Japan's NTT DoCoMo says that it has been awarded USD1.17 billion in compensation following a dispute with India's Tata Teleservices Limited (TTSL).
The origins of the dispute date back to an agreement signed in 2009/11 when the Japanese carrier built up a 26.5 percent stake in the Indian mobile network forUSD2.6 billion.
As part of the investment agreement, NTT DoCoMo was granted an option that would enable it to require the majority shareholder, Tata Sons to find a buyer willing to pay at least half the value of the investment if the Japanese firm wanted to sell.
As the investment soured, NTT DoCoMo exercised its option in July 2014, but after Tata failed to find a buyer, filed for international arbitration in January 2015.
Now, the London Court of International Arbitration has ruled in favour of NTT DoCoMo and ordered TTSL to buy back the stake, offering USD1.17 billion in compensation.
Although a legal victory for the Japanese company, there is some doubt as to whether the Indian company will be able to afford to make the payment.
There is also doubt about how the agreement would comply with Indian regulations which ban sales of stakes in companies for more than their realistic market value, and TTSL's valuation has dropped over the years to the point that it is less than even the half-price return that NTT DoCoMo has been seeking.
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