Talks have failed between the Dhoots of the Videocon [Get Quote] group and Mahendra Nahata of Himachal Futuristic Communications Ltd [Get Quote] to buy out the latter's 36 per cent stake in all-India mobile licence-holder Datacom Solutions.

The failure of a settlement could delay Datacom's ambition to be the first telco among the new licencees to roll out GSM mobile services by the end of this year.

Sources close to the deal said Dhoot offered to buy back Nahata's shares on the basis of a $900-million valuation for Datacom. Nahata wanted Dhoot to buy his stake out on the basis of a $1.4-billion valuation.

In other words, Dhoot was ready to offer Nahata $324 million (Rs 1,360 crore), but Nahata has asked for $504 million (Rs 2,116 crore). Sources in Nahata's camp claim the latter valuation had been accepted in an agreement by the two shareholders when Dhoot was brought in as a partner in Datacaom.

Dhoots also passed a resolution in an extraordinary general meeting of Datacom held on August 8 in which Rajkumar Dhoot, a director in the company, assumed more powers to run the mobile service firm.

The move has been opposed by Jumbo Techno Services, the company through which Nahata holds his 36 per cent stake in Datacom.

"We tried our best to come to a solution, even accepting terms that are worse than what we had agreed upon. However, we reserve our right to go for legal recourse to protect our interest," said Mahendra  Nahata.

An SMS query and several follow-ups to Venugopal Dhoot did not elicit a reply.

Sources close to the deal also said the lack of agreement might make it difficult for the company to get in a foreign strategic partner. The agreement between Jumbo and Videocon is already part of the articles of association of Datacom, and a new partner cannot be bought in without changing it.

Datacom has held talks with Dubai-based Etisalat and Bahrain's Batelco, according to informed sources, but no final deal has emerged.  Merchant banker Morgan Stanley has been mandated to find a strategic partner.

Datacom received a mobile licence a few months ago, when the shareholding was divided between Nahata and some other investors. Videocon later came in as a 64 per cent partner.

Disagreements between the two arose over investments in the company. Sources with knowledge of the deal said the two partners agreed to subscribe to an initial equity capital of Rs 150 crore (Rs 1.5 billion).

The Dhoots also agreed to put in further equity investments of around $1 billion (Rs 4,200 crore) needed to set up the network infrastructure.

Sources in Nahata's camp said he was not required to make further investment and his stake would remain intact at 36 per cent - a reward for getting the licence from the government. Jumbo also alleged that Videocon had said it would not bring in more equity but offered a loan to finance the project.

This was unacceptable to Jumbo, and the issue became a bone of contention between the two partners.