NTT DoCoMo Inc has not yet decided whether to bid for AT&T Wireless Services Inc, despite announcing that it had waived its right as an exiting AT&T Wireless shareholder to be notified of any rival bid for the number three ranked US mobile operator.
DoCoMo said it would temporarily waive its right to be consulted on merger talks. AT&T Wireless had set the waiver as a condition for DoCoMo to keep its right to submit a bid of its own.
NTT DoCoMo holds a 17% stake in AT&T Wireless, and is one of a number of companies thought to be interested in entering the $30bn plus auction that would likely signal the start of much needed consolidation in the highly competitive US mobile sector.
NTT DoCoMo picked up its AT&T Wireless stake back in January 2001, during the height of the 3G wireless frenzy, paying approximately $8bn. Most of the value of the investment has been wiped off now, after NTT DoCoMo wrote off almost its entire investment in the carrier in 2002 following a sharp drop in AT&T Wireless’ share price.
If DoCoMo were to submit a bid for AT&T Wireless, it would be a complete change in strategy for a company which has preferred to take minority stakes in foreign operators.
Indeed, there is a degree of skepticism among industry analysts, who believe that DoCoMo is unlikely to take over AT&T Wireless because of setbacks in its previous attempts to expand overseas, its lack of experience in managing a non-Japanese company, possible US political opposition, and stiff competition in a cutthroat US wireless market.
Last week AT&T Wireless apparently received expressions of interest from a number of companies including Cingular Wireless LLC, NTT DoCoMo Inc, Nextel Communications Inc, T-Mobile USA Inc, and Vodafone Group Plc, although no official offer has yet been tabled.
The frontrunner at the moment is thought to be Cingular, but Vodafone is also seen as a good bet because it is known to be unhappy with its current American operation, where it has a 45% stake in the market leader Verizon Wireless.
Vodafone is being touted because its GSM network clashes with the CDMA standard used by Verizon. The theory is that Vodafone might prefer to grow using a GSM network, an approach Deutsche Telekom took in the US with its purchase of Voicestream (now rebranded T-Mobile).
AT&T Wireless has recently won a dubious distinction for 2003, after consistently having the highest customer complaint rate of any national wireless carrier, according to complaints received by the Federal Communications Commission and obtained by The Wall Street Journal through a Freedom of Information Act request.
This article is based on material originally published by ComputerWire