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Last Updated: Monday, 30 August, 2004, 09:32 GMT 10:32 UK
Softbank to offer cut-rate calls
Softbank president Masayoshi Son
Softbank boss Masayoshi Son has NTT in his sights
Japanese telecoms and internet company Softbank is to launch a new cut-rate, fixed-line phone service in December.

Analysts say the new service could hit the sales of Nippon Telegraph and Telephone (NTT), the country's biggest telecoms provider.

Softbank, led by one of Japan's best known entrepreneurs Masayoshi Son, said the basic monthly fee would be 200 yen ($1.82; 1) lower than NTT's service.

The announcement saw NTT's share price fall by almost 6% on Monday.

Broadband leader

Softbank said it will build new relay facilities and use Japan Telecom's network, which it bought back in July, to offer the service.

"This suggests to us that the sanctuary of NTT's basic fixed-line service charges - 1.8 trillion yen per year, on a market share of 99 percent - is set to be invaded," said Deutsche Securities analyst Tetsuro Tsusaka.

"We regard this as the greatest of the threats NTT has faced from new market entrants, and believe that the scenario of profit growth through consolidation and broadband revenues will be fundamentally shaken."

Softbank is already Japan's largest provider of ADSL broadband access, a position achieved through cut-price fees and aggressive sales campaigns. Its shares ended Monday trading up 2.84% at 4,710 yen.

Giant profits

NTT is not just Japan's but also the world's biggest provider of fixed line phone services.

In May, it reported a record annual profit of 1.56 trillion yen (7.8bn; $14bn) for the year to 31 March.

The company has however warned that its current financial year would be much tougher, due to earnings being dented by mobile phone subsidiary NTT DoCoMo.

It has forecast a 20% drop in operating profit at NTT DoCoMo, citing the increased cost of providing faster and more complicated mobile phone services as a key factor.

Softbank slides into the red
20 Nov 01  |  Business

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