Tokyo Metallic Communications Corp., an Internet access service provider specializing in digital subscriber lines, faces a management crisis due to fundraising problems, the company’s president said Tuesday.
Iwao Tojo issued a comment saying, “It is a fact that we are hard-pressed for capital, but we are in talks on a capital tieup and services will continue.”
After mentioning a plan to sell new shares to a third party next month, he said, “The monthly sales volume will be 300 million yen, and if we succeed in business reforms our operating balance sheet will turn to the black after this fall.”
Aggressive capital investment has led to a short-term shortage of funds, and the company now plans to look for an entity to take over its operations or companies to buy extra shares it would issue, the sources said.
Tokyo Metallic’s service for asymmetrical digital subscriber lines, which provide faster Internet access than conventional fixed-line services, will continue, the sources said.
Tokyo Metallic helped trigger widespread demand for high-speed Internet access when it started operations in December 1999. The company’s subscribers, mostly in Tokyo’s 23 wards, currently number around 25,000, and the number is steadily growing.
Its finances are suffering because the company paid for much of its ADSL equipment in cash, the sources said. In addition, the company also had to deal with interference from NTT in getting corporate customers, a situation that had to be rectified with a government warning.
The rise in costs, in tandem with the climb in the number of subscribers, also took a toll, they said. The firm is currently suffering losses of about 150 million yen a month, the sources said.
With debts coming to around 4 billion yen, Tokyo Metallic is facing difficulties finding new short-term funding from banks and other financial institutions.
The company plans to take cost-cutting measures and reconstruct itself, while it looks for a company to take over its business, the sources said.
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