Japan's largest mobile phone operator NTT DoCoMo is to go ahead with plans to sell up to 800bn yen ($6.8bn; �4.6bn) worth of new shares.

The share sale is intended to raise funds for worldwide investments, including a 16% stake in AT&T Wireless of the United States.

It will be Japan's biggest offering of new shares by a listed company.

But it comes at a difficult time for telecoms firms, which have seen their share prices eroded in recent months over concerns ranging from expensive network licences, high debts and slowing revenues to safety issues and the general gloom overshadowing the technology sector.

Orange competition

DoCoMo will additionally be competing for investor interest with France Telecom, which earlier this week began marketing shares in its Orange wireless division.

Many of the world's other big mobile outfits will be watching the progress of the sales closely.

Carriers including Deutsche Telekom, KPN of the Netherlands, British Telecom and the US' Verizon, BellSouth and SBC are all aiming to venture into equity markets this year.

DoCoMo's need to tap the market stems partly from a $9.8bn investment in AT&T Wireless, announced in November.

The company also needs substantial funds to develop third-generation mobile phone services. It hopes to be the world's first operator of such a service, with a launch date in May.

Credit rating protected

Analysts said DoCoMo was financing its expansion through a share issue rather than just bank loans out of a desire to protect its credit rating, which might have been at risk if debts mounted any more.

Earlier this month, the carrier clinched a 1,200bn yen loan deal with five Japanese banks.

The share sale is DoCoMo's first since its flotation by parent company Nippon Telegraph & Telephone in 1998.

Amounting to about a 4.6% stake, it will dilute NTT's share of the company to 64% from 67%.

Some 400,000 shares have been allocated for sale in Japan and overseas, with a further 60,000 available for investors based outside Japan if demand is sufficient.

Shares hit 16-month low

DoCoMo shares have slumped more than 30% since early December, dragging the Tokyo stockmarket's benchmark Nikkei 225 index down by about 10%.

On Friday, DoCoMo climbed 1.03% to 1.97m yen, up from a 16-month low reached the day before.

Japan had 58 million mobile phone users in 2000, up 20% from the previous year.

DoCoMo said it had 34.2 million subscribers as of end-December, of which 17.6 million used its "i-mode" internet-enabled phones.

Some 26.8 million people or 46% of the total market had internet-enabled phones - a penetration level well in advance of US and European markets.