US private equity firm Carlyle Group and Kyocera have agreed to jointly acquire a 90% stake in KDDI’s low-cost wireless data services operator DDI pocket for JPY220 billion (USD2.03 billion). Under the terms of the deal, which ranks as the second largest leveraged buy-out ever in the country, Carlyle will purchase 60% of DDI Pocket, equipment vendor Kyocera will take a further 17% interest to boost its holding to 30% and KDDI will reduce its 81% stake to 10%. The announcement follows Softbank’s recent acquisition of Japan Telecom from Ripplewood, and reiterates growing investor interest in the Japanese telecoms sector by groups looking for a quick return. Ripplewood paid JPY261 billion for Japan Telecom in November 2003 and less than a year later sold it to Softbank for JPY340 billion. Carlyle plans to expand DDI Pocket’s personal handyphone system (PHS) business, once written off as a less attractive investment than cellular services, despite it being more cost effective. DDI is the leading player in Japan’s PHS market with more than three million customers.
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