Sells Japanese Unit To Softbank for $14.9 Billion
By a WALL STREET JOURNAL Staff Reporter
Friday, March 17, 2006
Vodafone Group PLC announced the sale of its Japanese
Softbank Corp. in a deal valued at £8.5 billion ($14.9
In doing so, the United Kingdom cellphone giant turned down
an approach by buyout firms Cerberus Partners LP and
Providence Equity Partners Inc. of the U.S. to buy the
unit. The two firms had been preparing to make an offer for
The sale of the unit to Softbank allows Vodafone to exit
from Japan quickly and focus on other issues, including the
possible sale of the company's holding in Verizon Wireless
Verizon Communications Inc., which has indicated it
wants to buy the U.K. firm's stake. Vodafone indicated
Friday that it has no plans to sell U.S. holding.
The purchase of Vodafone's Japan unit will allow Softbank to
take over the more than 15 million Japanese users who have
signed on to the carrier, as well as its mobile network,
instead of building it from scratch. Tokyo-based Softbank,
which has scored success with its broadband service Yahoo!
BB in Japan, has been trying to move into the mobile
business. Meanwhile, Vodafone, the world's largest
mobile-phone company by revenue, has struggled to boost its
business in Japan amid tough competition from the two
biggest players, NTT DoCoMo and KDDI Corp.
Following the sale, Vodafone said it will return £6 billion
in cash to shareholders through a special dividend. The
distribution is worth 10 pence a share, and the company said
it will disclose final details with its preliminary results
in May. Vodafone also said it intends to complete its £6.5
billion share-buyback program in fiscal 2006.
Vodafone's sale of the Japanese unit marks the latest in a
slew of telecom deals in the past 18 months. Earlier this
AT&T Inc. agreed to acquire
BellSouth Corp. for $67 billion.
The prospect of the rival bid was seen as possibly nudging
along Vodafone's discussions with Softbank, a Japanese
Internet conglomerate. Cerberus and Providence had been
working to secure financing for a bid for Vodafone's
Japanese mobile subsidiary, people close to the situation
said. The companies would have needed to assume billions of
dollars of debt.
By buying the Vodafone unit, Softbank gains immediate access
to a mobile-phone network. Softbank had signaled its intent
to enter the cellphone business by acquiring a mobile
license, but building a network could take years, and
negotiating to lease another company's network to become a
so-called virtual network can be tricky.
Vodafone's unit is the third-largest wireless carrier in
Japan with about 15 million customers. Vodafone is the
largest cellular carrier in the world by sales, operating in
almost 30 countries. The company has long viewed Japan as
an important learning ground in the complex and quickly
changing world of wireless telecommunications. Vodafone's
market share in Japan, however, recently has shrunk amid
intense competition to 17% from 19% in 2003.