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Engadget Japan
NTT, which groups all the companies in the NTT Group as a holding company, has decided to make NTT Docomo a wholly owned subsidiary. NTT is originally a major shareholder with approximately 64% of Docomo shares, but has implemented a TOB (Offer to Purchase) for the remaining 30%. Our goal is to make it a wholly owned subsidiary through TOB. By making it a wholly owned subsidiary, it will be easier to reflect NTT’s intentions in various DoCoMo actions, and the intergroup cooperation is expected to be further strengthened.
Jun Sawada, president of NTT, cites the importance of creating a wholly owned subsidiary “to accelerate decision-making.”
Regarding the cooperation between groups, he mentioned NTT Communications and NTT Comware, although a preface that “is still under consideration.” “We are thinking of transferring to the Docomo Group,” while revealing the idea of hanging two companies under Docomo as an interface for users.
Since Mr. Yoshii Suga took office as Prime Minister, pressure to cut prices from mobile phone companies has increased, but “this case has never been related to price cuts” (Docomo, President Kazuhiro Yoshizawa) . The relationship is denied.
On the other hand, if we strengthen inter-group cooperation and improve cost efficiency, “as a result, that kind of excess capacity will come out,” said President Sawada. Both Mr. Sawada and Mr. Yoshizawa said, “In June last year, we reduced the price by 40% in the volume zone”, but seemed to suggest the possibility of further price reduction by making it a subsidiary of full ownership.
While mobile communication has entered the 5G era and is being used as an infrastructure for various solutions, DoCoMo remains a strong consumer company. The DoCoMo challenge was: “In this age, we cannot outperform the competition unless we broaden our perspective and expand our territory.” Making it a wholly owned subsidiary was a shortcut.
President Yoshizawa said, “We have decided that the shortest and most reliable way to do this is to use the assets of NTT Communications and NTT Comware to strengthen DoCoMo’s business base.”
Certainly DoCoMo, NTT Communications, and NTT Comware have strengths that the others do not, so the synergistic effect appears to be high. Compared to Docomo, which is mobile and strong for consumers, NTT Communications, which is strong for corporations with fixed networks and solutions, can cover each other’s weaknesses, and both companies have a high share in that field.
If NTT Communications and NTT Comware reorganize after the acquisition of Docomo as a wholly owned subsidiary, it appears that the group’s competitiveness will be further strengthened.
On the other hand, it is also true that I felt a bit uncomfortable. Docomo is currently one of the NTT Group’s top earners, but without fear of misunderstanding, it was once considered a “side stream”. When it was removed from the main body of NTT, the fixed communication network was mainstream. In this context, DoCoMo has taken on a number of challenges that do not fit within the NTT framework.
Rather, there is also a growth story up to this point with the revulsion towards NTT as a spring. The success of Pokebell and i-mode is a typical example. It can be said that the exclusive idea of the private sector, which was difficult for the parent company NTT, and the desire to bet on the future of mobile phones have come true.
Many docomo officials said: “We are not NTT.” As Docomo’s sales and operating income increased, the holding’s stake gradually deepened, but it can be said that it was Docomo who was able to crash into KDDI and that Softbank.
By making it a wholly owned subsidiary, DoCoMo has positioned itself as a core NTT company, but on the contrary, I fear it will lose its openness and boldness.
At the same time, from the holding company, Docomo may have seemed a difficult son in Yancha. At times, it was said that the intention of the holding company was hit. Since more than 30% of the shareholders are owned by companies other than NTT, it is important for the subsidiary to make its own decisions, but it must have seemed like a subsidiary that was difficult for the holding company to control.
Mr. Sawada previously mentioned “speeding up decision making”, but in the end, after making it a wholly owned subsidiary, it will operate 100% according to the intentions of the holding company. It is not yet clear if there is a “docomo-ness” as it used to be.
As a group, there is concern that NTT will become too powerful. In the age of fixed networks, that was considered a problem, and there was a history that the company split into NTT East and West and NTT Communications, but when NTT Communications and NTT Comware rallied around Docomo, did what was the division for? You will be asked.
Chairman Sawada cites Docomo’s share of around 40% and said: “The NTT Group is very large and other companies were not very small in the market decades ago.” “It is not said that the legal system is not good for deepening cooperation with NTT Communications and NTT Comware, which make Docomo a subsidiary,” (President Sawada), but the regulations and competitive environment under the so-called NTT Act are strong. Isn’t it another axis?
In fact, following the announcement by NTT and Docomo, KDDI commented: “I believe that NTT’s management style should be discussed from the perspective of fair competition throughout the telecommunications market.” Softbank also commented that “certain rules are imposed on the ideal status of each NTT Group company, and the acquisition of DoCoMo by NTT as a wholly owned subsidiary must be verified from the perspective of ensuring fair competition in the market of the telecommunications “. I said.
The government has raised the banner of promoting competition in the telecommunications market, but in reality, it seems that competition is stagnating.
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