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To: Ruffian who wrote (88091)	11/22/2000 3:04:48 PM
From: Sully-	Respond to of 152472

NTT DoCoMo to Buy Stake in AT&T Wireless A deal between NTT DoCoMo and AT&T Wireless is all but imminent, according to most news reports. The world's most successful wireless data company would buy a stake in AT&T Wireless, giving it the foothold in the U.S. that it has long sought. In return, AT&T Wireless would benefit from DoCoMo's success with its i-mode service, and would be more likely to use the 3G standard DoCoMo has adopted, known as W-CDMA. By Chris Rugaber (TMF RFK) November 22, 2000 The search for a U.S. partner may finally be over for Japanese wireless provider NTT DoCoMo (OTC: NTDMY), which is reportedly in the concluding stages of talks to buy a chunk of the third-largest U.S. wireless carrier, AT&T Wireless (NYSE: AWE). While the deal is not yet final, news reports indicate that the companies hope to formally announce it early next week. DoCoMo may pay about $9 billion for 15% to 20% of AT&T Wireless, which sported a market cap of $45.9 billion as of yesterday's market close. NTT DoCoMo is Japan's dominant mobile phone service provider, with over 33 million customers, and its proprietary i-mode data service has grown like a weed since its launch early last year. Currently, over 14 million people subscribe to the service, and almost 95% of the company's new customers sign up for i-mode, a far higher take-up rate for data services than anywhere else in the world. The company has been searching for an alliance with a U.S. wireless carrier for months, with potential candidates including VoiceStream Wireless (Nasdaq: VSTR) until it was purchased by Deutsche Telekom (NYSE: DT) this summer, and Cingular, the newly formed joint venture of SBC Communications (NYSE: SBC) and BellSouth (NYSE: BLS). DoCoMo has bought minority stakes in other wireless carriers in Europe and Asia as part of its strategy to extend the reach of i-mode service and W-CDMA, the third-generation (3G) wireless transmission standard the company plans to use when it begins rolling out high-speed data services in Japan next May. DoCoMo would earn licensing or royalty fees for use of its i-mode technology by other carriers, and its customers would benefit from international use of a common 3G standard. DoCoMo owns about 15% of KPN Mobile in the Netherlands, 19% of Hong Kong's leading wireless service provider Hutchison Whampoa, and is also close to an agreement with Taiwan's KG Telecommunications. Impact of the deal If the agreement goes through, AT&T Wireless and the U.S. mobile communications industry would likely be the better for it. The United States is behind Europe and Japan in wireless data services and use, and would benefit from technology transfers from DoCoMo, the most successful wireless data service provider in the world. Not only would it likely speed the ability of AT&T Wireless to offer fast data services, but could also act as a spur for other providers to quicken the development of their next generation wireless services. AT&T Wireless itself should certainly benefit from the cash infusion, especially as its spin-off from AT&T (NYSE: T) proceeds. Currently, the wireless tracking stock records only $5 million in cash on its balance sheet, which may be misleading since it has access to its parent company's cash, but could become a problem for the company as it moves towards independence. As the company faces wireless spectrum auctions -- one is scheduled for next month and another for next March -- it will certainly need as much cash as it can get. Some questions Earlier this year, it seemed that the Cingular alliance was more likely to end up partnering with DoCoMo, but today's news reports indicate that the combined ownership of that venture -- BellSouth owns 45%, with SBC owning the other 55% -- made a deal more complicated. In addition, since AT&T Wireless is already publicly traded, it is easier to value its shares. Cingular isn't planning an IPO until the first quarter of next year. What will be interesting to see is whether a final deal between the two companies will include a firmer timetable for the actual spin-off of AT&T Wireless as an asset-backed independent company. Current plans are fairly vague, with an exhange offer to take place sometime next year and the final spin-off to occur after that. In addition, AT&T Wireless is currently developing its own standard for high-speed data transfer, known as EDGE. It may now dump EDGE, as news reports indicate that NTT DoCoMo will provide technology and equipment for the W-CDMA standard as part of the deal. If this means that AT&T Wireless is definitely on the W-CDMA track, that would benefit Qualcomm (Nasdaq: QCOM), which holds patents for all flavors of CDMA. Interested investors should stay tuned, for the wireless provider business just got more interesting. Join us on the Wireless World discussion board to sort through all the ramifications. fool.com Ö¿Ö