Japan's NTT DoCoMo Inc said on Friday it would exercise the option to sell its 26.5% stake in Tata Teleservices Ltd by June if the Indian mobile phone joint venture failed to achieve performance targets for the financial year that ended last month.

The sale price would be Rs 7,250 crore ($1.19 billion) - the equivalent to half of the original acquisition price - or a "fair market price", whichever was higher, as agreed when DoCoMo made the initial investment in 2009, Japan's top mobile phone services operator said in a statement.

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NTT DoCoMo had invested 266.7 billion yen ($2.61 billion) in Tata Teleservices in 2009.

The agreement allows DoCoMo to sell the stake to Tata Sons Ltd, it added.

In India, an industry source familiar with the matter said the diversified Tata Group conglomerate would buy the stake, but did not specify a price. Singapore state investor Temasek and Indian businessman C Sivasankaran also own small stakes in Tata Teleservices.

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Unlisted Tata Teleservices expanded into lucrative GSM-based mobile phone services after the deal with DoCoMo and amassed subscribers by offering a cheaper per-second billing plan, but it subsequently failed to build on its initial success and has lost market share in the past two years.

It currently ranks seventh in terms of subscriber numbers among the 12 firms that operate in India's fiercely competitive telecoms market.

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NTT DoCoMo to sell 26.5% stake in Tata Teleservices