NTT DoCoMo (DCM) has decided to focus strongly on mobile content offerings, a new avenue to increase revenue. In order to become a powerful mobile content delivery player internationally, the company has decided to acquire German wireless value-added services specialist Net Mobile AG for a consideration of approximately $60.8 million. The deal is expected to be completed by the end of this month. DoCoMo will start implementing LTE (Long Term Evolution) networks in Japan from 2010. The main purpose of deploying the LTE network is to offer mobile content services in Japan and then systematically in the international markets.
Net Mobile is a leading mobile content specialist in Europe offering mobile content distribution and mobile payments services to more than 500 telecom operator and corporate clients. Its major customers include Coca-Cola (KO), RTL2, Vodafone Group Plc (VOD), E-Plus Mobilfunk GmbH, Telefonica O2 Europe Plc, and SwissCom AG (SCM). Additionally, the company has business agreements with various record labels, broadcasters, and film studios for the distribution of music and video content.
At present DoCoMo commands more than 50% of the Japanese wireless market. However, this market is quickly approaching maturity, is low margin and characterized as highly competitive. For the last one year, the company is trying very hard to achieve its two objectives: (1) offers innovative wireless value-added services to its customers (2) become a powerful international player. Management sets a target that international revenue should accounted for 10% of total revenue within a decade.
DoCoMo is on the verge of launching a mobile payment service in Japan for the company’s i-mode mobile internet subscribers using its 3G FOMA network. Leveraging on this, successful acquisition of Net Mobile will enable the company to offer this service in the international markets.
DoCoMo has signed a $66 million joint venture with Avex Entertainment Inc, the largest music and movie content company in Japan, to produce and distribute on-demand mobile videos. The company holds 30% in this partnership. On May 1, the company started a new service called Bee TV. This service offers custom-made videos for mobile phones. As of now, more than 400,000 paying customers have signed up for this service. In last June, DoCoMo has purchased 35% stake in PacketVideo Corp, a subsidiary of NextWave Wireless Inc (WAVE), for a consideration of $45.5 million. This strategic alliance will enhance DoCoMo’s music and video services.
In May 2009, DoCoMo entered into a significant international business agreement through which the company purchase 26% stake of Tata Teleservices Ltd., (TCL), the sixth largest telecom service operator in India, for a consideration of around $2.7 billion. This gives DoCoMo a strong foothold in the world’s second largest emerging market. Earlier, in 2006, the company purchased minority stake in the Philippine mobile service provider Smart Communications Inc and in 2008, DoCoMo also acquired minority stake of Bangladeshi player Aktel.
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