In a major move and a first by a Japanese telco into India, NTT DoCoMo (NYSE: DCM) is taking a 26 percent stake in local telco giant Tata Teleservices, for a price of $2.7 billion. This is surely to spur more rivalry with other local giants like Reliance, Vodafone (NYSE: VOD) and Airtel, and help DoCoMo expand beyond its sluggish home market as well as try and redo its disastrous forays in Europe and Asia earlier.

PTI: DoCoMo has been trying to enter the Indian market for some time. Tata Teleservices has also been trying to sell part of its stake for a while and it was in talks with South Korea Telecom two years ago, but the talks failed due to disagreement over price. Tata Teleservices has 30 million subscribers, making it the sixth-largest telecom company in India on that parameter.

FT: Analysts said that DoCoMo was paying a high price to get into India, however. “We’re very bearish on this. Tata has been on the block for years and nearly everyone has kicked the tyres and walked away,” said one, who asked not to be named in the story. He added that, at around $350 per subscriber before debt, DoCoMo was paying a substantial premium relative to IDEA Cellular, a comparable Indian network. DoCoMo defended the deal, saying that because of Tata’s rapid growth, it expected to make a 15 percent return on investment over the next five to ten years.