NTT DoCoMo Inc., Japan's biggest mobile-phone operator, plans to buy a stake in India's Tata Teleservices Ltd. to expand into the world's fastest-growing major wireless market, a company official said.

The board approved the investment today, said the official, who asked not to be identified before the company's announcement this afternoon. The official declined to provide the size of investment, which the Nikkei Net Interactive Web site reported at 260 billion yen ($2.7 billion) for a 26 percent stake.

An acquisition of that size would be DoCoMo's largest in almost eight years, underscoring the appeal of a market that's gaining 9 million mobile-phone customers a month, or about 60 percent more than the total additions in Japan last year. The Tokyo-based company is resuming expansion overseas after failed investments including Hutchison 3G UK Holdings Ltd. forced it to write off 1.5 trillion yen between 2001 and 2004.

``The company has shifted to developing countries with room for further growth. It's a good strategy,'' said Shinji Moriyuki, an analyst at Mitsubishi UFJ Financial Group Inc. in Tokyo, who has a ``neutral'' rating on DoCoMo. ``The scale is also relatively small, meaning the risk is lower.''

The company plans to spend $1.5 billion to buy a 25 percent stake, Sankei newspaper reported today, without saying where it obtained the information.

No decision has been made regarding a stake in Tata Teleservices, DoCoMo said in a statement in response to the Sankei report. Anil Kumar Sardana, managing director of Tata Teleservices, wasn't immediately available for comment.

Share Reaction

DoCoMo rose 1 percent to 158,800 yen as of 1:41 p.m. on the Tokyo Stock Exchange, while the benchmark Nikkei 225 Stock Average fell 1.3 percent. The shares have lost 15 percent this year, after declining 1.1 percent in 2007.

The operator cut its revenue forecast last month because of weaker handset sales in Japan, where about 80 percent of people already own mobile phones, and as KDDI Corp. and Softbank Corp. slash fees to lure customers.

DoCoMo, which has about 200 billion yen in cash available, may sell about 100 billion yen in bonds by the end of March to help fund a share buyback and dividend payments, Chief Financial Officer Kazuto Tsubouchi said in a Bloomberg Television interview broadcast today. The sale wouldn't cover overseas investments, he said in the interview conducted yesterday.

Keen On Emerging Markets

In June, DoCoMo said it's keen on investing in markets including Bangladesh, Vietnam, Cambodia, Laos and China because of low mobile-phone usage.

The company on June 16 agreed to pay $350 million to buy a 30 percent stake in TM International Bhd.'s TM International (Bangladesh) Ltd.

As of Sept. 30, the number of subscribers in India rose 51 percent to 315.3 million, surpassing the U.S. population, according to the Telecom Regulatory Authority of India.

In comparison, Japan added 0.4 percent more customers to 104.8 million, based on figures from the nation's Telecommunications Carriers Association.

Sankei reported that Tata Teleservices has 30 million subscribers, making it the sixth-largest operator in India.

The Mumbai-based company, a unit of Tata Group, offers mobile and fixed-line phone connections and sells Richard Branson's Virgin Mobile services in India.

The money from the stake sale would help fund Tata Teleservices's plans to invest in its networks before new competitors such as Russia's Sistema JSFC expand, and Norway's Telenor ASA and Emirates Telecom Corp. begin operating in India.

Source:Bloomberg