TOKYO (Reuters) – U.S. private equity firm Carlyle Group has given up on finding an additional investor for a mobile phone operator it owns in Japan, and will use a rival’s network to cut the carrier’s spending, a person familiar with the plan said.
Last year, Carlyle hired Merrill Lynch & Co (MER.BA) to find an investor to purchase new shares in Willcom Inc, a Tokyo-based mobile phone operator that had wanted to spend $2.2 billion by 2015 to develop faster data transmission technology. [ID:nT80939]
But the global financial and economic crisis has sapped banks’ willingness to lend and buyout firms’ appetite for risk.
Willcom, 60 percent owned by Carlyle, competes against NTT DoCoMo Inc (9437.T), KDDI Corp (9433.T) and Softbank Corp (9984.T) in providing fast Internet access via data cards.
Competition increased after Emobile Ltd, a mobile phone unit of Internet access provider eAccess Ltd (9427.T), entered the market in March 2007.
Willcom now plans to use NTT DoCoMo’s network so it can expand new technology nationwide without incurring the cost of building its own network, said the person, asking not to be identified because the plan was not public.
That would cut Willcom’s need to spend significantly, he said.
Willcom’s number of subscribers fell by 77,000 to 4.5 million in January from a year earlier, while Emobile boosted its subscribers five times to 1.2 million during the same period.
Carlyle and electronics maker Kyocera Corp (6971.T) in 2004 bought their stakes in Willcom from KDDI for a combined 220 billion yen.
Willcom offers mobile phone services by using a technology called PHS, or personal handyphone system.
The company in December last year won one of two licences from the government to provide next-generation wireless Internet access, which will enable quick access on laptops and other mobile devices while users are on the move. KDDI obtained the other licence.
By Junko Fujita
(Editing by Edwina Gibbs)