TOKYO-DDI Corp., IDO Co. Ltd. and KDD Corp. reportedly will merge by third-quarter 2000 at the earliest to compete with the giant NTT group. If merger talks are successful, a new giant communications company-providing a package of cellular, PHS, long-distance and international offerings-will be born. As a result, the Japanese telecommunications market will be reorganized into three large groups: NTT, Japan Telecom (JT) and the DDI-IDO-KDD group.
The merger plan has been reported repeatedly since mid-September; however, none of the companies have admitted talks are close to a conclusion.
Reports have said the three firms will merge to jointly launch wireless services. DDI and IDO together provide cdmaOne service and plan to jointly provide third-generation (3G) cellular services as well.
KDD, the former international monopoly, has been studying wireless services for some time; however, it is not currently involved in a wireless business.
Since the Ministry of Posts and Telecommunications (MPT) decided to allocate 3G licenses to only three carriers-or three groups-due to limited available spectrum, KDD has had no choice but to seek a partner among existing cellular carriers to launch a 3G business.
In addition to the DDI-IDO group, NTT DoCoMo and the J-Phone Group, a subsidiary of JT, are currently providing nationwide wireless services and are said to have each secured a seat for the 3G business.
Both the DoCoMo and J-Phone groups plan to launch 3G service with W-CDMA; the DDI-IDO group has not decided whether it will employ either direct spread or multi carrier system technology.
The merger talks have been promoted between Kazuo Inamori, founder and honorary chairman of Kyocera, and Fujio Cho, president of Toyota Motor Corp. DDI is a subsidiary of Kyocera, and Inamori is the decision-maker of DDI. Toyota is the parent company of IDO and KDD’s second-largest shareholder.
At an informal party held at the end of September, Inamori said that because the NTT group has maintained its dominance even after reorganization in July, non-NTT firms must partner to compete with NTT.
At a separate occasion, Cho said IDO and DDI should work cooperatively because the two firms’ geographic coverage areas complement each other, but he said he couldn’t comment on KDD’s business relations with the other two firms. But he did not deny a chance for a merger of non-NTT firms and said it might be necessary for non-NTT firms to work together to compete with NTT.
