NTT DoCoMo focuses on Asia

NTT DoCoMo, Japan’s largest mobile telecommunications carrier, is planning a broad expansion into Asia in an effort to exploit a predicted boom in high-technology demand in the region.

Masao Nakamura, chief executive, told the Financial Times that the company was considering forays into the potentially large markets of Indonesia, Thailand and Vietnam. “I think the centre of activity going forward will be Asia,” he said.

Mr Nakamura said the model for its expansion into Europe – technical alliances without large cash outlays – might not work in less advanced Asian markets. “In Asia . . . no investment may not be a feasible idea.”

However, he raised doubts about investing in China and India, the two Asian markets with the biggest populations and greatest long-term potential.

He said a lack of clarity about the state of the Chinese market meant “we haven’t had any concrete talks . . . We’re not really sure which operator runs which technology.”

In India, Vodafone’s acquisition of a stake in Bharti Telecom, the Indian operator, meant “we have to think which operator is left and it’s going to be difficult”.

NTT DoCoMo’s zeal for overseas expansion is driven by a desire to cut handset costs – one of the biggest headaches of Japanese mobile carriers.

About 70 models are launched every year in Japan to satisfy the country’s fashion-conscious customers. This reduces economies of scale, keeping costs high. It also sometimes forces carriers to give away relatively new handsets.

NTT DoCoMo’s solution – and the core of its overseas strategy – has been to persuade overseas operators to use the company’s trademark i-mode mobile internet services. This should allow manufacturers to produce more i-mode handsets, increasing economies of scale.

The plans will build on NTT DoCoMo’s success in persuading Hutchison Telecom Hong Kong to use i-mode phones – an alliance announced yesterday. The company already has i-mode alliances in Singapore, Taiwan and the Philippines.

In spite of doubts about China and India, “there are many other large markets with high
populations such as Thailand, Vietnam and Indonesia, and
the challenge for us is to decide what to do with these large
markets”, Mr Nakamura said.

He added: “We’ve been having talks on various issues. But in these markets . . . nothing has been decided.” NTT DoCoMo needed to clarify technological issues and “the direction of foreign ownership”, he said.

NTT DoCoMo’s focus on cutting handset costs is motivated in part by tougher competition in Japan. Softbank, the technology company with a reputation as an aggressive competitor, has recently entered the mobile market. Also, from this autumn Japanese consumers will be able to change mobile carrier without giving up their old number.