Japan's biggest mobile phone company, NTT DoCoMo, has dropped its stake in its Dutch partner to just 2.2%.

The two formed one of the most ambitious alliances in the late 1990s in the rush for third-generation mobile phone licences.

But massive debts and slower-than-expected takeup of the advanced 3G services at home have hit DoCoMo.

As a result, KPN's request for additional funds to buy new shares has been refused, and DoCoMo's stake will shrink from 15% to 2.2%.

Tough times

The news did not surprise the Dutch company, which has already said it will seek other avenues to recapitalise itself.

Earlier this year KPN announced a slim third-quarter profit of 68m euros (�43.3m; $68.3m), its first for two years, along with a steady shrinking of its own enormous debts.

Its i-mode network - mobile data services based on NTT's hugely popular offering in Japan - is up and running.

DoCoMo's profits, meanwhile, have evaporated thanks to the need to write off its huge spend on foreign partnerships.

The six months to September saw the firm lose 307.8bn yen ($2.5bn; �1.6bn) on KPN, AT&T Wireless in the US and Hutchison 3G in the UK.

It promised investors a freeze in overseas investments.

Nokia's warning

The announcement coincided with fresh discouraging news from the world's biggest mobile phone maker.

Finland's Nokia told the markets that it feared sales for the final three months of 2002 would slip below the levels it had previously predicted.

The likely figure was between 8.8bn and 9bn euros ($8.9-9.1bn; �5.6-5.8bn), rather than 8.9bn-9.2bn euros, the company said, despite assuring investors of continuing market share gains and reaffirming a 400 million handset sales forecast for the worldwide market.

The company's shares slipped 2.7% in morning trading.

But German competitor Siemens was staying upbeat, offering a challenge to its Finnish rival.

In an interview with German newspapers on Tuesday morning, its chief executive declared that the company wanted to raise its share of the global handset market to 15% from the current level of less than 8%.

Nokia, in contrast, has about 36%.