Japan's biggest mobile carrier NTT Docomo will be taken over by its parent company, government-backed Nippon Telegraph & Telephone, in a tender offer worth $40 billion, the two firms said on Tuesday.
The move comes with Docomo and other Japanese telecoms firms under government pressure to cut the price of mobile phone services, and is expected to help the company boost investment in 5G tech.
“Today we decided to make Docomo a wholly owned company,” NTT CEO Jun Sawada told reporters, adding that the move would boost the carrier’s “competitiveness and growth”.
NTT, which currently holds more than 60 per cent of NTT Docomo’s shares, is proposing a price of 3,900 yen ($37) per share to buy out the whole subsidiary, it said.
That represents a 40 per cent premium on Monday’s closing price and values the purchase at around 4.25 trillion yen.
Japan’s new Prime Minister Yoshihide Suga has repeatedly said the country’s mobile rates should be reduced, as they are relatively high compared to prices abroad.
By taking full control of the carrier, NTT may be able to push down prices quickly, and force competitors to follow suit.
But the heads of both companies denied that pressure over pricing was behind the deal.
Sawada said: “We are not doing this because of cutting service fees.”
But, he added: “Docomo will get stronger with the move, which would strengthen its financial foundation and room to cut prices.”
Docomo CEO Kazuhiro Yoshizawa said the move was about responding to a changing business environment, including the coronavirus pandemic.
“The background of the move is that our market environment is facing a big change . . . and competition is intensifying.”
Competition in the telecoms market is also heating up with the advent of next-generation 5G networks, which promise radically quicker transfers of data.