Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Welsh poet Dylan Thomas is famous for one poem in particular - one called "Do not go gentle into that good night." It is a great poem, and I can always spare a brief moment to <a href="https://poets.org/poem/do-not-go-gentle-good-night" target="_blank" rel="noopener">re-read it</a>. It starts...Do not go gentle into that good night, Old age should burn and rave at close of day; Rage, rage against the dying of the light.This deal, and the accompanying <a href="https://www.nttdocomo.co.jp/english/info/media_center/pr/2020/pdf/english_news_release_200929_02.pdf" target="_blank" rel="noopener">documentation</a> (and Nikkei article <a href="https://asia.nikkei.com/Business/Business-deals/NTT-to-take-over-wireless-unit-Docomo-for-38bn" target="_blank" rel="noopener">updates</a>) tell you NTT is not going gentle.An unkind interpretation might use a later stanza to point out that "grave men, near death, who see with blinding sight, Blind eyes could blaze like meteors and be gay" may produce a last gasp cascade of brilliance, but here the strategic rationale notes, and accompanying management actions are putting the world on notice.We're not going gentle.<hr>This morning, exactly eight hours after the Nikkei published articles in <a href="https://www.nikkei.com/article/DGXMZO64352350Y0A920C2MM8000/" target="_blank" rel="noopener">Japanese</a> and <a href="https://asia.nikkei.com/Business/Business-deals/NTT-to-take-over-wireless-unit-Docomo-for-38bn" target="_blank" rel="noopener">English</a> that <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> would soon launch a Tender Offer to buy out the minority shareholders of its mobile telephony subsidiary and largest mobile phone operator in Japan by subscriber count <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a>, NTT made a short release to the exchange saying that nothing had yet been decided regarding the subject "NTT to make DoCoMo a wholly-owned subsidiary" but that NTT would hold a board meeting that day to discuss the matter and if an announcement were warranted, there would be one."Nothing has been decided" in Japan Corporate-Speak specifically meant that the board had not resolved the matter at a board meeting. Sure enough, after the close, and after a day when the shares were pegged at limit-up all day long and the gray market traded ¥3450-3500 during that time, after the close NTT and NTT Docomo announced that NTT would conduct a Tender Offer to buy out minorities at ¥3900/share, which is a 40.5% premium to the undisturbed price.Given the ownership circumstances and the trading prices of other telecom stocks out there, this is a Very High Price Indeed.Interestingly, there is more than a hint of frustration shown by NTT in the Management Policy After the Tender Offer section of the document (so far only available in the DoCoMo Opinion <a href="https://www.nttdocomo.co.jp/english/info/media_center/pr/2020/pdf/english_news_release_200929_02.pdf" target="_blank" rel="noopener">document</a>) and in the separate document outlining several management changes to be made 1 December (i.e. 1 week after settlement of the Tender Offer). That includes the NTT DoCoMo CEO Yoshizawa who will resign his board seat, and his roles as CEO and President. That is a wow. He will be replaced by Motoyuki Ii. There will be one more Representative Director added, and two more EVPs elevated to fill the vacuum (both internal). There is considerable explanation about their plans in that doc. For anyone curious about what happens to NTT next, it is well worth a read. They plan on going big in B2B2X with integrated mobile solutions, targeting corporates and local governments. It appears they are going to do more to make dbarai (DoCoMo's cashless payment solution) scaled bigger. Done right, this could both substantially lower costs and could make a much higher throughput system. Consumer mobile effectively takes a back seat. There is more strategic information here than one normally gets. One would normally look at <a href="https://www.smartkarma.com/entities/ntt-data-corp" target="_blank" data-smartkarma-citation="entities:11232:1" rel="noopener">NTT Data Corp (9613 JP)</a> but I think it is a bit early for that. NTT Data may benefit from dev work, but this is an NTT-DoCoMo deal to start. It may be too early to judge exactly whether NTT will adequately monetize the extra generosity it is showing in buying out DoCoMo at ¥3900/share, but it appears they will not go gently into that good night.As always, more below the fold.

