NTT DoCoMo Inc. (9437), Japan’s largest wireless carrier, is ready to return to investing in phone companies outside Asia after rival Softbank Corp. (9984)’s deal to acquire a majority stake in Sprint Nextel Corp. (S) in the U.S., its chief executive officer said.
“The acquisition plan of Sprint was quite astonishing for us,” Kaoru Kato, 61, said in an interview at the Mobile World Congress in Barcelona yesterday. “I hope this will lead to success for the U.S. market and for Softbank as well, but the hurdle will be very high.”
DoCoMo, based in Tokyo, has scaled back bets on non-Asian phone companies after earlier investments in Royal KPN NV (KPN) and the company then known as AT&T Wireless Services Inc. (T) led to writedowns a decade ago. Kato, who took over as CEO in June last year, is now seeking additional income from health and retail services as Japan’s shrinking population and market saturation limits growth in its main wireless operations.
While DoCoMo has recently focused on acquiring content and platform providers, making acquisitions in the mobile industry may be worthwhile as the sector “is characterized by constant growth,” Kato said. Last year, DoCoMo acquired Buongiorno SpA, an Italian mobile-content provider, for about 260 million euros ($340 million).
“We will constantly monitor the trends, and if there is anything good, we may make an investment,” Kato said.
DoCoMo, controlled by Nippon Telegraph & Telephone Corp. (9432), fell 0.7 percent to 142,700 yen in Tokyo. The stock has gained 15 percent this year, valuing the carrier at 6.23 trillion yen ($68 billion). Softbank has a market value of 4.06 trillion yen.
Kato said his company won’t necessarily stick to minority investments as it has traditionally done. DoCoMo had 340 billion yen in cash and cash equivalents as of Dec. 31, according to company filings. The CEO wouldn’t specify the size of its budget for potential acquisitions, nor would he discuss specific regions DoCoMo is looking at.
The CEO also declined to say whether DoCoMo plans to use put options to sell its 26 percent stake in Indian operator Tata Teleservices Ltd.
Japanese telecommunications companies have announced acquisitions totaling $47.4 billion over the past 12 months, according to data compiled by Bloomberg, compared with $6.5 billion a year earlier. Softbank agreed in October to buy about 70 percent of Sprint, the third-largest U.S. mobile-service provider, for $20.1 billion.
DoCoMo hasn’t yet decided whether to offer Apple Inc. (AAPL)’s iPhone, Kato said. The Cupertino, California-based company’s closed ecosystem makes it harder to integrate into DoComMo’s plan to link devices and services, he said.
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