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By Mayumi Negishi
TOKYO |
Thu Sep 22, 2011 1:05am EDT
TOKYO (Reuters) - Shares of Softbank Corp (9984.T), Japan's third-largest mobile carrier, tumbled more than 10 percent on Thursday after a report said the company was set to lose its position as the sole vendor of Apple's (AAPL.O) iPhone in Japan.
The online version of the Nikkei Business magazine said rival carrier KDDI (9433.T) would begin selling the iPhone 5 in Japan from around November.
Spokesmen for KDDI and Softbank declined to comment on the report, but Softbank said there was no clause in its contract with Apple that would prevent another carrier from offering the iPhone.
"I'm bracing myself for a huge shake-up in the sector for the next six to 12 months," said Michito Kimura, a senior market analyst at IDC Japan. Softbank may cut prices to prevent users unhappy about its network quality from fleeing to bigger KDDI, who could in turn lower rates, he said.
Another round of price cuts would likely embroil NTT DoCoMo (9437.T), which commands half of Japan's cellphone market, hurting earnings as well as those of handset makers, he said.
Softbank's profits have ballooned since it introduced the iPhone in 2008, betting that the hit product overseas would also take off in Japan, which has long been dominated by domestic handset makers.
The iPhone has enabled Softbank to expand its customer numbers more rapidly than either of its rivals each month for the past 17 months, leaving KDDI and DoCoMo scrambling to catch up.
Softbank's operating profit rose to a record 629 billion yen ($8.2 billion) in the year ended March 2011.
But many iPhone users in Japan complain about the patchy network, stirring speculation that Apple would eventually allow other carriers to distribute its phones in Japan, a strategy it is already pursuing in the United States.
Expectation had risen also on reports that Apple was using a Qualcomm (QCOM.O) chipset for the iPhone 5, opening up the way for Apple to supply phones on the CDMA network, which is what KDDI uses.
Shares of KDDI have risen more than 20 percent since mid-August. KDDI was down 0.9 percent on Thursday afternoon, while DoCoMo fell 3 percent.
"Selling the iPhone will bring more users to KDDI, but could also mean higher sales and maintenance costs," one market participant at a securities firm said.
KDDI would likely need to adjust its network to support the iPhone, and this could mean that Softbank will begin selling the iPhone 5 before KDDI can.
Attention now is on the likelihood of DoCoMo also supplying the iPhone in the future, said Hideyuki Ishiguro, a strategist at Okasan Securities. That possibility is weighing on KDDI and Softbank shares, he said.
DoCoMo's smartphone lineup now includes handsets made by Samsung Electronics (005930.KS), Sharp (6753.T), Sony Ericsson and Toshiba (6502.T).
($1 = 76.420 Japanese Yen)
(Additional reporting by Hirotoshi Sugiyama, Isabel Reynolds, Reiji Murai; Editing by Edmund Klamann and Chris Gallagher)
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