Welsh poet Dylan Thomas is famous for one poem in particular - one called "Do not go gentle into that good night." It is a great poem, and I can always spare a brief moment to re-read it. It starts...Do not go gentle into that good night, Old age should burn and rave at close of day; Rage, rage against the dying of the light.This deal, and the accompanying documentation (and Nikkei article updates) tell you NTT is not going gentle.An unkind interpretation might use a later stanza to point out that "grave men, near death, who see with blinding sight, Blind eyes could blaze like meteors and be gay" may produce a last gasp cascade of brilliance, but here the strategic rationale notes, and accompanying management actions are putting the world on notice.We're not going gentle.This morning, exactly eight hours after the Nikkei published articles in Japanese and English that NTT (Nippon Telegraph &amp; Telephone) (9432 JP) would soon launch a Tender Offer to buy out the minority shareholders of its mobile telephony subsidiary and largest mobile phone operator in Japan by subscriber count NTT Docomo Inc (9437 JP), NTT made a short release to the exchange saying that nothing had yet been decided regarding the subject "NTT to make DoCoMo a wholly-owned subsidiary" but that NTT would hold a board meeting that day to discuss the matter and if an announcement were warranted, there would be one."Nothing has been decided" in Japan Corporate-Speak specifically meant that the board had not resolved the matter at a board meeting. Sure enough, after the close, and after a day when the shares were pegged at limit-up all day long and the gray market traded ¥3450-3500 during that time, after the close NTT and NTT Docomo announced that NTT would conduct a Tender Offer to buy out minorities at ¥3900/share, which is a 40.5% premium to the undisturbed price.Given the ownership circumstances and the trading prices of other telecom stocks out there, this is a Very High Price Indeed.Interestingly, there is more than a hint of frustration shown by NTT in the Management Policy After the Tender Offer section of the document (so far only available in the DoCoMo Opinion document) and in the separate document outlining several management changes to be made 1 December (i.e. 1 week after settlement of the Tender Offer). That includes the NTT DoCoMo CEO Yoshizawa who will resign his board seat, and his roles as CEO and President. That is a wow. He will be replaced by Motoyuki Ii. There will be one more Representative Director added, and two more EVPs elevated to fill the vacuum (both internal). There is considerable explanation about their plans in that doc. For anyone curious about what happens to NTT next, it is well worth a read. They plan on going big in B2B2X with integrated mobile solutions, targeting corporates and local governments. It appears they are going to do more to make dbarai (DoCoMo's cashless payment solution) scaled bigger. Done right, this could both substantially lower costs and could make a much higher throughput system. Consumer mobile effectively takes a back seat. There is more strategic information here than one normally gets. One would normally look at NTT Data Corp (9613 JP) but I think it is a bit early for that. NTT Data may benefit from dev work, but this is an NTT-DoCoMo deal to start. It may be too early to judge exactly whether NTT will adequately monetize the extra generosity it is showing in buying out DoCoMo at ¥3900/share, but it appears they will not go gently into that good night.As always, more below the fold. 

NTT Deal for DoCoMo - Not Going Gentle, Definitely Raging Against the Dying of the Light

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

NTT (Nippon Telegraph & Telephone) / Event-Driven

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts on this development. What we didn’t expect was a ¥3,900 tender price.

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts on this development. What we didn’t expect was a ¥3,900 tender price.

NTT – NTT Is Going Big and Our Suspicions Are Aroused Further

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

In our latest Smartkarma Webinar, we are joined by Insight Provider <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920" rel="noopener">Kirk Boodry</a> to discuss the shock announcement from <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>  that it will buy in the 34% minority stake in DoCoMo for almost ¥4 trillion, taking the mobile unit private in what's expected to be the largest domestic tender offer for a Japanese company.<div><h3>The webinar will be hosted on Wednesday, 30/September/2020, 5.00pm SGT/HKT.</h3></div><div>
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<div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=87999858837" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>

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Kirk Boodry has over 20 years experience including time in NY, Tokyo, London, and Singapore. He first started covering Japanese equities in 2000 and Chinese equities in 2014.
His firm, Redex Holdings, is a Tokyo-based company providing independent equity research and consulting services. Outside of finance, the company is developing Internet media applications and content.
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In our latest Smartkarma Webinar, we are joined by Insight Provider Kirk Boodry to discuss the shock announcement from NTT (Nippon Telegraph &amp; Telephone) (9432 JP)  that it will buy in the 34% minority stake in DoCoMo for almost ¥4 trillion, taking the mobile unit private in what's expected to be the largest domestic tender offer for a Japanese company.The webinar will be hosted on Wednesday, 30/September/2020, 5.00pm SGT/HKT.

