DoCoMo's Hush-Hush Talks
NTT DoCoMo Inc. (NYSE: DCM) has confirmed that it has had "meetings" with both South Korea’s KT Freetel Co. and SingTel about potential alliances. Not surprisingly, however, the Japanese company is keeping the details under its hat.
Consequently, speculation is rife about the nature of these meetings. Various reports mention the potential purchase of a stake in Freetel, or some sort of technology cooperation, but DoCoMo spokeswoman Mariko Hanoka says the company declines to elaborate on an official statement issued Tuesday that “nothing had been determined” from the discussions.
DoCoMo signaled its intention to take its shopping bag and a bulging purse to Asia's telco market in May 2001 when company president and CEO Keiji Tachikawa said the company would seek to promote business in Korea, Hong Kong, and Singapore.
DoCoMo has already dipped into its coffers in the region for a 20 percent stake in Taiwan’s KG Telecom last November but was thwarted in its efforts to take a 14.5 percent stake in SK Telecom (Nasdaq: SKM) following some protracted haggling over the price. KG Telecom launched its own i-mode service on June 20.
DoCoMo will likely be cautious, however. Its previous investments in Asia, including a 25.4 percent equity stake in Hutchison Telecommunications (Hong Kong) Ltd., contributed to a whopping ¥812.9 billion (US$6.86 billion) extraordinary loss on foreign telecom investments last year that dragged the company to its lowest profits since 1998.
We couldn't let this one go without adding to the speculation, so here goes. Freetel could be interested in a technology swap involving the revenue-sharing billing system that DoCoMo developed for i-mode, according to Naomi Iida, telecom analyst at West LB Japan: “It’s not about money, it’s about technology. When you move to international roaming, billing becomes extremely difficult. One user goes around different networks, but databases are held by a single operator. It could be that Freetel is interested in DoCoMo’s billing technology."
— Paul Kallender, special to Unstrung