Ever since the first rumor broke, with talks quickly confirmed and ‘definitive deal’ announced soon after, the bat-phone here has been ringing for comments. Now that everyone has had time to digest, plenty of noise – as usual, we’ll toss our 1.5yen worth of unique perspective.
The Largest Foreign Acquisition Deal by a Japanese Company Ever!
Yes, the Mighty Yen: It’s been noted here several times over the last few years, with other examples in 2012 – Dentsu also bought Aegis for example – of Japan Inc. making $Billion deals, look at the exchange rates. We’ve seen many comments about the fiscal sense of $20Bn; expect SB and partners have done their diligence, considering what they paid per subscriber, it surely made economic risk sense to the bean-counters for them to sign-off.
Can SoftBank Repeat a Stunning #3 Turn Around Again There – How?
Indeed, the central question that had tongues waggin from the get-go.. certainly it’s possible. We’ve noted in private conversations that while there are many aspects of this that are similar to when they grabbed the struggling Vodafone operation here – a few significant differences to consider as well. Maybe best then to take a quick look at some of the initial moves they made in Japan and see if/how what lessons learned might apply for a US comparable.
1: Bandwidth: SBM gained a whack of un-used capacity, and a legacy VDF network that needed alot of work. They set to signing Disney as an MVNO and put plenty of cash into building out base-stations. It would seem with the Clearwire stake the same two-pronged approach will be in order state-side once they have control. Consider who would be natural local targets for that opportunity: Amazon, FaceBook, Yahoo!.. to blue-sky a few. The network side will be more tricky , especially considering ‘certain’ suppliers are not exactly welcome.
2: Flat-Rate: We have noted here many times that one of the most important early moves by SoftBank, a mere 60-days after assuming control, was customer acquisition ‘war’ via their so-called White Plan. Yes, a full 18-months before they finally had a 3G capable iPhone to sell. While their ARPU as a Telco suffered in comparison with the big boys, the core of the family business – Yahoo! – was gaining serious increase of revenues via ads, auctions and search. This will be a bit more difficult to replicate at first blush: expect some type of alliance with a comparable platform, again, Amazon, FaceBook, Yahoo! are natural partner profiles.
3: International: As we saw with the iPhone entering Japan via Softbank, obviously this new bridge would have potential to increase exchange Both ways. Rather easy to imagine them striking a good deal with Sharp, Sony etc. and bring a rocking local design into the Americas! There have been countless deals with various Content, Application and Service providers over the years, from Alibaba to uStream, this move represents a major gateway for current and future integration opportunities – raises all boats – for customers, partners & vendors.
Closing Thoughts for Round 1 – Stay Tuned
No doubt they are burning the midnight oil at HQ in Shiodome.. the deal as announced is not set to close until sometime in early 2013 and nobody seems to mention that if Mitts takes the big chair, yikes, that whole plan might hit some ‘snags’ along the way. Although, apparently Ok for Vodafone to run Verizon and Deutsche controls T-Mobile. When we first went through this dance here in Japan many folks dismissed Mr. Son, to be fair he’s lost a few bets over the years as well, as not up to such a task. Looking at this current attempt, as the market there just coming up to speed on mobile computing – and strong potential futures with respect to mobile payment and broadcasting verticals still almost entirely untapped – seems pretty likely this was a good gamble. It will be interesting to follow the incumbents reaction.
To be clear; it’s a massive chunk of cash, with many variables remaining on execution side, for them to take-on this effort. We’re looking forward to see how the next 3-5 years unfolds, it will be a great adventure for all, let’s boldly go on record here to say they can’t really lose.. but more a matter of (if) how much they win! Forecasting disruptive and exciting times ahead.
– WWJ Editors