eaccess, emobile, y!mobile

(c) 2014 Eurotechnology Japan KK www.eurotechnology.com eAccess - eMobile - Y!Mobile (12th version) May 26, 20141

EACCESS - EMOBILE - Y!MOBILEVersion 12 of May 26, 2014

by Gerhard Fasol PhD, Eurotechnology Japan KK http://www.eurotechnology.com/

[email protected] this is a free try-out version with a few selected pages.

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EXECUTIVE SUMMARY - EACCESS, EMOBILE AND Y!MOBILE

• eAccess was founded in November 1999 by Dr Sachio Semmoto, a veteran in Japan’s telecommunications sector, to offer fixed line ADSL broad band internet access services.

• On May 1, 2005, Dr Sachio Semmoto and Eric Gan founded the mobile company eMobile as a subsidiary of eAccess, and with financial partners including Goldman-Sachs and others. eMobile was the only new entrant to Japan’s mobile sector which is building a nationwide wCDMA-HSDPA network from the beginning

• eMobile accepted subscriptions and started mobile services in the Tokyo, Osaka and Nagoya regions from March 31, 2007

• eAccess acquired ADSL provider ACCA networks, greatly expanding market share for ADSL (however, subscriber numbers for ADSL are shrinking in Japan because of the shift to FTTH

• On March 31, 2011, eAccess absorbed its subsidiary eMobile. • In autumn 2012, while SoftBank was engaged in negotiations to acquire SPRINT in the USA, Masayoshi Son

found that KDDI was in negotiations with eAccess to acquire eAccess. SoftBank intervened, and was quicker to close the deal with eAccess, and on Jan 1, 2013, SoftBank acquired 100% of eAccess.

• On January 17, 2013, SoftBank sold part of the shares to 11 financial companies and telecom equipment suppliers. This was done by issuing voting and non-voting shares, resulting in a complex structure which is explained in this report.

• There have been plans for Yahoo-Japan (Yahoo KK) to acquire eAccess from SoftBank, however these discussions seem to have been abandoned, but there are discussions now of creating a Y!Mobile virtual operator based on eAccess mobile network.

• It has been announced that eAccess will be merged with Willcom in the near future.

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EACCESS-EMOBILE - VERSION OVERVIEW

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Version Date Revision and comments

1 March 19, 2007

2 August 31, 2008

3 September 29, 2008

4 November 1, 2008

5 November 11, 2008

6 January 16, 2009

7 June 1, 2009

8 July 21, 2009

9 December 12, 2010

10 December 13, 2010

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EACCESS-EMOBILE - VERSION OVERVIEW

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Version Date Revision and comments

11 January 6, 2011

12 May 26, 2014 revision and update, reformat

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LICENSE

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EACCESS SLOGAN !

A NEW AND MORE EFFICIENT BROADBAND LIFE FOR ALL

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AGENDA (LIST OF CONTENTS)• Executive Summary • eAccess today

• Financials, revenues, income, margins, ARPU • Japan’s telecom landscape: eMobile and eAccess’ battleground • eAccess and eMobile: Company structure and overview

• Dr. Sachio Semmoto • Company structure • Shareholder overview

• eMobile • Service roll-out • Shareholder structure • Market share and subscriber and growth • Strategy and positioning • 3G and LTE mobile network and base stations (suppliers) • Terminals and handsets • Mobile TV

• eAccess: ADSL and ISP • eAccess market position

• Japan’s broadband markets • AOL Japan

• Summary

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EACCESS TODAY

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EACCESS TODAY

• eAccess provides wireless broad band services and fixed line ADSL broadband services

• eAccess is integrated into the SoftBank group, management, base stations, backbone network are shared.

• via a complex shareholding structure, eAccess has a certain degree of management independence from SoftBank, but financially is 99.25% owned by the SoftBank group.

