TOKYO-Following months of speculation, three Japanese telecom companies announced plans to merge into one group to compete in the country’s increasingly competitive telecom market. DDI, IDO and KDD will merge to form Japan’s second-largest telecom company after NTT, in part to compete for the country’s lucrative third-generation wireless licenses.
The new group will operate under the DDI Corp. name with US$21.2 billion in assets. The merger officially will take place in October, following shareholder approval.
One share in DDI (US$48.40 per share) will be issued per 92.1 shares in KDD (US$4.84 per share). One share in DDI will be issued per 2.9 shares in IDO (US$484 per share).
The biggest shareholders in the new group are Kyocera, a Japanese electronics manufacturer with 16 percent, and Toyota Motor with 10 percent.
Toyota, which has plans for next-generation cars integrating telecom features, was a driving force behind the merger. DDI is a subsidiary of Kyocera, and Inamori is the decision maker of DDI. Toyota is the parent company of IDO and KDD’s second-largest shareholder.
DDI is Japan’s second-largest telecom carrier and holds numerous wireless licenses. IDO also is a cellular phone group. KDD, the country’s former international monopoly carrier, currently does not have wireless assets.
Since the Ministry of Posts and Telecommunications decided to allocate 3G licenses to only three carriers-or three groups-due to limited available spectrum, KDD has had no choice but to seek a partner among existing cellular carriers to launch a 3G business. In addition to the DDI-IDO group, NTT DoCoMo and the J-Phone Group, a subsidiary of JT, currently are providing nationwide wireless services and are said to have each secured a seat for the 3G business.
In a separate announcement, NTT said it will sell its stake in KDD before the planned merger is finalized. NTT currently holds an 8.4-percent stake in KDD.
