Japan's Nippon Tech launches $40 billion buyout of wireless unit Docomo

The buyout comes as Suga calls on wireless carriers to reduce prices, with the govt hoping resultant savings will stimulate consumer spending elsewhere in the economy

Japan’s state-backed Nippon Telegraph and Telephone Corp said it will take its wireless carrier business private in a deal worth 4.25 trillion yen ($40 billion) and which could spark a period of mobile price cuts. NTT will launch a tender offer for the 34 per cent of NTT Docomo Inc stock that it does not own, the firm said in a statement. The telecoms firm will offer 3,900 yen per share — a premium of 40.5 per cent to Monday's closing price.
 
The buyout comes as new prime minister Yoshihide Suga calls on wireless carriers to lower prices, with the government hoping resultant savings will stimulate consumer spending elsewhere in the economy. On Tuesday, Chief Cabinet Secretary Katsunobu Kato reiterated that call, saying there needs to be "visible progress on lowering mobile phone charges".
 
The former state monopoly still counts the government as its largest shareholder with a 34 per cent stake.
 
NTT’s share price fell as much as 5.8 per cent on Tuesday before closing down 3 per cent, while NTT Docomo ended up 16 per cent at its daily trading limit. Mobile peers KDDI Corp and SoftBank Corp fell 4 per cent, with SoftBank touching record lows, as the telcos continue a slide which began when Suga's predecessor Shinzo Abe announced his resignation on August 28. NTT spun off NTT Docomo in 1992 ahead of listing in 1998, as the government sought to stimulate competition in the telecoms sector. Buying it back would mark the end of a prominent "parent-child" listing that are frowned on in other economies but remain common in Japan.
 
At $40 billion, NTT's tender offer would be Japan's largest-ever, Refinitiv the data showed.

 

Buyout boosts global telecom deals by 30%
 
The Japanese deal, which could be worth as much as $40.2 billion, will raise the year’s total value of announced telecom deals globally to $175.4 billion, according to the data compiled by Bloomberg. That’s a 30% jump from the same period last year. The NTT-Docomo deal not only helps this year’s global telecom flow leapfrog last year’s, if successful, it will also set record for the Asia Pacific region’s biggest ever telecom transaction.
Bloomberg