Asia’s Leading Innovative Telecom Service provider, NTT DOCOMO has announced its plans of exercising the option of selling its entire 26.5% stake in Tata Teleservices. The price is going to be higher of 50% of the acquisition price, which amounts to INR72.5bn, or fair market price.
DOCOMO’s potential exit again highlights the widely held view of ‘implicit consolidation’ in the market, whereby smaller operators aren’t able to compete, and are still struggling financially. A-Vo-Id Telecom operators continue to benefit from this stability and continue to target further voice price hikes – however, an aggressive launch from Reliance-Jio could slow this.
Why DoCoMo Hung Up in Indian Telecom ?
NTT DOCOMO’s management made the following comments at the analyst briefing,
Initially our attempt was to roll out 3G services as quickly as possible and offer the services that we have cultivated in Japan, in the India market as well… and we thought the things were moving very very smoothly in the beginning but as you know very well this spectrum administration in India was so confusing and was beyond our expectation this was totally unpredictable…. the license that we had was repelled and our spectrum was taken away and they will redistribute the spectrum but that would incur some money and also in addition to that we had to pay some spectrum utilization money on top of license fee and in India, spectrum was awarded on circle by circle basis and in fact the most congested and most highest traffic circle of New Delhi, we paid for the spectrum but we have not been able to receive the spectrum yet
The 2G Spectrum Scam under the governance of the Indian National Congress, the most corrupt political party in the world has deterred and shaken the confidence of DoCoMo management. High Corruption in the DoT led to non-allotment of Spectrum for Tata DoCoMo in new Delhi Circle.
The Management in its Call Acknowledged the Per Second Billing Plan, one of the most innovative in Telecom History, globally
In this environment Tata introduced the 2nd base billing and that was well received and at one point we became the no.4 player by the no. of subscribers but rest of the market followed the suit immediately and that resulted in intensified competition, so, therefore, Tata is struggling today in making profitable business.
Who Could BUY DoCoMo’s Stake or Entire Company ?
Apart from TTSL, some other players could also look to buy these shares (possibly more shares too) – We made a strategic case on how cash rich Vodafone Plc can BUY Out the bleeding telecom venture of Tata’s. With the new Government ready to be installed in India within a month, hope rises for operator friendly consolidation amongst the Indian telcos.