What Will Yahoo Do With eAccess?

Source: Getty Images

Source: Getty Images

Yahoo, Inc. (NASDAQ:YHOO) isn’t the only Yahoo company acquiring other companies. Yahoo Japan plans to purchase eAccess, a mobile Internet service provider, from SoftBank, a telecommunications company and Yahoo Japan’s parent company. Yahoo Japan is paying 324 billion yen or about $3.2 billion to acquire the company. It is the first step for Yahoo Japan in launching its own mobile service, dubbed Y! Mobile.

Yahoo Japan is a joint venture between the Yahoo, Inc. and SoftBank. Yahoo, Inc. has a 35 percent interest in Yahoo Japan. SoftBank has a 42 percent interest. (SoftBank also owns approximately 80 percent of wireless carrier Sprint.) Yahoo Japan functions as both a regular Yahoo site and as a web portal in Japan. It also wants to get into the mobile Internet business.

For this merger to continue, eAccess has to first finish its merger with Willcom, a wireless company. That merger is expected to finish by June of this year. Yahoo Japan will then be able to begin the process to acquire eAccess, including Willcom. Yahoo Japan will own almost all of eAccess, with less than .5 percent of its ownership in other hands.  SoftBank purchased eAccess for 180 billion yen, about $1.8 billion, in 2012.

While Yahoo has shut down many of its Asian subsidiaries in past years, including the South Korean version of Yahoo in 2012, Yahoo Japan gets significant web traffic and profits enough to keep the company running. TechCrunch reported that Yahoo Japan got 14.3 billion monthly page views in April 2013.

EAccess also owns eMobile, a mobile service provider already in the Japanese market. Current eMobile shops will be rebranded Y! Mobile ones. The name will also serve as the moniker for Yahoo Japan’s newly launching mobile brand.

Yahoo Japan hopes to attract 20 million subscribers. (The total Japanese population is about 127 million as a comparison.) Acquiring eAccess is a step towards that goal because it has the infrastructure needed to develop new mobile services. “We figured that we need to be a traditional operator to have a complete control over devices, plans and sales channels,” said Manabu Miyasaka, president and CEO of Yahoo Japan when he announced the deal.

Yahoo Japan’s mobile service would become the underdog in the Japanese mobile market. EMobile is currently in fourth place in the Japanese mobile market. NTT DoCoMo Inc. and KDDI Corp. are the market leaders. Y! Mobile will also have to compete against parent company SoftBank in the highly competitive market.

The deal isn’t just about building up a new mobile carrier to enter the Japanese market. Yahoo Japan plans to use eAccess’ existing channels to sell Yahoo products and services to increase its revenue. It also hopes to boost its online advertising revenue and traffic on its auction site through an increased mobile presence.

For SoftBank, although the sale produces some extra money for the parent company, the deal has little impact on the group as a whole reports The Wall Street Journal.

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