DoCoMo says Hallo to Tata

(24 Feb 2009, BWCS Staff)

The Indian government has finally given its approval to Japanese mobile operator NTT DoCoMo's proposed purchase of a stake in local telco Tata Teleservices. In an unprecedented flurry of activity the DoCoMo deal was one of 60 agenda items cleared in three hours by the Indian cabinet of ministers. Now that the purchase has finally been rubber-stamped, the Japanese giant can begin its move into the world's fastest growing mobile market.

DoCoMo will acquire a 27.31% holding in Tata Teleservices for a cost of 129.3 billion rupees (US$2.6 billion). At the same time it will purchase a 20.25% holding in Tata Teleservices' subsidiary Maharashtra Ltd for 9.45 billion rupees (US$189 million). Last month India added a record 15.4 million new mobile customers. Mobile phone users now account for close to 91% of the country's telephone base with 362.3 million connections, the TRAI said. India's teledensity now stands at 34.5%.

Tata, which has yet to turn a profit, is the fourth largest mobile operator in India with just over 30 million customers on its CDMA network - putting it some way behind Bharti Airtel, which according to TRAI figures for the end of January 2009, has 88.3 million mobile customers. Tata says it has plans to launch a new GSM network in the near future. The news of DoCoMo's interest broke in early September 2008, after France Telecom had apparently pulled out of a possible bid for a stake in Tata.

Earlier in 2008, Tata Teleservices signed a deal with Virgin Mobile to jointly launch a new mobile phone service in India. The service operates under the Virgin brand and is targeting the country's youth, aged between 15 and 30 years old. According to estimates this sector in India is around 400 million strong. Virgin will merely take a share of the revenue in return for Tata using its brand name.


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