Japan’s NTT is establishing new foothold in the US
Nippon Telegraph and Telephone, the parent of Japan’s largest mobile carrier, NTT DoCoMo, and the world’s largest telephone company by revenue has been baring the burden of some ill-fated overseas investments over the years.
Most recently, the company announced it was divesting its stake in Indian carrier, Tata DoCoMo, of which NTT owned about 26% as the result of an initial investment of over $2.5 billion. Given the poor financial performance of Tata DoCoMo, it was not expected that NTT would recoup its investment.
NTT has been a player in the United States in the past, having invested in AT&T Wireless during the pre-Cingular days. The company ultimately sold its initial multi-billion dollar investment, taking a loss in the process, in 2002. Given AT&T’s performance of late, and 20/20 hindsight, it would have been better for the company to have held that stake a little while longer.
The company is looking to reverse its fortunes and has been investing in hard infrastructure in the US, particularly in Silicon Valley, where NTT is opening a new research center and showroom, hiring local talent from the competition to pump life into the venture. With nearly 90% of its revenues coming from Japan, NTT has to regroup as it reaches out internationally because the Japanese market has been in a very stagnant growth pattern for the better part of 20 years.
Eventually making a play into wireless makes sense, because mobile is the future (and present). However, given NTT’s past experience with major mergers and acquisitions, it is a virtual guarantee the company will not be making any major plays, such as bids for companies like T-Mobile. “We paid a high tuition for lessons on M&A,” NTT board member Tsunehisa Okuno.
source: The Wall Street Journal
Most recently, the company announced it was divesting its stake in Indian carrier, Tata DoCoMo, of which NTT owned about 26% as the result of an initial investment of over $2.5 billion. Given the poor financial performance of Tata DoCoMo, it was not expected that NTT would recoup its investment.
The company is looking to reverse its fortunes and has been investing in hard infrastructure in the US, particularly in Silicon Valley, where NTT is opening a new research center and showroom, hiring local talent from the competition to pump life into the venture. With nearly 90% of its revenues coming from Japan, NTT has to regroup as it reaches out internationally because the Japanese market has been in a very stagnant growth pattern for the better part of 20 years.
Its initial investments are more IT based, to capitalize on its Tier 1 internet backbone which has parity with the likes of AT&T, Sprint, and Verizon. From there, whatever direction NTT takes, it will take time, “NTT is a very big ship – it takes a long time for it to change course,” according to a fund manager who owns NTT stock.
Eventually making a play into wireless makes sense, because mobile is the future (and present). However, given NTT’s past experience with major mergers and acquisitions, it is a virtual guarantee the company will not be making any major plays, such as bids for companies like T-Mobile. “We paid a high tuition for lessons on M&A,” NTT board member Tsunehisa Okuno.
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