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DoCoMo Will Sell Nokia Phones for 3G Network From October

http://www.bloomberg.com/apps/news?pid=10000101&sid=aIT2zpOalGTA&refer=japan

May 27 (Bloomberg) -- NTT DoCoMo Inc., the world's second- largest cell-phone operator, will start selling Nokia Oyj phones as early as October, getting its second foreign handset maker after Motorola Inc. for its high-speed network.

Nokia, the world's largest mobile-phone maker, will produce a model for DoCoMo's so-called third-generation service, which allows users to download music and video clips and access the Internet at a faster rate than older phones, Chief Financial Officer Yoshiaki Ugaki said in an interview in Tokyo yesterday. About two-thirds of DoCoMo's 49.1 million subscribers use the carrier's older network.

The Tokyo-based company is looking to new and cheaper handsets to help capture market share as it tries to catch up with KDDI Corp. DoCoMo's smaller rival, which controls 58 percent of Japan's 31.5 million high-speed subscriber market, offers the only service in Japan that allows users to download full songs to their phones. Last month, DoCoMo said it will sell a model made by Motorola Inc. that also functions as a handheld computer to attract business users.

``A new handset is great for DoCoMo, regardless of where they come from, given that KDDI has the strongest handsets in the market at the moment,'' said Natasha Chetwynd, who manages the equivalent of $572 million, including DoCoMo shares, at Britannic Asset Management in Glasgow, Scotland. ``The foreign models already selling in the Japanese market aren't that strong.''

Ugaki didn't provide details on the new Nokia model. Nokia, based in Espoo, Finland, had made phones for DoCoMo's second- generation network between 1995 and 2000, according to DoCoMo.

Nokia, which lost market share for the first quarter in four to Motorola Inc. and Samsung Electronics Co., said it plans to offer 40 new models this year, including 10 high-speed devices.

Market to Double

DoCoMo expects the number of users on its FOMA high-speed service to more than double to 24.2 million in the year ending March 31. It had 12.2 million users on its network as of April, compared with KDDI's 18.2 million and Vodafone K.K.'s 1.1 million. Vodafone K.K. is the Japanese unit of Vodafone Group Plc, the world's biggest mobile phone operator.

Japan had about 17 percent of the world's 156 million users of the so-called third-generation services, according to 3Gtoday.com, an Internet site operated by Qualcomm Inc.

KDDI, said this week it will offer five new phones made by three domestic makers, including a phone that let users watch television programs, and a model that sends music to external audio equipment like car stereos.

KDDI buys 3G phones from Sony Ericsson Mobile Communications, while Vodafone K.K. offers handsets made by Nokia, Motorola and Sony Ericsson.

Cheaper Models

Ugaki said he plans to offer cheaper models for the 3G service, which are expected to make up about 40 percent of the phones for the network by the end of the year. Cheaper models, such as the FOMA700i series made by domestic makers such as Sharp Corp. and NEC Corp., are priced about 10,000 yen ($93) less than the higher-end phones.

``FOMA phones will become mainstream this year as we offer cheaper models,'' Ugaki said.

DoCoMo already offers handsets that include features such as those equipped with Sony Corp.'s Felica chip that allow users to pay for items such as snacks and concert tickets by swiping their phones through an electronic cashier.

Competition for users will likely increase as Japanese phone companies attempt to shift users to their more profitable high- speed networks ahead of a change next year that would allow customers to switch carriers without altering their phone numbers.

DoCoMo, 59.8 percent owned by former government monopoly Nippon Telegraph & Telephone Corp., earlier this month reported its first quarterly loss since it started reporting four times a year, after spending more on marketing and offering discounts.

The loss was 8.97 billion yen in the three months ended March 31, including a charge to exit an older phone network, compared with a 155.8 billion yen profit a year earlier. Sales fell 1.6 percent to 1.22 trillion yen.

DoCoMo has 56 percent of Japan's mobile-phone market, which includes the older generation networks, and KDDI holds 27 percent. Vodafone K.K.'s share is 17 percent.

Shares of DoCoMo, Japan's second-biggest company by market value, which lost more than 10 percent this year, rose as much as 1.8 percent to 167,000 yen as of 11 a.m. in Tokyo.



To contact the reporter for this story:
Aiko Wakao in Tokyo at [e-mail].
Last Updated: May 26, 2005 22:46 EDT