Masaki Yoshikawa employs 80 people in an office on Manhattan's Park Avenue. All told, they serve only a few thousand customers, mostly frequent travelers from Japan who prefer to use their own mobile phones with Japanese characters while in the U.S. But that's all right. Yoshikawa's office is actually an outpost for NTT DoCoMo USA, a little-known subsidiary of Japan's largest wireless company. His primary mission is to watch out for new business opportunities, and Yoshikawa thinks he has just spotted one.
On Nov. 30, Google (GOOG) confirmed it will file an application with the Federal Communications Commission to bid in January's auction of some very valuable wireless spectrum (BusinessWeek.com, 5/3/07). 'Google is trying to acquire spectrum now. Maybe they will be looking for a partner' for their network, Yoshikawa tells BusinessWeek.com, stressing that no talks have been held by the companies. 'Perhaps we can be involved in the process.'
That DoCoMo is on a U.S. prowl is striking, given the company's painful past in the States. Only three years ago DoCoMo threw up a white flag and sold its 16% stake in AT&T Wireless (now a part of AT&T's (T) mobile business), taking a $3.3 billion loss on its $9.8 billion investment. Yet the Japanese company isn't the only Asian telecommunications provider eyeing the market or actually dipping its toes.
China wants in, too
Another Japanese carrier named KDDI is already testing a cutting-edge wireless service in the Northeast. Elsewhere, Korea's SK Telecom recently boosted its ownership in Helio, a struggling youth-oriented service, by pledging up to $270 million in extra funding. And the Korean company may be looking for additional investments: In November, it bid unsuccessfully with Providence Equity Partners for a $5 billion slice of the troubled carrier Sprint Nextel (S), according to The Wall Street Journal.
Chinese companies and investors, having made a fortune in that country's economic boom, are also said to be eyeing the U.S. wireless market. It's notable that, in May, the Chinese government acquired a $3 billion stake in the Blackstone Group, a private equity firm that has invested in wireless businesses including U.S. tower operator Global Tower Partners and Germany's Deutsche Telecom (DT), parent of T-Mobile USA. Blackstone would not comment for this article.
The prospective influx of Eastern cash could kick off one of the biggest foreign investment waves in the U.S. wireless industry since DT's acquisition of VoiceStream in 2001, DoCoMo's investment in AT&T Wireless in 2000, and Vodafone's (VOD) 1999 purchase of AirTouch (later merged into what is now Verizon Wireless).
Mobile data is part of the lure
Yet the renewed interest in U.S. wireless assets might seem puzzling with average monthly phone bills holding steady and the supply of potential first-time customers dwindling fast in a nation where more than a quarter-billion of the population already carries mobile phones.
The answer may lie in mobile Internet access and data services. 'We have more opportunity in terms of data [services] growth than any other developed country,' says Gene Frantz, a partner at Texas Pacific Group, which, along with another private equity firm, purchased No. 5 U.S. wireless carrier Alltel for $27.5 billion in November.
Today, Americans spend about as much on data services"”ringtones, text messages, video, and music"”as their counterparts in Asia and Europe.