DJ Who Would Want to Buy Tata DoCoMo? -- WSJ Blog
9:05 AM Eastern Daylight Time Apr 25, 2014
By Kenan Machado
If Japan's NTT DoCoMo wants to unload its stake in Tata Teleservices, analysts say there are likely only a few potential buyers out there.
On Friday, NTT DoCoMo said it plans to sell its stake in Tata Teleservices Ltd.--an Indian telecommunications firm that was struggling to make profits amid fierce competition in India.
Its partner, the Indian conglomerate Tata group is also looking to withdraw from the venture which used the brand name Tata DoCoMo people familiar with the matter told The Wall Street Journal.
It isn't quite the sellers market right now. India is struggling through a period of stagflation and the future is uncertain as the country is in the middle of a heated national election.
The telecom market is suffering from tiny tariffs and low data usage despite the steep fees charged by the government for radio bandwidth. The high fees have led to massive debt piling on the balance sheets of most wireless firms.
The ones without deep pockets have to either shut shop, shrink or sell. Right now there are only a handful of companies with the cash to buy into Tata Teleservices.
"Buyers would be a few as the business is loss making and highly leveraged," said Naval Seth an analyst for stock broker Emkay Global Financial Services Ltd.
Despite the problems, some analysts said buying DoCoMo's stake and even the Tata group's stake could make sense for some phone companies if the price is right.
"With a 7.5% revenue market share, Tata Teleservices is an attractive asset," for either a new entrant hoping to crack the Indian market or an existing large player looking to add market share, said an analyst who asked not to be named.
Some analysts said the asset could be a good match for Reliance Industries Ltd., which is looking to expand its presence in the telecommunications sector.
Its new telecom venture, Reliance Jio Infocom Ltd., is planning to launch its phone services based on fourth-generation radio waves this year.
A Reliance spokesman would not comment on market speculation.
Vodafone Group PLC and Bharti Airtel Ltd.--India's top two telecom companies-- could also look to buying the venture to add scale, analysts add.
In the six regions in which the DoCoMo and Tata venture has more than a 10% market share, Vodafone has a market share of more than 20% making it an attractive target for the British giant, Emkay's Mr. Seth said.
Both Vodafone and Bharti in the past have stated their willingness to grow through acquisition in the Indian market.
In February, Bharti Airtel did a $113 million deal to acquire smaller rival Loop Mobile India Pvt. In early April, V odafone bought out its minority shareholders in the Indian venture in a deal worth more than $1.5 billion.
Vodafone and Bharti spokesmen could not be reached Friday.
"Good night, Westley. Good work. Sleep well. I'll most likely kill you in the morning."
