DoCoMo to upgrade 3G network at low cost: paper

TOKYO (Reuters) - Japan's NTT DoCoMo Inc. (9437.T: Quote, NEWS , Research) will upgrade its 3G network for less than one-tenth of what it cost to roll out the existing infrastructure, the Nikkei business daily reported on Thursday, sending shares in the telecommunications giant up more than 2 percent.

The "super 3G" network will enable downloading and uploading of data such as video and music clips at up to 260 times the speed of DoCoMo's existing third-generation (3G) service. The paper said DoCoMo plans to introduce the new service in 2010.

It has been said that DoCoMo's networks lag behind those of KDDI, but with this new network DoCoMo will be in a leading position, and that is likely why investors are picking up the stock.

The paper said DoCoMo would keep initial investment on its super 3G network down to 100-200 billion yen ($841 million-$1.7 billion), but spokeswoman Mamiko Tanaka said the company has not decided on the size of its spending on the new service.

"It has been said that DoCoMo's networks lag behind those of KDDI, but with this new network DoCoMo will be in a leading position, and that is likely why investors are picking up the stock," KBC Securities analyst Naruhito Morooka said.

"I can't say if the amount of the investment is reasonable or not, but it looks like its fairly low compared with what it would accomplish," he added.

Shares in the country's biggest mobile phone operator rose 2.1 percent to 192,000 yen by the midday close, outperforming a 0.74 percent gain in the benchmark Nikkei average <.N225>. Tokyo markets were open only for the morning session on Thursday.

Low investment costs may enable the mobile phone operator to cut fees for consumers, which could help it retain users, the paper said.

DoCoMo competes with KDDI Corp. (9433.T: Quote, NEWS , Research) and Softbank Corp (9984.T: Quote, NEWS , Research) in Japan's $78 billion mobile phone market, in which competition has intensified since the introduction of mobile number portability, under which customers can switch carriers without changing phone numbers. Continued...