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DoCoMo eyes U.S. venture
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August 16, 2000: 7:20 p.m. ET
Report: Japan mobile provider said to eye SBC, BellSouth wireless tie-up
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NEW YORK (CNNfn) - NTT DoCoMo, the world's second-largest mobile phone company and Japan's largest firm by market value, is in talks that could give the company a stake in the second-biggest U.S. wireless company, the Financial Times reported Wednesday.
According to a report on the Financial Times' Web site, the discussions, which are still at an early stage, could leave DoCoMo with a minority stake in the joint venture being formed from the mobile operations of SBC Communications and BellSouth.
SBC spokesman Selim Dingol declined to comment on the Financial Times story. BellSouth officials couldn't be reached for comment.
In April, BellSouth (BLS: Research, Estimates) and SBC (SBC: Research, Estimates) announced plans to merge their domestic wireless operations to create the nation's second-largest wireless company, and compete nationwide in the rapidly growing wireless voice and data businesses. The two companies recently announced that a centralized headquarters staff for the new wireless company will be based in Atlanta, and that the joint venture will serve more than 17.4 million customers in 34 states, the District of Columbia and two U.S. territories.
Politically sensitive
The proposed joint venture currently is under review by the Federal Communications Commission and the Department of Justice. The European Union has already approved it. The two companies have said they expect to receive all necessary approvals and begin operations later this year.
If DoCoMo did take a minority stake in the joint venture, it would come at a politically sensitive time in the U.S., with opposition growing in Washington to foreign government-controlled companies taking control of U.S. communications companies, the Financial Times said.
DoCoMo's parent, Nippon Telegraph and Telephone, is still majority-owned by the Japanese government and has faced a security review from U.S. regulators over its planned acquisition of Verio, a U.S. Internet company. The Treasury Department's Committee on Foreign Investment in the United States is investigating the deal, with the help of the FBI, National Security Council (NSC), and the Departments of State, Defense and Commerce, according to an NSC source.
Concerns have surfaced that NTT's ownership of Verio (VRIO: Research, Estimates), which includes an Internet backbone, will inhibit the U.S. government's ability to maintain surveillance over the company's telecommunications network and infringe on the FBI's ability to perform wiretaps.
Focus on mobile Internet services
The discussions center on a partnership to offer mobile Internet services in the U.S., using the expertise that DoCoMo has gained at home through its highly successful i-mode service, the Financial Times said. I-mode is the most widespread mobile Internet service, with more than 10 million users. If an agreement is reached, BellSouth and SBC would be the first to introduce advanced mobile internet services similar to i-mode to the U.S. market, the newspaper's Web site said.
DoCoMo was recently thwarted in its effort to buy VoiceStream Wireless Corp., a major U.S. wireless carrier. Ignoring direct threats from U.S. legislators to block any such deal, Germany's Deutsche Telekom AG agreed on July 24 to acquire VoiceStream Wireless (VSTR: Research, Estimates) for $46.04 billion in cash and stock, acting on a long-stated goal to extend its reach onto American soil.
That transaction would create a powerful international wireless concern with roughly 19.8 million wireless subscribers worldwide, including 1.8 million in the U.S., and licenses to provide services to roughly 375 million people around the globe. It also marks the first phase of Deutsche Telekom's plan to become a significant participant in the U.S. telecommunications industry.
DoCoMo has said it is only interested in allying with U.S. wireless carriers that have national reach and an interest in adopting W-CDMA, the technology standard that DoCoMo will use when it launches the world's first third generation high-speed Internet service in Japan next spring, the Financial Times said. Deutsche Telekom's acquisition of VoiceStream leaves the SBC-BellSouth venture as one of the only businesses left that fits DoCoMo's requirements, the newspaper said. 
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