Thursday, March 23, 2006

Ovum: Vodafone Japan sold to Softbank: that'll do nicely

Robin Hearn at Ovum offers up his thoughts on Vodafone's sale of "its underperforming Japanese operation to Softbank, the Internet and media player, for £8.9 billion." Hearn thinks the deal makes sense, and writes:

Vodafone had struggled with its Japanese unit for some time and attempts to turn it around had met with limited success. The marriage of a willing buyer and seller at a sensible price means that Vodafone can walk away as positively as it can have expected to. What's more, returning the bulk of the cash from the deal to investors should buy Vodafone's embattled management a bit of breathing space after a very turbulent couple of weeks.
Hearn points out that Vodafone's "top end is stuck on 9% for the year, as is the longer-term growth guidance of 5% to 6.5%. And it's this that Vodafone now needs to concentrate on. Selling Japan gets rid of an irritation, but it does not make everything else ok. There's still plenty of pressure in its core markets, and the company must now focus on generating growth in those markets that pay in cash, not just experience." He concludes that:
Now that Japan is gone, attention that had been divided between it and the US will now be focused squarely on Vodafone's stake in Verizon Wireless. But the circumstances of Vodafone's positions in the US and Japan are completely different. Would Vodafone actually be better off selling its stake in Verizon Wireless? Ultimately, what counts is that marriage of willing buyer and seller. And so far it has not materialised.