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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Vodafone Bids Sayonara Contd...

Vodafone entered Japan in the late 1990s, when it acquired a 26 percent stake in J-Phone, one of Japan's leading mobile operators. Over the years, it increased its stake. With J-Phone being well established in the market, Vodafone found the going easy at the beginning.

However, things began to look less rosy after the company made some mistakes, such as introducing handsets that were manufactured for the European markets in the Japanese market. The tech-savvy Japanese rejected these offerings. Vodafone also delayed the roll-out of 3G⁶ services in the market, and this resulted in a steady erosion in its customer base.

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In contrast, competitors NTT DoCoMo⁷ and KDDI Corporation⁸ (KDDI) introduced cutting edge technology and handsets that appealed to Japanese customers.

In early 2006, Vodafone announced its exit from the Japanese market. About the decision, Arun Sarin (Sarin), CEO, Vodafone, said, "In the case of Japan, we have been making progress on the turnaround in recent months.

However, given the relative competitive position of the business, the reduced prospects for superior long term returns and a good offer from SoftBank, the board took the decision to sell."⁹ Vodafone's decision surprised many people, as at that time, Japan was the second largest mobile phone market in the world, and Vodafone among the top three players in the market...

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6] 3G refers to the third generation in mobile phone standards. Through 3G technologies, operators can provide services like wide-area wireless telephony and broadband wireless data through mobile phones.

7] NTT DoCoMo is the leading mobile phone operator in Japan. It was spun off from Nippon Telegraph and Telephone in 1991.

8] KDDI Corporation is one of the leading telecom operators in Japan. It was formed in 2000 through the merger of DDI Corp, KDD Corp, and IDO Corp.

9] Tom Jowitt, "Vodafone Signals Retreat from World Stage with Japan Sale," www.cbronline.com, March 20, 2006.

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