NTT Group to Take Over Docomo on a Billion-Dollar Deal

NTT Group will take over wireless carrier NTT Docomo under a billion offer, one of the largest M&A acquisitions among Japanese firms.

The per-share price will get a boost from the typical 30% premium. Thus, raising the deal’s value to roughly $38 billion or 4 trillion yen.

The Japanese global services company will purchase outstanding stocks owned by other shareholders amounting to 34% of the total.

Should things go ahead as planned, it plans to delist the currently publicly traded firm from the Tokyo Stock Exchange.

The move will help the mobile phone operator respond to pressure at a more flexible term now. Especially now that the decision sits with one owner.

According to a statement released by Japan’s new Prime Minister, Yoshihide Suga, the country’s mobile rates could be reduced further by about 40%. The adoption of a policy to address the matter is reportedly underway.

Due to this, Nippon Telegraph and Telephone looks to haste decision making to free up resources for a looming rate cut.

Similarly, the group is cooperating with other companies in the industry to enable 5G networks.

Docomo’s Sole Ownership: Good or Bad?

The new administration’s plan to lower wireless rates will pose harmful risks to Docomo.

With that, having a sole shareholder will mitigate otherwise painful losses should the firm remain public.

The shift will also help NTT Group’s subsidiary expand growth prospects, especially in the international fora.

Over the years, Docomo is one of NTT’s biggest income generators. However, over the years, Japan’s wireless market flattened as new market entrants emerge, paving the way to a stiffer competitive environment.

As it moves back to square one, Docomo will seek to revisit current business strategies and with the backing of its parent company.

The firm will explore possibilities to carve its own place overseas on 5G and IoT business.