TOKYO— NTT Docomo Inc., Japan’s top cellphone service provider, said it planned to return to 100% control by its parent, Nippon Telegraph and Telephone Corp., in a deal expected to cost the parent nearly $40 billion.
The parent NTT owned 66.2% of Docomo’s voting rights as of March 31. Docomo said Tuesday that NTT planned to take 100% control. It said its board would vote on the plan later in the day. The Nikkei newspaper and other Japanese media earlier reported the plan.
Publicly traded Docomo shares were collectively valued at nearly $30 billion as of the close of Monday’s trading. Assuming NTT pays a premium to acquire all the shares, it could spend close to $40 billion.
Shares of the parent NTT were down about 3% in morning trading in Tokyo. Docomo shares weren’t trading yet because of a flood of buy orders.
The deal would end a 22-year experiment that began when fixed-line telephone service was still the NTT conglomerate’s core business and mobile phones were owned by relatively few people.
By listing its mobile-phone unit in 1998, NTT allowed investors to bet on the fast-growing service.
During the turn-of-the-century internet bubble, Docomo was one of the world’s most valuable companies, briefly earning a market capitalization of more than $300 billion in February 2000 as it pioneered mobile internet services.
After the bubble burst, Docomo retreated from investments outside Japan and settled into a stable role as the biggest of three cellphone providers that serve most consumers in Japan.
In recent years, Docomo came to represent the bulk of NTT’s value, and the logic of separating mobile communications from the rest of the business faded. Both the NTT parent and the Docomo subsidiary had market values of about $85 billion on Monday, meaning NTT’s 66% stake in Docomo represented 66% of the parent’s value.
Other parts of the NTT group have significant overseas business, operating data centers and selling communications systems to improve security in cities such as Las Vegas. Revenue outside Japan reached $19.5 billion in the year ended March 2020.
Formerly a Japanese government-owned telephone monopoly, NTT was privatized in the 1980s, but the government still owns nearly one-third of its shares.
New Prime Minister Yoshihide Suga has taken aim at what he says are excessively high cellphone bills in Japan, hurting the share prices of Docomo and the other two mobile service providers.
Write to Peter Landers at [email protected]
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