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December 13, 2005 4:07 pm

DoCoMo in talks over 10% KTF stake

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NTT DoCoMo is in talks with KTF to buy a 10 per cent stake in the South Korean mobile carrier for up to US$500m, in a move that would give Japan?s leading mobile telecoms group a toehold in one of Asia?s most dynamic telecoms markets.

The proposed investment in KTF highlights DoCoMo?s continuing quest to promote 3G wide-band CDMA technology globally despite a disastrous offshore investment spree several years ago that cost it as much as Y1,900bn (US$15.8bn).

?We are talking but nothing has been decided,? DoCoMo said. ?The ability to offer roaming is a pillar of our strategy.?

A deal with KTF would give DoCoMo a roaming partner in one of Asia?s most important telecoms markets, worth about Won16,500bn (US$16.2bn), and would help it to speed up the deployment of W-CDMA services there.

The deal would allow KTF, which has 12.3m subscribers and is 48.7 per cent-owned by KT, the country?s largest fixed-line and broadband service company, to raise further capital.

?Negotiations have been under way since late last year for the Japanese company?s equity investment in KTF,? KTF told Yonhap news agency. ?But nothing has been determined yet.?

Nam Joong-soo, chief executive of KT, declined to answer questions on DoCoMo on Tuesday. But he said KT would invest Won3,000bn in its core businesses next year.

?We will make the investment next year mainly to build up our new growth engines such as WiBro, IP-TV and content development,? he said, referring to KT?s wireless broadband service and next-generation internet-based TV service.

Many of DoCoMo?s previous investments, made mostly at the peak of the telecoms boom, have failed to produce the intended benefits and declined sharply in value. The company drew criticism for its controversial $10bn investment in AT&T Wireless in 2001.

However, DoCoMo executives have consistently stressed their interest in expanding overseas to address dwindling growth prospects at home.

Toshinari Kunieda, DoCoMo?s managing director of global business, said in August the company?s growth was under threat from IP telephony, which has cost its parent, NTT, Y1,000bn in revenues over three years.

DoCoMo has partnerships with Far EasTone in Taiwan and StarHub of Singapore. Both groups offer mobile internet services using DoCoMo?s i-mode model. However, Hong Kong?s Hutchison has not adopted i-mode despite the 24.1 per cent stake DoCoMo has in Hutchison Telephone.

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