NTT DoCoMo Raises $7.13 Billion in Sale of New Shares
<<In Japan alone, the company expects to spend 1 trillion yen ($8.6 billion) to start its 3G service. >>
--From AOl.-- Cooters
Tokyo, Feb. 5 (Bloomberg) -- NTT DoCoMo Inc. will raise $7.13 billion selling shares, the most it targeted, as investors bet a company that connected 19 million Japanese mobile phone users to the Internet can duplicate that performance worldwide.
The world's second-biggest cellular company will sell 400,000 shares at 2.066 million yen, 3 percent below today's close, it said. The company had offered the shares as low as 5 percent less than the market price. European and U.S. investors placed orders for more stock than they were allocated as DoCoMo generated demand for more than three times the shares available.
The sale was seen as a referendum on the mobile phone industry's plans to invest billions of dollars in networks that link cell phones to the Internet at high speed. DoCoMo plans to start operating the world's first so-called third generation, or 3G, network in Japan in May and has struck alliances around the world to sell the service.
``European institutional investors have greater expectations for the future of mobile phones, especially the future of 3G as its market is fairly advanced,'' said Norio Suzuki, senior fund manager at Axa Investment Managers Tokyo Ltd. ``The reason why Japan had weaker demand was that the investors are concerned whether DoCoMo will succeed overseas.''
European investors put in orders for about four times the amount originally allocated to them, compared with about two times from professional investors in Japan, a banker involved in the transaction said.
Higher Returns
DoCoMo needed to overcome skepticism about its use of the proceeds to pull off the sale. The company has said it will use the offer proceeds to pay for the purhase of a 16 percent stake in AT&T Wireless Group at $9.8 billion.
In Japan alone, the company expects to spend 1 trillion yen ($8.6 billion) to start its 3G service.
While its i-mode service has attracted nearly 19 million users in less than two years, it's not clear subscribers want to upgrade from this simple text service to the full-motion video and other third generation applications.
DoCoMo has also yet to convince investors it can turn money spent on stakes in other companies like KPN Mobile NV, Hutchison Telephone Co., 3G UK Holdings Ltd. and KG Telecommunications Co. into higher returns.
DoCoMo slid 44 percent as Japan's benchmark Nikkei 225 Stock Average lost 33 percent in the 12 months to today. The shares fell 1.39 percent today, adding up to a 16 percent decline the past two weeks.
`Weak Market'
Those falls were partly attributed to concern that DoCoMo's offering may hurt demand for other stocks. DoCoMo is Japan's largest company by market value. ``It's a good price considering that DoCoMo decided to carry out the sale under these weak market conditions,'' said Tsuyoshi Segawa, general manager for equities at Sakura Securities Co.
France Telecom SA, the largest French phone company, was recently forced to cut the price at which it plans to offer shares in its mobile phone unit, Orange. The company is now seeking to raise about 8 billion euros ($7.5 billion) from the sale, just over half its initial target.
DoCoMo is selling 220,000 to Japanese individuals, who can subscribe to them between Feb. 6 and Feb. 8. Another 40,000 shares will go to professional investors in Japan, with 140,000 shares to U.S. and European professional investors.
The company originally planned to sell 60,000 shares to Japanese professional investors and 120,000 to those in Europe and the U.S.
Another 60,000 shares are available to meet extra demand if needed, possibly raising $1.1 billion more. Brokerages will decide whether to exercise the so-called greenshoe option by Feb. 19.
Goldman Sachs Group Inc. and Nikko Salomon Smith Barney Inc. are managing the sale. Kokusai Securities Co., Merrill Lynch & Co., Morgan Stanley Dean Witter & Co., Nomura Securities Co., Shinko Securities Co., Tsubasa Securities Co. and Wako Securities Co., are also selling the shares.
Feb/05/2001 9:20 ET |
