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DoCoMo to resume phone M&A after Softbank move, CEO says

Bloomberg

NTT DoCoMo Inc. is ready to return to investing in phone companies outside Asia after rival Softbank Corp.’s deal to acquire a majority stake in Sprint Nextel Corp. in the U.S., its chief executive officer said.

“The acquisition plan of Sprint was quite astonishing for us,” Kaoru Kato, 61, said in an interview Monday at the Mobile World Congress in Barcelona. “I hope this will lead to success for the U.S. market and for Softbank as well, but the hurdle will be very high.”

DoCoMo has scaled back bets on non-Asian phone companies after earlier investments in Royal KPN NV and the company then known as AT&T Wireless Services Inc. led to writedowns a decade ago.

Kato, who took over as CEO last June, is now seeking additional income from health and retail services as Japan’s shrinking population and market saturation limits growth in its main wireless operations.

While DoCoMo has recently focused on acquiring content and platform providers, making acquisitions in the mobile industry may be worthwhile as the sector “is characterized by constant growth,” Kato said. Last year, DoCoMo acquired Buongiorno SpA, an Italian mobile-content provider, for about €260 million (¥ 31.3 billion).

“We will constantly monitor the trends, and if there is anything good, we may make an investment,” Kato said.

The stock of DoCoMo, controlled by NTT Corp., has gained 15 percent this year, valuing the carrier at ¥6.25 trillion. Softbank has a market value of ¥4.12 trillion.

Kato said his company won’t necessarily stick to minority investments as it has traditionally done. DoCoMo had ¥340 billion in cash and cash equivalents as of Dec. 31, according to company filings. The CEO wouldn’t specify the size of its budget for potential acquisitions, nor would he discuss specific regions DoCoMo is looking at.

The CEO also declined to say whether DoCoMo plans to use put options to sell its 26 percent stake in Indian operator Tata Teleservices Ltd.