Japan's NTT DoCoMo eyes Millicom's Cambodia network

By Mayumi Negishi and Reiji Murai

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

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

But DoCoMo has not decided to make a bid for Mobitel, which sources have priced at several hundred million dollars, and will consider other M&A targets in Cambodia and political and economic risks, 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. "But we will date."

DoCoMo is also hunting for investment targets in Vietnam, Indonesia, Thailand and China, 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 100 billion yen ($1.1 billion), of which about 60 percent now 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: Quote, Profile, Research) 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: Quote, Profile, Research) rose 0.2 percent and third-ranked Softbank Corp (9984.T: Quote, Profile, Research) fell 0.9 percent.

READY TO BET, AGAIN

DoCoMo incurred massive losses after spending nearly 1.9 trillion yen 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 investing in software firms that could help DoCoMo raise its data-related revenues. It is not interested in Deutsche Telekom's (DTEGn.DE: Quote, Profile, Research) T-Mobile UK unit, Kunieda said.

Last month DoCoMo said it bought a 35 percent stake in NexWave Wireless Inc's (WAVE.O: Quote, Profile, Research) software unit PacketVideo for $45.5 million to shore up its music and video services ahead of the planned launch of its high-speed LTE network next year.

But in Asia, DoCoMo is ready to bet big, and in some cases is only waiting for certain countries to relax their regulations 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 has appointed Goldman Sachs to advise on the sale of its Asian assets and said last month that it had several potential suitors.

Malaysian telecom firm Axiata has voiced interest in buying Millicom's Sri Lankan and Cambodian operations, both worth at least $500 million, while Russian operator VimpelCom (VIP.N: Quote, Profile, Research) may be interested in assets in Laos and Cambodia, sources told Reuters last month.

($1=95.31 Yen)

(Additional reporting by Saeed Azhar in Singapore; Editing by Chris Gallagher and Joseph Radford)