NEW YORK-NTT Mobile Communications Network Inc., Japan’s largest mobile carrier, said Dec. 2 it plans to buy a 19-percent interest in Hutchison Telephone Co. Ltd., Hong Kong’s biggest wireless provider, for $410 million.
Under terms of the agreement, reached with Hutchison Whampoa Ltd., which is HTCL’s parent, Motorola Inc. will reduce its stake in the Hong Kong mobile services company to 25.1 percent from 30 percent. Hutchison Whampoa’s share would drop to 55.9 percent from 70 percent in the transaction, which the companies expect to complete by year-end. NTT DoCoMo will gain a seat on Hutchison Telephone’s board of directors.
“I believe NTT DoCoMo’s technology and vision, combined with Hutchison’s local market presence and Motorola’s strength in mobile communications technology, put Hutchison in an excellent position to drive the Hong Kong mobile communications industry forward,” Canning Fok, group managing director of Hutchison Whampoa, said at a press conference in Hong Kong.
In the near term, Hutchison Telephone is considering introducing NTT DoCoMo’s i-mode service to Hong Kong. The i-mode uses a proprietary Internet platform that permits mobile customers to access information, send messages and engage in electronic commerce transactions. Since its February launch in Japan, i-mode has gained 2.6 million subscribers.
“To introduce mobile Internet or mobile multimedia services, the maturity of the cellular business is very important,” said Kiyoyuki Tsujimura, managing director of NTT DoCoMo’s global business department.
“That is why the Hong Kong market is very attractive for us.”
NTT DoCoMo’s wideband Code Division Multiple Access technology is one of the international standards selected for third-generation mobile communications, which can carry sound and video. The two carriers regard W-CDMA “as one of the likely systems” for future mobile phone services in Hong Kong, said Shiro Tsuda, executive vice president of NTT DoCoMo.
Hutchison Telephone, which has about 1.2 million subscribers, holds a 33-percent share of the Hong Kong market. NTT DoCoMo, the name under which NTT Mobile Communications does business, has 27 million subscribers in Japan, representing a 57-percent market share.
Keiji Tachikawa, president of NTT DoCoMo, the mobile phone subsidiary of Nippon Telegraph & Telephone Corp., said the carrier had budgeted about $1.5 billion for investments outside Japan during the last five months of this fiscal year, Reuters reported.
Several days before the Hutchison Telephone equity-stake announcement, Moody’s Investors Service said NTT planned to sell about $782 million in 10-year, yen-denominated bonds. Citing NTT’s “dominant position in Japan’s growing telecommunications market,” the agency assigned an investment grade rating of Aa1 to the proposed debt issue.
“NTT is likely to take a moderate investment strategy in expanding its international operations,” said Takahiro Morita, senior vice president of ratings for Moody’s in Tokyo, and Robert Konefal, managing director of corporate finance for Moody’s, New York.
“While these investments may not result in positive cash-flow contributions in the intermediate term, the impact on NTT should be manageable.”
During NTT DoCoMo’s simultaneous press conferences last week in Tokyo and Hong Kong, its executives were circumspect about possible plans for a joint foray with Hutchison Telephone into mainland China, wire services reported.
Tsujimura said the companies would see first how well they work together in the Hong Kong endeavor before deciding whether to negotiate a combined effort to tap the wireless market in the rest of the People’s Republic of China.
“This is not a step towards an entry into mainland China,” Tsuda said, adding that the Japanese carrier would consider separately various strategies for entering that country.
