Big writedown on cards for DoCoMo


DoCoMo launched the world's first 3G mobile service in Japan last year

Staff and wires

TOKYO, Japan (CNN) -- Investors flocked to invest in Japan's dominant wireless operator, NTT DoCoMo, despite a report the mobile giant will post its first full-year loss since it listed in 1998.

The Japanese mobile operator says it is looking at its overseas stock investments and may write off the billions it lost on AT&T Wireless of the United States and KPN Mobile of the Netherlands.

Investors accentuated the positive -- a large write-off would mean DoCoMo is getting the bad news out of the way after seeing the value evaporate from acquisitions it made during the telecoms bubble, and could pave the way to robust profits next year.

Shares in DoCoMo jumped Thursday on reports the operator of the world's oldest and largest mobile Internet service will take a special charge of 1 trillion yen ($7.54 billion) on overseas investments.

DoCoMo, the largest company by market capitalization on the Tokyo Stock Exchange, ended the day at 360,000 yen, a gain of 3.75 percent. Shares in parent NTT shares rose 17,000 yen or 3.46 percent to 509,000 yen.

The firm's offshore investments in mobile operators include 16 percent of AT&T Wireless Services in the U.S., 15 percent of KPN Mobile in the Netherlands, 20 percent of Hutchison 3G U.K. and 21 percent of Taiwan's KG Telecommunications.

It is using these investments to help launch its i-mode wireless Internet service in markets outside Japan, where i-mode has been hugely successful.

Writedown on cards

DoCoMo President Keiji Tachikawa said a decision on a widely expected writedown of his company's $9.8 billion investment in AT&T Wireless Services Inc, by far its largest foreign holding, could come as early as Friday.

"We want to make calculations based on AT&T's (Wireless) share price at the end of tomorrow, and take any necessary accounting measures," Tachikawa was quoted by Reuters news agency as saying in a press conference.

DoCoMo began i-mode services in Germany this month, with Belgium and Holland to follow soon and a rollout in the U.S. likely later this year.

But the downturn in global telco valuations since April 2000 means the company's investments face heavy writedowns.

Credit Suisse First Boston analyst Mark Berman told Reuters he had been looking for a special loss of between 850 billion yen and 1.5 trillion for the current fiscal year.

But Tachikawa said the losses on past investments would not deter DoCoMo from continuing its expansion overseas, particularly in Asian markets where its shareholdings are currently limited to Hong Kong and Taiwan.

The Nihon Keizai Shimbun business daily reported that in addition to taking the1 trillion yen special charge on its investments, DoCoMo would post a group net loss of 100 billion yen ($754 million) in the financial year that ends this month.

It said the telco, which had previously forecast a net profit of 255 billion yen for the year, would fall into the red for the first time since going public in 1998.

On track for record sales

DoCoMo will post the net loss despite being on track to post record figures for both group sales and operating profit, the Nihon Keizai said.

DoCoMo listed its shares on the New York and London stock exchanges on March 1 and now faces increased scrutiny from global investors.

After investing more than 1.8 trillion yen ($13.56 billion) in wireless carriers overseas, DoCoMo took a 263 billion yen ($1.98 billion) appraisal charge in the April-September first half on its investment in KPN Mobile.

It has been expected to take an additional charge on KPN after the Dutch company decided this month to take a 13.7 billion euro goodwill write-down on its stake in Germany's third-largest wireless carrier, E-Plus.

The Nihon Keizai said 600 billion to 700 billion yen of the charge would come on DoCoMo's 1.19 trillion yen ($8.97 billion) investment in AT&T Wireless Services, the third-largest wireless carrier in the United States.

DoCoMo's net profit in the year to March 2001 was a record 365 billion yen ($2.75 billion).