By Tomoko A. Hosaka, Associated Press Writer
Friday, February 19, 2010
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TOKYO (AP) — Willcom Inc., a Japanese mobile phone company controlled by private equity giant Carlyle Group, filed for bankruptcy protection Thursday.
The Tokyo-based carrier's 206 billion yen ($2.2 billion) in liabilities is the biggest ever bankruptcy for a Japanese telecommunications company, according to private research firm Teikoku Databank.
Investments in high-speed mobile data communications led to the heavy debt, the company said. Payment negotiations with its two biggest creditors, Mitsubishi UFJ Financial Group and Mizuho Financial Group, came to an impasse.
Willcom is Japan's sole provider of the personal handyphone system, or PHS, which first drew customers in the 1990s for its relatively low calling fees. The technology relies on a system of simple antennas and is used mainly in Japan, China and other Asian countries.
But the number of users has tumbled in recent years as customers jumped to large competitors like NTT DoCoMo, KDDI and Softbank, which have been cutting calling charges while offering better sound quality and range.
Willcom had about 4.3 million subscribers in January, down from a peak of about 4.7 million in July 2007. In contrast, DoCoMo had more than 55 million subscribers in January.
The company cited "harsh competition" in the industry in its decision to file for court protection under Japan's Corporate Rehabilitation Law.
It will seek restructuring help from the Enterprise Turnaround Initiative Corp. of Japan, the same quasi-governmental body that is assisting Japan Airlines Corp. in a turnaround. Willcom also said it was in talks with Softbank Corp. and investment fund Advantage Partners LLP for support.
The Carlyle Group owns 60 percent of Willcom. Kyocera Corp. holds a 30 percent stake, while KDDI Corp. has the remaining 10 percent.
Willcom said it will continue providing mobile services for customers during its rehabilitation.
In the fiscal year ended March 2009, Willcom's revenue fell 20 percent to 202.5 billion yen on a parent-only basis. It booked a net profit of 5.98 billion yen.