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NTT DoCoMo Moves Into India, Buys a Piece of Tata

[qi:076] Japanese telecom giant NTT DoCoMo said today that it has acquired 26 percent of Tata Teleservices for $2.7 billion, which is actually higher than the valuation of the largest CDMA carrier in India, Reliance Communications. The premium is a sign that the Japanese covet the Indian market and, more importantly, the ethics of the Tata Group. Tata’s wireless and fixed wireless business is sold under the brand Tata Indicom. The new money will allow Tata to expand into offering GSM-based services and compete more effectively against the likes of Bharti Airtel and Reliance. A large number of international players have made a beeline to the Indian market in recent months, with DoCoMo being just the latest.

6 Responses to “NTT DoCoMo Moves Into India, Buys a Piece of Tata”

  1. Om,

    Tata Group and Ethics ? I will enlighten you here,

    Tata Power invested Rs 500 crore in Broadband Infrastructure and they sold the same to group company VSNL at 50% discount 5 years later. In the end, who lost ? The shareholders of Tata Power. [My question was simple, when India faces severe power shortage, what is the need for Tata Power to invest in broadband ?] I had written to Ratan Tata on 09/23/05 [I still have e-mail Proof] questioning his investment, but as usual like any other Indian CEO/Chairman he didn’t bother to reply.

    Also, have a look at this Video featured on CNN IBN about the functioning of their Tata Group’s ISP division :-)
    http://in.youtube.com/watch?v=dFpWy0ZoC2M

    Almost all the Indian companies are the same – Customers and Shareholders are at the mercy of the management.

  2. @Sidharth

    I think it is valuation mostly because of the ethics of the parent. secondly, i think NTT sees an upside in the investment itself. it is a fairly good investment — but i guess premium is one of the reasons why Tata might have sold the stake to them versus some private equity group.

  3. Absurd valuation. Reason is that Tata Tele is very behind in the marketplace inspite of it being the first provider in many states. They have just about 30% of the subscriber base of Bharti Airtel. And as far as ARPU is considered Tata Tele is probably the worst. I think NTT has paid huge huge premium just to get a toehold in the market