Register for the Webinar here


Kirk Boodry has over 20 years experience including time in NY, Tokyo, London, and Singapore. He first started covering Japanese equities in 2000 and Chinese equities in 2014.
His firm, Redex Holdings, is a Tokyo-based company providing independent equity research and consulting services. Outside of finance, the company is developing Internet media applications and content.


Smartkarma Webinar | NTT's DoCoMo Privatisation - A Long-Term Win?

The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really big move following Suga’s ascendance to the Prime Ministership and in our opinion, it signals that things are going to get increasingly tough for Softbank Corp and probably for KDDI. We discuss our reasoning below.

The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really big move following Suga’s ascendance to the Prime Ministership and in our opinion, it signals that things are going to get increasingly tough for Softbank Corp and probably for KDDI. We discuss our reasoning below.

NTT – Initial Thoughts Reading Through the Lines of the Shock News

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Late last evening, Nikkei published an <a href="https://asia.nikkei.com/Business/Business-deals/NTT-to-take-over-wireless-unit-Docomo-for-38bn" target="_blank" rel="noopener">article</a> that <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> was looking to take full control of <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> in a deal that could be worth around  ¥4 trillion (US$38bn) based on a 30% premium to the last close.<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> is trading 2.4% lower today while <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> is still untraded on a glut of buy orders. The ADR closed 30% higher overnight.A second order effect of the buyout is that it would open up a slot in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> that would need to be filled. <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> belongs to the Technology sector and the replacement will most likely be a stock from the same sector.We see <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata Manufacturing (6981 JP)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> and <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a> as the most likely candidates to replace <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a>. There is a lower probability of <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM Co Ltd (6963 JP)</a> or <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a> being included in the index.

Late last evening, Nikkei published an article that NTT (Nippon Telegraph &amp; Telephone) (9432 JP) was looking to take full control of NTT Docomo Inc (9437 JP) in a deal that could be worth around  ¥4 trillion (US$38bn) based on a 30% premium to the last close.NTT (Nippon Telegraph &amp; Telephone) (9432 JP) is trading 2.4% lower today while NTT Docomo Inc (9437 JP) is still untraded on a glut of buy orders. The ADR closed 30% higher overnight.A second order effect of the buyout is that it would open up a slot in the Nikkei 225 (NKY INDEX) that would need to be filled. NTT Docomo Inc (9437 JP) belongs to the Technology sector and the replacement will most likely be a stock from the same sector.We see Murata Manufacturing (6981 JP), Renesas Electronics (6723 JP) and Sharp Corp (6753 JP) as the most likely candidates to replace NTT Docomo Inc (9437 JP). There is a lower probability of ROHM Co Ltd (6963 JP) or Anritsu Corp (6754 JP) being included in the index.

Nikkei 225 Index Rebalance: Likely Candidates to Replace NTT Docomo

Japan

NTT DOCOMO, INC. provides various types of telecommunication services including cellular phones, satellite mobile communication, and wireless LAN Network. The Company also sells cellular phones, and other equipment.

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NTT Docomo Inc (9437 JP)

NTT Deal for DoCoMo - Not Going Gentle, Definitely Raging Against the Dying of the Light

This morning, exactly eight hours after the Nikk

Travis Lundy

NTT – NTT Is Going Big and Our Suspicions Are Aroused Further

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts...

Mio Kato

Smartkarma Webinar | NTT's DoCoMo Privatisation - A Long-Term Win?

In our latest Smar

Smartkarma Research

NTT – Initial Thoughts Reading Through the Lines of the Shock News

The Nikkei article regarding NTT buying out Docomo comes out of the blue and seems to have blindsided almost everybody. This is the first really...

Mio Kato

Nikkei 225 Index Rebalance: Likely Candidates to Replace NTT Docomo

Late last evening, Nikkei published an article

Brian Freitas

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