MMO2 is a target for Japanese

MMO2 has emerged as a possible takeover target for the Japanese mobile phones giant NTT DoCoMo.

A bid for the former BT Cellnet business, valued at £6 billion, is the most radical option being considered to revamp DoCoMo's European strategy in the wake of a disastrous launch by new operator Three, in which DoCoMo has a 20% stake.

Management at Three have been given until the New Year to show they are sorting out the business.

It also needs to take steps to implement DoCoMo's successful I-Mode technology, which gives users access to a wide range of digital content.

DoCoMo has strengthened its European presence and chief executive Keiji Tachikawa has recently briefed bankers and investors.

Earlier, Tachikawa signalled that the firm might take part in consolidation of the European mobile phone sector, but would not make the first move. However, analysts said there were now signs this was changing.

'It has been a while since we have seen Tachikawa in Europe,' said one.

'There is still no sign of the industry being drawn together. Certainly, if an elder brother is needed to push some of the smaller companies towards the altar, then he has the influence.'

DoCoMo's more likely options would be deals to license I-Mode with either Virgin Mobile or BT, which has just moved back into the consumer mobile market.

Virgin is close to resolving a long-running revenue row with T-Mobile, the German-backed company that owns half its shares and whose network it uses. Virgin is expected to try to float next year or seek another trade partner.

DoCoMo also has an investment in KPN, the Dutch operator that has just sold its five% stake in Three to major partner Hutchison Whampoa for £90 million. It also has licensing deals for I-Mode in France, Italy and Spain.

'DoCoMo would like to see I-Mode implemented,' a source said. 'The most obvious choice is Three, but it needs to work well or users will be very disappointed.'

MMO2 shares rose sharply last week after it reported its first profit - £26 million --since demerging from BT two years ago.

City rumours have repeatedly linked the company to a variety of merger partners.