January 02, 2001, 11:16 AM — TOKYO -- Japanese mobile data services provider NTT DoCoMo Inc. took another step forward in its international business strategy today, confirming along with AT&T Corp. that the two companies have signed a deal under which NTT DoCoMo will buy a 16% stake in AT&T's independently operated wireless unit for $9.8 billion.
NTT DoCoMo had said last week that the agreement to invest in AT&T Wireless Group, the third-largest wireless carrier in the U.S., was in the final stages of negotiations. Until now, a deal in the U.S. had eluded NTT DoCoMo after a series of talks with other potential partners broke down.
The Japanese carrier was keen to secure a deal with a U.S. wireless services provider in order to round out a global business strategy that calls for NTT DoCoMo to work with business partners in North America, Europe and Asia on next-generation cellular technology and wireless data services.
The deal between the two companies is due to be completed in January. AT&T Wireless is currently a subsidiary of AT&T, but it's scheduled to be spun off into a separate company by the middle of next year. NTT DoCoMo would continue to own 16% of the new wireless company after the spin-off takes place, according to today's announcement.
Elliott Hamilton, an analyst at Strategis Group in Washington, called NTT DoCoMo "a perfect partner for AT&T Wireless." The Japanese company "can offer a lot of expertise with the wireless Internet" based on its customer base of more than 10 million users in Japan, Hamilton said.
And the cash infusion from NTT DoCoMo could aid AT&T Wireless in its bidding for additional wireless spectrum, he added. The U.S. Federal Communications Commission plans a series of airwave auctions over the next two years designed to support the rollout of high-speed wireless services, with the first auction scheduled for Dec. 12.
As part of the investment deal, the companies said, AT&T Wireless is committing to adopt Wideband Code Division Multiple Access (W-CDMA) for its third-generation mobile system. W-CDMA is the technology favored by NTT DoCoMo, and the Japanese company has been trying to persuade other wireless carriers to adopt that system.
The W-CDMA network could be launched in limited areas in the U.S. in 2002, said Jordan Roderick, head of international operations at AT&T Wireless, at a press conference here today. That would be a year later than NTT DoCoMo's planned Japanese launch next May.