Vodafone pursues virtual operators

Vodafone has held talks with about 30 companies in Japan about hosting them on its network as so-called mobile virtual network operators as part of the restructuring programme at its troubled Japanese unit.

Bill Morrow, who heads Vodafone?s Japan operations, said on Wednesday the UK mobile operator was ?feverishly in negotiations with quite a few? potential MVNOs.

The world?s largest mobile operator by revenues wants to sign up to 10 MVNOs within two years, with the first contract expected to be signed in the next financial year.

A deal with MVNOs would make Vodafone the first mobile phone network wholesaler in Japan. NTT DoCoMo and KDDI, the country?s largest mobile operators, have said they do not have enough capacity to lease their networks to MVNOs.

Vodafone has so far been reluctant to open its networks around the world to this relatively new concept, which was pioneered by Virgin Mobile in the UK in 1999.

Arun Sarin, group chief executive, this week said he expected the Japanese business to host at least one of the three new mobile licence holders that are due to enter the market in late 2006..

Mr Sarin committed the company to turning round its Japanese business but has warned it will take one more year of pain before the unit is back on a growth track in terms of profitability.

This was one of a series of issues that spooked investors as Vodafone released its interim results on Tuesday. The company?s shares fell nearly 11 per cent, the biggest one-day drop in seven years.

Mr Morrow said other potential customers for Vodafone included internet service providers and cable TV companies. Another industry observer suggested it would focus on niche providers like Extreme Sports.

Mr Morrow said the contribution of the MVNO business to Vodafone in Japan would be ?material?.

Vodafone is under pressure to improve the profitability of its Japanese operations, having struggled to maintain its subscriber base there.