Vodafone Exits Japan

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Case Details:

Case Code : BSTR286
Case Length : 15 Pages
Period : 1999-2006
Pub Date : 2008
Teaching Note :Not Available
Organization : Vodfaone
Industry : Telecommunications
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Japan has been a peculiar place where things haven't worked Vodafone's way. The company was slow to realize that, gee whiz, Japan is really different from Europe."¹

- Makio Inui, Telecom Analyst, UBS Securities², Japan, in 2005.

"This (exit from Japan) makes sense. Vodafone had struggled with its Japanese unit for some time and attempts to turn it around had met with limited success. The marriage of a willing buyer and seller at a sensible price means that Vodafone can walk away as positively as it can have expected to."³

- Robin Hearn, Principal Analyst, Ovum, in 2006.

"The board has arrived at the decision to withdraw our capital from the Japanese market based on several key criteria. It has become increasingly clear that the greatest operational benefits come from strong local and regional scale."⁴

- Arun Sarin, CEO, Vodafone Group Plc., in 2006

Vodafone Bids Sayonara

In March 2006, one the world's leading mobile telecommunication companies, the UK-based Vodafone Group (Vodafone), announced the sale of its Japanese unit, Vodafone KK (Vodafone Japan), to SoftBank⁵ for £ 8.9 billion. Of the total amount, £ 6.8 billion was to be received in cash, £ 1.5 billion in preference shares in a subsidiary of SoftBank, and £ 0.5 billion in a subordinated loan repayable to Vodafone.

As part of the deal, SoftBank agreed to assume £ 800 million in external debt and Vodafone Japan's other liabilities. At that time, Vodafone Japan was the third largest mobile operator in Japan, with more than 15 million subscribers.

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1] Martin Fackler, "A Major Backfire in Japan Deflates Vodafone's One-Size-Fits-All Strategy,"www.nytimes.com, September 05, 2005.

2] UBS is a leading financial services company, with interests in wealth management, investment banking, retail, and commercial banking.

3] "And the Winner is: SoftBank,"TelecomWeb News Digest, March 17, 2006.

4] "SoftBank Pays $15.5b for Vodafone Japan,"Electronic News, March 27, 2006.

5] SoftBank is one of the largest telecommunications and media companies in Japan. Its interests include broadband, fixed line telecommunications, e-commerce, Internet, broadband, and technology services.

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