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Business

Japan's Docomo to retreat from India

TOKYO -- NTT Docomo will unload its 26% interest in Indian telecommunications carrier Tata Teleservices, withdrawing from cell phone operations in that country after a long struggle with red ink.

     The Japanese mobile carrier is in talks to sell its holdings to local conglomerate Tata Group, which also owns an interest in the telecom company.

     Docomo entered the Indian market in 2009 by acquiring an interest in Tata Teleservices for some 260 billion yen ($2.51 billion). But stymied by competition, the operations have languished, with Docomo apparently booking related impairment charges of about 50 billion yen in the year ended March 31.

     The company provides its services under the Tata Docomo brand. At one point, it rapidly expanded operations by touting discount fee schedules ahead of others, but peers quickly followed suit. With more than 10 carriers crowding the market, competition has intensified.

     Tata Teleservices ranks No. 7 in the South Asian country, with a market share of 7% and 63 million subscribers, according to the Telecom Regulatory Authority of India.  

     Around the year 2000, Docomo stepped up overseas expansion by investing in U.S. carrier AT&T Wireless and others, only to give up its holdings after failing to gain management control at the companies.

     Since then, the Japanese company has focused its efforts on Asia, where high growth is expected. India, in particular, had been positioned as a key market.

     In overseas markets, Docomo has acquired digital-content providers and settlement service firms in a bid to reduce dependence on the communications business. But such operations are not as profitable. Given its imminent exit from India, the telecom giant needs to hammer out a new growth strategy.

(Nikkei)

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