Softbank aims to make mobile Yahoo big in Japan

Japan's high-tech Softbank Group has reported a small profit for the first quarter of fiscal 2007, which ended on 30 June, but analysts say the company still has much to do if it is to regain its former stockmarket star status. Softbank operates a Yahoo-branded broadband service in Japan and in April bought Vodafone's ailing Japanese mobile phone operation, Vodafone KK.

The company reported a $12m profit, partly due to an increase in users of its fixed line telecoms fiber optic and ADSL broadband service, Yahoo BB, and a 91 per cent jump in net sales revenue, half of which came from the newly acquired Vodafone KK subsidiary. Vodafone KK will soon be rebranded under Softbank's own name.

Softbank's takeover of Vodafone mobile, the weakest player in Japan's national mobile arena with 15 million subscribers, less than 10 per cent of the market, comes as the country introduces a number portability scheme.

The new system is intended to allow subscribers to easily keep their mobile numbers when they switch between operators. When the scheme is introduced in October, a price and promotion war is expected to break out as operators attempt to induce subscribers to switch, and try to lock them in with attractive content and community services. Softbank hopes to use its broadband strength to bolster the costly mobile business, which requires more than $12bn in financing to acquire.

“In the mobile communications market, which the [Softbank] Group has newly entered, the Group will aggressively introduce new handsets and new services and will expand a lineup of appealing content, centered on Yahoo Japan,” Softbank announced in a press statement.

“In consumer businesses, the group will strive to rapidly build a seamless broadband infrastructure that links Yahoo! BB and mobile communications. In this way, the Group will target the realization of a society in which a ubiquitous environment makes it possible to enjoy the range of innovative content that has already been developed for deployment over fixed-line broadband.”

Some 90 million of Japan's 130 million potential mobile phone subscribers already have at least one phone, making it increasingly difficult for operators to expand. There is still room for growth in upgrades to 3G, however. More than 50 per cent of users have 3G phones already, but more than 90 per cent of new phones sold are now 3G models, according to recent market research reports.

Softbank plans to invest more than $4bn to double the number of 3G base stations in the existing Vodafone network to 46,000 within a year. Responding to a common criticism of Vodafone KK, Softbank will “enhance its lineup of 3G handsets that are optimal for Japan's market," the company announced. Features like a special Yahoo Mobile button will also be added.