Q in Japan:
Top News
Fri, 16 Jul 1999, 1:57am EDT
Toyota Eyes IDO, DDI Merger to Take On NTT Docomo in Japan Cellular Market
Toyota Seeks IDO, DDI Merger; Boosts Net Investment (Update2)
(Rewrites lead to emphasize effect on NTT DoCoMo; adds
details in 4th paragraph about support for merger from DDI's top
shareholder.)
Tokyo, July 16 (Bloomberg) -- Toyota Motor Corp. indicated
it may seek to merge Japan's third-largest phone company and
fourth-largest cellular service provider, creating a powerful
rival to NTT Mobile Communications Network Inc., the world's
largest cellular phone company.
Toyota ''sees merit'' in merging its cellular phone
subsidiary IDO Corp. with DDI Corp., which provides both mobile
and domestic long-distance phone service, Toyota senior managing
director and head of information technology, Susumu Miyoshi, told
Bloomberg News.
''If the two companies merged, they would be able to combine
marketing, research and development, and advertising, resulting
in cost savings,'' Miyoshi said.
A DDI-IDO merger is also supported by Kazuo Inamori, the
founder and honorary chairman of Kyocera Corp., the largest
shareholder in DDI with a 25 percent stake. ''DDI and IDO should
merge,'' Inamori was quoted as saying yesterday by the Mainichi
newspaper.
Such a merger would create a company offering cellular phone
service nationwide, neutralizing one of NTT DoCoMo's major sales
points: currently it's the only company to provide mobile phone
service throughout Japan. That has enabled NTT DoCoMo to
quadruple its number of subscribers to 43.1 million over the past
three years and grab 58 percent of the market.
NTT DoCoMo this year surpassed Toyota to become Japan's
second-largest company by market value as its shares doubled in
value.
Yet a merger between IDO, in which Toyota owns a 63 percent
stake, and DDI would wipe out NTT DoCoMo's major competitive
advantage at the stroke of a pen by creating a rival nationwide
cellular network. DDI has eight regional cell phone subsidiaries
providing service everywhere except in Tokyo and Nagoya, the only
two areas in which IDO operates.
The move would also deliver another blow by Toyota to the
domination of the Japanese telecommunications market wielded by
NTT Corp., the nation's former domestic phone monopoly. NTT owns
59 percent of NTT DoCoMo.
Last month Toyota thwarted NTT's attempt to take over
International Digital Communications Inc., Japan's second-largest
overseas phone service company. Toyota sold its 17.7 percent in
IDC to rival bidder Cable & Wireless Plc., giving the British
suitor control of a company it hopes to use to penetrate Japan's
13 trillion yen telecommunications market, the world's second
largest.
NTT wanted to buy IDC to speed its expansion abroad
following the lifting last year of a Japanese government ban on
the company operating internationally.
cdmaOne
DDI controls about 13 percent of the Japanese cellular phone
market, IDO about 8 percent. A merger would create a company with
a 21 percent market share, increased marketing clout and reduced
operating costs.
DDI and IDO already cooperate in providing a new cellular
phone technology, cdmaOne, nationwide. CdmaOne, or code division
multiple access, a technology developed by San Diego-based
Qualcomm Inc., provides clearer sound than the technology used by
NTT DoCoMo. That has boosted DDI and IDO's subscriptions at the
expense of NTT DoCoMo in recent months, according to analysts.
DDI's shares rose as much as 54,000 yen, or 7.1 percent, to
759,000 in morning trading. Some 5,600 shares traded by the lunch
break, surpassing the full-day average of 5,196 the past three
months.
|
