports.

The move will see the Japanese firm exit the world's second-biggest mobile phone market five years after its entry.

Docomo chief executive Kaoru Kato Kato blamed the joint venture's poor performance on a delay in rolling out 3G mobile networks that can support high-margin data services, and on an alleged graft scandal that saw partner Tata Teleservices and other firms lose some or all of their zonal operating licenses.

"We invested in India because at the time we saw excellent growth prospects in emerging countries and we wanted to be involved there," Kato said in Tokyo on 25 April, after his company reported earnings for the financial year ended 31 March, 2014.

"We came to this decision (to sell) because the growth we've seen in five years is not what we expected," Kato added.

Reports in India have named Vodafone as a likely suitor for Tata Teleservices.

However, a deal would require Tata Teleservices to be merged with Vodafone's Indian unit, with parent Tata Group either exiting the business or picking a minority stake in the merged entity.

Singapore's state-owned investment firm Temasek and Indian businessman C Sivasankaran are minority shareholders in unlisted Tata Teleservices.

Tata Teleservices ranks seventh in terms of subscriber numbers among the 12 firms that operate in India's telecoms market, where competition is stiff.

NTT Docomo had invested 266.7bn yen ($2.61bn, £1.5bn, €1.9bn) in Tata Teleservices in 2009.

Earlier in the month, Vodafone agreed to buy out a minority partner in its Indian arm for $1.48bn in a bid to take full control of its Indian operations.