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KDDI Corp. plans to sell DDI Pocket Inc., its personal handy-phone system unit, company sources said Wednesday.

In addition to foreign-affiliated firms, Kyocera Corp. has emerged as a strong potential buyer, according to industry sources.

KDDI has denied it is in talks with Kyocera, as has been reported in a Japanese newspaper.

According to the company sources, KDDI plans to focus its mobile communications operations on its au service, spinning off DDI Pocket and the Tu-Ka cell phone service group from its corporate group.

Both are ridden with cumulative debts.

The move demonstrates that regrouping maneuvers within the telecommunications industry are rippling throughout the mobile communications business, they said.

Last month, U.S. investment fund Ripplewood Holdings LLC said it would acquire Japan Telecom Co., the fixed-line carrier arm of Japan Telecom Holdings Co., which operates under the wing of British mobile giant Vodafone Group PLC.

KDDI will likely hold talks with more than one DDI Pocket suitor over a fairly lengthy period, the company sources said.

Established in 1994, DDI Pocket is the largest domestic PHS operator, boasting some 2.94 million subscribers as of last month.

KDDI owns an 80 percent stake in DDI Pocket, while Kyocera is the second-largest shareholder.

On the back of its fixed-price Air Edge data service, DDI Pocket posted a pretax profit of 17.7 billion yen on sales of 197.5 billion yen in the year through March.

KDDI issued a brief statement saying, “It is not true that we have entered negotiations with Kyocera on the sale of DDI Pocket.”

Mobile shipments up

Domestic shipments of mobile phone handsets surged 40.3 percent in July, hitting 5.254 million units, the Japan Electronics and Information Technology Industries Association said Wednesday.

This represents the ninth consecutive year-on-year gain, the association said.

It is the third time on record that domestic shipments of mobile phones, including personal handy-phone system handsets, have surpassed 5 million units in a month.