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Friday, May 19, 2006

Softbank, Vodafone set up firm

New company will focus on handsets and digital content


Staff writer

Softbank Corp. and Britain's Vodafone Group PLC, which recently sold its Japanese subsidiary to Softbank, announced Thursday that they are setting up a joint venture to develop and procure mobile phone handsets, software and digital content.

Softbank President Masayoshi Son also said the former Vodafone unit will be renamed Softbank Mobile Corp. to underscore Softbank's commitment to the business. The name change will take effect Oct. 1.

Softbank and Vodafone will each invest 5.5 billion yen in the venture and provide four board members each, including Son and Vodafone Group CEO Arun Sarin.

Bill Morrow, former president of Vodafone's Japan unit, will be the company's CEO, while Son will serve as chairman for the first year. The two may switch positions in the second year, Son said.

At a joint news conference in Tokyo, Sarin said Vodafone agreed to set up the venture because it wanted to maintain its presence in Japan, which he described as the most advanced and innovative market in the world.

"We don't want to lose the window of innovation," Sarin said.

Son said the venture will develop and procure state-of-the-art handsets in order to cut costs through high-volume orders, but the two companies will not develop all their handsets jointly.

"There were voices of doubt before on whether we could offer enough handset models because our users are small in number" compared with NTT DoCoMo Inc. and KDDI Corp., operator of the rival au service. "But with the Vodafone Group, the number of customers is bigger," Son said.

Softbank's Vodafone K.K. subsidiary, which has about 15 million customers nationwide, ranks a distant third behind NTT DoCoMo and KDDI. Vodafone Group has about 170 million users worldwide.

Son brushed aside worries that the joint venture will force Softbank to use handsets from overseas manufacturers, thereby repeating Vodafone's mistakes in the Japanese market.

"We may share motherboards, but we will each introduce a different interface suitable for (different) users" he said.

The venture will also develop basic software for mobile phone and buy digital content such as TV drama, sports and music programs for their customers.

At the briefing, Softbank also unveiled a new 3G handset made by Sharp Corp. that can receive One Seg terrestrial digital TV broadcasts.

The handset, which will go on sale May 27, has a screen that can be rotated 90 degrees for TV viewing. Users can receive e-mails or make calls while watching TV, the first mobile handset with that function.

Softbank plans to introduce five additional models from June.



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