Tata-DoCoMo settlement buzz sends Tata Tele soaring over 9%

Buzz of Tata Sons reportedly agreeing to pay damages to Japan’s NTT DoCoMo sent Tata Teleservices soaring over 9 percent intraday on Tuesday. Tata Sons has reportedly agreed to pay USD 1.17 billion in damages to Japan's NTT DoCoMo in their dispute over the latter's exit from a joint venture in India. The parties have opted for an out-of-court settlement. The new regime at Tata Sons under N Chandrasekaran has sought to quickly resolve the matter, which cropped up under the reign of Cyrus Mistry. Mistry's handling of the dispute was among the many grievances that irked the Tata Sons board and led to his unceremonious ouster last October.In further develoments, Tata Sons offered to withdraw its application against DoCoMo in Delhi High Court. Both companies have filed consent terms for perspective settlement in their long-standing dispute.Case fileIn 2009, the Japanese telecom giant invested around USD 2.6 billion in order to buy a 26.5 percent stake in Tata Teleservices (TTSL). Under the terms of that deal, in the event of an exit, DoCoMo was guaranteed the higher of either half its original investment, or its fair value. DoCoMo later deemed the venture as its “worst” overseas investment, and sought USD 1.17 billion in compensation for its 2014 exit from India. In June last year, an arbitration court in London ruled against the Tata Group. Docomo had alleged a breach of contract on the grounds that Tata Sons had neither found a buyer nor bought back the Japanese partner's 26 percent stake in their telecom joint venture Tata Teleservices. The stock has seen strong movements in the recent past, posting gains of over 20 percent in the past one month. In the build up to this decision, it gained nearly 11 percent in the past three days. At 10:25 hrs, the stock was quoting at Rs 7.11, up Rs 0.42, or 6.28 percent on the BSE. It touched an intraday high of Rs 7.32 and an intraday low of Rs 6.90.