NTT DoCoMo To Buy Stake In Voicestream
By Matt Paolucci

According to sources, Japanese wireless giant NTT DoCoMo Inc. is in talks to acquire a 15 to 20 percent equity stake in Voicestream Wireless Corp. (VSTR), one of the few remaining independent wireless companies in the United States.

A 15 to 20 percent stake would be valued at anywhere from $3.7 billion to $4.3 billion, given VoiceStream's market capitalization of $21.3 billion.

The investment would be NTT DoCoMo's first investment in a U.S. based mobile phone company. DoCoMo already dominates Japan's cellular market, one of the world's largest, with more than 30 million subscribers.

On the flip side, the deal would give Voicestream an international partner with the deep pockets which it needs for expansion.

"We are in talks with several overseas phone operators on a possible capital tie-up, but we cannot mention their names in specific at this stage," a DoCoMo (NTDMY) spokesperson said.

DoCoMo made its first major move internationally last month with an agreement to pay $4.5 billion for a 15 percent stake in KPN Mobile, a unit of Dutch based Royal KPN NV. DoCoMo already has a 19-percent stake in Hong Kong's leading cell phone firm, Hutchison Telephone Co.

Sources say NTT DoCoMo is also negotiating with South Korean communications giant SK Telecom. DoCoMo will most likely raise funds through a public offering to complete the VoiceStream and SK Telecom deals.

The Japanese mobile phone giant is rushing to assemble a global service network prior to its launch of third generation, or 3G, cellular phone services scheduled for May 2001.

VoiceStream hasn't exactly been lethargic. The company, a spin off of Western Wireless Corp. (WWCA) in 1999, has quietly been gobbling up smaller competitors. Among its latest coups include a pending deal with Aerial Communications Inc., a wireless provider based in Chicago, for more than $3 billion. Three months before, Voicestream snapped up Bethesda, Md.- based cell-phone provider Omnipoint Corp. for a little over $2 billion.

Omnipoint and Ariel, as well as Voicestream, are advocates of GSM technology, which stands for global system for mobile communications. GSM is the dominant standard for mobile phones in the European and Asian markets. San Jose, Calif.-based Qualcomm (QCOM), who owns patents on a competing technology called CDMA (code divisional multiple access), has had trouble gaining acceptance in overseas markets due to the entrenchment of the GSM standard outside the U.S.

A spokesman for NTT DoCoMo declined to comment on the news. At VoiceStream, Cregg Baumbaugh, executive vice president, finance, strategy and development, said, "We only comment on a deal, whether it's an acquisition, a divestiture, a strategic relationship... when we have a contract to do that deal and so therefore we have no comment."

DoCoMo officials said they hope the KPN and Voicestream deals will help the company expand its mobile Internet services worldwide. DoCoMo's i-mode Internet service allows subscribers to send and receive e-mail, as well as surf the Web via their cell phones.