Bloomberg News

EAccess Mobile Phone Unit Will Borrow 220 Billion Yen

April 05, 2006

EAccess Ltd. (9427)'s mobile phone unit EMobile Ltd. said it agreed to borrow 220 billion yen ($1.9 billion) to enter Japan's cellular phone business.

The company expects to raise a total of 350 billion yen, including proceeds from stock sales. The company made the announcement today in a release distributed at the Tokyo Stock Exchange.

EAccess, Japan's third-largest Internet service provider, was among three companies granted wireless licenses in Japan last year. They will be the first entrants to the nation's 8.5 trillion yen cell-phone industry in 12 years.

``This completes our long-term finance,'' said Sachio Semmoto, EAccess chairman and chief executive officer. He spoke at a press conference in Tokyo.

The company plans to introduce handsets and services to win customers from NTT DoCoMo Inc. and KDDI Corp., Japan's two biggest mobile operators. Softbank Corp. (9984), the nation's second- largest Internet access provider, last month said it's paying 1.8 trillion yen to buy Vodafone Group Plc's local unit, giving it the third-largest share of Japan's mobile phone market.

3G Network

EAccess plans to build a network to third-generation, or 3G, standards, which allow faster transmission of data, including music and video. That may give it an advantage against rivals such as Softbank, which by inheriting Vodafone's infrastructure, would operate both 2G and 3G networks, Semmoto said.

``Softbank will probably have to spend money to get Vodafone's 15 million users, of which 85 percent still uses 2G, to switch to 3G,'' Semmoto said.

EAccess declined to disclose financial details of the planned borrowing.

Goldman Sachs Group Inc. (GS:US), Mizuho Financial Group Inc., JPMorgan Chase & Co. (JPM:US) and seven other financial companies will provide the loans to the unit of EAccess.

The company said it may also lease some of its planned wireless network to rival Internet service providers.

``We are in talks with three companies, including Nifty and So-net to lease our network,'' said EAccess President Haruo Taneno.

Nifty Corp. is a unit of Fujitsu Ltd., Japan's biggest maker of fiber-optic networks. So-net is operated by Sony Communication Network Corp., an affiliate of Sony Corp.

Shares of Tokyo-based EAccess, which fell 7.7 percent last year compared with a 44 percent gain in the benchmark Topix index, dropped 2,700 yen to 86,400 yen as of 3 p.m. in Tokyo.

To contact the reporter on this story: Tomomi Sekioka in Tokyo at tsekioka@bloomberg.net

To contact the editor responsible for this story: Peter Langan at plangan@bloomberg.net


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