TOKYO-NTT Mobile Communications Network Inc., known as NTT DoCoMo, launched the biggest initial public offering in Japanese history on 22 October, raising 2.1 trillion yen (US$17.95 billion).
DoCoMo ended its first day on the First Section of the Tokyo Stock Exchange (TSE) at 4.65 million yen (US$39,754), about 700,000 yen higher than the IPO price of 3.9 million yen (US$33,342). On the first day, trading reached about 360 billion yen (US$3.08 billion), representing 40 percent of all trading on the First Section of the TSE.
DoCoMo currently holds 56.8 percent of Japan’s cellular market, with more than 20 million subscribers as of the end of September. In the Tokyo metropolitan area, its share is 68.4 percent.
The 22 October IPO gives the company the third-largest market capitalization in Japan with 8.90 trillion yen (US$76.09 billion), after its parent NTT and Toyota Motor Corp. It is expected DoCoMo’s profit at the end of March 1999 will reach 272 billion yen (US$2.33 billion), exceeding that of NTT (259 billion yen (US$2.2 billion).
Among the 2.1 trillion yen it raised in the IPO, DoCoMo got 1.2 trillion yen (US$10.26 billion). DoCoMo is planning to use about 40 percent to repay its loans, 40 percent to cover deficits of NTT Personal and the remaining 20 percent to pay for future facilities and equipment investment.
NTT DoCoMo is planning to launch third-generation cellular, wideband CDMA (Code Division Multiple Access) in spring 2001. With an estimated future bill of up to 2 trillion yen to launch the W-CDMA services, DoCoMo with the IPO now has raised enough money to launch it.
The only concern of NTT DoCoMo is its PHS (Personal Handyphone Service) business, which DoCoMo is scheduled to take over from ailing NTT Personal in December.
At a press conference held just after the first day’s trading, Keiji Tachikawa, president of NTT DoCoMo, said he believes the firm will be able to move the PHS business into the black within three to five years and will be able to get rid of accumulated deficit in 10 years. He also mentioned the firm will market a dual terminal having both PHS and cellular functions next fiscal year and will offer a multi-terminal program in which one subscriber will be able to use more than one mobile terminal, at discounted prices.
Junichiro Miyazu, NTT president, said NTT will pass on some of the profits NTT won by releasing NTT DoCoMo’s share to NTT shareholders. NTT won 390 billion yen profits via the IPO. According to Miyazu, spending 80 billion yen, NTT will give away 5,000 yen in additional dividends to each NTT shareholder, and with another 120 billion yen, NTT will buy out NTT shares. Using the remaining 190 billion yen, NTT will strengthen its management structure. The government is planning to soon release 1 million shares of NTT stock.
New common carriers (NCCs) expressed their concern against a “too big” DoCoMo.
“In principle we can not say (anything) about (a) competitor’s financial status. However, DoCoMo, which is already a powerful carrier, will be more threatening for us because it now has more options winning more financial power,” said Mamoru Mishina, manager of DDI Corp.’s public relations division.
Using its now-abundant financing, DoCoMo is planning to improve its coverage to nearly 100 percent. NCCs with tight budgets will not able to pour their money into rural areas in the same way. Since strong coverage is a key factor for winning subscribers, DoCoMo, already with a strong brand image, seems favored to win more users.
