Looking to up its cable TV capabilities while its legacy wireline and wireless sales continue to remain flat in a competitive market, Japan's KDDI has crafted a $4 billion deal to purchase a major piece of cable operator Jupiter Telecommunications (J:Com).
Touted as one of Japan's largest media & entertainment deals in over ten years, KDDI will acquire Liberty Global's 37.8 percent stake in J:Com. When news of the deal broke, J:Com's shares rose 14.4 percent to 94,000 yen, while KDDI was down 2 percent.
KDDI's acquisition of the J:Com stake, which it expects to complete in February, comes as the service provider tries to look to compete with not only former telecom monopoly NTT and younger rivals such as Softbank that provide the hip Apple iPhone in Japan.
While KDDI views the J:Com deal as a ticket to fuel new growth at the struggling service provider, some analysts think the deal could backfire. "There's limited scope for J:Com to break new territory or bring in new customers," said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management in a Reuters article. "I worry that Cable TV might end up eating into some of KDDI's existing businesses, such as media distribution."
- Reuters has this article
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