Japanese operator NTT expects to turn listed mobile carrier NTT DoCoMo into a wholly owned subsidiary via a tender offer of nearly JPY4 trillion ($37.9 billion), Nikkei Asian Review reported.
NTT, which currently owns 66.2% of NTT DoCoMo, is considering making a tender offer to acquire the remaining shares and delist the company from the Tokyo exchange, according to the report.
NTT DoCoMo stated in a stock exchange filing that the matter is scheduled to be discussed at a board meeting on September 29.
According to the report, a move of this kind will enable DoCoMo to more easily respond to pressure to cut wireless service prices. Japan’s new Prime Minister Yoshihide Suga has said Japan’s mobile rates can be reduced by around 40% and considers the issue a policy priority.
A cut in mobile rates will certainly have a negative impact in DoCoMo’s earnings. However, having NTT as the sole shareholder will mitigate the negative impact on the company.
“This deal is not linked to the government’s request to lower phone charges,” NTT’s President Jun Sawada said during a joint news conference with NTT DoCoMo. “But this deal will make DoCoMo stronger … as a result, DoCoMo’s financial base will be more solid, so there will be room to cut the fees.”
Through this move, NTT also expects to generate greater synergies within the group and reallocate resources so that it can better compete with overseas rivals in areas such as 5G and IoT, according to the report
“There has been little appetite for change within DoCoMo, causing the unit to lag behind our groupwide strategy,” an NTT executive reportedly said.
DoCoMo led Japan’s mobile market at the end of June by subscriber numbers, with a 37% share, followed by KDDI, with 28% of the market and SoftBank, with 22%
“DoCoMo has a big market share but the size of profits has fallen to third place,” said Sawada.
DoCoMo was spun off from NTT in 1992 as part of government efforts to promote competition in the communications sector.
NTT DoCoMo has been an important profit generator within the NTT group, which is made up mainly of five firms — NTT East, NTT West, NTT Communications, NTT Data and NTT DoCoMo. In fiscal year2019, over 50% of NTT’s operating profit came from NTT DoCoMo.
NTT DoCoMo ended August with a total of 240,000 subscribers in the 5G segment after launching commercial services in March, the company’s President and CEO Kazuhiro Yoshizawa recently said during a conference call with investors.
At the end of the fiscal quarter ended June 30, the carrier had 150,000 5G customers, the executive said.
Yoshizawa said NTT DoCoMo expects 5G to start to reach mass market scale in the second half. The company is maintaining its target of 2.4 million 5G subscribers at the end of the financial year ending March 30, 2021.
NTT DoCoMo previously said it expects to reach 10,000 5G sites by June 2021 and 20,000 by March 2022.
Its 5G plans for its current fiscal year include promoting open RAN technology and deploying mmWave, as well as expanding the range of 5G smartphones.
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