Report: NTT DoCoMo Eyes 15 Percent Stake in KPN Unit

BOSTON (05/08/2000) - NTT DoCoMo Inc., Japan's leading cellular telephone operator, is in the final stages of talks to acquire a 15 percent stake in KPN Mobile, the cellular unit of Holland's Royal KPN NV, according to the Tuesday morning edition of Japanese business daily the Nihon Keizai Shimbun.

The deal, which will see NTT DoCoMo investing 500 billion yen (US$4.59 billion) in KPN Mobile, is part of the preparations towards making a joint bid for U.K. cellular operator Orange PLC, said the report, quoting anonymous sources. By teaming up with KPN Mobile, NTT DoCoMo would gain valuable knowledge of the European market and a partner to share the cost of the Orange bid which is expected to be substantial. Mannesmann AG, which currently owns Orange, must sell the company in order to advance its planned merger with Vodafone AirTouch PLC.

NTT DoCoMo, which had a domestic market share of 57.4 percent of all cellular users in Japan in March, leads Japan's fast growing cellular market and has previously signaled its intention to expand overseas as carriers around the world roll-out 3-G (third-generation) wireless services. The new services allow data transmission at speeds up to 384K bps (bits per second) and are expected to spark a boom in wireless data services.

NTT DoCoMo is planning to launch its own service, the first in the world, in the Tokyo area in May 2001.

Orange recently won a license to operate a 3G service in the U.K. and buying Orange would give NTT DoCoMo a significant presence in the European market.

Orange operates not only in the U.K., but also in France, Germany, Austria, Switzerland and Belgium.

However, any company bidding for Orange can expect to be in for a fierce fight.

Its possession of a U.K. 3G mobile license is expected to make the company hot property after the recent auction of licenses left some of the world's leading telephone companies disappointed because they failed to gain a license.

At present, NTT DoCoMo's most significant foreign investment was its purchase of a 19 percent stake in leading Hong Kong cellular carrier Hutchison Telephone Co. Ltd. [See "NTT DoCoMo to Take Stake in Hutchison Telephone," Dec. 2, 1999].

NTT DoCoMo, in Tokyo, can be found online at http://www.nttdocomo.co.jp/.

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