Saturday, March 25, 2006
"Why Japan is several years ahead of Europe in telecomms..."
Today (March 23, 2006) I was invited to brief the Technology Attaches of the Embassies of the 25 European Union countries here in Tokyo about Japan's telecommunications sector (both fixed net and wireless) in a one hour presentation + discussion. I had offered several alternative topics and the conference of EU Technology Attaches selected the most provocative title I had offered:
"Why Japan is several years ahead of Europe in telecommunications and what Europe can do to catch up"
Vodafone KK's Chairman and former NTT-DoCoMo Vice-President Tsuda, who had worked 34 years at NTT and DoCoMo, said in a recent interview with Bloomberg that "Japan is way ahead in 3G". - therefore, although this title is clearly provocative, it's clearly worthwhile examining this question. With the sale of Vodafone KK to SoftBank last week, the timing of this briefing was particularly interesting. My presentation discussed the following questions:
- Is Japan ahead of Europe in Telecommunications?
- Why?
- What is the impact? Is this important?
- What Europe can do to catch up
Download a pdf-file with the slides of my presentation here (for current (2006) corporate customers, we offer this presentation free of charge (please contact us for your copy), for others the presentation is available for purchase)
"Why Japan is several years ahead of Europe in telecommunications and what Europe can do to catch up"
Vodafone KK's Chairman and former NTT-DoCoMo Vice-President Tsuda, who had worked 34 years at NTT and DoCoMo, said in a recent interview with Bloomberg that "Japan is way ahead in 3G". - therefore, although this title is clearly provocative, it's clearly worthwhile examining this question. With the sale of Vodafone KK to SoftBank last week, the timing of this briefing was particularly interesting. My presentation discussed the following questions:
- Is Japan ahead of Europe in Telecommunications?
- Why?
- What is the impact? Is this important?
- What Europe can do to catch up
Download a pdf-file with the slides of my presentation here (for current (2006) corporate customers, we offer this presentation free of charge (please contact us for your copy), for others the presentation is available for purchase)
Tuesday, March 21, 2006
SoftBank & YAHOO acquire Vodafone KK
The Deal
SoftBank and Yahoo-Japan acquired 97.7% of outstanding shares of Vodafone Japan (Vodafone KK) in Japan's largest M&A transaction (the remaining 2.3% are owned by other investors). In a Leveraged Buy-Out (LBO) a consortium of banks extended US$ 9.5 to 10.4 Billion in loans.
SoftBank's aim: grow to 26 million mobile subscribers and become No. 2 in Japan
SoftBank announced the plan to return to J-Phone's growth curve and to aim for 26 million subscribers, which would place the resulting mobile operator on place 2 in Japan.
Japan's new telecom landscape
Three major players emerge after a sequence of consolidation and restructuring: NTT, KDDI and Softbank/YAHOO.
For more information:
download our JCOMM-Report on Japan's telecom's industry
SoftBank and Yahoo-Japan acquired 97.7% of outstanding shares of Vodafone Japan (Vodafone KK) in Japan's largest M&A transaction (the remaining 2.3% are owned by other investors). In a Leveraged Buy-Out (LBO) a consortium of banks extended US$ 9.5 to 10.4 Billion in loans.
SoftBank's aim: grow to 26 million mobile subscribers and become No. 2 in Japan
SoftBank announced the plan to return to J-Phone's growth curve and to aim for 26 million subscribers, which would place the resulting mobile operator on place 2 in Japan.
Japan's new telecom landscape
Three major players emerge after a sequence of consolidation and restructuring: NTT, KDDI and Softbank/YAHOO.
For more information:
download our JCOMM-Report on Japan's telecom's industry
Monday, March 13, 2006
Internet music taking off in Japan
i-Tunes Music Store (ITMS) kick-started internet music downloads in Japan, which were falling just before ITMS arrived:
i-Tunes & i-Pod themselves are under attack by KDDI's "au Listen Mobile Service" - LISMO!, which includes sophisticated viral marketing, music community and location based services.
Read more in our Mobile-Music-Japan Report (MOMJ)
i-Tunes & i-Pod themselves are under attack by KDDI's "au Listen Mobile Service" - LISMO!, which includes sophisticated viral marketing, music community and location based services.
Read more in our Mobile-Music-Japan Report (MOMJ)
Monday, March 06, 2006
Vodafone in Japan?
About one year ago, in an interview with Bloomberg, I mentioned that a sale of Vodafone's Japan operations to Softbank might be the way Vodafone will go in Japan. This seems to be happening now and negotiations to this effect were confirmed by both Softbank and Vodafone over the weekend.
The potential deal
Although a deal has not been closed yet, it is widely reported that a sale of Vodafone's Japan operations to Softbank is very likely to be closed within a few weeks. What could this deal look like?
As reported by Bloomberg Vodafone KK's capitalization at the point of delisting from the Tokyo Stock Exchange was around YEN 1.4 Trillion (= about US$ 12 Billion). Bloomberg mentions estimations by London based analysts who value Vodafone KK in the range US$ 14 to 16 Billion. Of course, if a deal is actually concluded, it might be a complex deal with several components, not just a simple cash price, and any cash value will not be determined by analysts in London, but on the negotiating table between Softbank and Vodafone, and the final deal could be more complex than a simple
sale against cash payment.
In any case, this deal - if it happens - promises to become one of the largest M&A transactions ever in Japan sofar in terms of cash value. Vodafone is reported to prefer a cash deal, and Softbank has been reported to consider a leveraged buy-out (LBO) where Softbank will take debt against the to-be-acquired company.
It has also been reported that Softbank seems to be planning to change the name of the resulting company, so the "Vodafone" brand is not likely to survive in Japan.
