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- Dubai 05:31 06:45 12:35 15:51 18:20 19:34
Indian salt-to-steel conglomerate Tata said Tuesday it had reached agreement with NTT Docomo to pay the Japanese mobile carrier $1.18 billion to settle a long-running legal dispute.
Docomo paid $2.6 billion for a 26.5 percent stake in Tata Teleservices in 2008 but triggered an option to sell it six years later after incurring losses and deciding to withdraw from India.
Under the terms of the tie-up, if Docomo pulled out Tata agreed to find a buyer for the Japanese firm's stake, or buy back the investment itself at half the price.
When Tata failed to find a buyer and India's central bank rejected Tata's offer to purchase the stake as "illegal", the Japanese giant approached an international arbitration court.
The court in June last year ordered Tata to pay $1.17 billion in damages. Tata Sons' failure to pay up was believed to be a factor in shareholders' decision to remove Cyrus Mistry as chairman last October.
In a statement on Tuesday Tata said it had reached agreement in principle to pay Docomo $1.18 billion, without giving details about why they had come to an agreement now.
"Tata Sons is pleased to announce that in the interests of putting an end to a dispute that had arisen with NTT DOCOMO, Japan, and in the larger national interest of preserving a fair investment environment in India, it has reached an agreement with NTT DOCOMO on a joint approach to enable enforcement of the... arbitration award," read the statement.
The companies have approached the Delhi High Court to authorise the settlement and over-ride the Reserve Bank of India's objections to the firms fixing the price of the stake sale years in advance.
The Tata-Docomo tie-up was the first to offer 3G data services in India. But it was unable to attract enough customers in a highly competitive marketplace that has around one billion mobile subscriptions.
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