Japan’s third carrier Softbank to buy smaller rival eAccess for $1.8 billion

Japanese third largest operator Softbank has agreed a deal to buy smaller rival eAccess in a deal worth $1.84 billion which will increase its bandwidth, boost its LTE service and see it overtake second-placed KDDI on customer numbers.

The Nikkei reports [translation] that the acquisition will see eAccess (and eMobile), which had 4.01 million customers as of August, become a wholly owned Softbank subsidiary, adding to its userbase, which hit 30 million back in August.

Speaking at a press conference announcing the deal, Softbank CEO Masayoshi Son revealed the significant role played by the iPhone, which the operator held an exclusive grip on until KDDI struck a deal to sell the iPhone 4S last November.

“You asked if the iPhone 5 had an role as a trigger for this business merger. The answer is yes,” he said, before claiming that the coming-together will see Softbank-eAccess overtake KDDI’s 36 million customers.

Son also confirmed that the deal will see the two operators make significant financial savings by sharing  infrastructure and associated costs.

Japanese smartphone consumers are increasingly adopting Western smartphones, ahead of feature phones, and — with the Samsung Galaxy 3 and iPhone 5 both supporting the 4G technology — that has seen carriers focus on their 3G mobile broadband and, particularly, LTE networks.

eAccess, last month partnered with Rakuten to start a wireless LTE business for the retailer, and its own LTE service launched in partnership with Ericsson in January and has 300,000 customers.

DoCoMo is Japan’s dominant carrier with more than 60 million customers and it has seen good progress for its LTE network, Xi. The 4G service hit 5 million subscribers in August, at which time the company claimed it was growing at a rate of 1 million new sign-ups every four weeks.

eAccess — which also runs an ADSL business — was a relative late entrant into Japan’s mobile industry, entering the space in March 2007. The firm recently shut down its MVNO business which, coupled with raised marketing costs, saw it post a 54 percent drop on profits in its most recent earnings in August.

The deal is scheduled to be completed in February and is based on a stock swap that sees Softbank pay $670 (52,000 yen) for each eAccess share – that’s three times the closing price from Friday’s trading.

Note: The original price of the transaction has been changed since this article was published following confirmation of the deal price from Softbank.

Hat tip Hiroko Tabuchi, image via Getty Images / AFP / Toru Yamanaja