Japan’s NTT to spend USD38B to buy out, take DoCoMo private

MITO, Japan (AP) — Japanese telecoms giant Nippon Telegraph & Telephone, or NTT, announced yesterday it will spend JPY4.3 trillion (USD38 billion) to buy out and take private its mobile unit NTT DoCoMo in one of the largest ever deals of its kind.

NTT and NTT DoCoMo executives released details of the plan yesterday.

The move is intended to enhance the competitiveness of the NTT group as it consolidates its services, said NTT’s CEO Jun Sawada.

“We want to be a game changer,” Sawada said.

He said that between September 30 – November 16 the company would buy DoCoMo’s shares at a price of JPY3,900. DoCoMo’s shares were last trading at JPY3,213. NTT held about 66 per cent of DoCoMo’s shares as of March 31.

The acquisition will be financed by bridge loans, not a share offering, the company said.

Passers-by walk past a NTT DoCoMo shop in Tokyo yesterday. PHOTO: AP

The restructuring dovetails with newly installed Prime Minister Yoshihide Suga’s push for lower telecoms rates and more consumer and business-friendly services. It is expected to enable DoCoMo to offer cheaper rates in competition with rivals such as SoftBank and KDDI.

Suga has made expanding digital services a main part of his policy agenda and has called for reforms of the industry’s complex pricing policies and relatively inflexible contract arrangements. Pressures to improve such services have intensified with the push for remote work during the coronavirus pandemic.

NTT’s shares fell 2.7 per cent ahead of the announcement, which was made after markets closed. DoCoMo’s shares were suspended from trading. Share prices for other NTT subsidiaries surged ahead of the announcement.

NTT DoCoMo is Japan’s largest mobile carrier, with more than 70 million subscribers. It was founded in 1992. According to its website, it holds a 44.2 per cent market share compared with the 32 per cent share held by KDDI’s au brand. SoftBank is third ranked, with a nearly 24 per cent share.

Although DoCoMo is the market leader, its profits have been eroding, a factor that helped drive the decision to consolidate.

Sawada said there was no direct link between the buyout and cutting mobile subscription prices.

“However, by doing this, DoCoMo will get stronger. That’s why we are doing this. As the result of this, we could build a stable foundation which apparently could give us power to decrease the price,” he said.