A STUDY GLOBAL MARKET ENTRY
WITH THE EXAMPLE OF NTT DOCOMO’S JV WITH TATA TELESERVICES LIMITED
NTT DOCOMO, Inc. is the world's leading mobile communications company. DOCOMO serves over 53 million customers, including 46 million people subscribing to FOMA, launched as the world's first 3G mobile service based on W-CDMA in 2001. DOCOMO also offers a wide variety of leading-edge mobile multimedia services, including i-mode, the world's most popular mobile e-mail/Internet service, used by 48 million people. With the addition of credit-card and other e-wallet functions, DOCOMO mobile phones have become highly versatile tools for daily life. NTT DOCOMO is listed on the Tokyo, London and New York stock exchanges. NTT DOCOMO has a global presence in Europe, North America and Asia. Most of its global market entry was through Joint Ventures. On November 12, 2008, NTT DOCOMO, Inc. (DOCOMO), Tata Teleservices Limited (TTSL), and Tata Sons Limited announced their agreement on a strategic alliance in India, under which DOCOMO acquired 26 per cent of TTSL's common shares for approximately 130.7 billion Indian rupees (US$2.7 billion). Here we study about the Joint Venture between NTT DOCOMO and TTSL.
Rationale for the Investment in India:
As pointed out by the SEVP of NTT DOCOMO, Masatoshi Suzuki, there are two identified rationales for the investment. To realise medium term financial return. India is the world's fastest-growing cellular market, adding as many as 9 million new customers a month. The industry is expected to reach a size of Rs.3,44,921 crore (US$ 76.92 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. The outlook for the future. The company believes that they can realise synergy effect with TTSL. Roaming and enterprise services would be business domains whereby they can expect synergy with TTSL and through this they hope to gain medium term growth for DOCOMO.
NTT DOCOMO focussed primarily on expanding into emerging markets starting with network and Infrastructure. They decided to focus on India as a fast-growing, emerging and growing market. The penetration in India in the year 2008 was only 30% and they expected it to grow to 57% in the next 4 years. Annually this translated to 8-10 million new customers which offer a potential for growth that is somewhat inconceivable to them. The total area of India is 9 times the area of Japan and 9 fold the population and so the growth is also 9 fold. India has a very strong, well established legal network and a liberalized one too because of which the country has grown enormously in the past two decades. So, this makes a big difference between India and other emerging countries. The macroeconomic picture of India in relation to cell phones shows very strong growth. With a GDP growth of 9.3% (2% in Japan), the cell phone penetration in India was only 21% as of March 2007. But the actual number is 59% year-on-year growth. The same in Africa is 49%, Japan 5.4 % and Europe 9%. So, the growth in India is far ahead of the rest. The middle class in India is also expanding at a high rate which offers the company a substantial growth prospect. The wireless operation in India is divided into 22 circles nationwide and there is a circle to circle licenses provided. So, it is a nationwide development.
Strategic Rationale for partnership with Tata Teleservices Limited: Tata Teleservices (which sells under the brand Tata Indicom and Virgin Mobile India) and Tata Teleservices (Maharashtra) Limited, both based in Mumbai, are telecommunication units of the Tata business, India’s largest conglomerate in terms of operating revenues. Both companies have high-quality wireless networks spanning the entire country. TTSL along with TTML operates in more than 320,000 towns and villages across 20 circles and also have a large number of retail stores and customer-service outlets. TTSL and TTML have...
Please join StudyMode to read the full document