Following months of speculation, three Japanese telecom companies announced plans to merge into one group to compete in the country’s increasingly competitive telecom market. DDI Corp., IDO Corp. and KDD Corp. will merge to form Japan’s second-largest telecom company after Nippon Telegraph and Telephone Corp., in part to compete for the country’s lucrative third-generation wireless licenses.
The new group will operate under the DDI Corp. name with $21.2 billion in assets. The merger officially will take place next October, following shareholder approval.
One share in DDI ($48.40 per share) will be issued per 92.1 shares in KDD ($4.84 per share). One share in DDI will be issued per 2.9 shares in IDO ($484 per share).
The biggest shareholders in the new group are Kyocera Corp., a Japanese electronics manufacturer with 16 percent, and Toyota Motor Corp. with 10 percent.
Toyota, which has plans for next-generation cars integrating telecom features, was a driving force behind the merger. Merger talks were promoted between Kazuo Inamori, founder and honorary chairman of Kyocera, and Fujio Cho, Toyota president. 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.
DDI is Japan’s second-largest telecom carrier and holds numerous wireless licenses. IDO also is a cellular phone group. KDD, the country’s former international monopoly carrier, currently does not have wireless assets.
Since the Ministry of Posts and Telecommunications 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, currently are providing nationwide wireless services and are said to have each secured a seat for the 3G business.
Both the NTT DoCoMo and J-Phone groups plan to launch 3G service with wideband Code Division Multiple Access technology. The DDI company has not decided what 3G technology it will employ, although DDI and IDO announced last month a cdmaOne 64 kilobits per second packet-data transmission service will be available nationwide in January.
