Vodafone sells Japanese operations;
American ones next?
We've said it over and over. Being #3 in a market is a sorry place, especially when that industry is relatively static and the two bigger rivals are not inclined to stumble.
That's the case of Vodafone in Japan, where it just unloaded its cell phone business to Japanese conglomerate Softbank for $15 billion. Those cell phone operations have been mired in third place behind those of NCC DoCoMo and KDDI. Vodafone's efforts to grow its market share have been in vain, as a Wall Street Journal article ("Vodafone Sells Japanese Unit To Softbank for $15 Billion", 3/187/060) points out:
Despite repeated efforts to kick-start its Japanese operations, including frequent leadership shuffles and new gadgetry, Vodafone could never quite shake the perception that rather than an asset, its businesses in Japan was instead a drag on the rest of its global operations, and criticism of the business in Japan was mounting.
Softbank among other properties already owns some land-line phone systems along with Internet connection services. Softbank had been thinking of building its own cell phone network. It beat out US equity firms Cerberus Partners LP and Providence Equity Partners Inc. The deal is one of Japan's all-time biggest leveraged buyouts.
Meanwhile, Vodafone is also eager to cash out its partnership with Verizon in the US, selling off its 45% holdings in Verizon Wireless. Verizon is eager to buy the whole company in order to compete with the newly expanded AT&T after the Bell South purchase. Vodafone, whose equipment in Europe is incompatible with Verizon Wireless's, would be smart to sell out that valuable property.
The biggest problem is the tax bill due on the sales. But Verizon also owns a piece of Vodafone's Italian operations. The companies are working out a way to make at least some of the paper profit disappear with a switch of assets. Speculation is that Vodafone might sell off its Verizon Wireless shares in stages to minimize the tax bill from the enormous appreciation of the American assets.
