A Losing Battle

Is it worthwhile investing in the Indian telecom sector? Japan's NTT DoCoMo would reply in the negative. In 2009, DoCoMo acquired a 26.5 per cent stake in Tata Teleservices (TTSL) for $2.7 billion. The agreement stated that if TTSL failed to achieve certain milestones in five years, the Tatas would find a buyer for the shares held by DoCoMo or buy that stake at a 50 per cent discount. Last October, DoCoMo took a hit when the Tatas paid it about $1.27 billion, 47 per cent of the deal amount, and that too after a three year fight with Indian regulators. At the same time, the share price had fallen much below the agreed value. The actual erosion was, in fact, much higher.

In 2008, Norwegian operator Telenor joined hands with realty firm Unitech, which had acquired nationwide spectrum in 2008. The venture started with huge losses but Telenor was hopeful of making money in the long term. It bought a majority stake (67.25 per cent) from Unitech for $1.3 billion and also invested in the 2G network. It lost all its licences when the Supreme Court revoked 122 licences in 2012 in the 2G scam case. It returned