NTT, KPN in mobile deal

DoCoMo is to gain a foothold in Europe

Japanese telecommunications company NTT DoCoMo is to take a 15% stake in the mobile unit of Dutch telecommunications company, Royal KPN for 5bn euros ($4.5bn)

The stake gives DoCoMo, the mobile arm of NTT Communications, a long-awaited foothold in the European market.

The deal marks DoCoMo's largest single investment overseas.

DoCoMo's interest in KPN's mobile business had hit the rumour mill after merger talks between Spain's Telefonica and KPN broke down last week.

Expansion plans

The talks floundered when Spain objected to the Dutch government's 44% shareholding in KPN.

The merger breakdown heightened speculation that KPN would seek a partner in its mobile phone business to help fund its expansion plans.

The DoCoMo/KPN alliance would strengthen a potential joint bid for UK mobile phone operator, Orange, which DoCoMo is rumoured to be interested in.

KPN has also expressed an interest in the company.

Germany's Mannesman must sell its stake in Orange as part of its merger with Vodafone Airtouch.

The alliance comes hot on the heels of another large deal by NTT Communications, DoCoMo's parent company.

It said on Monday it would buy US internet company Verio for $5.5bn.