US private equity group Ripplewood may bid for Vodafone’s Japan Telecom subsidiary.
Vodafone’s progress in the sale of Japan Telecom came as welcome news to investors. The price and timing of the potential transaction are still being negotiated, but if Ripplewood’s bid is successful, the deal could be the largest investment by a foreign fund in Japan.
Ripplewood already has several investments in the country, including Shinsei Bank, Seagaia resort and Nihon Columbia.
Vodafone bought 66.7% of Japan Telecom and 40% of its mobile phone subsidiary J-Phone in 2001 for $11.5 billion. Vodafone has always been widely expected to sell the fixed line business, as it does not form part of its core operations in the region.
Since the acquisition, Vodafone has restructured the Japanese business, bringing it to profitability. Last year it ended negotiations with Tokyo Electric Power over a sale of JT, which were believed to falter due to a disagreement over price.
The mobile phone operator has used Japan as a test market for its 3G phone services, including video phone calls and high-speed Internet connections. Its mobile phone business has been growing strongly, thanks to its camera phones. J-Phone now has a market share of 20%, although its average spend per customer was down in Q3 following the sign-up of many lower spending customers.
The sale would allow it to concentrate on its mobile phone operations. Last December, Japan was the first market to receive Vodafone’s 3G service, but the company plans to roll out the offering into other markets later this year.
It would also provide additional funds for Vodafone to invest in other companies elsewhere. It is currently discussing the potential purchase of more shares in its majority owned Dutch, Portuguese and Swedish subsidiaries, Vodafone Libertel, Vodafone Telecel-Communicacoes Pessoais and Europolitan Vodafone respectively.
Related research: Datamonitor, Mobile Consumer Update (DMTC0864)
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