Asia Long-Short PM/Analyst

Curtis Lehnert

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

In a devastating announcement on October 31st, NTT Docomo announced it will lower mobile phone fees by 20 - 40% beginning in the April-June quarter of 2019. Shares of both <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo Inc (9437 JP)</a> and <a href="https://www.smartkarma.com/entities/623" target="_blank" data-smartkarma-citation="entities:623:1">Ntt (Nippon Telegraph &amp; Telephone) (9432 JP)</a> traded down 15% on Thursday after the announcement with other mobile operators <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI Corp (9433 JP)</a> and <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a> falling sharply as well in expectation that the competition will follow suit.
This is obviously bad news for the mobile operators, but what about <a href="https://www.smartkarma.com/entities/623" target="_blank" data-smartkarma-citation="entities:623:1">Ntt (Nippon Telegraph &amp; Telephone) (9432 JP)</a> which only generates a bit over 60% of its OP from the mobile communications business and contributes 64% of NAV? Does it deserve to have its valuation cut as much as a company that generates 100% of its OP from the mobile communications business? 
There are a lot of moving pieces to this highly-liquid and widely-followed stub, and in this insight I will add to the excellent work that <a href="https://www.smartkarma.com/profiles/1917" target="_blank" data-smartkarma-citation="accounts:1917">Chris Hoare</a> and <a href="https://www.smartkarma.com/profiles/25" target="_blank" data-smartkarma-citation="accounts:25">Travis Lundy</a> have done on both NTT and NTT Docomo. I have tremendous respect for the breadth and depth that <a href="https://www.smartkarma.com/profiles/25" target="_blank" data-smartkarma-citation="accounts:25">Travis Lundy</a> is able to cover in his research and when writing on any company in Japan I only half-jokingly say that this is Travis Lundy's world, I am just writing in it. 
OK, back to the point of this insight in which I will examine:
<ul>
<li>Buybacks at both NTT and NTT Docomo </li>
<li>NTT Urban buyout by NTT</li>
<li>Stub business performance, focusing on the Domestic and International business</li>
<li>A trade idea considering the above points</li>
</ul>

In a devastating announcement on October 31st, NTT Docomo announced it will lower mobile phone fees by 20 - 40% beginning in the April-June quarter of 2019. Shares of both NTT Docomo Inc (9437 JP) and Ntt (Nippon Telegraph &amp; Telephone) (9432 JP) traded down 15% on Thursday after the announcement with other mobile operators KDDI Corp (9433 JP) and Softbank Group (9984 JP) falling sharply as well in expectation that the competition will follow suit.
This is obviously bad news for the mobile operators, but what about Ntt (Nippon Telegraph &amp; Telephone) (9432 JP) which only generates a bit over 60% of its OP from the mobile communications business and contributes 64% of NAV? Does it deserve to have its valuation cut as much as a company that generates 100% of its OP from the mobile communications business? 
There are a lot of moving pieces to this highly-liquid and widely-followed stub, and in this insight I will add to the excellent work that Chris Hoare and Travis Lundy have done on both NTT and NTT Docomo. I have tremendous respect for the breadth and depth that Travis Lundy is able to cover in his research and when writing on any company in Japan I only half-jokingly say that this is Travis Lundy's world, I am just writing in it. 
OK, back to the point of this insight in which I will examine:

Buybacks at both NTT and NTT Docomo 
NTT Urban buyout by NTT
Stub business performance, focusing on the Domestic and International business
A trade idea considering the above points


TRADE IDEA: NTT (9432 JP) Stub - Overreaction to Docomo Rate Cuts

Japan

ASAHI Net, Inc. provides Internet access services using ADSL (Asymmetric Digital Subscriber Line) and fiber optic technologies.  The Company also offers IP Phone, web hosting, and Web 2.0 related services.

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Asahi Net Inc (3834 JP)

TRADE IDEA: NTT (9432 JP) Stub - Overreaction to Docomo Rate Cuts

In a devastating announcement on October 31st, NTT Docomo announced it will lower mobile phone fees by 20 - 40% beginning in the April-June quarter...

Curtis Lehnert

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