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eMobile March 31, 2011 absorbed by eAccess

Founded May 1, 2005 founded by Dr. Sachio Semmoto March 31, 2007 start of mobile services

Founder Dr Sachio Semmoto and Eric Gan

Headquarters Tokyo

Stock Exchange -

Consolidated sales -

Number of employees -

Major share holders 100% eAccess

Major business areas wireless broadband services



FINANCIALS

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MOBILE ARPU

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As for most mobile operators globally, eMobile’s ARPU is steadily falling, and currently below YEN 3000/month (US$ 30 / month) eMobile is planning to turn around this decreasing ARPU by improving services



JAPAN’S TELECOM LANDSCAPE-EMOBILE AND EACCESS’ BATTLEGROUND

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For a detailed overview of Japan’s telecom markets, see http://www.eurotechnology.com/store/jcomm/


http://www.eurotechnology.com/store/jcomm/


EACCESS & EMOBILE

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EACCESS AND EMOBILE• eAccess and eMobile are lead by Dr Sachio Semmoto. eAccess was founded on November 1, 1999. • eAccess is one of Japan’s leading ADSL service providers with about 2 million subscribers.

• However, with Japan’s trend to switch to FTTH the number of ADSL subscribers is decreasing. • Consequently the number of eAccess subscribers is decreasing and we believe the prospects for eAccess are mainly for areas where NTT does not roll out FTTH,

e.g. for rural areas • With the number of ADSL subscribers falling, eAccess is following a dual strategy: • increase the ARPU from existing subscribers, e.g. by offerening VOIP via metal connections (service is provided by KDDI) • Attracting ISP customers through AOL. For this purpose eAccess acquired AOL-Japan in July 2004

• eMobile was founded on January 5, 2005 • Worked towards and obtained a 3G mobile license in 2005 • 1.7 GHz mobile license awarded by Japan’s General Affairs Ministry on November 9, 2005 • Builds a nationwide 3G (wCDMA-HSDPA) network, started with networks in Tokyo, Osaka, and Nagoya municipal regions and today covers most major regions of

Japan • Initially data services only were offered, voice services started in 2008, initially only in the municipal areas with nationwide coverage via a roaming agreement with

DoCoMo. • Data services started on March 31, 2007, subscriber acquisitions exceeded expectations

• WiMax license not granted • eAccess has obtained a license for testing WiMax services from Japan’s General Affairs Ministry. eAccess is currently testing WiMax services from three base stations

in the Tokyo area. • However, the WiMax license was not granted. 2 licenses awarded to

• KDDI led consortium (offering services under the brand UQ Communications) • Willcom. After bankruptcy of Willcom, this license was transfered to a new operator: Wireless City Planning.

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DR. SACHIO SEMMOTO

• While SoftBank is driven by Masayoshi Son, eAccess and eMobile are driven by serial mega-entrepreneur Sachio Semmoto.

• In contrast to SoftBank’s Masayoshi Son who was financially independent since his student days by selling a patented invention, Sachio Semmoto initially worked several years at Japan’s telecommunications giant NTT, before becoming an entrepreneur as co-founder of the new telecommunications company DDI, which today is part of KDDI. Semmoto had a leading role in building DDI in record time, leading to an IPO. DDI was later acquired by KDD - the resulting merged company changed the name to KDDI, reflecting the merger of KDD with DDI (for an overview of KDDI, including the M&A history, see: http://www.eurotechnology.com/store/kddi/ ).

• Short personal history • NTT: developed fibre optic systems

• 1974-1980: Japan’s representative to the ITU on optical fiber and ISDN • Kyocera Corporation • Co-Founder of DDI Corporation (today part of KDDI),

• IPO on Tokyo Stock Exchange • Merged with KDD, the resulting company named KDDI

• Professor at Graduate School of Business Administration of Keio University • November 1999: founded eAccess

• October 2003: IPO on Mothers • November 2004: Tokyo Stock Exchange, First Section

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EACCESS/EMOBILE - COMPANY STRUCTURE BEFORE ABSORPTION OF EMOBILE BY EACCESS

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47% 53%Investors

founded: January 5, 2005

Capital shares andreserves: YEN 143.2 billion

wCDMA-HSPDA start:March 31, 2007

Target:5 million subscribers by March 2012

founded: November 1, 1999Capital shares and reserves: YEN 22.6 billionEmployees: 600, Tokyo Stock Exchange (1st Sect)

ADSL wholesale1.92 millionsubscribers

AOL-JapanISP, acquired:July 2004239,000 subscr.

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• This figure shows the structure of the eAccess/eMobile group at the time when eMobile was founded in 2005.

• Since this time, eAccess and eMobile have been merged into eAccess, and has been acquired by the SoftBank group.



