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Japan’s NTT to Take Full Control of Mobile Unit in $40 Billion Deal

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Japan’s NTT to Take Full Control of Mobile Unit in $40 Billion Deal

TOKYO—Japan’s biggest telecommunications company, Nippon Telegraph and Telephone Corp., said it would spend $40 billion to buy the portion of its mobile unit that it doesn’t already own, taking full control of its principal cash cow.

NTT already owns 66.2% of the unit, NTT Docomo Inc., and it said Tuesday it would pay 3,900 yen per share, equivalent to $36.97 to buy out Docomo’s other shareholders. In total, the acquisition will cost the equivalent of $40 billion, NTT said.

The offer price is a nearly 41% premium over NTT Docomo’s closing price Monday. Shares of the parent NTT closed down 2.85% in Tokyo trading Tuesday as investors fretted about the cost of the deal and Prime Minister Yoshihide Suga’s plans to force Docomo and other mobile providers to cut their prices for consumers.

The deal would end a 22-year experiment that began when fixed-line telephone service was still the NTT conglomerate’s core business and mobile phones were owned by relatively few people.

By listing its mobile-phone unit in 1998, NTT allowed investors to bet on the fast-growing service.

During the turn-of-the-century internet bubble, Docomo was one of the world’s most valuable companies, briefly earning a market capitalization of more than $300 billion in early 2000 as it pioneered mobile internet services.

After the bubble burst, Docomo retreated from investments outside Japan and settled into a stable role as the biggest of three cellphone providers that serve most consumers in Japan.

The others are

KDDI Corp.

and

SoftBank Corp.

, which is partly owned by SoftBank Group Corp.

In recent years, with Docomo representing the bulk of NTT’s value, the logic of separating mobile communications from the rest of the business faded. Both the NTT parent and the Docomo subsidiary had market values of about $85 billion on Monday, meaning NTT’s 66% stake in Docomo represented 66% of the parent’s value.

Other parts of the NTT group have significant overseas business, operating data centers and selling communications systems to improve security in cities such as Las Vegas. Revenue outside Japan reached $19.5 billion in the year ended March 2020.

Formerly a Japanese government-owned telephone monopoly, NTT was privatized in the 1980s, but the government still owns nearly one-third of its shares.

Mr. Suga has pledged to reduce what he calls excessively high cellphone bills in Japan, hurting the share prices of Docomo and the other two mobile service providers.

Write to Peter Landers at peter.landers@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the September 29, 2020, print edition as ‘Docomo Parent Retakes 100%.’

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