TOKYO-NTT DoCoMo has been gearing up its global strategy, concluding one investment agreement after another. Since December 1999, it has invested in carriers in Hong Kong, the Netherlands and Britain.
At the end of November 2000, DoCoMo announced another big deal with a U.S. carrier, whereby DoCoMo successfully constructed a footprint in Asia, Europe and the United States.
NTT DoCoMo acquired 16 percent of AT&T Wireless, the mobile unit of AT&T, for 1 trillion yen (US$8.7 billion). In conjunction with the deal, AT&T Wireless declared it will migrate from its current TDMA-based services to General Packet Radio Service (GPRS), a GSM evolutionary technology, and then to wideband-CDMA (W-CDMA), a third-generation (3G) standard that NTT DoCoMo has been promoting. The carriers also announced they would develop a dual-browser i-mode and Wireless Application Protocol (WAP) phone to provide i-mode-like services in the U.S. market.
Through the agreement, NTT DoCoMo has won a footprint in the United States, the world’s largest telecommunications market, secured an opportunity to deploy W-CDMA technology in the U.S. market and found a way to provide i-mode-like services in the United States by offering the dual-browser phone.
Remarkably, the deal between DoCoMo and AT&T is also “exclusive,” whereby NTT DoCoMo will provide i-mode technology and know-how only to AT&T Wireless and will not seek any other partner in the United States.
Jordan Roderick, president of the International Business Division of AT&T Wireless, said AT&T Wireless will expand its overall customer base, fully using know-how from NTT DoCoMo.
The time schedule for 3G services in the U.S. market is unknown, partly because spectrum is not available. However, Roderick said AT&T Wireless would like to launch its 3G services based on W-CDMA in 2002 at the earliest.
Prior to launching 3G services, both carriers will launch i-mode-like services based on AT&T Wireless’ GPRS network by developing dual-mode mobile handsets that will be able to read c-html, the language used for i-mode, and WML, a WAP-based language used for AT&T Wireless’ PocketNet service. The carriers are targeting to commercially offer i-mode-like services in the fourth quarter of 2001.
AT&T Wireless has not been as successful in providing its mobile Internet service, launched last year, as its Japanese partner.
AT&T Wireless in 2001 will spin off from its corporate parent, with NTT DoCoMo holding 16 percent of the AT&T Wireless shares. NTT DoCoMo will send five to six engineers and a chief technology officer to work for the company.
Keiichi Yoneshima, an analyst at J.P. Morgan Securities Asia in Tokyo, said NTT DoCoMo made a good move, because it won nationwide networks and a WCDMA/i-mode partner in the United States with moderate investment money.
However, the 1 trillion yen price tag is not that small. NTT DoCoMo is reportedly going to issue new shares in February at the earliest to cover the cost.
The deal also caused another stir in the Japanese telecom market. Following the deal with NTT DoCoMo, AT&T decided to sell its stake in Japan Telecom. Japan Telecom owns J-Phone, a rival mobile unit to NTT DoCoMo. Due to a special deal between AT&T and British Telecommunications (BT), AT&T is reportedly going to sell the stake to BT. Because of the increased influence of BT over J-Phone, Vodafone, the world’s largest mobile carrier, in December decided to purchase a 15-percent stake in Japan Telecom to increase its influence over J-Phone.
In Europe, NTT DoCoMo has already established footprints by investing in KPN Mobile and Hutchison 3G UK Holdings last year. In May 2000, DoCoMo announced it purchased a 15-percent stake in KPN Mobile, a major mobile operator based in the Netherlands, for 408 billion yen (US$3.6 billion).
In July, it assumed 20 percent of Hutchison 3G UK Holdings, the holding company of Hutchison 3G UK, for 194 billion yen (US$1.7 billion). DoCoMo is now the second-largest shareholder for these two European carriers.
Keiji Tachikawa, NTT DoCoMo president, said the firm’s next target is Asia. On the same day as the U.S. announcement, NTT DoCoMo announced another deal with KG Telecom, the fourth-largest mobile carrier in Taiwan.
NTT DoCoMo will assume 20 percent of KG Telecom, at 5.98 billion yen (US$51.4 million) to become the second-largest shareholder. Like the deal with AT&T Wireless, NTT DoCoMo will provide know-how and i-mode technology to KG Telecom, and KG Telecom will launch its 3G services based on W-CDMA.
NTT DoCoMo in December 1999 assumed 19 percent of Hutchison Telephone, the largest mobile carrier in Hong Kong. DoCoMo has provided i-mode technology to Hutchison, and the carrier is offering i-mode-like services.
But there are still many other Asian countries where NTT DoCoMo is seeking partners for its W-CDMA technology and i-mode services. Through its development and standardization efforts for W-CDMA, NTT DoCoMo has been working with many carriers in Asia during recent years. Tachikawa suggested NTT DoCoMo may pick its business alliance or investment partners among the carriers with which the company jointly worked on W-CDMA. The list includes PT Telekomunikasi Indonesia, Singapore Telecom, Smart Communications in the Philippines, Telecom New Zealand and SK Telecom in South Korea.
