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Breaking the mold in Japan

17 May 2010
00:00
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Best Asian Telecom Carrier

Softbank Mobile

Last year's winner:Orange Business Services
Business segments:2G, 3G mobile voice, data (Japan)
Chairman & CEO:Masayoshi Son
Key shareholders:Softbank Corp. 100%
Key stats:(March 31) 21.9m subs; (2009-10) profit $1.04b, up 124%

It's only fitting that Softbank Mobile has just become the first Japanese operator to report more revenue in data than voice.

Since it began business out of the shell of the old Vodafone KK in 2006, Softbank Mobile has done things it own way in the clubby Japanese market.

It focused on data, it cut prices, it shut down its 2G service, it pioneered the iPhone - dismissed by some as bound to fail in Japan. It started with just 4.8% of the 3G market; it now has more than 20%.

The first thing about this mobile operator is it doesn't consider itself a mobile operator.

As senior executive vice president Ted Matsumoto puts it: "We are not thinking of ourselves as a network operator period. We're a value provider. Value comes from the combination of networks and network capability, handset and services. The three things all come together."

In Japan, mobile operators are the leading integrators and in the best place to create value - that's why Softbank entered the mobile business.

"We came from the internet world knowing that the marriage of internet and mobile will create the biggest future value. We knew the mobile telephone would become the mobile internet; that's why we bought Vodafone."

The move has certainly delivered value to shareholders. In its latest full-year result, thanks to the iPhone, the company more than doubled earnings to just over $1 billion. ARPU held firm thanks to its strong data growth, in contrast to the declining voice-centric revenues of its competitors.

Unlike every other telecom operator, Softbank is comfortable facing the future.

"Many people came from the telephone companies and are afraid of the internet. We are probably the first company to become a serious mobile operator from the internet world. We are not worried."

As a way of clearing the decks ahead of 4G, Softbank shut down its 2G network in March.

It has put its LTE plans on the backburner and will focus instead on HSPA+. According to Matsumoto, that's because LTE doesn't yet support voice and does not offer a great deal of additional download speed over HSPA+.

In the meantime, Softbank hopes to reap the benefits of running a single HSPA+ network, without the distractions of 2G or 4G, and offering download speeds of up to 42 Mbps.

The other issue is that it doesn't yet have all the spectrum it needs.

Softbank has just bought a stake in declining PHS operator Willcom, which gives it access to 2.5-GHz frequencies. For that spectrum range it's considering mobile Wimax, Chinese-backed TD-LTE, or XGP, Willcom's next-gen PHS technology.

But it's awaiting on an outcome of a government review of the much sought after 700-MHz and 900-MHz ranges. Both of Softbank's competitors have long occupied this valuable radio real estate and the company is lobbying hard to even up the playing field.

According to Matsumoto, the real value of LTE is only in spectrum deployments wider than 20 MHz. Softbank only has 20 MHz.

Looking ahead, the company's strategy is to become a global player in mobile internet.

"It doesn't mean we will invest in mobile... we would like to tie up with operators through the world, and we would like to be a creator of new value in the services layer," he said. 

"Our expertise is not in network operation, there are lots of experts there. Our capability is in the service stream; applications, content and the entire ecosystem." 

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What the judges said: "In four years, this operator has completely changed the rules in its market. For its boldness, innovation and successful execution"

Winners' list:

Related video: Celebrating Asia's telecom champions
  

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Rating: 5