DoCoMo to write off $6B in carrier investments

NTT DoCoMo is recognizing the cost of a buying spree undertaken at the height of the telecommunication bubble and plans to write off a total of ¥812.7 billion (US$6.1 billion) in the fiscal year just ended in investments made in cellular carriers around the world, the company said Thursday.

In a string of deals made in 2000 and 2001, the company snapped up stakes in cellular carriers in a handful of countries as expectations for 3G (third-generation) cellular services were reaching their height and the company was in the international spotlight for its hit I-mode wireless Internet service.

The single largest write-off will be in its investment in AT&T Wireless Service Inc., the Basking Ridge, New Jersey, cellular carrier in which DoCoMo bought a 16 percent stake for $9.8 billion in late 2000. The carrier later spent $380 million to keep its share at 16 percent after AT&T Wireless issued additional shares. However, since the initial investment, the price of AT&T Wireless stock has fallen by more than half. DoCoMo said Thursday it will recognize a consolidated loss of ¥506 billion on the investment.

DoCoMo also said it will write off ¥14 billion in its investment in Hutchison 3G UK Holdings Ltd., a London 3G wireless license holder in which it has a 20 percent stake, and ¥30 billion in KG Telecommunications Co. Ltd., a Taipei carrier of which DoCoMo holds 24.4 percent.

The company stated six months ago that it also plans to write off ¥262.7 billion in another of its high-profile investments, Amsterdam's KPN Mobile NV.

Thursday's announcements bring DoCoMo's total write-offs for the fiscal year just ended to ¥812.7 billion. This is expected to translate into a loss on the company's bottom line.

DoCoMo said the write-offs, applied to its latest forecast, will mean a consolidated loss of ¥36 billion for the fiscal year ended March 31, on operating revenues of ¥5.2 trillion. The company made a profit of ¥366 billion in the previous year and until Thursday's announcement had been predicting a profit of ¥255 billion for the year just ended.

The news was not unexpected. Last week the company's president, Keiji Tachikawa, said DoCoMo would evaluate its investments as soon as the Japanese financial year ended on March 31. The markets, which had closed when DoCoMo made Thursday's announcement, had been expecting the news for some time.

"Only God could have predicted two years ago what has happened to the current telecommunication market," Tachikawa said at a news conference Thursday.

"Our overseas marketing strategies have never been wrong, and they are currently bearing fruits steadily," he said, adding that if the company had not invested in those carriers, things like the launch of I-mode in Germany in March would not have happened.

"Whether our strategies are wrong will be seen when all of our I-mode-like services and 3G services overseas are launched and if they fail," he said.

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