Friday, March 10, 2006

Vodafone's sayonara problems

United Press International takes a look at the possibility Vodafone might retreat from the Japan wireless market as well as sell its stakee in Verizon Wireless in the U.S.

Robin Hearn at Ovum said, "Vodafone has been struggling with its Japanese unit for some time and attempts to turn it around have so far met with limited, if any, success. This has frustrated Vodafone's management and investors alike."

Vodafone is rumored to be in discussions with Softbank to sell their Japanese operations, which has 15 million customers"in a market estimated to be worth over $79 billion (8 trillion yen)."

Gerhard Fasol at Eurotechnology said, "An acquisition of Vodafone's Japan operations will be the completion of Softbank's march to build a full-scale telecommunications group on par with NTT and KDDI through a series of acquisitions plus internal growth, thereby making it a formidable competitor against the two Japanese mobile giants."

"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," Fasol added.

Ovum's Hearn expressed optimism about a potential Softbank deal. He said, "Softbank makes a good buyer. It has a longstanding ambition to enter Japan's mobile market, and already owns a license. Acquiring Vodafone Japan would speed its market entry and give it a foothold in a market dominated by DoCoMo and KDDI. Of course it also needs to do rather more with it than Vodafone has been able to. Vodafone meanwhile would shed a unit that it just doesn't seem able to fix, and which certainly doesn't fit within the profile of the Vodafone investment portfolio. It might also buy Vodafone's management just a little respite after a very rough ride over the past few months."

As for Vodafone's problems in Japan and the U.S., Hearn said Vodafone Chief Executive Arun Sarin "has come under even more pressure to do something about either -- or both -- of the company's positions in Japan and the United States. So much so that without some form of positive action, there are those that have said that his position would become untenable."