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March 13, 2006 12:13 pm

Rival calls for break-up of NTT DoCoMo

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NTT DoCoMo, Japan’s dominant mobile phone operator, should be broken up to promote greater competition in the country’s Y9,000bn ($76bn) mobile phone market, the chairman of a rival operator said on Monday.

“The current state of the Japanese [mobile phone] market is abnormal. A market where one company has a 56 per cent market share…could be a breach of anti-monopoly rules,” Sachio Senmoto, chief executive of eMobile, said in an unusually critical statement for a member of Japan’s normally polite corporate world.

Mr Senmoto, whose company recently received one of three new mobile phone licences, was speaking at an announcement that eMobile had chosen Ericsson as the primary supplier of its new nationwide mobile phone network.

His comments come as Japan’s mobile phone market faces greater competition and as Heizo Takenaka, interior minister, has started reviewing the state of the telecoms and media sectors with a view to stimulating growth.

Mr Takenaka’s roundtable of experts is discussing, among other issues, the future structure of NTT, including the possibility of amending the NTT law, by which the telecoms group was broken up into two regional operators, a long-distance and international operator and a mobile phone operator company under a holding company.

NTT wants to promote greater cooperation and coordination among group companies and is believed to be lobbying for a change to the law to allow it to re-absorb DoCoMo, which earned 65 per cent of the group’s operating profits last year.

“It’s a mistake [to re-assemble the former NTT],” said Mr Senmoto, who added that Mr Takenaka believes in the importance of promoting competition.

Mr Senmoto – a co-founder of DDI, Japan’s first private phone company, and founder of eAccess, the ADSL group – said DoCoMo’s dominance was unusual in global markets.

“In the UK, there are four mobile operators which compete for 20 to 30 per cent of the market. Hong Kong has five to six companies. The fact that Japanese consumers don’t complain [about the lack of competition] is abnormal,” he said.

However, Michito Kimura, senior market analyst at IDC, said DoCoMo had worked to gain its dominance.

“About 1m people switch operators every month…but even with this change DoCoMo has 56 per cent of the market,” Mr Kimura said.

Analysts expect the new entrants – eMobile, ip mobile and Softbank – to face an uphill battle not only because they have to build their networks, but also because Japanese mobile phone operators have introduced services aimed at locking in their subscribers.

Softbank aims to get round those problems by acquiring Vodafone’s operations in Japan, which has a considerable subscriber base and a national network.

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