NTT Corp. announced Tuesday plans to acquire all of the shares in NTT Docomo Inc., to take full control of the mobile phone unit.
The telecommunications company, which currently has a 66.2% stake in Docomo, will spend 4.25 trillion yen to acquire the remaining shares in the takeover bid.
NTT will pay 3,900 yen a share. Shares in Docomo closed at 3,213 yen Tuesday.
The move will allow NTT to invest as a group in the next-generation, high-speed mobile phone standard 5G and respond flexibly to Prime Minister Yoshihide Suga's call for a reduction in mobile phone charges.
The takeover would be the largest ever for a Japanese company, according to merger and acquisition advisory firm Recof Corp.
NTT Corp. is a holding company with five major subsidiaries: Docomo, NTT Data Corp., NTT East Corp., NTT West Corp. and NTT Communications Corp. Docomo and NTT Data are listed on the stock exchange, while NTT East, NTT West and NTT Communications are wholly owned units.
Docomo was spun off from NTT in 1992 and listed on the Tokyo Stock Exchange's first section in 1998. The mobile phone subsidiary will be delisted if the takeover bid is successful.
The domestic mobile phone industry is dominated by Docomo, KDDI's au and Softbank, with profit margins of as high as nearly 20%.
NTT will be able to speed up decision making by making Docomo a wholly owned subsidiary. NTT will also be able to raise funds for capital investment more easily if all of Docomo's profits are incorporated into the group.
There has been growing criticism over the opaqueness of parent-subsidiary listings, or parent companies that are listed on the same exchange as their subsidiaries, as is the case with NTT and Docomo.
The takeover would help NTT fend off such criticism and accelerate investment in 5G and the internet of things, or the networking of everyday devices via the internet.
With competition heating up in the global telecommunications industry among companies including Chinese telecommunications equipment giant Huawei Technologies Co., Japanese firms have been lagging behind.
The move is also seen as an attempt to prepare for the lower mobile phone rates sought by Suga.
At a press conference on Tuesday, Internal Affairs and Communications Minister Ryota Takeda welcomed NTT's plan, saying, "It is hoped that the company will adopt a sound approach that benefits the social environment."
On the same day, Chief Cabinet Secretary Katsunobu Kato said: "The public is very interested in seeing mobile phone rates reduced. It is important that procedures are transparent."
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