What is Softbank likely to do with Vodafone's Japan operations
An acquisition of Vodafone's Japan operations will be the completion of Softbank's march to build a full-scale telecommunications group on a par with NTT and KDDI through a series of acquisitions plus internal growth.
Softbank in this new shape will become a much more serious competitor for NTT and KDDI, which both have succeeded to transform themselves from former monopolies into some of the world's most advanced telecom operators.
In a sense Softbank is already where DoCoMo and KDDI are working very hard to get to: DoCoMo and KDDI are working hard to build content and transaction businesses (such as shopping, financial services, auctions and music), because pure traffic revenue (ARPU) is driven down by relentless competition.
Softbank is strongly linked to YAHOO-Japan, and YAHOO-Japan demonstrated it's strength by driving eBay out of Japan - so Softbank is already where DoCoMo and KDDI want to go. All Softbank still needed was a wireless network, and with a Vodafone acquisition, Softbank will have a wireless network much faster than expected.
A Vodafone/Softbank deal will not be a good development for eAccess, and eAccess is reported to have submitted documents to Japan's regulatory authorities regarding Softbank's wireless license. It will be interesting how the regulating government ministry will decide on the regulatory aspects of any Softbank/Vodafone deal. In the past few years Japan's government has been singularly focused on creating the conditions to make Japan the most advanced IT market in the world, so I think we can
be confident to expect a wise decision - wise for Japan, not necessarily beneficial for particular mobile operators.
What made Vodafone change it's mind about Japan?
As reported by Bloomberg, one year ago Vodafone had the clear intention to remain in Japan for the next 10, 20, 30 years. What made Vodafone change it's mind?
As widely reported, Vodafone was loosing market share in Japan's mobile phone market over the last several years.
With number portability being introduced in Japan from autumn 2006, and with three new operators entering the market during 2006-2007, the competitive environment will become much more severe than it is now, decreasing pure network profitability, while at the same time massive network investments are necessary.
Analysis of Vodafone-Japan's subscriber numbers shows that early warning signs appeared already in 2002 - 2002 would have been the time for Vodafone to take decisive action to turn the business around in Japan.
More about Japan's telecom sector: download our JCOMM-Report. Contact us for annual subscriptions.
See also, my comments in Der Standard (German language)
UPI also quotes us:
"Globe Talk: Vodafone's sayonara problems" (link to UPI)
The potential deal
Although a deal has not been closed yet, it is widely reported that a sale of Vodafone's Japan operations to Softbank is very likely to be closed within a few weeks. What could this deal look like?
As reported by Bloomberg Vodafone KK's capitalization at the point of delisting from the Tokyo Stock Exchange was around YEN 1.4 Trillion (= about US$ 12 Billion). Bloomberg mentions estimations by London based analysts who value Vodafone KK in the range US$ 14 to 16 Billion. Of course, if a deal is actually concluded, it might be a complex deal with several components, not just a simple cash price, and any cash value will not be determined by analysts in London, but on the negotiating table between Softbank and Vodafone, and the final deal could be more complex than a simple
sale against cash payment.
In any case, this deal - if it happens - promises to become one of the largest M&A transactions ever in Japan sofar in terms of cash value. Vodafone is reported to prefer a cash deal, and Softbank has been reported to consider a leveraged buy-out (LBO) where Softbank will take debt against the to-be-acquired company.
It has also been reported that Softbank seems to be planning to change the name of the resulting company, so the "Vodafone" brand is not likely to survive in Japan.
What is Softbank likely to do with Vodafone's Japan operations
An acquisition of Vodafone's Japan operations will be the completion of Softbank's march to build a full-scale telecommunications group on a par with NTT and KDDI through a series of acquisitions plus internal growth.
Softbank in this new shape will become a much more serious competitor for NTT and KDDI, which both have succeeded to transform themselves from former monopolies into some of the world's most advanced telecom operators.
In a sense Softbank is already where DoCoMo and KDDI are working very hard to get to: DoCoMo and KDDI are working hard to build content and transaction businesses (such as shopping, financial services, auctions and music), because pure traffic revenue (ARPU) is driven down by relentless competition.
Softbank is strongly linked to YAHOO-Japan, and YAHOO-Japan demonstrated it's strength by driving eBay out of Japan - so Softbank is already where DoCoMo and KDDI want to go. All Softbank still needed was a wireless network, and with a Vodafone acquisition, Softbank will have a wireless network much faster than expected.
A Vodafone/Softbank deal will not be a good development for eAccess, and eAccess is reported to have submitted documents to Japan's regulatory authorities regarding Softbank's wireless license. It will be interesting how the regulating government ministry will decide on the regulatory aspects of any Softbank/Vodafone deal. In the past few years Japan's government has been singularly focused on creating the conditions to make Japan the most advanced IT market in the world, so I think we can
be confident to expect a wise decision - wise for Japan, not necessarily beneficial for particular mobile operators.
What made Vodafone change it's mind about Japan?
As reported by Bloomberg, one year ago Vodafone had the clear intention to remain in Japan for the next 10, 20, 30 years. What made Vodafone change it's mind?
As widely reported, Vodafone was loosing market share in Japan's mobile phone market over the last several years.
With number portability being introduced in Japan from autumn 2006, and with three new operators entering the market during 2006-2007, the competitive environment will become much more severe than it is now, decreasing pure network profitability, while at the same time massive network investments are necessary.
Analysis of Vodafone-Japan's subscriber numbers shows that early warning signs appeared already in 2002 - 2002 would have been the time for Vodafone to take decisive action to turn the business around in Japan.
More about Japan's telecom sector: download our JCOMM-Report. Contact us for annual subscriptions.
See also, my comments in Der Standard (German language)
UPI also quotes us:
"Globe Talk: Vodafone's sayonara problems" (link to UPI)
