Japanese internet and telecom giant Softbank will inject 3 billion yen ($33.1 million) into a new company that will assume control of Willcom’s valuable 30Mhz of spectrum at 2.5Ghz.
The deal is one part of a rescue package secured on Friday for the Carlyle Group-controlled troubled PHS operator, which recently filed for bankruptcy protection and has only 4.2 million PHS subs.
As part of Willcom’s revitalization, Softbank, equity fund Advantage Partners and undisclosed other investors will “establish a new company that will take over the XGP business of Willcom to roll out next generation high speed communications operations,” said Softbank.
“The fact that Softbank has been able to acquire hard-to-come-by wireless frequency for a mere ¥3 billion is positive,” said Credit Suisse.
The frequency allotted to XGP is a 30Mhz portion of the 2.5Ghz band.
“There have been doubts expressed about the future prospects of XGP from a technical perspective, [so] there is little likelihood of Softbank making any substantial investment [in next generation PHS],” explains Credit Suisse. “[Rather… it is likely to apply to the Ministry of Internal Affairs and Communications (MIC) for permission to divert the frequency for use with another protocol.”
In other words, Softbank – the parent of Japan’s third-largest mobile operator Softbank Mobile - is likely to use the new spectrum to roll out a Wimax network at 2.5 Ghz. Rival KDDI-backed UQ Communications uses 2.5 Ghz frequencies for mobile Wimax.
Meanwhile, the new business entity – in which Softbank will own a 33.3% stake in - will also assume ownership of “most of the base station sites” of Willcom.
In turn, this could open up co-location advantages for Softbank.
Separately, Willcom’s existing PHS operation will be bailed out by Advantage Partners, which will invest 300 million yen into the venture via a third-party allocation of shares.
State-backed Enterprise Turnaround Initiative Corp. and banks will also inject up to 12 billion yen into the existing operation.
Willcom is also seeking debts to be waived to the tune of 114.5 billion yen.