TOKYO: Softbank Corp, Japan's second largest Internet access provider, agreed to buy Vodafone Group Plc's Japanese unit for 1.8 trillion yen (US$15.4bil) in Asia's biggest leveraged buyout, gaining 15 million mobile-phone customers.
Softbank, whose billionaire founder Masayoshi Son is branching into mobile phones after winning a licence last year, would control a 97.68% stake in Tokyo-based Vodafone K.K., the companies said in yesterday.
The acquisition gives Son a network to compete against NTT DoCoMo Inc and KDDI Corp in a 8.5 trillion yen mobile-phone market, where customers are tapping online services such as video downloads, share trading and auctions.
Vodafone, the world's biggest cell-phone company, sold the unit after more than two trillion yen of spending failed to increase earnings.
“Softbank will be able to get a subscriber base immediately,'' said Koji Uchida, who helps manage US$1.3bil in Japanese equities at UFJ Partners Asset Management Co in Tokyo.
“There is potential for Vodafone's business to be revitalised, but it won't be easy and will be costly,'' Uchida added.
Vodafone K.K, with a 17% market share, lags behind its two rivals in network coverage and subscriber growth.
Profits have been shrinking as the company invests in infrastructure and offers discounts to attract customers.
The Japanese unit's operating profit fell 55% to £423bil in the six months to Sept 30, and its profit margin before interest, tax, depreciation and amortisation dropped 6 percentage points to 22%.
Vodafone Group Plc said in London yesterday it would return £6bil to shareholders following the sale of its stake in its Japanese unit to Softbank.
The sale of its 97.68% stake valued Vodafone Japan at an enterprise value of around 1.8 trillion yen (£8.9bil), of which £6.8bil would be received in cash on closing, the company said.
Vodafone said it would incur an impairment charge of around £4.9bil in its results for the year to the end of March, 2006, as a result of the stake sale. – Agencies
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