DoCoMo mulls over switching of UK mobile allegiance

2 Mar 2004

Following last week’s news that mobile heavyweight NTT DoCoMo is interested in UK-based wireless operator mmO2, rumours are rife that the Japanese cellco could be preparing to dissolve its current UK partnership with Hutchison Whampoa by selling its 20% stake in Hutchison 3G (UK – H3G UK). DoCoMo is said to be reviewing its venture with Hutchison as it becomes increasingly concerned about the lack of a return on its USD1.7 billion investment in the 3G operator. Another bone of contention is H3G UK’s delay in launching DoCoMo’s mobile internet access service i-mode and the general consensus is that the Japanese operator now feels that mmO2 would be a better vehicle for i-mode than the struggling H3G UK. DoCoMo’s president Keiji Tachikawa fuelled the rumour mill by indicating that his company would be interested in a possible tie-up with mmO2 on the proviso that the UK company agreed to adopt i-mode.

DoCoMo claims that i-mode is now the most popular mobile internet service in the world, with a global subscriber base of 42 million users at the end of January. However, only two million of the total user base were outside of its domestic Japanese market, and i-mode lags some way behind the rival mobile internet service offered by Vodafone in the rest of the world, where the UK-based cellco claimed 4.5 million Vodafone Live! mobile internet customers across 16 countries at the end of 2003. i-mode licensees currently go head-to-head with Vodafone Live! in five of the six biggest mobile markets in western Europe – France, Germany, Italy, Spain and the Netherlands. Taking a stake in mmO2 would give DoCoMo access to more than 13 million customers in the UK, the only country where it does not have an i-mode presence. If DoCoMo did decide to exit H3G UK to pursue its interest in mmO2 it would be faced with a number of problems, not least in finding a buyer for its 20% stake. With poor customer growth since launching last March, H3G UK is a far from enticing prospect for potential investors; Hutchison only agreed to buy out former stakeholder KPN Mobile when the Dutch operator was forced to divest its assets to secure survival last year.

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