Info-tech

NTT to take mobile unit Docomo private for $38 bn

Bloomberg September 29 | Updated on September 29, 2020 Published on September 29, 2020

The deal to buy Docomo would be the largest tender offer for a Japanese company in history. When NTT spun out Docomo in 1998, it was also the biggest-ever initial public offering at the time   -  Bloomberg

The buyout is worth around 4.25 trillion yen ($40 bn), an over 40% premium to Monday’s closing price in Tokyo

Nippon Telegraph & Telephone Corp plans to turn its wireless carrier unit, NTT Docomo Inc, into a wholly-owned subsidiary, a move that may help Prime Minister Yoshihide Suga’s policy push to lower phone tariffs.

NTT will pay 3,900 yen a share to acquire the shares it doesn’t already hold, the companies said in a statement. The buyout is worth around 4.25 trillion yen ($40 billion), a more than 40 per cent premium to Monday’s closing price in Tokyo. Given that parent NTT already controls 66 per cent of the wireless carrier, any proposal is all but guaranteed to pass. Docomo’s board said it approved the takeover.

Also read: Why billionaires are taking their ‘unloved’ companies private

The proposal to combine the former national companies comes just 15 days after Suga succeeded Shinzo Abe as the nation’s prime minister. With government documents showing data-heavy users in Tokyo pay more than three times for a monthly contract than users in Paris, Suga has made reducing phone bills charged by Docomo and Japan’s other major carriers a priority to score a quick policy win and avoid being seen as a caretaker leader, market watchers have said.

The deal to buy Docomo would be the largest tender offer for a Japanese company in history. When NTT spun out Docomo in 1998, it was also the biggest-ever initial public offering at the time.

Also read: Vedanta’s delisting plan: What choice do shareholders have?

“It’s logical to think that the move is aimed at cushioning the two companies from the negative impact from a reduction in mobile phone prices,” said Atsushi Takeda, chief economist at Itochu Corp.

“If prices decline, it would be a boost for the current administration,” he said.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on September 29, 2020
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.