NTT could pay up to USD38bn to take control of DOCOMO and delist it

29 Sep 2020

Japan’s Nippon Telegraph & Telephone Corp (NTT Corp) is looking to take full control of its wireless arm NTT DOCOMO by buying out the roughly 34% stake in the company it does not already own, and then take the company private, reports say. The nation’s former state-owned monopoly listed the cellular business 28 years ago but is now looking to effectively reverse that, in what analysts say could be Japan’s biggest ever tender offer. With incoming Japanese prime minister Yoshihide Suga tipped to shake up the domestic telecoms market through his insistent calls to see mobile operators forced to make deep price cuts, Jefferies analyst Atul Goyal suggested that in taking DOCOMO private, NTT Corp will be more easily able to comply – as it will no ‘longer be answerable to shareholders.’ Bloomberg writes that shares in Japan’s largest mobile carrier by subscribers were ‘untraded and overwhelmed with bids on Tuesday’, with brokers anticipating the parent company’s bid ‘would place a hefty premium on the mobile business’ possibly as much as 30%. Based on DOCOMO’s closing share price on 28 September 2020, a 34% stake in the company is valued at approximately JPY3 trillion (USD28 billion). Assuming a 30% premium, that figure balloons to around JPY4 trillion, or USD38 billion.

Related to the above, Reuters reports that three Japanese banks – belonging to Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group – are queuing up to extend loans to NTT for its potential acquisition, It cites two unnamed sources as saying that the first named ‘megabank’, MUFG Bank, will extend the largest amount, although they declined to be identified because the deal is not official yet.

Japan, Nippon Telegraph and Telephone Corporation (NTT Corp), NTT DOCOMO