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A government-backed corporate turnaround body said Friday it will sponsor the rehabilitation of mobile phone carrier Willcom Inc., which filed for bankruptcy last month, but stopped short of providing any direct investment.

Under the rescue scheme, Willcom will work with three parties — the state-backed Enterprise Turnaround Initiative Corp. of Japan, Softbank Corp. and investment fund Advantage Partners LLP — to revitalize its personal handy-phone service business and will compile a rehabilitation plan by July 20.

ETIC said it will provide a credit line of up to ¥12 billion, together with other financial institutions, to maintain Willcom’s existing PHS services.

Advantage Partners will invest ¥300 million in the company, while also teaming up with Softbank and other possible sponsors to handle Willcom’s high speed, next-generation PHS services under a new company.

Jun Watanabe, managing director for ETIC, said it is important to continue the PHS services — a stripped-down version of mobile phone services with relatively low charges and weaker electromagnetic interference.

“PHS services are used in hospitals and nursing care facilities because of less concern of possible electromagnetic interference with sensitive medical devices, and this is used by 60,000 medical workers at 5,000 facilities,” Watanabe said in a press briefing.

As of February, Willcom had roughly 4.26 million subscribers, with around 4.17 million of them subscribing to PHS services. The subscription figure compares with those of industry leaders NTT DoCoMo Inc. and KDDI Corp., which are in the tens of millions.

As part of the rescue package, Willcom said it will spin off its high-speed, next generation PHS service known as Willcom Core XGP into a new company, which will get ¥8 billion in capital from Softbank and Advantage Partners as well as ¥3 billion from other investors.

It is the second case following Japan Airlines Corp. for ETIC, which is financed by the government and private financial institutions, to aid the restructuring of a struggling firm.

Although not as closely watched as JAL, ETIC’s aid for yet another large firm has been questioned since the entity was designed to help small and midsize businesses.

But ETIC officials justified the move by saying they supported Willcom because of its importance in social infrastructure, adding their decision to neither invest in nor buy debts for Willcom speaks of how they want the private sector to be more heavily involved.

ETIC initially was expected to specify its support for Willcom in late February, but a decision was delayed due to differences about the rescue plan.

The Tokyo-based firm, with about 1,300 employees, filed for court protection on Feb. 18 with liabilities topping ¥200 billion.

Willcom, the nation’s largest PHS provider, sank deep into the red as its customers drifted to rivals NTT DoCoMo and Softbank, which offer faster mobile phone services. Its subsequent attempt to invest in Willcom Core XGP and attract more customers eventually led to heavy debts.

Willcom’s creditors are likely to be asked to waive about ¥114.5 billion in debt, according to ETIC’s statement.

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