NTT's $2.65 Billion Investment in Tata Reveals Provider Strategy

NTT DoCoMo is buying a 26 percent stake in fixed and mobile operator Tata Teleservices Ltd., currently owned by Tata Sons Ltd. (the Tata Group).

 

The $2.65 billion is not necessarily a large amount, by global standards. What is important is what it shows about where growth exists in the global business, and what strategies tier one providers are pursuing to maintain revenue growth.

 

Telenor (News - Alert) ASA recently made a $1 billion investment in Indian GSM operator Unitech Wireless as well.

 

DoCoMo in September also acquired a 30 percent stake in Aktel, a GSM mobile operator in Bangladesh.

 

According to its Web site, DoCoMo is very interested in research and development on 4G, and collaborates in international standardization.

 

Here’s a graphic the company put together showing its outlook on the evolution of higher data speeds:

 

 

At one level, the moves confirm the importance of the India market, which – along with China – has been fueling mobile subscriber growth of late. At another level, the move suggests the difficulty of maintaining robust growth if a company continues to operate only within its legacy footprint. Some service providers, for example, expect that global revenues will eclipse revenues from their original home countries.

 

Tata Teleservices (News - Alert) provides fixed and wireless CDMA services in 20 of India’s 23 telecom markets, has 29.3 million mobile customers and 821,600 wireline customers.

 

Tata is India’s sixth-largest mobile operator, with a 9.3 percent market share. In total, India has more than 315 million mobile connections and is activating about 10 million additional lines each month.

 

Vodafone (News - Alert) Essar is India’s second-largest mobile operator with 54.6 million customers.

 

DoCoMo’s experience with advanced mobile technologies, handsets, and services will be especially useful to Tata when India finally auctions and awards 3G licenses in 2009, one line of thinking suggests.