Japanese mobile carrier NTT DoCoMo Inc. (NYSE: DCM) is to acquire half of NTT Communications Corp. (NYSE: NTT)'s 14 percent stake in Philippine Long Distance Telephone Co. (PLDT) for ¥52.1 billion (US$443.6 million). (See NTT DoCoMo Buys PLDT Stake.)

It will pick up 12.6 million shares in the Philippines' largest telco and appoint a director each to the boards of PLDT and its mobile unit, Smart Communications Inc. . DoCoMo "may consider increasing its investment in PLDT if a suitable opportunity arises," PLDT said in a statement. It had been reported previously that DoCoMo was looking to invest $300 million for a 5 percent stake in the operator. (See Asian Carriers Indulge in January Sales.)

The companies have also formed a strategic partnership that will allow Smart to launch DoCoMo's i-mode mobile Internet service. "Other benefits of the relationship with DoCoMo would include co-development of other 3G services/applications, roaming arrangements and potential handset/equipment procurement savings," PLDT said.

Smart recently acquired 15Mhz of 3G spectrum and has begun rolling out its network using Nokia equipment. (See Smart Preps 3G Rollout and Nokia Delivers 3G to Smart.)

The move is part of DoCoMo's return to international investments following earlier forays that ended up losing it money. The company sold its 16 percent interest in AT&T Wireless, when the latter merged with Cingular Wireless in 2004, sold its 20 percent share of Hutchison 3G UK Ltd. to Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY), and divested its 2.16 percent stake in KPN Mobile in October. (See DoCoMo Sells Hutch Stake and DoCoMo Dissolves KPN Tie.) It's turned its focus instead to licensing i-mode to international partners abroad. (See O2 to Launch UK i-mode, MTS Launches I-Mode , and Cellcom to Launch i-mode.)

But it has tiptoed back into the investment arena, taking a 10 percent stake in Korea's KT Freetel Co. last month. NTT says the tieup with PLDT plays into its fixed/mobile convergence strategy.

DoCoMo also announced financial results today for the nine months ended December 31, 2005. It reported operating revenues of ¥3.58 trillion ($30.6 billion), down 1.7 percent year-on-year on declining handset sales, while net income dropped 31.7 percent to ¥516.4 billion ($4.42 billion) -- the year-ago earnings having been inflated by the AT&T sale.

Revenues from handset sales fell 13.6 percent to ¥353.2 billion ($3.02 billion) as the carrier paid higher subsidies to retailers in an attempt to boost customer additions. At the end of December, DoCoMo had 50.36 million subscribers, giving it a 56 percent share of Japan's mobile market. Forty percent of those users were signed up to its 3G FOMA (Freedom Of Mobile Multimedia Access) service.

Despite the decline, the operator is sticking to its full-year operating profit forecast of ¥830 billion ($7.1 billion).

Separately, DoCoMo said it will terminate its money-losing Personal Handyphone System (PHS) mobile phone service during the third quarter of the 2006-2007 fiscal year and encourage users to switch to other services such as FOMA. (See DoCoMo to End PHS Service.)

And in a sign of the increased competition it expects once Japan introduces number portability this year, DoCoMo will expand the availability of its unlimited data tariff to all monthly 3G customers from March. (See DoCoMo Offers Flat Rate.)

DoCoMo's shares closed up ¥1,000 ($8.56), or 0.53 percent, to ¥190,000 ($1,626.45) today on the Tokyo Stock Exchange.

— Nicole Willing, Reporter, Light Reading