Japan’s Nippon Tech launches $40 billion buyout of wireless unit Docomo

Japan’s Nippon Telegraph and Telephone Corp (NTT) said it will spend 4.25 trillion yen ($40 billion) to take its wireless carrier business private, in a deal that opens the path to lower prices as the government calls for cuts.

NTT will launch Japan’s largest-ever tender offer for the 34% of NTT Docomo Inc stock that it does not own, the firm said in a statement. The telecoms firm will offer 3,900 yen per share, a premium of 40.5% to Monday’s closing price.

The buyout comes as new prime minister Yoshihide Suga calls on wireless carriers to reduce prices, with the government hoping resultant savings will stimulate consumer spending elsewhere in the economy.

On Tuesday, Chief Cabinet Secretary Katsunobu Kato reiterated that call, saying there needs to be “visible progress on lowering mobile phone charges”.

“NTT Docomo’s financial base will become stronger giving us the capacity to cut prices,” NTT Chief Executive Jun Sawada told a news conference.

NTT’s share price fell as much as 5.8% after the company said it was considering the buyout. The stock closed down 3% while NTT Docomo ended up 16% at its daily trade limit.

Mobile peers KDDI Corp and SoftBank Corp fell 4%, with SoftBank touching record lows.

That continued a slide among telcos which began when Shinzo Abe announced plans to step down as prime minister on Aug. 28, as investors digested the prospect of Suga, who had previously called for price cuts, becoming premier.