EMOBILE SHARE OWNERSHIP IN EACCESS LTD (CAPITAL= YEN 17.1 BILLION) BEFORE ABSORPTION BY EACCESS

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Shareholder Number of Shares Percentage

Morgan Stanley 259,260 17.74%

Sachio Semmoto 101,810 6.96%

The Master Trust Bank of Japan (Trust Acct.) 98,132 6.71%

Eric Gan 94,765 6.48%

Goldmann Sachs 67,760 4.63%

Nomura Int (Hong Kong) 48,030 3.28%

Societe General (Paris) 43,364 2.96%

eAccess Holdings LLC 22,220 1.52%

Bank of New York 20,696 1.41%

BBH (LUX) Fidelity Active Strategy – Japan Fund

19,887 1.36%

Other (27,719 share holders) 685,386 49.90%

Total shares issued 1,461,310 (810,607 foreign) 100% (55.5% foreign holders)



MARKET SHARE AND SUBSCRIBER GROWTH

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EMOBILE NET ANNUAL GROWTH

• Initially, in the start-up phase, eMobile achieved high annual growth on the order of 1 million new subscribers per year, however this rapid growth soon slowed, and in the first quarter of 2014, eMobile even lost subscribers to competitors.

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PREPAY

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EM-CHARGE (PREPAY)

• eMobile achieved approx. 90,000 prepaid users by mid-2011, however stopped disclosing prepaid usage numbers by mid-2011, therefore the graph above ends in mid-2011.

• in any case, the share of prepaid usage among eMobile users is very small.

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STRATEGY AND POSITIONING

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MVNO BUSINESS

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MVNO BUSINESS

• The Japanese government has been actively promoting the development of MVNO business development to increase the number of wireless operators offering services to consumers and businesses.

• Astonishing government and industry, SoftBank and eMobile announced an MVNO agreement, where SoftBank will use eMobile’s wireless data network to offer flat-fee data-only services targeting wireless data connectivity for laptops and other portable devices.

• Previously, SoftBank was the only operator in Japan which could not offer flat-rate data connection for laptops, due to limited network capacity.

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SPECTRUM LICENSE AND BASE STATIONS

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HOW MANY LOW POWER REPEATERS DOES EMOBILE HAVE?

• eMobile has about 45,000 low power repeaters installed57



LTE

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TERMINALS AND HANDSETS

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EACCESS

• eAccess offers ADSL broadband access and ISP services to approx. 2 million subscribers • The number of subscribers is falling, as subscribers switch to FTTH, which has much higher connection speed • eAccess is seeking to add services to increase ARPU and to gain additional subscribers for the fixed line services:

• eAccess acquired the Japan subsidiary of AOL from DoCoMo in order to offer ISP services • eAccess entered into a cooperation with KDDI to offer VOIP telephony over copper lines to subscribers. eAccess

acts as a reseller of KDDI services • Recently eAccess acquired ACCA Networks and greatly expanded the combined market share (ACCA networks

had applied for a WiMax license in cooperation with NTT-DoCoMo, however was not awarded a license, which greatly weakened ACCA’s position. In addition, ADSL markets are shrinking in Japan with the growth of FTTH)

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DSL BROADBAND MARKET SHARES

• eAccess has achieved approx. 23.6% market share in Japan’s shrinking DSL market

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AOL

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SUMMARY

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SUMMARY

• eAccess today is part of the SoftBank Group, and is jointly owned by SoftBank and 11 financial companies and equipment suppliers. Management, base stations, spectrum, network, distribution networks are jointly management within the SoftBank group.

• eAccess is one of Japan’s leading fixed line broadband (ASDL) service providers, and with the acquisition of ACCA Networks, could recently expand market share – in the shrinking ADSL market

• eMobile started operations on March 31, 2007, as the fifth mobile service provider in Japan. • Initially eMobile offered HSDPA data services only, expanding from the Tokyo, Osaka and Nagoya areas, and recently

started also voice services, with national coverage with roaming over DoCoMo’s network. • eMobile’s HSDPA radio network today covers about 85% of Japan’s population • eMobile announced that because of careful purchasing decisions, eMobile’s network investment cost and basestation

acquisition cost is 5 to 8 times lower than DoCoMo’s • With a very competitive data value proposition, eMobile could attract more subscribers than expected. It has been

announced that eAccess will be merged with Willcom in the near future.

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