Press Releases 2005

Announcement of the sale of the modem rental business as part of broadband business restructuring

Dec. 1, 2005

SOFTBANK CORP. (the Company) announced the restructuring of SOFTBANK Group (the Group)’s broadband business on October 14, 2005. As part of the restructuring process, its wholly-owned subsidiary, SOFTBANK BB Corp. (head office: Minato-ku, Tokyo; representative: Masayoshi Son; hereafter “SOFTBANK BB”), established a company for the modem rental business, BB Modem Rental Yugen Kaisha. (head office: Minato-ku, Tokyo, representative: Fumihiro Aono; hereafter “BB Modem Rental”), through a corporate divestiture on November 1, 2005. Furthermore, as of December 1, 2005, SOFTBANK BB was split into BB TECHNOLOGY Corp. (the surviving company; the name of SOFTBANK BB was changed to this name; hereafter “BB TECHNOLOGY”), which focuses on the ADSL business, and SOFTBANK BB Corp. (newly established company; head office: Minato-ku, Tokyo; representative: Masayoshi Son; hereafter “(new) SOFTBANK BB”), which assumes the businesses other than ADSL. The Company hereby announces that, in order to focus management resources on the core broadband business, the Group decided to sell BB Modem Rental to Yugen Kaisha Gemini BB (head office, Minato-ku, Tokyo; representative: Yukinobu Abe; hereafter “Gemini BB”), which had been established through arrangements made by Citibank, N.A. Japan Branch (hereafter “Citibank”). BB TECHNOLOGY will subcontract the modem rental service to BB Modem Rental, ensuring that the customers of BB TECHNOLOGY will continue to receive its high-quality service.

1. Outline

BB Modem Rental will be sold to Gemini BB through arrangements made by Citibank once conditions are met. As for the corporate divestiture process involved, please refer to the figure below.

2. Benefits resulting from this scheme

  • (1) The sale of the modem rental business brings in 45 billion yen plus 40 billion yen in advance royalties, totaling 85 billion yen. In addition to this, incentives, royalties, and subcontracting fees will also generate revenue according to the number of subscribers and other factors in the ADSL business. Thus, the sale of the modem rental business achieves cash flow from the sale itself, as well as future profit-earning opportunities from the modem rental business according to the performance of the ADSL business.

  • (2) The sale of the modem rental business leverages the corporate divestiture system to align the sale with the business strategy of further focusing business resources into the three major business areas (infrastructure, portals, and content).

3. Impact on consolidated financial results

Proceeds from the sale will be recorded after being leveled on a long-term basis, so its effect on the consolidated ordinary profit and net profit for fiscal year ending March 31, 2006 will be minor. Incentives, royalties, and subcontracting fees are subject to change according to the performance of ADSL business, so it is not possible to present definite numbers at this moment. These will be announced as soon as the numbers become certain.

4. Outline of the parties

SOFTBANK BB Corp.

Trade name SOFTBANK BB Corp. (“new” SOFTBANK BB)
Head office 1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo
Representative Masayoshi Son
Shareholder Wholly-owned by SOFTBANK CORP.
Capital 30 billion yen
Date of incorporation December 1, 2005
Description of business Content, FTTH, and distribution businesses

BB TECHNOLOGY Corp.

Trade name BB TECHNOLOGY Corp.
Head office 1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo
Representative Masayoshi Son
Shareholder Wholly-owned by SOFTBANK CORP.
Capita 119.9 billion yen
Date of incorporation May 16, 2000
Description of business ADSL business

BB Modem Rental Yugen Kaisha

Trade name BB Modem Rental Yugen Kaisha
Head office 1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo
Representative Fumihiro Aono
Shareholder Wholly-owned by BB TECHNOLOGY Corp.
Capita 3 million yen
Date of incorporation November 1, 2005
Description of business Modem rental business

Yugen Kaisha Gemini BB

Trade name Yugen Kaisha Gemini BB
Head office 5-2-20, Akasaka, Minato-ku, Tokyo
Representative Yukinobu Abe
Shareholder Gemini BB Holdings
Capita 3 million yen
Date of incorporation October 24, 2005

The corporate divestiture process

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