Wednesday, 02 December 2020

Rival firms rally to challenge NTT’s $40bn buyout of DoCoMo

by Harry Baldock, Total Telecom
Wednesday 11 November 20

Twenty-three companies have signed a joint letter to the communications minister in protest

At the end of September, it was announced that Japanese telco NTT was set to buyout NTT DoCoMo, the mobile unit in which it already owns 66% equity. The deal is set to be for a record-breaking $40 billion, with Japan’s three major banks set to coordinate loans amounting to almost $37…

At the end of September, it was announced that Japanese telco NTT was set to buyout NTT DoCoMo, the mobile unit in which it already owns 66% equity. The deal is set to be for a record-breaking $40 billion, with Japan’s three major banks set to coordinate loans amounting to almost $37.9 billion.

 

At the time, NTT CEO Jun Sawada noted that this move would give DoCoMo the financial stability it needs to be able to proceed with the mobile price cuts that the government have been lobbying for in recent years. 

 

But, while this deal may seem like good news for customers and new Prime Minister Yoshihide Suga, NTT’s rival telcos are less than pleased.

 

Today, it has been announced that 23 Japanese firms, including major competitors KDDI and SoftBank, have signed a joint letter to the communications minister arguing against the deal on the grounds that it would make the market uncompetitive.

 

The letter says that NTT wholly owning DoCoMo would create an entity that “dominates the market” and would “prevent fair competition in the telecoms market”.

 

The plea asks that the government “set up measures to protect an environment of fair competition and instruct and ensure compliance and implementation”.

 

Currently, the buyout is expected to be completed by March 2021.

 

The deal comes at an exciting time for the Japanese telecoms industry, which is eying far greater rollout of 5G in an attempt to catch up to its Asian rivals, China and South Korea. Recent reports suggest that SoftBank and KDDI are each prepared to pump $19 billion into the next-generation technology.

 

This commitment is perhaps a major subtext to their complaint about the DoCoMo acquisition. With expensive 5G being rolled out nationwide, can these telcos really afford the price war that the unified DoCoMo will be positioned to deliver?

 

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