Japan’s NTT Docomo wants to offload its entire 26.5 per cent stake in Tata Teleservices (TTSL), a move with potential wider implications for India’s consolidation saga.

Docomo said it will exercise an option to sell its TTSL stake as soon as the conditions for the sale are met.

A previous agreement between Docomo and Tata Sons – Tata Group’s holding company – means the Japanese operator has the right to require its stake in TTSL be acquired for 50 per cent of its acquisition price in 2009, which amounts to $1.2 billion, or a fair market price, whichever is higher.

The Tata Group holds 59.5 per cent of TTSL.

The Docomo requirement is triggered if TTSL failed to meet certain specified performance targets in the financial year to end-March 2014.

The operator, without actually saying the targets were not met, said it expects to exercise its option in or before June 2014.

“It is uncertain how the option will be performed, however, and Docomo is not able to predict how events will unfold”.

If the targets are not met then Tata is obliged to find a buyer for the Japanese operator’s shareholding, it is thought.  If Tata fails then it would have to snap up the stake itself.

How the situation plays out over the next few months has wider implications for the country’s mobile industry.

A report earlier this year said Vodafone had talks with the Tata Group about buying its stake in TTSL. Unravelling Docomo’s stake could be a step towards that deal moving ahead.

A Vodafone-TTSL combination would vault over Bharti Airtel to become the country’s largest mobile operator.

TTSL is currently India’s seventh-largest operator with 63 million connections (GSMA Intelligence, Q1 2014 figures).

Docomo’s decision seems to have been driven by domestic competition. The company is attempting to lure back customers in Japan with price cuts. However, CFO Kazuto Tsubouchi said last month that the cuts may hit profits.

Docomo is also spending as much as $4.9 billion on a share buyback programme.