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DoCoMo to Buy Stake in Tower Records Japan

The Associated Press
Monday, November 7, 2005; 5:54 AM

TOKYO -- Japan's largest cellular phone service operator NTT DoCoMo Inc. has agreed to purchase a 40 percent stake in Tower Records Japan Inc., effectively putting the top retailer of music software in Japan under DoCoMo's control, the two companies announced Monday.

The mobile carrier will purchase about 42 percent of Tower Records' shares, including part of the 32.24 percent stake held by current principal shareholder Nikko Principal Investments Japan Ltd., making it the largest shareholder in the retailer, according to a joint statement released Monday.

The investment will cost DoCoMo about 12.8 billion yen ($108.2 million), the release said.

DoCoMo intends to expand the number of subscribers using its third-generation cell phones by offering new e-money and credit card functions through the 78 music stores operated nationwide by Tower Records. The phones will allow DoCoMo subscribers to buy CDs and receive discount vouchers at the shops without using cash.

The company has already installed cell phone readers at convenience stores, video rental shops and restaurants. About 6.5 million DoCoMo users, or 30 percent of its subscribers, have taken advantage of the payment functions.

DoCoMo expects to increase the value of its mobile phones by offering more music-related information, while Tower Records will use the alliance for marketing purposes, the release said.

A report in the Nihon Keizai Shimbun, Japan's biggest business daily, also said Tower Records _ which has said it wants to go public _ decided to join hands with DoCoMo in hopes of gaining a stable shareholder.

DoCoMo intends to maintain an equity interest of at least 33.4 percent in Tower Records, a stake that will give it decisive voting power even after the retailer becomes a listed company, the Nihon Keizai report said.

© 2005 The Associated Press