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DoCoMo to Get UK/U.S. Stock Exchange Listings

DoCoMo to Get UK/U.S. Stock Exchange Listings

DoCoMo's share price has fallen 33% since a new share issue a year ago...but will cheaper shares attract new capital to the Japanese mobile giant? And just how safe is Vodafone's investment in JAPAN TELECOM?

January 2002 ended with NTT DoCoMo's confirmation of their plans to list in New York and London in March. The mobile phone operator also announced a five-for-one share split aimed at increasing liquidity and raising their attractiveness to retail shareholders.

DoCoMo, which has invested about $13.4 billion in overseas partners, hopes to raise their international profile through the listings and increase their financing options to support their growing global operations. The company had originally aimed to list overseas last September, but poor market conditions, a planned write-down of their investment in KPN Mobile, and delays in preparing computer systems forced them to push back their listings.

DoCoMo Shareholders to Double
The share split, which is the third for DoCoMo since their initial public offering, comes as DoCoMo's shares are under pressure from an overall disenchantment with telco stocks and continuing concerns about the mobile operator's overseas investments and growth prospects. DoCoMo's share price has fallen 33% since a new share issue a year ago. By lowering the price, DoCoMo hopes to increase demand for their shares in Japan as well as attract investors overseas, where their current share price is likely to seem high.

"The number of shareholders is likely to double or triple," says DoCoMo president Keiji Tachikawa. However, market participants say that in the current market environment it will be difficult to stimulate further demand.

"It will make it easier to buy (DoCoMo shares)," says Koji Fujiwara, a trader at BNP Paribas. "Two years ago (in the dot-com mania), it would have been a very positive factor. But in the current market, it won't make a big difference to sentiment." Analysts say that the overseas listings could be in preparation for another fund-raising exercise, or a sale by NTT, the holding company, of some of their 67% holding in DoCoMo.

Can 'Project V' Rescue Vodafone's Investment in JT?
Turning from one mobile giant to another, from DoCoMo to Vodafone, the new month began with JAPAN TELECOM (JT), in which Vodafone now owns a 66.7% stake, putting together a restructuring plan to pull out of unprofitable businesses, focus on their core strengths, and improve their financial performance.

The plan, dubbed Project V, is to be finalized by the end of March and comes as JT is set to announce their first loss since listing in 1994. The aim is to raise competitiveness by speeding up the decision-making process, paying greater attention to market needs, and becoming more profit-oriented. As part of the plan, the company will reduce capital spending to $862 million.

JT president William Morrow says: "We have to define core areas of growth, we need to create a culture that makes decisions quickly with real-time data, (and) we need products driven by customer needs, not just technology." The effort to improve JT's performance follows a first-half group loss and comes as JT is expected to suffer a further net loss in the year to March. JT also has "lower returns than the average NCC (new common carrier) in other markets," Morrow says.

Capital spending is being reviewed but staff cuts aren't expected. Nevertheless, JT is likely to face a difficult future in spite of Project V. The group's fixed-line business has suffered from fierce competition particularly in the consumer market, where the start of preregistration services highlighted the weakness of the JT brand in the consumer market. The corporate market, on which JT had focused, is also likely to decline as the Japanese economy continues to slump.

Furthermore, following the end of their partnership with BT Group and AT&T through Concert, "customers have no reason to choose JT," says Yasumasa Goda, telecoms analyst at Merrill Lynch in Tokyo. Nor is it clear whether an increase in data communications can make up for the sharp decline in voice communications revenues. JT's president adds that the group plans to release further details of Project V as they become available.

Anxious Times
All this comes just one month after a top NTT DoCoMo executive admitted that the Japanese pioneer of the world's first third-generation W-CDMA mobile phone service may not meet their target of attracting 150,000 subscribers to the service by the end of this coming March.

For Vodafone and JT alike, it's going to be an anxious month ahead.

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