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DoCoMo to attack Europe
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July 12, 2000: 6:56 a.m. ET
Japanese firm cements UK deal, aims for next-generation licenses in Europe
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LONDON (CNNfn) - NTT DoCoMo and its Dutch telecom ally Royal KPN NV unveiled a joint £2.1 billion ($3.2 billion) investment in Britain Wednesday as Japan's largest company by market value vowed to thrust its way "aggressively" into the European mobile-phone market.
NTT Mobile Communications Network Inc. (known as DoCoMo) confirmed widespread speculation it had agreed a deal to buy a stake in a U.K. unit of Hong Kong's Hutchison Whampoa Ltd. that owns a next-generation cellular-phone license in Britain. DoCoMo will pay £1.2 billion for a 20 percent holding in Hutchison 3G UK Holdings Ltd.
"This cooperation enables us to execute an aggressive pan-European strategy," KPN Chief Executive Paul Smits said in a statement, promising further applications for third-generation mobile-phone licenses in Europe.
KPN's cellular subsidiary will pay £900 million for a 15 percent stake in the same Hutchison unit. DoCoMo bought a 15 percent holding in KPN Mobile for  4.0 billion ($3.8 billion) earlier this year. The Japanese company also has a 19 percent holding in Hutchison Whampoa's Hong Kong telephone unit.
The three companies will join forces to bid in forthcoming auctions of cellular licenses in France, Germany and Belgium. The next phase of wireless technology, the Universal Mobile Telecommunications System, will allow high-speed Internet access and features such as videoconferencing.
Earlier this year Hutchison 3G UK paid £4.4 billion for a license to provide UMTS services in Britain.
Jake Saunders, regional director of telecom consultancy Strategis Group, told CNNfn the combination of DoCoMo, KPN and Hutchison created a powerful new competitor in the cellphone market. The Japanese firm aims to boost its presence outside its home market, using as a springboard the phenomenally successful i-mode service that it offers to Japanese customers.
"DoCoMo needs to establish itself in Europe, and it's not to be underestimated," said Saunders, who pointed out the deal would also open up opportunities in China, the world's largest cellular market. Hutchison has close ties to Chinese authorities.
"We consider the European market to be a key element in our global strategy," said Keiji Tachikawa, NTT DoCoMo's president. "Europe will be next after Japan to implement UMTS and will provide an opportunity for us to leverage our technology and experience."
KPN Mobile controls E-Plus, Germany's third-largest cellular operator, which will cooperate with the new consortium in the event of the joint company winning a UMTS license in that country.
Analysts warned that DoCoMo's entrance into the European market would present a powerful challenge to local operators such as Vodafone AirTouch PLC (VOD). U.K.-based Vodafone shades DoCoMo as the world's largest cellular-phone company by number of subscribers.
Saunders of Strategis noted that DoCoMo's experience of running mobile-phone services that provide multimedia content would give its European consortium an advantage over competitors. He pointed out that "it's very rare for the pecking order (in cellular markets) to be changed, once that order has been established," so the first companies to offer next-generation services stand to garner the juiciest chunks of the market.
NTT DoCoMo has more than 30 million subscribers, of whom more than 8 million use its i-mode service, based on continuous Internet connection. It is 67 percent owned by Nippon Telephone & Telegraph Corp., the world's largest telecom firm. 
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