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Last updated: December 21, 2005 7:32 am

NTT DoCoMo buys stake in Fuji Television Network

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NTT DoCoMo is in talks to invest about Y20bn to take a 2.6 per cent stake in Fuji Television Network, one of Japan’s leading TV broadcasters, in a step that heralds the growing convergence of telecommunications and broadcasting.

DoCoMo on Wednesday confirmed it was considering a tie-up with Fuji TV that would involve a small capital investment by the mobile operator and that it was also negotiating with several other Japanese broadcasters about possible alliances.

The mobile operator’s interest in the broadcasting industry comes ahead of the introduction of digital broadcasting for mobile phones in April next year. DoCoMo and Matsushita are developing a handset capable of receiving such broadcasts, which they aim to launch before April.

DoCoMo is looking to develop new businesses to make up for declining profitability brought on by a saturated market and intensified competition.

However, digital broadcasts for mobile phones will not generate additional revenue for mobile operators as they will be freely available to anyone with a phone that is equipped to receive the broadcasts.

By tying up with TV networks, DoCoMo hopes it can develop a new business model involving TV broadcasts that will encourage users to increase use of their mobile phones.

Digital broadcasts would offer multi-media capabilities and viewers would be encouraged to not just passively watch TV but also access related web-sites and communicate with the broadcasters, generating possible new revenue for the operators that way, a DoCoMo representative said.

The investment in Fuji TV will be the latest in a string of investments made by DoCoMo this year and reflects its continued appetite for branching out beyond its traditional borders through minority stakes.

DoCoMo has invested in Rakuten, an internet services group, Tower Records, Aplix, a software company, Access, an internet browser developer, and KTF, the Korean mobile operator.

If the planned investment in Fuji TV was included, DoCoMo’s total investment in other companies would come to Y228.5bn this year, noted Hitoshi Hayakawa, analyst at Credit Suisse First Boston in Tokyo.

Although a strengthening of ties between operators and broadcasters was a step in the right direction, given the start of mobile broadcasting, the investment raised questions, he wrote in a report on Wednesday.

“It remains unclear, in our view,  whether there is a true need for capital participation, and particularly what  kind of return shareholders can possibly expect from an extremely small stake of  only about 3 per cent,” Mr Hayakawa wrote.

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