DoCoMo's Purse Stays Shut

NTT DoCoMo Inc. (NYSE: DCM) is set to turn down the opportunity to acquire new shares in KPN Mobile, in which it currently holds 15 percent. An official announcement regarding the decision is expected next week. The Dutch mobile carrier's parent, KPN, decided last month to re-capitalize the wireless business with a debt-for-equity swap (see KPN Posts Q3 Profit) and so offered the Japanese operator the chance to inject new capital. Not surprisingly, DoCoMo is not so keen on pumping another ¥300 billion ($2.43 billion/€2.4 billion) into KPN Mobile to retain its 15 percent stake, particularly as the Japanese giant wrote down the value of its current holding to zero earlier this year (see DoCoMo Takes a $4.7B Hit). It originally paid €5 billion in the summer of 2000 for its slice of the Dutch action. Telecom analysts at Lehman Brothers were expecting this decision and believe that once the debt-for-equity swap is complete, DoCoMo's stake in KPN Mobile will be diluted to less than 3 percent. DoCoMo clearly has more urgent matters at home, particularly regarding its 3G service, called FOMA, which is struggling to impress the Japanese public (see DoCoMo Claims 3D First). After about a year of service it had fewer than 140,000 subscribers (end of September), and it is to face further high-speed mobile access competition from J-Phone Co. Ltd. within a few weeks, to add to the battle it already has with CDMA2000 1xRTT player KDDI Corp. (see J-Phone Heads for 3G). The latter has just unveiled its latest subscriber figures, including nearly 4 million 1xRTT customers, all of which have been signed up since early March this year. — Ray Le Maistre, European Editor, Unstrung
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