Vodafone may sell controlling interest in Vodafone Japan

[ShoresGuy]

3 March 2006
Vodafone Group

Announcement re: Vodafone Japan

Vodafone Group ("Vodafone") has noted today's press speculation regarding its Japanese subsidiary.

Vodafone confirms it is in discussions regarding a potential sale of a controlling interest in Vodafone Japan to SoftBank. These discussions may or may not lead to a transaction.

A further announcement will be made in due course.

Source: http://www.vodafone.com/article_with...277138,00.html


More info also comes from the BBC:

Vodafone could sell Japanese arm

Vodafone has revealed it is in talks about selling its struggling Japanese phone business to internet and telecoms provider Softbank.

Its Japanese subsidiary has been losing customers in the face of fierce competition from domestic operators such as NTT DoCoMo and KDDI.

It has struggled since a disappointing launch of its 3G service in 2004.

Vodafone's shares - which have been depressed by its Japanese problems - rose 8.4% to 121.5 pence on the news.

Falling customers


These discussions may or may not lead to a transaction
Vodafone

"Vodafone confirms it is in discussions regarding a potential sale of a controlling interest in Vodafone Japan to Softbank," the company said in a statement.

"These discussions may or may not lead to a transaction."

Although Vodafone still has nearly 15 million customers in Japan, its customer base has shrunk over the past year amid tough competition and a poor reception for its 3G service.

Profits fell sharply in the past six months while revenues were flat.

Recovery claim

Vodafone has said it is confident of increasing its share of new customers by 2007.

Only last November, Japanese boss William Morrow said he felt the business had turned the corner and was on the road to recovery.

However, the firm has warned that expenditure on new handsets and improving its 3G services will further reduce profit margins.

Paul Kavanagh, an analyst with stockbrokers Killick & Co, said the sale of its Japanese business would be popular with the City.

"I think Vodafone had singularly failed to achieve success in Japan," he told BBC News.

The rising share price signalled City confidence that Vodafone bosses were "taking appropriate action to tackle the problem", he added.

No fix

Telecoms analysts said Vodafone's Japanese difficulties had frustrated both its management and shareholders.

"Vodafone would shed a unit that it just doesn't seem able to fix and which certainly does not fit within the profile of the Vodafone investment portfolio," said Ovum's Robin Hearn of the mooted sale.

"It might also buy Vodafone's management just a little respite after a very rough ride over the past few months."

Vodafone's management has come under growing pressure amid a slowdown in the firm's growth and problems in key markets.

Earlier this month, it revealed it would write down the value of its assets by up to £28bn and that earnings were likely to fall 1% in 2007.

Softbank secured a licence to operate a mobile phone business last year.

Source: http://news.bbc.co.uk/1/hi/business/4771780.stm

[agentHibby]

I think Vodafone will be keeping VZW for awhile because of $$$$$$$$$$$. Vodafone needs profitable operations. Vodafone Japan is not one of them.

[Bugwart]

True. Vodafone KK has been a money vacuum. They tried hard, but they have not been able to provide a service which provides what the Japanese consumer was looking for.

[ShoresGuy]

Here are some more details:

http://in.tech.yahoo.com/060303/137/62siw.html
http://news.bbc.co.uk/1/hi/business/4771780.stm

Vodafone hasn't commented completely on this just yet.

[scotsboyuk]

It would make sense for them to sell Vodafone KK, they just don't seem to be able to turn it around. Having spoken to someone living in Japan who is familiar with the mobile scene there, he informed me that Vodafone approached the Japanese market with a European mindset, which didn't work.

[viewfly]

Vodafone certainly occupied a much, much smaller footprint in the typical Japanese electronics store's display compared to the other two Japanese providers. This is based on the sheer number of models provided by the competitors.

When I was traveling around Japan, DoMoCO and Vodaphone's 3G coveraged overlapped very well. That doesn't seem to be the problem (at least in my small sample). But even though Japan is loaded with McDonald's, KFC's, etc, the Japanese have a tendency to prefer japanese branded stuff, as we americans do. This may be part of the problem too.

[scotsboyuk]

@viewfly

That may be part of the problem, but I think Vodafone didn't approach the Japanese market with the right mindset. For instance, they were selling the V802, which was a good handset in Europe, but perhaps not right for Japan.

[viewfly]

@viewfly

That may be part of the problem, but I think Vodafone didn't approach the Japanese market with the right mindset. For instance, they were selling the V802, which was a good handset in Europe, but perhaps not right for Japan.

Yes, I'm sure it is only one part of Vodaphone's problem.

What is wrong with the V802 for Japan? It is a UMTS phone plus tri band GSM. This would make it a world phone for the japanese. It's style fits very well into the models that I've seen offered.

viewfly - From Paris this week, roaming with Cingular.

[ShoresGuy]

I didn't know you were abroad, viewfly. Any chance you'll be passing through Germany? Which networks are you roaming on? A roaming report would be neat.

[viewfly]

I didn't know you were abroad, viewfly. Any chance you'll be passing through Germany? Which networks are you roaming on? A roaming report would be neat.

Not passing through Germany. This is a short trip, Wed through Sunday.

I've been roaming on OrangeF, SFR and F Bouygtel (BT). I really haven't a clue how my phone is deciding which service on to lock onto. But I noticed during this trip and others that at the airport it locks into OrangeF and in Paris onto SFR and BT mostly...and at full bars. This is 1800 Mhz.

Where I am now, at the southern edge of Paris, BT is the consisent carrier, again with max bars.

Last night on the Paris Metro subway, I had service in the underground stations and a good number of times between them too. The 1800 service seems much improved, even since last year.

voice, sms and web browsing back to the Cingular Media network is working fine.

I have to say one thing. Stopping by my favorite mobile phone store, I find myself not jealous any more with the phone offerings compared with what we can obtain in the states now. That is a big change!

Viewfly.

[ShoresGuy]

Cool, thanks for the report. I've experienced the same thing over the past few years when I still lived in London and took the Thalys from Cologne to Brussels and then the Eurostar from Brussels to London Waterloo. My Vodafone UK SIM would prefer to roam on SFR but I was also able to access Orange France. GSM 1800 is used a lot more as a filler option than it is here in Germany. T-Mobile and Vodafone are still using primarily GSM 900. E-Plus and O2 have solid GSM 1800-only networks so they do quite well on their own too with just 1 band.

[scotsboyuk]

What is wrong with the V802 for Japan? It is a UMTS phone plus tri band GSM. This would make it a world phone for the japanese. It's style fits very well into the models that I've seen offered.

If you compare the V802 with other handsets available at the time in Japan it doesn't look to be the high-end handset that it was in Europe. For instance other handsets had better cameras, QVGA screens, etc.

Don't get me wrong, the V800/802 was a good handset, but I just don't think it was quite at the same level in Japan as it was in Europe.

[Bugwart]

If the V802 were the right phone for Japan, wouldn't Vodafone KK have many subs than they have signed up?

Clearly the handsets and the services offered by KDDI Au and FOMA were more in line with what the Japanaese consumer wants.

The GSM service on the V802 is beneficial if you are traveling to Taiwan, China, or parts of SE Asia. Many Japanese tourists visit Korea. The best phone for roaming there would be from KDDI Au. These phones also roam on Verizon in the US, another popular destination for Japanese tourists.

Businessmen who travel to Europe, Taiwan, SE Asia, and China frequently would likely find the V802 beneficial and these people may account for a large portion of Vodafone KK's subs.

Whatever Vodafone KK did or did not do, they were never able to capture enough consumers to rival the Number 1 and Number 2 providers.