NTT DoCoMo to take 10 percent stake in KTF

NTT DoCoMo, Japan’s largest cellular carrier, will take a 10 percent stake in KTF, South Korea’s second-largest cellular carrier, the two companies said Thursday.

The agreement, which will see NTT DoCoMo pay 565 billion won ($563 million) for the stake, is the Japanese carrier’s first major international investment since a failed series of tie-ups with American and European carriers during the dot-com and telecommunication bubble.

The two carriers operate WCDMA (Wideband Code Division Multiple Access) networks, although KTF’s is much less developed.

NTT DoCoMo launched its 3G service in 2001 and has spent the last four years building up the network, working with handset makers on advanced cell phones and positioning the service as its premium offering. KTF has long operated a CDMA-based network that has been upgraded to 3G level but launched a WCDMA service earlier this year under a separate 3G license it won from the South Korean government. The network covers Seoul and major cities only and isn’t as heavily promoted as its CDMA service.

Through this tie-up, the two carriers hope to develop services that can be offered to their respective WCDMA customers.

“The nationwide deployment and early stabilization of KTF’s W-CDMA network, with DoCoMo’s technical support, is key to achieving these objectives,” they said in a statement.

Another objective of the tie-up is a roaming agreement between the two networks. At present NTT DoCoMo customers traveling to South Korea can roam on KTF’s WCDMA network although for nationwide coverage they must rent a CDMA handset. There is no agreement in the opposite direction for KTF customers heading to Japan, said Tomoko Tsuda, a spokeswoman for the company in Tokyo.

They also hope to realize cost savings from joint standardization of equipment and other benefits from exchanging technical and marketing expertise on mobile services, they said in a statement.

NTT DoCoMo made a string of similar investments in overseas carriers several years ago but was forced to write off billions of dollars after the telecommunications bubble burst and the stock prices of the carriers dropped sharply. Those investments, which included AT&T Wireless, Taiwan’s KG Telecom and Hong Kong’s Hutchison, were aimed at spreading WCDMA 3G and its I-mode wireless Internet technology worldwide.

While Thursday’s agreement with KTF includes WCDMA it does not cover I-mode, said Tsuda.