DoCoMo to record impairments


NTT DoCoMo Inc, Japan’s largest wireless carrier, said on Wednesday it would post a 573 billion yen (USD 4.68 billion) appraisal loss on its stakes in foreign carriers but vowed to stand by its partners. Analysts worry that the costly overseas strategy, aimed at promoting DoCoMo’s third-generation wireless technology as the next global standard, may continue to sap its coffers just as it confronts an increasingly competitive home market.

Written by Reuters for PMN Mobile Industry Intelligence.

Insight

Keiji Tachikawa is right to cite the long-term value of its foreign investment strategy. If in five years time NTT DoCoMo was a rapidly maturing utility confined to a competitive home market, analysts would be castigating him for not seizing overseas investment opportunities when they were available. However painful it may be at present, DoCoMo is prudent to use its strong balance sheet to gain influence outside Japan.

The evidence is mounting, supported by relatively successful i-Mode-style launches in Europe and the US, that the success of DoCoMo’s model is not reliant on unique quirks of Japanese culture. Its open policy and billing relationships with content providers represent best practice which should be applicable in other countries.

Once dual-mode W-CDMA/GSM handsets become widely available, the wisdom of its technology choices will also become more apparent. As PMN has stated previously, DoCoMo is in a strong position and has a sound long-term strategy, but it must address short-term perform issues with FOMA if it is to counter increasingly negative investor sentiment.


Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.
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