TOKYOJapans biggest telecommunications company, Nippon Telegraph and Telephone Corp., said it would spend $40 billion to buy the portion of its mobile unit that it doesnt already own, taking full control of its principal cash cow.NTT already owns 66.2% of the unit, NTT Docomo Inc., and it said Tuesday it would pay 3,900 yen per share, equivalent to $36.97 to buy out Docomos other shareholders. In total, the acquisition will cost the equivalent of $40 billion, NTT said.The offer price is a nearly 41% premium over NTT Docomos closing price Monday. Shares of the parent NTT closed down 2.85% in Tokyo trading Tuesday as investors fretted about the cost of the deal and Prime Minister Yoshihide Sugas plans to force Docomo and other mobile providers to cut their prices for consumers.
The deal would end a 22-year experiment that began when fixed-line telephone service was still the NTT conglomerates core business and mobile phones were owned by relatively few people.
By listing its mobile-phone unit in 1998, NTT allowed investors to bet on the fast-growing service.
During the turn-of-the-century internet bubble, Docomo was one of the worlds most valuable companies, briefly earning a market capitalization of more than $300 billion in early 2000 as it pioneered mobile internet services.
After the bubble burst, Docomo retreated from investments outside Japan and settled into a stable role as the biggest of three cellphone providers that serve most consumers in Japan.
The others are
KDDI Corp.
and
SoftBank Corp.
, which is partly owned by SoftBank Group Corp.
In recent years, with Docomo representing the bulk of NTTs value, the logic of separating mobile communications from the rest of the business faded. Both the NTT parent and the Docomo subsidiary had market values of about $85 billion on Monday, meaning NTTs 66% stake in Docomo represented 66% of the parents value.
Other parts of the NTT group have significant overseas business, operating data centers and selling communications systems to improve security in cities such as Las Vegas. Revenue outside Japan reached $19.5 billion in the year ended March 2020.
Formerly a Japanese government-owned telephone monopoly, NTT was privatized in the 1980s, but the government still owns nearly one-third of its shares.
Mr. Suga has pledged to reduce what he calls excessively high cellphone bills in Japan, hurting the share prices of Docomo and the other two mobile service providers.
Write to Peter Landers at peter.landers@wsj.com
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