NTT DoCoMo (DCM), the largest wireless service provider in Japan, has decided to launch an innovative on-line money transfer service. Customers of DoCoMo’s i-mode mobile internet service using the 3G FOMA network will be able to remit up to 20,000 Yen per transaction, subject to a limit of 200,000 Yen every month.
The payee will have the option to either deposit the money in a domestic bank account or have the amount credited to his monthly DoCoMo phone bill. Charges per payment will be 105 Yen for the payer and 65 Yen for the payee. However, the payee will not be charged if the remittance gets deposited in a Mizuho Bank (for which DoCoMo will act as an agent) account or credited to the payee’s monthly DoCoMo phone bill.
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. Smaller service providers like Softbank Corp., and KDDI Corp., have initiated severe price competition after the introduction of mobile number portability system in Japan.
DoCoMo has reinvented the i-mode service as an answer to competition. Nearly 90% of its mobile subscribers have signed up for this service, which enables internet access including e-mail and online credit card transactions.
The company has also started a new service enabling subscribers to use mobile phones as credit cards or e-wallets. For this, DoCoMo has installed a multi-service wireless mesh network spanning 100 cities, added vendors and various service providers and also offering compatibility with the Visa Card network.
Recently, DoCoMo decided to purchase 35% stake in PacketVideo Corp, a subsidiary of NextWave Wireless Inc (WAVE), for a total consideration of $45.5 million. This strategic alliance will enhance DoCoMo’s music and video services. PacketVideo’s multimedia technologies have already been incorporated in 90 handsets for DoCoMo’s 3G FOMA network service. We reiterate our Buy recommendation on NTT DoCoMo.
Read the full analyst report on “DCM”
Read the full analyst report on “WAVE”
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