Tata Sons has received formal communication from Japan's NTT DoCoMo about exercising its sale option in Tata Teleservices Ltd, a company spokeswoman said.
NTT DoCoMo had said in April it would exercise the option to sell its 26.5 percent stake in Tata Teleservices by June if the Indian mobile phone joint venture failed to achieve performance targets.
Tata Sons had said in April it was not "possible to predict how events will unfold; however, Tata Sons is cognizant of its responsibilities, and will act keeping in mind the interests of all stakeholders and in accordance with law".
DoCoMo's exit from India after just five years highlights the difficulties both foreign and local telecom companies face in a fiercely competitive market, where carriers rely on cut-throat pricing to attract subscribers.
DoCoMo paid 266.7 billion yen ($2.61 billion) for a 26.5 percent stake in Tata Teleservices in 2009. Under the joint venture agreement with Tata, DoCoMo could sell its stake for about half of what it originally paid for the stake or at a "fair market price", whichever was higher.
"We invested in India because at the time we saw excellent growth prospects in emerging countries and we wanted to be involved there," DoCoMo Chief Executive Kaoru Kato had told reporters in April after the company posted its earnings for the financial year ended March 31.
"We came to this decision (to sell) because the growth we've seen in five years is not what we expected," he had said.
Edited by NDTV Staff from original story by Reuters