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NTT DoCoMo Inc (DCM) controls 55.8% of the cellular phone carrier market in Japan (as of February) and is consistently adding new subscribers. Why then is its stock going nowhere and its ADRs near all-time lows? Very simply, the Japanese domestic market is fiercely competitive and is saturated with about 75% of the population already subscribing to cellular services. See below for analyst ratings.

The market currently features only 2 other competitors, KDDI and Vodafone Japan (to be purchased by Softbank). There were to be three new entrants this year after the government granted permission but with the Softbank's purchase, it takes over Vodafone simultaneously reducing the number of new entrants.

DoCoMo ADRs have recently traded as low as $14.05 on March 9th, its 52-wk and all-time low. DoCoMo's ordinary shares closed at 173,000 yen on Wednesday, and when accounting for its ADRs 100:1 ratio listing and an exchange rate of Y117.5/US$1, that equates to $14.72. During intraday trading today, DoCoMo has traded between $14.70 and $14.92.

The latest analyst ratings on DoCoMo out of Japan (courtesy of Japanese-language site: http://getrating.seesaa.net/) include:

    • Morgan Stanley - Maintain "equal weight" with target share price of 197,000 yen

    • Merrill Lynch - Maintain "neutral"/"equal weight"

    • Nikko-Citi - Maintain "2H" (neutral/equal weight rating with higher risk) with target share price of 190,000 yen

    • MitsubishiUFJ - Maintain "3" (neutral/equal weight) with target share price of 210,000 yen

(Using the same conversion method as above, 190,000 yen at Y117.5/US$1 equals $16.17. 197,000 yen equals $16.77. Lastly, 210,000 yen equals $17.87.

DoCoMo is increasingly being considered as a value play in Japan.

DCM 1-yr chart:

Source: DoCoMo ADRs Trading Near All Time Low (DCM)