Internet Initiative Japan Inc., a major Internet service provider, said Thursday it will float and sell some 12 billion yen in shares to a group of companies including NTT Corp.
Although details of the third-party share allotment plan, which was approved at an IIJ board meeting in the afternoon and will be implemented Sept. 16, have yet to be worked out, the NTT group is expected to become the firm’s top shareholder, according to IIJ.
In addition to the NTT group, IIJ has requested both Sumitomo Corp. and Itochu Corp., existing major shareholders in the firm, to purchase new IIJ shares, the company said.
Taking into consideration the financial impact of Crosswave Communications Inc., an IIJ subsidiary which filed for court protection from creditors under the Corporate Rehabilitation Law on Aug. 20, IIJ said it aims to drastically strengthen its financial base through the third-party share allotment plan.
Crosswave Communications’ failure has led IIJ to incur a loss of more than 10 billion yen and face the urgent need to enhance its capital base.
Backed by the planned share purchase, NTT wants to take advantage of the technological expertise of IIJ, whose staff includes skilled engineers, so that its group companies can provide innovative services, industry sources said.
IIJ wants to make it easier to raise funds and expand its operations on the strength of the high creditability of the NTT group, the sources said.
The NTT-IIJ alliance is to come at a time when a reconfiguration of ties among telecommunications carriers is picking up momentum, as evidenced by a decision last week by Ripplewood Holdings LLC to purchase Japan Telecom Co., the fixed-line carrier arm of Japan Telecom Holdings Co.
IIJ plunged into financial difficulties as a result of the intensification of price competition in the field of Internet-related businesses, where it has acted as a pathfinder.
IIJ, set up in 1992, is listed on the U.S. Nasdaq market.
NTT West-Softbank row
The telecommunications ministry ordered NTT West Corp. Thursday to resume talks with the Softbank Corp. group over Softbank’s demand that it be allowed to do wiring work at switching stations to improve its high-speed access service.
The move comes after the telecom dispute settlement panel, an advisory council at the telecommunications ministry, recommended that the talks be resumed, raising the odds that Softbank’s demand may be met.
Softbank has been demanding for two years that its engineers be allowed to do wiring work at NTT West’s switching stations — to which the phone lines of all NTT West users are linked — if users apply for Softbank’s ADSL service.