NEC to spin off internet unit

29 Mar 2006

Japanese equipment manufacturer NEC Corp is to spin off its internet service provider (ISP) Biglobe in a bid to improve profitability. The struggling electronics company will spin off the ISP as a wholly owned subsidiary in July in a deal that will see new shares issued, worth a total of JPY12.7 billion (USD104.3 million), to Sumitomo Group, Daiwa Securities Group and other investors. Upon completion, NEC will hold 78% of Biglobe, Sumitomo (7%), Daiwa Securities (7%), Sumitomo Mitsui Banking (5%), Dentsu Inc. (2.5%) and Hakuhodo Inc. (2.5%). NEC, which is restructuring amid falling earnings in its chip and mobile phone operations, will use the proceeds of the sale to raise the company’s capital from JPY4 billion to JPY10.4 billion. Biglobe is reportedly Japan’s fourth largest ISP with around 4.4 million subscribers across its multi-platform service range, including resold services of several network providers.