Japanese operator NTT readied plans to take its mobile subsidiary NTT Docomo private by buying out the minority interest in the listed company for JPY4 trillion ($37.9 billion), Nikkei Asian Review reported.

NTT, which owns 66.2 per cent of the mobile operator, is considering making a tender offer to acquire the remaining shares and delist the company from the Tokyo exchange, making Docomo a wholly owned subsidiary. The acquisition price is based on a 30 per cent premium to Monday’s closing price, the news agency stated.

Docomo stated the matter is scheduled to be discussed at a board meeting today (29 September). NTT, which is 33.7 per cent owned by the government, spun off Docomo in August 1991.

The country’s new Prime Minister Yoshihide Suga has sparked fears in the industry of imminent price cuts, as in the past as chief cabinet secretary under Shinzo Abe he pushed aggressively for reductions in mobile rates, local media reported.

Price cuts
Atul Goyal, equity analyst at Jefferies, said in a research note Docomo would no longer be answerable to shareholders following an acquisition and would oblige the government if instructed to cut prices. He believes it would just be a matter of time before KDDI and SoftBank Corp follow.

He added if incumbents sharply cut prices it raises questions for Rakuten Mobile’s positioning and strategy, as it’s been relying on price to gain market share.

Marc Einstein, chief analyst at Japan-based research company ITR, told Mobile World Live he doesn’t think the move is about pricing: instead the “Suga’s comments on price reductions” and Covid-19 (coronavirus) “probably got the share price down to an attractive level”.

Taking Docomo private had been on the cards for some time, he added.

Because NTT is the second-largest company in Japan with more than 300,000 employees,Einstein explained there are several perceived inefficiencies across the group and streamlining the operations of its subsidiaries has been a high priority.

“For this to happen now, however, is quite unexpected, and I believe there will be significant opposition from Docomo’s management and labour union, and there are important regulatory concerns which must also be addressed.”