DoCoMo Is Looking Abroad -- Again

Courtesy of Yaromir at Japan's Cellphone Edge comes this article in BusinessWeek about DoCoMo's efforts to look beyond Japan in Asia for new partnership opportunities. Two recent deals include DoCoMo's $560 million investment for a 10% stake in KT Freetel of Korea and its negotiations to a tie-up with Philippine Long Distance Telephones. According to the article, DoCoMo wants to spread W-CDMA beyond Japan so customers can roam and also "cut its handset prices as development costs get spread over more carriers."

DoCoMo is trying to combat home market saturation as well as increased competition and number portability. Gerhard Fasol at Eurotechnology said, "DoCoMo can't do much more to sell mobile voice and data, except maybe to business customers."

NikkoCitigroup analyst Toru Hosoi ceommenting on DoCoMo's recent spending said, "If it's spending 10% of its cash on new business, it's not a big deal. But if we start seeing huge spending like before, there will be lots of angry investors."

Some of DoCoMo's recent investment have been outside of traditional phone services. In 2005, it purchased "a controlling 34% stake in Sumitomo Mitsui Financial Group's credit-card business -- Japan's second-largest" then "bought a 40% stake in Tower Records Japan for $110 million" and closed the year by spending "$170 million on a 2.6% piece of Fuji TV, to secure the rights to beam digital TV broadcasts to cell phones with built-in tuners beginning in April.

Some analysts think DoCoMo should be "more creatively about what to do with its cash." Nikko Citigroup's Hosoi said, "It could spend 10% or 20% of that to buy a bank or start a fund. There are many ideas out there. It just has to adopt a more radical mindset."