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Tuesday, 19 June, 2001, 11:27 GMT 12:27 UK
Yahoo Japan to launch ISP
A woman checks share prices in a Tokyo window
Yahoo Japan's share price has slumped
In a bid to revive its flagging share price, Yahoo Japan is to launch a high-speed internet access service.

But not everyone is convinced that Japan's dominant internet portal has the financial muscle to compete in an expensive and unfamiliar market.

Yahoo Japan said it would be teaming up with its parent company, internet holding Softbank, to offer asymmetrical digital subscriber lines (ADSL), which transmit data up to ten times faster than a standard connection.

The move is a departure for the firm, which like other Yahoo affiliates around the world has so far concentrated solely on providing content, earning its income mainly from advertising.

Ad worries

Fears over falling advertising revenues have seen Yahoo Japan's share price more than halve in value, to just under 4m yen (23,000; $32,400) this year alone.

The move is not yet seen as indicative of a shift in overall Yahoo strategy, because the US-based firm only has a minority stake in Yahoo Japan.

Yahoo Japan's announcement cheered the Tokyo financial markets, causing an 8% bounce in the firm's shares.

A tricky task

But not everyone is convinced that moving into ADSL internet access will prove the cure for Yahoo Japan's ills.

The Japanese ADSL market is dominated by Nippon Telegraph & Telephone, the country's biggest telecoms company.

Other Japanese firms, including a subsidiary of Japanese conglomerate Mitsui, have tried and failed to loosen NTT's hold on the ADSL market.

In order to compete, Yahoo Japan is planning to be aggressive on price, with charges possibly only half those of NTT.

This could spark a price war, at just the time when Yahoo Japan and Softbank will need cash to cover the huge costs of rolling out an ADSL network.

According to Japanese press reports, Softbank is planning to invest 100bn yen by the end of this year to install ADSL infrastructure in major Japanese cities.

"The business won't pay," said Akihiro Ito, an analyst at Deutsche Bank, in a note to clients.

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