DoCoMo reconsiders overseas drive

DoCoMo's launch of third-generation mobile phones has proved costly

The Japanese mobile phone giant NTT DoCoMo has warned that it may freeze all its overseas investments.

The company dominates Japan's mobile phone market, and is a world leader in the roll-out of third-generation mobile phones.

But in recent weeks DoCoMo had to write off $4.7bn of its investments in the United States, Britain, the Netherlands and other foreign markets hurt by the global economic slump.

And at home DoCoMo has already spent some two trillion yen ($16.25bn) on third-generation (3G) mobile phones, which allow users high-speed internet access and video-conferencing.

But the new service has yet to make a profit and the company is pondering the cost of allowing its users global roaming.

Technical problems hit earnings

Being first with 3G has not given DoCoMo a head start on earnings.

Technical problems have kept user numbers well below expectations and DoCoMo short of precious cash flow.

Massive discounts have boosted subscriber numbers in recent months, but in turn have depressed revenues.

DoCoMo is making serious losses - just under $1bn (£0.6bn) last financial year alone - and its foreign ventures are to blame for it.

Its investments include KPN Mobile, the beleaguered Dutch operator, KG Telecoms in South Korea, AT&T Wireless in the US, UK third-generation mobile phone operator Hutchison and a joint venture with AOL Time Warner.

According to Tokyo's respected Asahi Shimbun newspaper, DoCoMo has already decided to stop its search for any further costly link-ups with foreign partners.

Company spokesman Yoshiki Kono, however, said nothing was decided yet: "Freezing overseas investment is one option, we're considering it."

DoCoMo's biggest asset is its i-Mode mobile internet service, which has taken Japan by storm and put the Wap system promoted by Western telecoms firms to shame.

The company had hoped to repeat this success in Europe. The roll-out has started in a few European countries, but still has to make an impact.