NTT DoCoMo shares surge

NTT DoCoMo: Second only to Vodafone

Shares in Japan's number one mobile phone operator rose to a nine-week high on Monday, surging more than 7% as investors welcomed NTT DoCoMo's plans for an overseas listing.

The firm unveiled plans on Friday to list its shares in London and New York in March in a bid to raise its international profile.

NTT DoCoMo is highly successful in its home market where its i-mode mobile internet technology has taken off.

This is primarily aimed at raising NTT DoCoMo's visibility overseas and expand(ing) its investment opportunities

Keiji Tachikawa
NTT DoCoMo

I-mode allows users to download crisp pictures to their handsets, as well as access a range of web-like services. It also offers service providers easy ways of charging small amounts for their services.

Shares in the mobile operator - the biggest component of the Tokyo Stock Exchange by market capitalisation - closed up 7.25% at 1.48m yen ($11,058) on Monday.

Worries on Sony

The benchmark Nikkei 225 average closed only marginally higher, up 0.75% at 10,220.85, curbed by a fall of 2.5% in consumer electronics giant Sony's shares.

Sony's share price fall was reportedly due to continuing worries among investors about the sector despite the firm's better-than-expected third quarter profits last week.

NTT DoCoMo is winning the race among mobile phone firms to get third-generation, or 3G, mobile networks up and running.

The international listing, set for March after months of speculation, will not involve the sale of any new shares.

"This is primarily aimed at raising NTT DoCoMo's visibility overseas and expand(ing) its investment opportunities," said chief executive Keiji Tachikawa.

The company is also doing a share-split to increase liquidity in its closely held stock.

Stronger framework

The Japanese mobile phone firm is 64% owned by its parent company NTT.

It has relatively few freely traded shares, making those that are available very expensive.

By contrast, UK mobile phone giant Vodafone is the biggest single constituent of the FTSE 100.

The international listing will create a framework to make it easier for foreign buyers to invest in the stock.

Risk of big swings

With relatively few freely traded shares, the implications of a sharp swing in the share price is daunting.

For example, the stock closed in Tokyo on Friday at 1.38m yen per share - a staggering $10,240 each.

To solve this problem, NTT DoCoMo will carry out a five-for-one share split, giving existing shareholders five new shares for every one they hold.

The result will be to lower the price of individual shares without damaging the value of investors' holdings.

"It's very good to increase the stock's liquidity," said Kirk Boodry, a telecoms analyst at Dresdner Kleinwort Wasserstein in Tokyo.

Possible sell-off?

The move is also being seen as a prelude to NTT reducing its own holding from 64% in future, telecoms analysts said.

Furthermore, they expect NTT DoCoMo to finance future overseas expansion plans by raising funds on the London and New York markets.

I-mode has acquired 30 million subscribers in three years.

In Europe, NTT DoCoMo signed deals last autumn licensing its high-speed picture download technology to the Netherlands' KPN Mobile, Belgium's KPN Orange and Germany's E-Plus.

KPN was the natural partner for DoCoMo as the Japanese firm holds a 15% stake in the Dutch company, the result of a three-way deal also involving Orange to collaborate on third-generation phone networks.

NTT DoCoMo also has a relationship with AOL Japan.