Bloomberg News

DoCoMo Considers Role for Partners to Fuel Overseas Sales

July 13, 2012

NTT DoCoMo Inc. President Kaoru Kato

NTT DoCoMo Inc. President Kaoru Kato. Photographer: Akio Kon/Bloomberg

NTT DoCoMo Inc. (9437), Japan’s biggest mobile-phone company, may buy more companies overseas to widen access to entertainment content and e-commerce operations to help boost sales abroad ninefold in four years.

“We will consider acquisitions if necessary,” Chief Executive Officer Kaoru Kato said in an interview. Revenue outside Japan, excluding roaming fees, may grow to as much as 200 billion yen ($2.5 billion) in the year ending March 2016 from about 22 billion yen last fiscal year, he said.

The carrier will also consider boosting the use of wireless networks it controls overseas to deliver animated films, games and music to smartphone and tablet computer users in countries including France, the 61-year-old CEO said, without elaborating. DoCoMo has trailed domestic rivals KDDI Corp. (9433) and Softbank Corp. (9984) in subscriber additions in Japan this year, as it doesn’t offer Apple Inc. (AAPL:US)’s iPhone, which works with iTunes, the largest online entertainment distribution platform.

“We first need to succeed with this distribution business at home, before taking it abroad,” Kato said.

Baidu Venture

The carrier spent $22.5 million to form a venture with Baidu Inc. to distribute Japanese games and other content in China in collaboration with Japanese social gaming company DeNA Co., DoCoMo said today in a statement announcing completion of the investment. The investment gives DoCoMo a 20 percent stake in the venture, Baidu Yi Xin Network Technology (Beijing) Co.

DoCoMo fell 0.7 percent to 132,400 yen at the close in Tokyo trading, extending its decline this year to 6.4 percent. Japan’s benchmark Nikkei 225 Stock Average was little changed and has gained 3.2 percent this year.

To help narrow the gap with the iPhone, DoCoMo, which controls 47 percent of Japan’s wireless market, will introduce 16 smartphone models including Samsung Electronics Co.’s Galaxy series by August, it said in May. The carrier aims to sell 13 million smartphones this fiscal year in Japan, rising from 8.82 million a year earlier.

Smartphones make it easier for users to watch video, surf the Internet and listen to music because they have larger touch- screens than conventional mobile phones.

Android Strategy

“The iPhone is very attractive,” Kato said. Still, “our strategy remains to fight back with handsets” operated by Google Inc.’s Android.

Docomo has already acquired at least one European partner to add content for mobile distribution. The carrier said in May it agreed to pay as much as 224 million euros ($273 million) for Buongiorno SpA (BNG), an Italian mobile-content provider. DoCoMo plans to complete the transaction on July 18, it said July 11.

In India, DoCoMo owns 26 percent of Tata Teleservices Ltd., the sixth-largest carrier by subscribers as of May.

DoCoMo had cash and near cash of 522 billion yen as of March 31, down 32 percent from a year earlier and compared with the five-year average of 578 billion yen.

DoCoMo will probably have a net addition of 2.8 million subscribers in the current 12-month period, compared with growth of 2.28 million the preceding year, it projected on April 27.

Net income in the year started April 1 will rise 20 percent to 557 billion yen as sales increase 5 percent to 4.45 trillion yen, the company forecast in April, citing higher data transmission fees and handset sales.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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