Vodafone Fights Back in Japan

June 7, 2005 - source: BWCS

Vodafone's struggling Japanese division, Vodafone KK, has announced plans to invest heavily in its mobile network in an effort to boost its 3G service. The global mobile giant said it will increase spending by 50% to £1.32 billion (US$2.4 billion) in a bid to compete with rivals in Japan.

Vodafone KK is the country's third largest mobile operator and has been losing subscribers since the beginning of 2005. Now, in an attempt to hit back at the market-dominating NTT DoCoMo and the fast-growing KDDI, the UK-based parent company says it will build 5,400 new base stations by March 2006. However, some analysts see this as too little too late, and point out that both of Vodafone's rivals have been spending heavily to upgrade their networks too.

A company spokesman, quoted by Reuters, claimed "Improvements of networks are a vital step to fight back in 3G (third-generation) services, in which we have slightly lagged behind our competitors. The timing is important as competition is expected to intensify further next year," the spokesman added. With the country nearing saturation point for mobile services all three operators are focusing on upgrading customers to 3G services.

The government in Japan also plans to throw the cat among the mobile pigeons later this year by licensing up to three new entrants into the market. It has already said it is determined to allow more competition in an industry dominated by three operators. In addition, Tokyo has said that it plans to allow customers to switch services but keep their existing mobile phone numbers.

In April of this year, Vodafone lost around 40,000 customers to its rivals in the Japanese market. This was the company's fourth straight monthly decline in a row. Furthermore in April the company could only report 141,300 new 3G customers, down from 241,900 in March. By the end of the month it had barely 15 million customers, slightly fewer than it had one year ago.

Some analysts argue that Vodafone's relative lack of success in Japan has been at least in part due to its decision to try to sell European 3G phones in Japan as part of its plan to standardize its offerings across the globe.