Vodafone eyes Tata Tele; will beat Airtel to become largest telco by subscribers if it succeeds

Vodafone is in early talks with the Tata Group to buy its controlling stake inTata Teleservices to create India’s largest telco by subscribers.

“Discussions are at an early stage. It is difficult at this stage to say what the outcome of these talks will be,” said a person aware of the development. The right of first refusal (RoFR) to the Tatas’ 59.45 per cent stake in Tata Teleservices rests with its Japanese partner NTT Do-CoMo, which owns a little over onefourth of the telecom company.

But if the Japanese company refuses to buy out the Tatas, the Indian partner has the right to exercise its ‘drag along’ rights and force NTT DoCoMo to sell its shares to the buyer of its choice, said two persons familiar with the development.

According to the shareholders agreement between Tata Sons and NTT DoCoMo, if certain performance parameters and other conditions are not met by March 31, 2014, and the Japanese partner decides to exit, Tata Sons is obligated to find a buyer for its shares. If it fails to find another buyer, Tata Sons would have to acquire NTT DoCoMo’s stake.

But it is not clear if the performance parameters built into the agreement between Tatas and the Japanese company have been triggered yet. Both Tata Teleservices and Vodafone declined comment. NTT DoCoMo did not respond to an email.

One of the persons familiar with the development said Vodafone, which recently sold its 45 per cent stake in Verizon Wireless for $130 billion, wants to buy out the entire company. “Apart from the Tatas and DoCoMo, Vodafone will also look to make an offer to .. 

 
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