KDDI Invests in American MVNOs

KDDI America has entered into separate agreements with American MVNOs (Note (1)) Locus Telecommunications, Inc. (Hereinafter referred to as “Locus.”) on January 19th, 2010, and Total Call International, Inc. (Hereinafter referred to as Total Call) on January 21st, 2010 to invest in the respective companies.

In accordance to the above mentioned agreement, KDDI America, Inc. will acquire a combined total of USD 41M (JPY 3.7B) of issued shares corresponding to 51% of the number of shares issued by the respective companies, and plans to make them as consolidated subsidiaries (Note 3). Through the aforementioned pair of investments, KDDI and the KDDI Group plan to enter the mobile service segment offering services to migrants residing in the U.S.—a promising growth market—to further expand the companies’ global business base.

Each year many laborers leave their homelands and arrive in developed countries in search of employment opportunities. In the U.S. alone, there reside 40 million such migrant workers and their dependents, forming a growth market that continues to increase annually by over one million potential subscribers. These migrants form their own unique communities and lifestyles based on the cultures of their homeland, requiring KDDI to approach them through culturally specific marketing. In our efforts to engage demand for mobile service among migrant segment of the populace, we have taken account of an inclination among them to rely on pre-paid mobile handsets rather than become registered service subscribers due to restrictions in settlement methods.

As mobile virtual network operators, Locus and Total Call have firmly embedded themselves in their respective markets by offering mobile services through pre-paid cards, underlined by segment-specific marketing measures and approximately 70,000 distribution channels (Note 5) serving migrant communities across the United States.

KDDI America, Inc. has been offering mobile services to Japanese nationals residing in the U.S. through its MVNO business since April 2007. However, through these recent investments, KDDI America, Inc. will expand their local market share, and encompass a customer base and distribution channels to configure a base for expansion in what is increasingly becoming a promising growth market within the United States.
KDDI plans to enhance customer convenience by offering high quality, yet low cost international communications service between the United States and developing countries by integrating services offerings for migrant users with its established international telephony business.

Furthermore, KDDI is planning to expand its business in the future by offering high-value added services such as contents delivery and mobile remittance services to migrant users. KDDI is pursuing the acquisition of a combined total of one million mobile service subscriptions (????subscribers) through the operations of KDDI America Inc., Locus, and Total Call, and seeks to be counted among the top 10 mobile network operators in the United States in terms of mobile subscribers.

KDDI will continue to expand its global business base by proactively developing market-specific businesses throughout the world’s growth markets.

(Note 1) MVNO : Mobile Virtual Network Operator. An MVNO is a service provider that provides mobile telephone services by by leasing wireless communications infrastructure for mobile handsets from third parties.
(Note 2) Conversion based on USD 1 = JPY 89.52. (Based on the Conversion rate on Friday, February 5th, 2010 (17:00 hours).
(Note 3) This shall be performed after acquiring certification and authorization from local authorities in the United States.
(Note 4) Immigrants in the United States, 2007 (Center for Immigration Studies)
INTERNATIONAL MIGRATION 2006 (Department of Economic and Social Affairs, United Nations)
(Note 5) Combined number of distribution channels of Locus and Total Call.

Translated from original source in Japanese.

Posted: 9 February 2010 | Filed: Editor's Note, U.S Market | Feedback | Print |