DoCoMo desperate for 3G growth - set to launch dual-mode handset

18 Feb 2003

Mobile phone giant NTT DoCoMo [NYSE: DCM] has revealed that it will introduce a dual-mode 2G-3G handset in the spring, contradicting an earlier assertion that it would not launch transition products and would instead seek to roll out a single standard nationwide. The company claims that its volte face does not mean that its original plan was a mistake, but that it is simply issuing the new handsets as a form of risk management. DoCoMo has been forced to acknowledge that take-up of 3G services has been slower than anticipated and it is keen to avoid seeing its FOMA brand image damaged by further failure to meet subscriber targets. Late last year DoCoMo revised its 3G subscriber target from 1.38 million by the end of March 2003 to just 320,000 and company president Keiji Tachikawa is now warning that this lower goal may not be achieved. He has blamed slow growth on delays in handset deliveries and the lack of appealing handset models on the market. There is little doubt that customer additions have also been affected by gaps in coverage between current and next-generation services, although sources at DoCoMo believe that growth will take off once FOMA has achieved 97% coverage. The new handsets, which will be supplied by NEC and should appear on the shelves in the next few months, are expected to be particularly popular amongst customers in rural areas as they have historically proved reluctant to migrate to new technologies. There will be only one model of transitional phone.