NEW DELHI: Japanese telecom major NTT DOCOMO could acquire a controlling stake in Tata Teleservices (TTSL) in which it has a 26% stake, if the
latter is unable to meet some performance benchmarks, according to the shareholding agreement between the two, details of which are available with ET.
The shareholders’ agreement gives DOCOMO the right to increase its stake in TTSL to 35% by March 2012 by infusing fresh equity at what document describes at fair market value, though without any premium to the valuation at that point in time.
By March 2015, DOCOMO can further raise its stake in TTSL to 51% and take control of the company by subscribing new shares at fair market value plus a 30% control premium. But these options get triggered only if TTSL is not able to meet the aggressive performance criteria set out in the agreement. These targets include reaching a minimum operating profit (EBIDTA) margin of 15% and rolling out 20,000 GSM towers by March 2012. By March 2015, TTSL has to increase the number of GSM towers to 26,000 and further hike its EBIDTA margin to 25%.
TTSL may lose controlling stake to DOCOMO- Telecom-News By Industry-News-The Economic Times
latter is unable to meet some performance benchmarks, according to the shareholding agreement between the two, details of which are available with ET.
The shareholders’ agreement gives DOCOMO the right to increase its stake in TTSL to 35% by March 2012 by infusing fresh equity at what document describes at fair market value, though without any premium to the valuation at that point in time.
By March 2015, DOCOMO can further raise its stake in TTSL to 51% and take control of the company by subscribing new shares at fair market value plus a 30% control premium. But these options get triggered only if TTSL is not able to meet the aggressive performance criteria set out in the agreement. These targets include reaching a minimum operating profit (EBIDTA) margin of 15% and rolling out 20,000 GSM towers by March 2012. By March 2015, TTSL has to increase the number of GSM towers to 26,000 and further hike its EBIDTA margin to 25%.
TTSL may lose controlling stake to DOCOMO- Telecom-News By Industry-News-The Economic Times
