UPDATE 1-Japan's NTT DoCoMo eyes Millicom's Cambodia network

http://www.reuters.com

Fri Aug 7, 2009

* DoCoMo mulls political risk, other targets in Cambodia * Looking to invest in Sri Lanka in future, including Celltell * Not interested in Deutsche Telekom's T-Mobile UK unit * Focus in Europe, US on software firms to boost data revenues * Shares up 1.2 pct vs KDDI 0.2 pct rise, Softbank 0.9 pct fall (Adds details, background)

By Mayumi Negishi and Reiji Murai

TOKYO, Aug 7 (Reuters) - Japan's top wireless operator NTT DoCoMo Inc (9437.T) is interested in buying Luxembourg-based telecom operator Millicom's (MICC.O) Cambodian network to boost its presence in Southeast Asia, an executive said.

DoCoMo, which controls half of Japan's mobile market, is hungry for acquisitions in other parts of Asia as growth slows in saturated markets at home, in the U.S. and in Europe.

It has not decided to make a bid for Mobitel and will consider other M&A targets in Cambodia and weigh political and economic risks there first, said Toshinari Kunieda, senior vice president and managing director of DoCoMo's global business.

"It's like a marriage proposal -- you don't make an offer the day after falling in love at first sight, you look at other potential partners, too," Kunieda told Reuters in an interview on Friday.

DoCoMo is hunting for investment targets in Vietnam, Indonesia and Thailand, as well as in the Middle East, Oceania and Sri Lanka, as it chases a midterm target of boosting overseas revenues to 10 percent of its total sales in four to five years.

Based on its sales in the year ended in March, that would mean quadrupling its overseas revenues, of which 60 percent comes from roaming fees.

"It can't be done without M&A," Kunieda said. "We will have to hunt for a majority stake somewhere."

DoCoMo's recent foreign investments include a 26 percent stake in Tata Teleservices [TATASL.UL], India's sixth-largest mobile operator, a 30 percent stake in telecom operator Axiata's (AXIA.KL) Bangladesh unit, and a 16.5 percent stake in Malaysian operator U-Mobile.

DoCoMo's shares closed up 1.2 percent, while those of No.2 Japanese carrier KDDI Corp (9433.T) rose 0.2 percent and third-ranked Softbank Corp (9984.T) fell 0.9 percent.

LOOKING ABROAD

DoCoMo incurred massive losses after spending nearly 1.9 trillion yen ($20 billion) in the late 1990s and early 2000s to invest in overseas carriers to promote its i-mode mobile Internet technology and the W-CDMA 3G standard.

In Europe and the U.S., the company is now focusing on possible M&A with software firms that could help DoCoMo raise its data-related revenues. It is not interested in Deutsche Telekom's (DTEGn.DE) T-Mobile UK unit, Kunieda said.

But DoCoMo is ready to bet on potential growth around other parts of Asia, and is waiting for countries to relax regulation on foreign telecom ownership.

DoCoMo, whose operating profit slid 15 percent in April-June on sluggish sign-ups, could look at Millicom's Sri Lanka asset Celltel among other possibilities, "but I can't say that we would pick Millicom," Kunieda said.

Millicom, which has appointed Goldman Sachs to advise on the sale of its Asian assets, said last month that it had several potential suitors.

Malaysian telecom firm Axiata (AXIA.KL) has voiced interest in buying Millicom's Sri Lankan and Cambodian operations, each worth at least $500 million, while Russian operator VimpelCom (VIP.N) may be interested in assets in Laos and Cambodia, sources told Reuters last month [ID:nKLR441625] [ID:nL9469191]. ($1=95.31 Yen) (Additional reporting by Saeed Azhar in Singapore; Editing by Chris Gallagher)