Citing reduced prospects, mobile phone giant Vodafone today announced the $15.4 billion sale of its troubled Japan unit to Softbank. Japan’s Softbank already owns two mobile phone carriers.
Vodafone said it is selling its Japan operation because of “reduced prospects for superior long-term returns and a good offer from SoftBank,” Arun Sarin, CEO of the UK-based carrier, said in a statement.
“It has become increasingly clear that the greatest operational benefits come from strong local and regional scale,” Sarin explained.
Since coming to Japan six years ago, Vodafone has consistently run third behind NTT DoCoMo and KDDI. NTT controls 50 percent of the mobile phone market. Vodafone maintained just 14.7 million subscribers and 17 percent of the Japanese mobile market, Thomas Husson, a JupiterResearch analyst, told internetnews.com.
Husson said Vodafone is looking at all regions where it does not hold at least 50 percent of the market.
Although Verizon Communications last month said it was considering buying Vodafone’s 45 percent stake in Verizon Wireless, a Vodafone spokesperson told internetnews.com it plans to remain in the U.S.
“It is an attractive market and we are part of a very successful partnership,” said the spokesperson.
The withdrawal from Japan follows Vodafone entering multiple other markets. Vodafone paid $4.55 billion for Tesim, Turkey’s second-largest mobile operator.
Other 2005 deals included a $1.4 billion for a 10 percent stake in India’s leading mobile carrier; a 79 percent control of Romanian MobiFan; and total control of the Czech Republic’s Oskar Mobile.
Also hindering Vodafone in Japan was its lack of success offering 3G services. While Vodafone worked with traditional handsets from Nokia and Motorola, NEC and Panasonic for years worked with NTT DoCoMo and KDDI, according to Husson.
Because of the missteps, Vodafone captured only 2.2 million Japanese 3G subscribers in 2005, said the analyst.
Softbank, while not the giant Vodafone is, has the home-field advantage, according to analysts. Owners of Japan Telecom and Cable & Wireless, Softbank will be able to compete with NTT, said Husson.
European mobile companies have never succeeded in Japan’s demanding market, according to David Chamberlain, analyst with In-Stat. The move will bring Japan’s mobile subscribers relief the Vodafone unit is Japanese.