When will Japan Telecom become a wireless-only operator?

28 May 2003

The posting of Japan Telecom’s annual results yesterday has raised a question over how long it will be before it completes the sale of its wireline assets. The telco, which is majority-owned by Vodafone, posted a consolidated net profit of JPY79.5 billion for the year ending 31 March 2003, up from a loss of JPY65.97 billion the previous year. Revenue grew 5.5% to JPY1.8 trillion, though this was wholly driven by its wireless arm J-Phone. Indeed, sales from its wireless business fell from JPY410 billion in fiscal 2002 to JPY385 billion a year later. The company claims that while demand for its data and managed services was strong, revenues from its voice services declined in response to greater competition from mobile service providers and cut-rate VoIP operators.

Vodafone has made no secret of its desire to sell Japan Telecom’s wireline business; it is currently deep in negotiations with US investment fund Ripplewood and a conclusion is expected within the next five to six weeks. According to Japan Telecom helmsman Bill Morrow the parties have not yet reached agreement, but are ‘in the last throes’ of negotiation. With the wireline assets sold, Japan Telecom – which is currently operating under the brandname J-Phone but will switch to the Vodafone banner in October, will become a solely wireless operator, in line with Vodafone’s wider global strategy. At the end of March 2003 J-Phone had 13.91 million customers, representing a market share of over 18%. Some 87.1% of its customer base subscribes to its mobile internet service J-SKY, while a massive 65% of its customers use camera-enabled handsets. In part because of the success of photo and movie messaging services, J-Phone’s ARPU remains the highest of all Vodafone subsidiaries, standing at an average of JPY87,159 per annum.

CIT's Yearbook of Asia-Pacific Telecommunications 2003