NTT DoCoMo IPO Cements Goldman Sachs' Leadership Position in Japan

Theme: Clients

Goldman Sachs co-leads the 1998 initial public offering of NTT Mobile Communication Network, Inc., (NTT DoCoMo), the largest IPO in history at the time. Coming in the midst of Japan's worst recession since World War II, the offering restores confidence in global capital markets at a time when it is critically needed.

On the heels of the 1997 Asian Financial Crisis, Japan was in the midst of its worst recession since World War II when in 1998 its leading cellular service provider, NTT DoCoMo, announced plans for a massive global stock offering. Around the world, companies were pulling stock offerings and investors were taking their money out of the equity markets. Goldman Sachs delayed its own planned initial offering at the end of September 1998 in order to wait for markets and other conditions to improve. Yet, the next month, the firm was able to co-lead what was then the world’s largest IPO: that of Japan’s NTT Mobile Communications Network Inc., better known as NTT DoCoMo.

Nippon Telegraph & Telephone Corp. (NTT) established DoCoMo in 1992 from a carve-out of its mobile communications operations. The new company derived the name “DoCoMo” from the phrase “DO COmmunications Over the MObile Network.” By 1998, it served 57% of Japan’s 36.5 million wireless subscribers. Even amid the severe recession, the cellular phone business had proven to be growing and profitable, resulting in strong demand for DoCoMo’s offering. It traded up 19 percent in its first day of trading to US$39,540 from the initial public offer price of US$33,163 and raised just over US$18 billion, nearly US$5 billion more than the then-record IPO of its parent company NTT in 1986.

Goldman Sachs International and Nikko Securities Co. co-led the offering, which turned DoCoMo into Japan’s third-largest company by market capitalization. In the years leading up to the IPO, Goldman Sachs had built a reputation in Japan for its strong research coverage, solid relationships with the Japanese government, and global perspective. The DoCoMo offering further elevated Goldman Sachs’ status as a major distributor of equities in Japan at a time when distribution was still largely in the hands of domestic firms.

The DoCoMo IPO was a bright spot during a turbulent time for global financial markets, lifting the Nikkei Index and restoring confidence in global capital markets at a time when it was critically needed.