NEW YORK-NTT DoCoMo Inc., Tokyo, has filed with the Securities and Exchange Commission to issue up to $9.55 billion in dollar-denominated bonds over the next few years.
The shelf registration becomes effective April 11, meaning Japan’s largest wireless carrier can sell any or all of those bonds at any time over a two-year period from that date. With its registration on the shelf, a corporation saves time and money because it can tap favorable capital markets quickly, provided the company routinely supplies the SEC with quarterly, annual and related reports.
In its first rating of any DoCoMo debt, Moody’s Investors Service assigned its highest investment grade rating of Aa1 to the planned securities.
NTT DoCoMo Inc. was the first company to apply for a license to provide third-generation services in Japan. The Ministry of Posts and Telecommunications plans to issue the licenses later this year under the International Mobile Telecommunication-2000 standard.
After the government screens the license applications, it will grant licenses to three carriers. Most industry insiders believe a license will go to each of the country’s three largest carrier groups-NTT DoCoMo, DDI Group and JT Group.
In February, the Japanese government announced its spectrum allocation policy for the 3G business. The government will allocate 15 megahertz of spectrum for uplink or downlink or 30 megahertz for both uplink and downlink for each of the three licensed carriers.
Japan has one of the world’s largest wireless markets, with 56 million subscribers and a 45-percent penetration rate. Moody’s projects that the number of wireless customers will surpass the number of wireline telephone customers this year in that country.
Although there is increasing competition for mobile customers, DoCoMo still dominates with its 57-percent market share in Japan. Any market share loss should be offset by the overall growth in the customer base, even if the growth rate slows, Moody’s said.
“Antitrust consideration should be monitored but should not prevent [DoCoMo] from achieving its current stated business and financial goals,” said Takahiro Morita, Moody’s Tokyo-based senior vice president of ratings, and Robert Konefal, its New York-based managing director of corporate finance.
To enhance its competitive position, DoCoMo is racing to become the first wireless carrier in the world to introduce W-CDMA, a third-generation wireless technology conforming to the International Mobile Telecommunications 2000 standards. That debut is scheduled for the spring of 2001.
The 3G rollout would be an encore to DoCoMo’s introduction in late 1999 of i-mode, a packet-switched system that gives mobile users Internet access.
“Growing customer demand for multimedia services is probably the biggest challenge DoCoMo needs to face. The success of i-mode provides some comfort, but the level of consumer acceptance and demand for such services needs to be further identified,” Morita and Konefal said. “The implementation of a W-CDMA network and migration of customers to a new system also pose some manageable risks. DoCoMo is likely to continue to make strategic investments to promote W-CDMA.”
The Moody’s analysts also said they expect the Japanese carrier “to take a measured approach in making international investments.”
Global Wireless Editor Sandra Wendelken contributed to this report.
