NTT DoCoMo is selling its Hutchison 3G UK stake for GBP120 million.
Hutchison has also agreed to repay the GBP200 million shareholder loan made by DoCoMo to H3G UK back in May 2003. It was this shareholder loan that was at the center of a long-running legal dispute. The dispute started in March 2003, when H3G UK asked for GBP1 billion from its then parents Hutchison Whampoa, NTT DoCoMo, and KPN Mobile to extend banking loans.
Hutchison Whampoa, which had a 65% stake, provided GBP650 million, while NTT DoCoMo, which held 20%, agreed (after some careful consideration) to provide GBP200 million.
However, KPN Mobile refused to provide GBP150 million for its 15% stake, despite being contractually obliged to. Hutchison Whampoa and KPN reached a settlement in November last year, avoiding a potentially costly court battle. Following that settlement, KPN received GBP60 million up front for its 15% stake, with a further GBP30 million to be paid over the next three years.
Publicly, it seemed that DoCoMo was happy to provide the shareholder loan, but behind the scenes the Japanese mobile operator was known to be growing increasingly frustrated with the struggling UK 3G operator.
The loan was one source of friction, but the other was H3G UK’s refusal to adopt DoCoMo’s i-mode mobile Internet service. The UK is the only European market with a 50 million plus population that does not have an i-mode service. In other large European markets, DoCoMo has technology alliances covering i-mode with local operators.
The deal means that DoCoMo is now clear to seek a more compliant UK operator so that it can finally offer i-mode services in one of Europe’s largest mobile markets. It also means that DoCoMo has no further financial commitments to H3G UK.
DoCoMo’s decision also represents something of a blow to both Hutchison Whampoa and H3G UK, which is struggling to gain market share in a crowded UK mobile market.
