Japan’s leading mobile operator NTT DoCoMo [London: 9437q.L] this morning apologised to its shareholders for writing down JPY1.5 trillion of the JPY1.9 million worth of investments it has made in recent years, but said it would not abandon its future plans for foreign expansion. Buoyed by a dominant position in its domestic mobile market, DoCoMo made a number of high-profile acquisitions both before and after the downturn in the global telecoms market, including a 16% stake in AT&T Wireless for which it paid USD9.8 billion in January 2001. AT&T witnessed a record fall in its share price in October 2002, leaving DoCoMo’s stake estimated to be worth as little as USD2.2 billion. To compound matters, growth in the Japanese mobile market has been slowing since mid-2000 as the market nears saturation. In the year to 31 March 2003 the country’s five operators collectively recorded new subscriber additions of less than 6.5 million; at that date DoCoMo had 44.9 million customers – 43.2 million of which were connected to its PDC 800/1500 network, and 1.7 million to its PHS service which has gradually waned in popularity. This gave it a 55% share of the total Japanese market of 81.3 million subscribers.
Despite the slowing growth, DoCoMo’s senior vice president Kiyoyuki Tsujimura this week told an annual meeting of shareholders that the company ‘still needs to conduct its business globally in order to keep growing’ and that it would ‘keep pressing on with foreign alliances and investments in a cautious manner’. In a bid to highlight the positives in the company’s recent investment strategy, he pointed to the successful overseas rollout of its i-mode mobile internet service across several European markets, and the service’s continuing growth at home; at the end of March 2003 there were 37.75 million Japanese i-mode subscribers, a rise of 826,000 during the month. He also cited the launch of third-generation (3G) mobile services in the UK by Hutchison 3G, in which DoCoMo has a 20% stake, as a positive to have come from its costly expansion strategy of recent years. It seems that despite the beleaguered appearance of the company’s balance sheet, it nevertheless has the blessing of its shareholders who at the end of the meeting approved the company’s plan to buy back 2.5 million of its own shares at a cost of around JPY600 million.