The world's second-biggest cellular company sold 400,000 shares at 2.066 million yen, 3 percent below today's close, it said. The company offered the shares as low as 5 percent less than the market price. The company allocated more shares to European and US investors than planned.
The sale was seen as a referendum on the mobile phone industry's plans to invest billions of dollars in networks that link cell phones to the Internet at high speed. DoCoMo plans to start operating the world's first so-called third generation, or 3G, network in Japan in May and has struck alliances around the world to sell the service.
"European institutional investors have greater expectations for the future of mobile phones, especially the future of 3G as its market is fairly advanced," said Norio Suzuki, senior fund manager at Axa Investment Managers Tokyo Ltd. "The reason why Japan had weaker demand was that the investors are concerned whether DoCoMo will succeed overseas."
DoCoMo needed to overcome skepticism about its use of the proceeds to pull off the sale. In Japan alone, the company expects to spend 1 trillion yen (US$8.6 billion) to start its 3G service.
Higher returns
While its i-mode service has attracted nearly 19 million users in less than two years, its not clear subscribers want to upgrade from this simple text service to the full-motion video and other third generation applications.
DoCoMo has also yet to convince investors it can turn money spent on stakes in AT&T Wireless Group, KPN Mobile NV, Hutchison Telephone Co, 3G UK Holdings Ltd and KG Telecommunications Co into higher returns.
DoCoMo slid 44 percent as Japan's benchmark Nikkei 225 Stock Average lost 33 percent in the 12 months to today. Today the company's shares fell 1.39 percent today.
The recent decline was partly attributed to concern that DoCoMo's offering may hurt demand for other stocks. DoCoMo is Japan's largest company by market value.
"It's a good price considering that DoCoMo decided to carry out the sale under these weak market conditions," said Tsuyoshi Segawa, general manager for equities at Sakura Securities Co.
France Telecom SA, the largest French phone company, was recently forced to cut the price at which it plans to offer shares in its mobile phone unit, Orange. The company now hopes to raise about 8 billion euros (US$7.5 billion) from the sale--just over half its initial target.
Overcoming skepticism
DoCoMo stock fell as low as 1.91 million yen on January 11, the day before the share sale announcement.
DoCoMo is selling 220,000 to Japanese individuals. Another 40,000 shares will go to professional investors in Japan, with 140,000 shares to professional investors in the US and Europe. The company allocated originally planned to sell 60,000 to Japanese professional investors and 120,000 to those in Europe and the US.
Another 60,000 shares are available to meet extra demand if needed, possibly raising US$1.1 billion more. Brokerages will decide whether to exercise the so-called greenshoe option by February 19.
Goldman Sachs Group Inc. and Nikko Salomon Smith Barney Inc are managing the sale. Nomura Securities Co, Wako Securities Co, Shinko Securities Co, Kokusai Securities Co and Tsubasa Securities Co are also selling the shares in Japan.
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