DoCoMo heads for red on overseas losses

Eriko Amaha

TOKYO: NTT DoCoMo Inc, Japan's largest firm by market value, looks set to

post a net loss for this year due to write-offs on its overseas investments, but

this should pave the way to profits next year, analysts said on Thursday. The

Nihon Keizai Shimbun reported on Thursday that DoCoMo would post a group net

loss of 100 billion yen ($750 million) in the year ending this month -- the

result of one trillion yen in special charges on its overseas investments.

The newspaper and other media said this would force DoCoMo to fall into the

red for the first time since going public in 1998.

DoCoMo said in a statement that no decision had been made on overseas

appraisal losses. Company President Keiji Tachikawa is scheduled to hold a

regular news conference at 3 p.m. (0600 GMT). Back in November, DoCoMo projected

a net profit of 255 billion yen for the business year ending this month.

Analysts said the write-downs were widely expected and would get most of the

bad news for the company out of the way, allowing investors to focus on its

healthy earnings outlook. "They were going to report a record revenue and

operating earnings this year, so if you clear out extra losses this year, you

set the stage for them to report a record net profit next year," said Mark

Berman, equity research director of Credit suisse First Boston.

DoCoMo shares showed little reaction to the newspaper report and at 0400 GMT

the stock was up 2.44 per cent to 504,000 yen, outperforming the benchmark

Nikkei which had edged down 0.56 per cent.

The firm had a dominant share of around 60 per cent in Japan's mobile phone

market as of February, accounting for 41.1 million subscribers.

Soured investments



Having invested more than 1.8 trillion yen ($13.56 billion) in wireless
carriers overseas, DoCoMo is now paying the price for a global slide in telecom

valuations.

Motoharu Sone, telecom analyst at Tsubasa Research Institute, pointed out

that DoCoMo is required to make a timely disclosure of its financial situation

following its debut on the New York Stock Exchange on March 1.

The Nihon Keizai said the biggest chunk of the full-year loss -- roughly 600

billion to 700 billion yen -- would come on DoCoMo's $9.8 billion investment in

AT&T Wireless Services Inc., the third-largest wireless carrier in the

United States.

The company is also expected to take an additional charge on Dutch mobile

operator KPN Mobile NV at the March book closing, after writing down 263 billion

yen in appraisal losses in the April-September first half. The Dutch company

decided this month to take a 13.7 billion euro ($11.95 billion)

"goodwill" write-down on its stake in Germany's third-largest wireless

carrier, E-Plus, forcing its 15-per cent stakeholder DoCoMo to take a 1.3

billion euro loss.

DoCoMo is also expected to book charges to write down its investments in

Hutchison 3G UK Ltd and Taiwan's KG Telecommunications Co, the Nihon Keizai

newspaper said. DoCoMo's net profit was a record 365 billion yen in 2000/01,

boosting the bottom line of parent Nippon Telegraph and Telephone Corp's (NTT).

But this year, DoCoMo's loss will push NTT to post a record high net loss for

a non-financial firm in Japan, according to the daily. NTT, which in November

forecast a group net loss of 331.0 billion yen, will now eclipse the 684.4

billion yen net loss posted by Nissan Motor Co Ltd. in 1999/2000, it said.

A NTT spokeswoman declined to comment on the report.