NTT DoCoMo Buys PLDT Stake

NTT DoCoMo forms partnership with Philippine Long Distance Telephone Company and acquires a 7% stake for 52.1 billion yen

January 31, 2006

5 Min Read

TOKYO -- NTT DoCoMo, Inc., announced today that it has agreed with NTT Communications Corporation (NTT Com), Philippine Long Distance Telephone Company (PLDT), and PLDT's largest shareholder First Pacific Company Limited that DoCoMo will acquire 12,633,486 PLDT shares (approximately 7% of PLDT's issued shares) owned by NTT Com for approximately 52.1 billion yen. In addition, DoCoMo and PLDT will form a comprehensive business tie-up, including the launch of the i-mode® service in the Philippines.

The share acquisition and tie-up with PLDT will take place after DoCoMo and PLDT's wholly owned mobile subsidiary, SMART Communications, Inc. (SMART), complete registration with the concerned authorities in the Philippines regarding the i-mode service, and also conclude an i-mode license agreement.

As part of the tie-up, DoCoMo will support PLDT and SMART in introducing i-mode and W-CDMA services and promoting international roaming between Japan and the Philippines. In addition, DoCoMo will appoint one director each to the boards of PLDT and SMART and may consider increasing its investment in PLDT if a suitable opportunity arises.

In a separate release:

MANILA, Philippines -- Philippine Long Distance Telephone Company(“PLDT”) (NYSE : PHI) (PSE : TEL) today announced that NTT DoCoMo, Inc. (“DoCoMo”) hasagreed to acquire 12,633,486 common shares of PLDT, representing approximately 7 per centof PLDT’s total outstanding common shares, from NTT Communications, Inc. (“NTT Com”) fora total consideration of Yen 52,103 million (equivalent to approximately US$440 million) whichwas determined based on the 30-day weighted average price of PLDT’s common stock ofPesos 1,825. NTT Com will retain 12,633,487 common shares of PLDT, thus remaining asignificant shareholder of PLDT with a similar 7 per cent equity holding. In addition, PLDT,together with its wholly-owned subsidiary, Smart Communications, Inc. (“Smart”), will beentering into a strategic partnership with DoCoMo which, among other things, will enable Smartto offer DoCoMo’s i-mode service exclusively to Smart’s subscribers.

PLDT, DoCoMo, NTT Com and PLDT’s single largest shareholder group, First PacificCompany (“FPC”) and certain affiliates of FPC, signed a Cooperation Agreement today whichamends the existing contracts between the parties and reflects the new shareholdingarrangements. The share acquisition and other business arrangements will take effect afterDoCoMo, PLDT and Smart acquire certain licenses and approvals.

“We are extremely pleased to welcome DoCoMo as a major shareholder in PLDT and animportant partner of First Pacific. We believe there are great opportunities for synergy andcooperation and we look forward to a long and mutually beneficial relationship with DoCoMo,similar to the one we enjoy with NTT Com”, said Mr. Manuel V. Pangilinan, PLDT Chairmanand FPC Managing Director and CEO.

DoCoMo’s acquisition will result in one of the current PLDT directors nominated by NTT Combeing replaced by a nominee of DoCoMo. DoCoMo may consider increasing its investment inPLDT provided a suitable opportunity arises.

The entry of DoCoMo is particularly strategic in light of the recent awarding of 15MHz of 3Gspectrum to Smart. Smart and DoCoMo have agreed to collaborate with each other in the rolloutand development of 3G services in the country. DoCoMo passed the 20 million subscribermark for its 3G services last December, only four years after its launch.

DoCoMo and Smart have agreed in principle for Smart to introduce DoCoMo’s mobile Internetservice, i-mode, exclusively for Smart’s subscribers. DoCoMo will provide the know-how,technologies and patents necessary for Smart to operate the i-mode service over GPRS andW-CDMA networks. i-mode was introduced in Japan in February 1999 and has been anunparalleled success. With i-mode, mobile phone users get easy access to more than 100,000internet sites as well as specialized services. Users can access sites from anywhere in theircountry of use, and at attractive rates as charges are based on the volume of data transmitted.Since its launch, i-mode has grown tremendously in popularity and is now available inGermany, the Netherlands, Taiwan, Belgium, France, Spain, Italy, Greece, Australia, Israel,Russia, United Kingdom, Ireland and Singapore.

Other benefits of the relationship with DoCoMo would include co-development of other 3Gservices/applications, roaming arrangements and potential handset/equipment procurementsavings.

“DoCoMo is pleased to have formed this partnership with the Philippines' leading telecomoperator, PLDT and its mobile arm, Smart. We are confident that the combined strengths ofSmart’s extensive network and local expertise together with DoCoMo's i-mode and 3G WCDMAtechnologies will lead to the development of new value-added services and applicationsthat will truly benefit end users. We also expect that this tie-up will lead to a more activeinternational roaming service between the Philippines and Japan,” stated Mr. MasaoNakamura, President and CEO of DoCoMo.

“The addition of DoCoMo as a strategic partner will certainly enhance our ability to developattractive 3G offerings for our market. DoCoMo’s experience in this technology is unmatchedand we look forward to learning much from their team. We are also excited to work withDoCoMo in introducing i-mode in the Philippines. We have always aimed at giving oursubscribers the most innovative services and i-mode is certainly a prime example of that”,stated Mr. Napoleon L. Nazareno, President and CEO of PLDT and Smart.

Mr. Hiromi Wasai, President and CEO, NTT Com, said "Through our strategic partnership,PLDT and NTT Com have excelled in providing global telecommunications services formultinational companies. DoCoMo's entry as a shareholder in PLDT will further boost theoverall global business development of the NTT Group, through the expansion of its mobilebusiness component, thereby enhancing the corporate value already built. The move playsinto the fixed-mobile convergence direction that DoCoMo and NTT Com have embarked onand results in a winning proposition for all parties."

“The entry of DoCoMo in addition to NTT Com would certainly be seen as a solid vote ofconfidence not only for PLDT but for the Philippines as well. From First Pacific’s perspective,we are delighted to be joined by a company as distinguished and esteemed as DoCoMo”,added Mr. Pangilinan.


Philippine Long Distance Telephone Co. (PLDT)

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