Sunday, 01 November 2020

NTT set to buy-out DoCoMo for $40bn as price war looms

by Harry Baldock, Total Telecom
Tuesday 29 September 20

The deal to acquire the 34% stake in DoCoMo that NTT does not already own would be the largest ever in Japan

NTT is set to acquire its mobile unit NTT DoCoMo for a record-breaking $40 billion. The former monopoly, which already owns around 66% of DoCoMo’s shares, is offering $37 per share, a premium of around 40% on Monday’s closing stock price.  …

NTT is set to acquire its mobile unit NTT DoCoMo for a record-breaking $40 billion. The former monopoly, which already owns around 66% of DoCoMo’s shares, is offering $37 per share, a premium of around 40% on Monday’s closing stock price.

 

The tender offer is Japan’s largest to date. Reports suggest that Japan’s three major banks, as well as additional sources, are set to coordinate loads to the tune of $37.9 billion in order to facilitate the move.

 

The Japanese government has been pressuring the Japanese telcos to lower their prices for some time, with an initial round of price cuts taking place last year. Now, under new Prime Minister Yoshihide Suga, the government is once again pledging to lower mobile fees further, with customers of the island nation paying some of the highest rates in the world. The buy-out of DoCoMo should go some way to facilitating these demands, with the mobile operator no longer answerable to shareholders.

 

“As a result of this move, DoCoMo will become stronger with a more solid financial position so it will have capacity to carry out further price cuts,” said Jun Sawada, CEO of NTT.

 

However, Sawada insists that renewed governmental pressure is, in fact, not the basis for their decision, with discussions allegedly taking place since April. Instead, the telco argues that the acquisition will allow the group to use its funds more effectively, helping to build out their expensive 5G network and minimise the disruption caused by the coronavirus.

 

Regardless of its motivation, analysts are suggesting that this deal could mark the start of a vicious price war between the Japanese operators NTT, KDDI and SoftBank, a development which would be welcomed by the public but lamented by the telcos.

 

Also in the news: 
BT chooses Nokia to fill 5G void left by Huawei
“Unacceptable risk”: US restricts exports to China’s biggest semiconductor company SMIC
Three Ireland’s 5G network goes live

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