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Thu, May 08, 2003 - Page 12 News List

DoCoMo proves that 3G services are a good wager

RECOVERING LOST TIMEKeiji Tachikawa has proven that his emphasis on lower spending while increasing the utility of handsets is the key to wireless success


NTT DoCoMo Inc chief executive officer Keiji Tachikawa's bet on new mobile-phone services and lower spending are beginning to pay off, restoring growth at Japan's largest company by market value after its first-ever loss.

With write-offs on overseas investments mostly behind it, DoCoMo's growth is being led by high-speed wireless phone services and the debut of camera phones, which are buoying revenue. The 63- year-old Tachikawa, a 36-year veteran of DoCoMo parent Nippon Telegraph and Telephone Corp, is set to report a Japanese Yen 200.8 billion (US$1.69 billion) fiscal second-half profit today.

Investors credit the turnaround to Tachikawa's decision to subsidize costs of developing mobile-phone handsets at companies such as NEC Corp and Matsushita Electric Industrial Co, helping sell more services. A spending cap and a popular picture-messaging service also helped lift DoCoMo's shares 28 percent since March 10, rebounding from a 41 percent drop in the previous 12 months.

Tachikawa "is running the company with a view to increasing shareholder value," said Muneyuki Tsuji, who holds DoCoMo shares among manages the equivalent of US$125 million he helps manage at Japan Investment Trust Management Co. ``I have no complaints.''

Investors are benefiting. DoCoMo plans to return some of its Japanese Yen 437.5 billion in cash to shareholders. In a January interview, Tachikawa said the company planned to increase its dividend and buy back some of its shares this year.

The world's No. 2 mobile-phone operator behind Vodafone Group Plc will probably report a 0.8 percent decline in sales to Japanese Yen 2.3 trillion for the six months ended March 31, according to the median estimate of eight analysts surveyed by Bloomberg News. A year ago, overseas investment losses dragged DoCoMo to a second-half loss of Japanese Yen 205 billion on sales of Japanese Yen 2.32 trillion.

DoCoMo shares rose as much as Japanese Yen 11,000, or 4.1 percent, to Japanese Yen 277,000 and traded at Japanese Yen 272,000, up 2.3 percent, as of 10:43am on the Tokyo Stock Exchange.

Much of Tachikawa's success the past six months lies in DoCoMo's focus on handsets. Specifically, the company has tried to get mobile-phone makers to introduce phones with added features so it can sell services like picture messaging, game downloads and audio clips to shore up flagging voice revenue.

Last June, Tokyo-based DoCoMo introduced its first camera-equipped cellular phones, allowing subscribers to take, send and swap photos from their handsets. Although late to the game -- Vodafone Group's J-Phone Co introduced its camera phones in November 2000 -- DoCoMo has made up for lost time.

Last month, DoCoMo said camera-phone subscribers had topped 10 million in 11 months. The company is adding almost 1 million users to its picture service almost every month. By comparison, J-Phone took 29 months to gain 9 million camera-phone users.

DoCoMo's high-speed, or third-generation, service is also gaining users. Spurred by lighter handsets with longer battery life from Matsushita Electric, DoCoMo attracted 138,400 "freedom of mobile multimedia access" (FOMA) users in March, almost four times the previous month's additions.

Wider network coverage is also helping. As of March, DoCoMo's high-speed wireless service covered 91 percent of the nation, compared with 22 percent at the service's introduction.

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