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One of the biggest pain points for Cyrus Mistry has been the Group’s handling of its dispute with Japanese major NTT DoCoMo over its telecom joint venture in India. The Indian conglomerate has taken legal recourse against claims of $1.17 billion awarded to NTT DoCoMo by a London court for violating a shareholder agreement.
Brand impacted“The move by NTT DoCoMo to drag the Tatas to international courts has certainly had an impact on brand Tata. Tatas have never known to be taking such an aggressive stand, especially against a joint venture partner,” said a top industry watcher.
The dispute with DoCoMo has further added to the Group’s woes in the telecom business. A far cry from the time when DoCoMo had first invested in Tata Teleservices. At that time it was widely believed that the partnership would evolve to become a major player in the highly competitive market.
The company had lost steam when Mistry took charge of the group in 2012. But he did not do much to turn its fortunes around.
Going downhillAccording to insiders, the telecom unit was not part of Mistry’s core plan. “He wanted to exit the telecom business. There have been conversations with potential bidders for a possible sale but nothing worked out. From then on it has been a downward slope,” said a company executive on condition of anonymity. Tata Teleservices’ revenue is stagnating, profitability is declining, and investments are slowing. “It’s as if the company is in freeze mode. When other players are investing in 4G services, Tata Telservices seems to be confused on what it wants to do. There is no clear signal. Do they want to exit or stay invested and expand,” said a market analyst. The company, though sprang a surprise at the recent auction by buying fresh airwaves.
The other telecom venture, Tata Communications, has had a better run under Mistry. The company, which once had a monopoly over the international long-distance segment, has had to reposition its strategy with focus on foreign markets. While this has paid off to some extent, Tata Communications has also been selling assets to pare debt.
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