NTT Mobile Communications Network Inc. and Japanese trading group Itochu have readjusted their ownership schemes in a consortium led by Spain’s Telefonica, which successfully bid for Brazilian A-band cellular operator Tele Sudeste Celular Participacoes.
DoCoMo, which initially had an 8.5-percent stake in the consortium, reduced its ownership share to 7 percent. Itochu reduced its share from 5.5 percent to 3.5 percent. Iberdrola S.A., a Spanish electric power company, holds a 7-percent interest.
Analysts say DoCoMo and Itochu, feeling the pressure of Japan’s poor economy, were unprepared for the high bid the consortium made in July for the cellular carrier, which operates in the states of Rio de Janeiro and Espirito Santo. The consortium bid $1.17 billion for the company, 136 percent above the asking price. The price reportedly was more than double the amount both Japanese companies initially were willing to put up.
Telefonica spokesman Edward Holland said his company, which now holds an 82.5-percent stake in the consortium, had the authority to bid whatever amount it felt was necessary to win the auction. DoCoMo and Itochu had the option to reconsider their participation in the consortium. DoCoMo said it reached an agreement with Telefonica “in order to explore the implementation of new technologies in the cellular industry.”
DoCoMo plans to become the world’s first mobile phone operator to commercially introduce third-generation technology, which will allow for more capacity and higher data speeds for sophisticated services like Internet access and full-motion video. The company has been working to develop wideband Code Division Multiple Access technology based on the Global System for Mobile communications platform. Standards bodies around the world have submitted the technology to the International Telecommunication Union, the body in charge of setting 3G standards worldwide. DoCoMo in July established its first overseas subsidiary, DoCoMo Europe S.A., in Paris to participate in standardization efforts in Europe as well as form alliances with European operators and manufacturers.
“Rio de Janeiro and Espirito Santo, where we are investing, are the second-largest economic blocks in Brazil, following Sao Paulo,” said Dr. Keiji Tachikawa, president of DoCoMo. “We can expect steady economic growth in these areas.”
Analysts say the Japanese firms wanted to grab a stake in another consortium that won Sao Paulo State-which has the largest Japanese population outside of Japan.
The Brazilian government received premiums of more than 200 percent above the minimum bid requirements on some of the cellular properties it auctioned off in late July. Analysts believe the high bids could cause other consortia to shift around ownership levels and look for new partners. Sources indicate some U.S. companies actively are negotiating with license winners for ownership stakes. U.S. companies failed to secure any cellular licenses in either auction.
