Why is DoCoMo making heavy investments?

Japan’s biggest mobile-phone operator, DoCoMo will invest 700 billion yen ($5.8 billion) to increase the capacity to transmit songs and videos as demand for the service has outgrown the voice calls.

Most of the funds will be used to upgrade base station, announced Chief Financial Officer Masayuki Hirata. The firm forecasts that customers will increase use of services like full-song downloads and web browsing to help data revenue increase 6.9 percent this year, as that of voice may fall 7.7 percent.

The 59 year old Hirata said in Tokyo that, “We have to expand the capacity of base stations as data transmission is expected to increase further. About 60 percent of our capital spending will be for base stations equipment that transmits wireless signals nationwide.”

This investment will be in addition to the 750 billion yen already spent this year to expand networks and accommodate increased data transfer. In March, DoCoMo started a fixed monthly price plan for unlimited Internet browsing and download, outspending KDDI and Softbank, whilst maintaining its 54 percent share of Japan’s $74 billion wireless market.

KDDI, Japan's second-biggest carrier, said it will invest 500 billion yen this fiscal year in the mobile-phone and fixed-line businesses, remaining at similar levels in the years through March 2011. Softbank, parent of Japan’s third-largest mobile-phone operator, will spend about 300 billion yen installing more base stations this year.

On May 7, DoCoMo revoked a license it gave to Hutchison Essar to provide i-mode internet access in India. This move slowed plans to extend services in new domains, from the existing 16 countries, including Germany, the Netherlands and Singapore. Having expanded worldwide, possessing such expertise, what could be DoCoMo’s hesitation with entering the Indian market? Is investing heavily in the competitive local market more viable than venturing into high-growth nations with astounding demands?