The Tata Group and Japanese telecom giant NTT DoCoMo said on Friday that they were eyeing joint technology development for mobile networks as the two partners offered Rs 949 crore to Tata Teleservices (TTSL) shareholders to buy up to 20 per cent equity in the company through an open offer.
The Tatas and NTT DoCoMo offered Rs 24.70 per share, almost a 4 per cent premium, to the shareholders compared to the current market price of Rs 17.99. As per the understanding Tatas and NTT DoCoMo will buy 38.64 crore Tata Teleservices Maharashtra Ltd (TTML) shares.
On Wednesday, NTT DoCoMo bought 26 per cent stake in Tata Teleservices for Rs 13,261 crore ($2.7 billion), valuing the company at Rs 50,960 crore ($10.4 billion).
“We hope to give subscribers a wider range of products and excellent basis of service not only in current technologies but in the technologies yet to come,” said Ratan Tata, chairman, Tata group.
The partnership with DoCoMo will be used to fuel TTSL’s GSM rollout plans. “The combination will also improve the customer offering to increase the net additions. We intend to develop and build high-quality and cost effective next generation networks,” said Anil Sardana, managing director, Tata Teleservices.
The company has a subscriber base of 30 million. Investment bankers say the deal was strategic in nature and was unaffected by the short-term equity market sentiments. “Good companies will not look at short-term market sentiments,” said K Balakrishnan, managing director and CEO, Lazard India, which was the sole financial advisor for the transaction.
Valuations of telecom companies have come down drastically because of the meltdown in the equity markets with most telecom stocks dipping by over 50 per cent since the beginning of this year.