KDDI to purchase Liberty’s 38% stake in Jupiter

25 Jan 2010

Japan’s second largest telecoms group KDDI Corp has struck a deal to acquire a 38% stake in local cable TV operator Jupiter Telecommunications from Liberty Global Inc in a USD4 billion cash deal that will give KDDI more new subscribers and access to a fibre network. The deal struck is equivalent to a premium of 44% on Jupiter’s closing share price at the end of last week. KDDI’s investment will give it access to a potential 3.2 million households for telephony services and simultaneously reduce its reliance of using NTT’s fibre-optic networks, said KDDI president Tadashi Onodera. Some local industry watchers have questioned the deal however, saying the price could be a little expensive. The offer values Jupiter at 25 times 2010 earnings estimated at Bank of America Corp.

Onodera told reporters at a press briefing that the purchase would not affect the outlook for the Tokyo-based firm’s fixed line business, which is looking to turn profitable in the year to 31 March 2011. The Jupiter deal is being financed by a mixture of bank loans he added, though he stopped short of identifying the lenders involved. KDDI’s 9M profit for the period ended 31 December 2009 dropped 35% year-on-year to JPY212.65 billion from JPY253.92 billion, partly the result of the introduction of discount packages for mobile phone handset users.