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NTT is 29It announced that it will make NTT Docomo a wholly owned subsidiary during the current fiscal year (ending March 2021) through a takeover bid (TOB). Both companies decided at a board meeting held the same day. It is necessary to work on the utilization beyond the limits of the next-generation communication standard “5G” and the development of communication technology for the next generation of 5G, and by making Docomo a wholly-owned subsidiary, the speed of decision making.
Docomo Store in Tokyo (29)
Photographer: Toru Hanai / Bloomberg
According to the announcement, it will acquire about 34% of Docomo shares owned by general shareholders and turn it into a subsidiary with a total of 4.254.5 billion yen and 3900 yen per share. The price is the level of the closing price of 2775 yen on the 28th with a premium of 41% added. The scale of the acquisition will be the largest TOB ever made by a Japanese company. NTT currently has a 66.21% stake in Docomo. NTT’s largest shareholder is the Ministry of Finance with 34.69% (as of March 31).
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In the future, it may be necessary to make an initial investment that harms the interests of minority shareholders, and if Docomo continues to be listed, it will be difficult to make a quick decision and it is necessary to make it a wholly owned subsidiary and remove the parent-child list. . The purchase started in mid-April and the DoCoMo side was asked to discuss it in early June.
Jun Sawada, president of NTT, met in Tokyo after the announcement, and products from the United States and China are sweeping the market. “I want to make a new game changer. Global services that we can offer to the world.” I want to provide a solution. “Regarding TOB funds, he explained,” We plan to acquire from financial institutions through bridge loans and gradually switch to long-term funds. “He said he would not raise funds by issuing new common shares.
President NTT Sawada (left) and President Docomo Yoshizawa (right) attending an interview on the web
Photographer: Shoko Takayasu / Bloomberg
Price reduction request
Prime Minister Yoshii Suga has set himself the task of strengthening Japan’s international information and communication technology (ICT) competitiveness as a topic for the new administration, and has announced a policy to establish a digital agency. Regarding the reduction of mobile phone rates, he has been aiming for an early reduction since he was Secretary General of the Secretariat, referring to examples from other countries, and instructed Minister of General Affairs Ryota Takeda on the 18th.
Shares of Docomo closed on the 29th at 3,213 yen, up 16% from the previous day. On this day, due to the impact of the ex-rights date of the interim dividend in September, NTT shares temporarily fell 5.8%, Softbank, which competes in the mobile business, fell 6%, and KDDI also fell 5 ,3%.
Jeffreys Securities analyst Azur Goyal said in a report on the 28th that turning it into a wholly owned subsidiary would be beneficial to Docomo, but that in the short term it would increase the risk of mobile price cuts, increasing competitors KDDI and Softbank. She noted that it would be disadvantageous.
Mitsunobu Tsuruo, an analyst at Citi Group Securities, said in a report that it would be difficult for NTT to raise funds through a capital increase issued at market value, and that the TOB would be financed entirely with available cash and loans. In g. The law stipulates that the government owns more than a third of the shares issued by NTT from the perspective of telecommunications stability.
Docomo’s stock price has been declining in line with the resignation of the former prime minister in August and Mr. Suga being nominated as a main candidate as successor, and on September 18, it was the lowest price in about a year. based on the closing price. It was attached.
Docomo has become a mainstay of earnings supporting NTT’s backbone and earned 56% of operating income in the April-June quarter. By making it a wholly owned subsidiary, the share of contributions can be further increased. DoCoMo was established in August 1991 and was listed on the First Section of the Tokyo Stock Exchange in October 1998.
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