Significant Move

 

As Softbank of Japan is giving positive signs in investing in a 4th mobile communication business of Korea, industry sources are paying attention to the aim of Softbank Chairman Son Jung-ui, or Masayoshi Son, his Japanese name.

According to industry sources on May 6, Softbank recently contacted several Korean companies to find out possibilities for cooperation in creating a 4th mobile communications carrier in Korea.

Even if the company invests in Korean firms, it cannot run a 4th mobile carrier right away. Under the Electronic Communications Business Act, foreign businesses cannot be key telecommunication business operators, and are restricted to having a 49 percent share of any communications company. Considering the fact that the government failed to select a 4th mobile carrier seven times in the screening process due to capital reliability and soundness until now, however, Softbank, which has massive funding power, is highly likely to be chosen as the operator even if the company secures the position of second-largest shareholder. Accordingly, it will be difficult for Softbank to directly run the mobile carrier in Korea, but possible to exercise its influence as a major shareholder, industry officials said.

Even though the Korean mobile communications market seems to have little advantage due to its high regulation barriers and small scale, it is attractive enough to be a bet for Chairman Son Jung-ui. An executive from a foreign communications equipment company said, “There are plenty of benefits for equipment and terminal firms to gain in the process to satisfy the needs of demanding customers in the Korean mobile communication market. So, it is the market to secure as a bridgehead without fail, even overtaxing its strength.” The reason why Chairman Son wants to tap into the Korean mobile communication market may be to test next-gen mobile communication services. This market is the fastest to adopt new technology and to spread customer use, especially compared to the Japanese mobile communication market dubbed “the Galapagos Islands.” Also, there are advantages to be able to apply its technologies to mobile carriers in other countries. Moreover, some say that Chairman Son has the intention to connect the mobile communications markets of three countries – Korea, the U.S., and Japan – and dominate the global Information Communication Technology (ICT) market. Softbank is currently running the mobile communication business of the Long-Term Evolution Time-Division Duplex (LTE-TDD) in Japan and the U.S., and is active in creating the LTE-TDD belt connecting Korea, the U.S., and Japan.

The company is running several large ICT businesses, including the U.S.'s largest cellphone distributor Brightcove, the world’s largest e-commerce company Alibaba of China, and the world’s largest mobile game development company Supercell. Softbank is showing its ambition to become a leading global ICT firm by expanding the network worldwide and creating various convergence services, from cellphones to content.

Under the motto of “Happier World with the Information Revolution,” Chairman Son is expanding its business in four sectors, including mobile communication, the distribution of ICT, energy, and the Internet. Softbank, then a software distribution firm, took over Japan’s fourth-largest mobile carrier Japan Telecom in 2004 and the third largest mobile carrier Vodafone Japan in 2006. Aiming at younger consumers, who were often neglected by mobile carriers in the meantime, the company released the iPhone and implemented an aggressive marketing strategy, including the launch of unlimited data plans. As a result, Softbank recorded 6.6 trillion yen (US$55.23 billion or 60.05 trillion won) in sales in in 2013, and moved up to the top spot in sales in Japan, surpassing NTT DoCoMo with sales of 4.4 trillion yen (US$36.82 billion or 40.03 trillion won).

Moreover, the company acquired Sprint, the third largest telecommunications company in the U.S., at a price of US$21.6 billion (24 trillion won), and the seventh-largest telecommunications operator Clearwire, which Sprint was already taking over, the same year. Therefore, Softbank became the third-largest mobile carrier in the world in terms of sales. Chairman Son also tried to purchase T-Mobile, the fourth largest mobile carrier in the U.S., last year, but failed to do so due to opposition from the U.S. authorities. There is keen interest on how far the company will expand in the global mobile communication and ICT markets.

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