NTT DoCoMo, Japan's largest mobile operator, will issue its first domestic bond deal next week with a Ñ200 billion ($1.7 billion) offering. The company has mandated Nomura Securities as lead manager on the transaction, with Morgan Stanley Dean Witter as co-lead.
The deal will encompass notes of five- and 10-year maturities, a company official confirms.
DoCoMo will use the funds to help diversify funding sources for its aggressive overseas expansion programme. The company - which already has over 30 million cellular subscribers and a market capitalization of Ñ27 trillion - last year bought stakes in Dutch telecom company KPN Mobile (15%), Hutchison 3G UK (20%), and AT&T Wireless (16%). This year the company is looking to further its interests both in Asia and the US.
So far this year, DoCoMo has already tried its hand on the equity market, raising Ñ950 billion last week through the issue of 460,000 new shares. There were suggestions in the market that this was below the figure it had hoped to raise and bank advisers suggested the debt market was a good means of meeting the shortfall.
"To help meet our financing needs, we have been looking to raise around Ñ1800 billion," says a company official. "We did our equity deal and raised some through bank loans, and during the bookbuilding process on the share deal we discussed other ways of raising funds.
"During those discussions, we asked banks whether they thought investors would be willing to buy our bonds, and we were recommended to do an issue," he continues. "It's good for us because it will result in financial savings against other funding methods at this time.
"When we look again to the capital markets, we might do another bond deal, but we will compare the costs to see if the conditions are still favorable."
It will also be interesting to see whether the company goes ahead this year with its planned listing on the New York Stock Exchange, as confirmed by Hiroaki Nishioka, DoCoMo's chief financial officer in the December/January issue of FinanceAsia magazine.
"We are still discussing how to match the accounting systems to meet disclosure requirements," says Nishioka. "It's not going to happen within a week or a month, but we do hope to list at an early stage."