DoCoMo & Hutchison Whampoa's 3 UK 'i-mode' Fate
>> DoCoMo to End Ties with Hutchison's 3 UK
Yukari Iwatani Kane
Yoshiyasu Shida
Tokyo
Reuters
01 March 2004
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NTT DoCoMo Inc, Japan's dominant mobile phone operator, is ending its ties with conglomerate Hutchison's third-generation phone venture in Britain, leaving the door open for a new partner there, sources close to the matter said on Monday.
The venture -- 3G UK Holdings Ltd (3 UK) -- never delivered on DoCoMo's hopes of spreading its Internet technology i-mode into the country. DoCoMo now may seek a partnership with mm02 Plc, the smallest of Britain's four mobile phone operators and the only one not tied to a large mobile phone group.
However, company sources and some analysts said a full takeover of mm02 -- Europe's sixth-largest mobile phone company with about 20 million customers in Britain, Germany and Ireland -- was unlikely after earlier overseas ventures flopped.
"At minimum, I would think DoCoMo would try to strike an i-mode partnership in the U.K.," said Hitoshi Hayakawa, a telecoms analyst with ING Barings.
DoCoMo invested 184.6 billion yen ($1.69 billion) in Hong Kong-based Hutchison Whampoa Ltd's 3 UK unit in December 2000 to spread its i-mode technology. The plan backfired when 3 UK, which was created to offer high-speed 3G mobile service, chose not to adopt i-mode.
DoCoMo said its relationship with 3 UK had not changed. A spokesman said DoCoMo still hoped to work with the company to roll out i-mode eventually.
A spokeswoman for Hutchison said: "We cannot comment on market rumours, but our relations are fine, as before. Our partnership remains unchanged."
Sources said DoCoMo was working through the finer details of pulling out of the investment, but the relationship had already effectively ended. One source also said the company was waiting to set a future British strategy before making an announcement.
DoCoMo's decision comes on the heels of a similar move last November by Dutch carrier KPN to sell back its stake in 3 UK to Hutchison.
Hutchison agreed to pay 90 million pounds ($168 million) for KPN's 15 percent stake, for which it originally paid 1.2 billion euros ($1.50 billion) three years ago.
While 3 UK is not publicly listed, analysts also believe DoCoMo's stake in the company has dwindled to almost nothing. In addition to the original investment, DoCoMo also provided 3 UK with a 200-million-pound loan last April.
DoCoMo also owns a 24 percent stake in Hutchison's Hong Kong-based mobile phone company Hutchison Telephone Co Ltd, for which it paid a total of about $440 million.
DoCoMo has refrained from large investments abroad recently, declining to bid for U.S. operator AT&T Wireless Services Inc.
But Takeshi Natsuno, DoCoMo's managing director of i-mode strategy, told Reuters last month he wanted more i-mode partnerships in European markets with dense populations such as Britain.
The company already has i-mode licensing agreements with several European operators including KPN in the Netherlands, Bouygues Telecom S.A. in France and Telefonica Moviles Espana S.A. in Spain.
Chief Executive Keiji Tachikawa reiterated the company's goals at a regular news conference on Friday.
"We have always said we would sit down at the table with any company in the U.K. that wants to adopt i-mode in its second-generation network," Tachikawa said.
He added that anyone who knew about Britain's mobile market would realise that the only possible operator in such a case would be mm02.
Still, even that may present challenges, according to one analyst, who declined to be named.
"I-mode is looking very outdated now. Nobody is really interested," the analyst said. "It's not that difficult to replicate so why would you even consider giving any royalties to DoCoMo?" <<
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