Tata’s Messy Divorce Adds to Its Problems

It seemed like the perfect marriage: the dominant mobile operator in Japan and the premier conglomerate in India operating a cellular service in one of the world’s hottest markets. In 2009, NTT Docomo and the holding company of Tata Group formed Tata Teleservices, with the Japanese company paying 260 billion yen ($2.5 billion) for 26.5 percent of the carrier.

Docomo arranged a prenup providing the option of selling its shares back to Tata for at least half the purchase price, in case things didn’t work out. As it turned out, the business struggled as competition in India intensified. By 2014, Docomo had had enough and said it wanted 50 percent of its money back. Tata sought permission from India’s central bank, the Reserve Bank of India (RBI). The bank said commitments such as the one Tata made to Docomo violated a law passed in 2014 allowing foreign investors to exit deals only at prevailing fair value, not at a predetermined exit price.