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Japan-Update

Docomo exits Wall Street on downsized global role

NTT group taps tech subsidiaries to lead international strategy

The NTT Group is raising its global profile while putting NTT Docomo on the sidelines.   © Reuters

TOKYO -- NTT Docomo, the mobile arm of Japan's Nippon Telegraph and Telephone, said Monday it will delist shares in the U.S., underscoring the NTT group's shift toward having its information technology units spearhead its global expansion.

NTT Docomo plans to remove its American depositary receipts from the New York Stock Exchange on April 13. When the company first listed on that market in March 2002, it had invested close to 2 trillion yen ($18.8 billion at today's rate) in five cell phone companies internationally.

But the collapse of the tech bubble eroded finances at those targets, causing NTT Docomo to sustain 1 trillion yen in losses shortly after listing.

At the same time, fellow subsidiary NTT Communications booked heavy losses from a roughly 600 billion yen buyout of a U.S. internet services firm. The NTT group was forced to overhaul its global strategy.

The game-changer came in 2010 when NTT purchased Dimension Data, a South African IT services provider. Taking over from NTT Docomo, NTT Communications and NTT Data led the group's international strategy up through 2017. The two tech subsidiaries embarked on acquisitions in Spain and the U.S.

NTT President Hiroo Unoura has indicated an appetite for further overseas expansion, saying he wishes to pursue mergers and acquisitions "evenly in North America, Europe and Asia." The group plans to swiftly raise the share of overseas sales from 20% to 25%.

Non-Japanese investors owned about 30% of NTT's shares at the end of last year, up from less than 20% before the Dimension Data takeover. The change indicates wide approval of NTT's resurgence in global investments.

Now the focus is on whether NTT can boost the profits generated from these sales. During the three quarters to December 2017, the group took in about 82 billion yen in operating profit overseas, which translates to an operating margin of only around 5%.

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