NTT Docomo Inc. (9437) plans to sell a stake in Tata Teleservices Ltd. and spend as much as 500 billion yen ($4.9 billion) buying back shares as Japan’s largest wireless carrier cuts prices to lure customers.
NTT Docomo may sell the entire 26.5 percent stake in Tata Teleservices it bought for 266.7 billion yen in 2009 and 2011. The company also will buy back as many as 320 million, or about 7.7 percent, of its shares through a repurchasing plan extending from tomorrow through March 31.
The planned stake sale and share buyback come as competition for new subscribers in Japan intensifies amid a declining population and after NTT Docomo became the last of Japan’s three carriers to offer Apple Inc. iPhones. Chief Financial Officer Kazuto Tsubouchi said in an interview last month that discounts may threaten profit as it seeks to lure subscribers from rivals.
“This is a big reset for Docomo,” Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. in Tokyo, said in a phone interview. “The financial guidance, and the share sale and its own share buyback all mean Docomo is showing the real financial status of the company.”
Net income in the year ended March 31 was 464.73 billion yen, a 5.4 percent decrease from a year earlier, the company said today in a statement. The impact of the stake sale on earnings is uncertain, the company said today in a filing.
The company had about 340.3 billion yen in cash and equivalents as of Dec. 31, and total debt of 230.7 billion yen, according to data compiled by Bloomberg.
The company targets net income of 480 billion yen for the current fiscal year, compared with the 527.5 billion-yen average of 17 analyst estimates compiled by Bloomberg. Operating profit was forecast to be 750 billion yen, compared with the 828.3 billion-yen average of analyst estimates.
February through early April is the biggest business season for Japanese wireless operators as parents typically buy a smartphone for children who pass entrance exams for high schools or universities.
SoftBank Corp. added 649,500 net users last month to boost its total to 35.9 million, according to a statement from the company April 7. That compares with 515,500 new subscribers for NTT Docomo and 494,600 for KDDI, the carriers reported separately.
NTT Docomo has 63.1 million subscribers and added more users than rivals in December for the first time in two years. KDDI has 40.5 million and SoftBank 35.9 million.
Japan’s population declined by 244,000 in 2013, a seventh straight year of decline and the largest drop on record, according to the Health Ministry.
Tata Teleservices offers wireless mobile services throughout India. NTT Docomo plans to exercise its option to sell the stake in June.
If the Indian company fails to meet performance targets in the fiscal year ended last month, Docomo can sell the Tata shares for 50 percent of the acquisition price or a fair market price, whichever is higher, according to a statement from Docomo.
Debasis Ray, a spokesman for a unit of the Tata Group conglomerate, declined to comment on Docomo’s announcements.
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