Seeking Alpha
Profile| Send Message| ()  

By Ingrid Lunden

Buongiorno logo

Mobile carrier NTT Docomo (DCM) today announced a move in its strategy to grow its content business outside of its traditional base of Japan: it issued a tender offer to acquire Buongiorno, a mobile content company based in Italy, paying up to ¥24 billion ($300 million) for the assets.

Docomo notes in a statement that the acquisition would be made by its Germany-based subsidiary, Docomo Deutschland, and that Maruo del Rio, Buongiorno's majority shareholder and chairman with 20 percent of Buongiorno's stock, has already agreed to sell his stake to the carrier. The deal would see Buongiorno become a subsidiary of NTT Docomo.

This is not the first time that Docomo has made moves to build up its European/rest-of-world business in mobile content, but it is an area that has been lying somewhat dormant for a while. A decade ago, well before the mobile world was hit with the revolution that became the iPhone and then Android following closely behind, Docomo made a foray to bring its popular i-mode mobile content service to the Continent, starting out first with a partnership with France's Bouygues Telecom with plans to extend that to other markets.

That never really followed through as a successful business, though, when the game for mobile content changed from walled gardens run by operators to app stores run by the handset makers. Since then, Docomo has also been involved in an LTE chip joint venture (with Samsung) that ended last month, as well as other European initiatives. For example, it inked a partnership with France Telecom's Orange to co-sell a Sharp 3D handset, the Aquos SH80F. And it also owns, in Germany, a mobile payments business net mobile, which in September 2011 got an investment from Docomo of €28.4 million so that it could in turn take a controlling stake in Bankverein Werther, a private German bank with e-commerce and payment service operations. "Utilizing Bankverein Werther's existing banking license and credit card licenses, as well as the bank's main systems, net mobile will be able to greatly enhance its mobile payment platform," Docomo said at the time.

This time around it looks like Docomo, which has 60 million customers in its home market, wants another local/international partner to help export its business model more effectively.

Buongiorno is one of the oldest mobile content companies around, first being established back in 1999 and currently employing 848 people. And it is profitable: in 2011 it reported revenues of €228.6 million (¥24.52 billion; $295 million) and operating profit of €7 million (¥7.5 billion; $9 million).

Its services - which include a sprawling list of direct-to-consumer offerings and those it creates in partnership with carriers and others - cover gaming, music, casual content like wallpapers and ringtones, and mobile payments. Its services are used by some 2 billion customers in 57 countries across four continents, the company says, and you can see how this distribution channel could get used by Docomo for the services that it has created itself, in addition to those from Buongiorno.

"The acquisition will combine Docomo's innovative mobile business and services know-how in Japan and other countries with Buongiorno's advanced mobile technologies and extensive global customer base," Docomo notes in its statement. "As part of expanding the businesses of both companies, Docomo expects to strengthen the foundation of its mobile platform businesses overseas."

This is also part of the ongoing trend that we are seeing from the likes of other carriers, like Telefonica, to create new lines of revenue that take operators beyond their traditional business of mobile voice and data sales in their traditional geographic footprints. Telefonica last week launched TU-Me new app that offers an all-in-one free voice, text, photosharing offering to all iPhone owners that it hopes can help it snag a new base of users.

Pending regulatory approval, Docomo says that it will officially begin its tender offer at €2 per share, which will last 25 days. Del Rio's 20 percent holding is equivalent to 111,888,895 shares in Buongiorno.

Original post

Source: NTT DoCoMo Will Pay Up To $300M To Buy Italian Mobile Content Company