C&W close to selling IDC unit

20 Oct 2004

UK-based telco Cable & Wireless (C&W) has revealed that it has entered into the final stage of talks with private fund MKS Partners to sell its Japanese arm Cable & Wireless IDC. The two companies have not divulged the final sale price, but it is thought to be between JPY13 billion (GBP66 million) and JPY15 billion, higher than the original price of JPY12 billlion. The deal is expected to be finalised by the end of October. C&W first announced plans to withdraw from Japan at the end of September, when it revealed that it was involved with Softbank Corp and MKS Partners. The company has struggled to keep pace with its rivals in the highly competitive market where even the country’s dominant telco Nippon Telegraph and Telephone Corporation (NTT) is finding it hard to hold onto customers. As a predominantly corporate services provider, C&W IDC is smaller than most of its rivals, and can not afford to compete in the ongoing price war in Japan, where the operators are in a constant battle to undercut each others prices in a bid to boost their customer bases and market share. When the deal is complete, UK cellular giant Vodafone – which operates in Japan through its subsidiary Vodafone KK – will be the only foreign telco with a major presence in the country.

C&W IDC first entered the Japanese market in September 1999 when C&W acquired Japanese company International Digital Communications (IDC). It is a major player in both the residential and business fixed line sectors, providing voice, data and internet services over its fully digital IP backbone. Its main competitors are former incumbent NTT, KDDI, Japan Telecom, PoweredCom and J-COM Broadband. At the end of December 2003 there was a total of 51.01 million fixed line subscribers in Japan, a penetration rate of 40.06%.

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