Tata Tele shares zoom 20% after group lowers exit offer price for DoCoMo

Shares of Tata group’s telecom company Tata Teleservices overcame the early weak broad market sentiment and hit the upper limit of 20 percent based on a media report the group has further slashed the exit offer price for Japan’s telecom firm DoCoMo in the Indian joint venture by 60 percent to Rs 23.34 per share. The market reacted positively to the proposal in the event of less cash outgo from the struggling Indian telecom company’s balance sheet, which is mired under huge debt and intense competition from the industry leaders. [caption id=“attachment_2351458” align=“alignleft” width=“380”]  Reuters[/caption] The fresh exit offer price is lower than the earlier offer of Rs 58 a share made by the Tata group to the Japanese firm. The Tata group has made this offer valuing the company at just Rs 11,000 crore. DoCoMo had invested in Tata Teleservices at Rs 117 per share valuation. The Tata group’s move comes after the RBI rejected its earlier proposal to buy DoCoMo’s stake in the struggling joint venture for about Rs 7,250 crore or Rs 58 a share. The yen’s 30 percent depreciation is adding more trouble to the company, a Business Standard report said. This would mean the value of DoCoMo’s original investment in Tata Teleservices would see a 90 percent erosion. DoCoMo, TTSL and Tata Sons had in March 2009 signed shareholder agreement for the business alliance. DoCoMo picked up 27.31 percent stake in Tata Teleservices for Rs 12,924 crore and 20.25 percent in Tata Teleservices (Maharashtra) Ltd - the listed arm of TTSL - for Rs 949 crore. Overall, DoCoMo holds 26.5 percent in Tata Teleservices. At 9.50 am, shares of Tata Teleservices (Maharashtra) was quoted at Rs 8.46, up 20 percent from previous close. Nearly 44 lakh shares changed hands on the BSE against two-week average volume of just 3.37 lakh shares.