Announcement of loss on contract revision relating to sales operation change due to strategic changes in sales agency policies on Otoku LineFeb. 10, 2006
SOFTBANK CORP. (hereafter “the Company”) announces that JAPAN TELECOM CO., LTD. (Head Office: Minato-ku, Tokyo; President & CEO Hideki Kurashige; hereafter “JAPAN TELECOM”), the Company’s wholly-owned subsidiary, recorded loss on contract revision relating to sales operation change as special loss, as a result of strategic changes in sales agency policies on Otoku Line, a direct connection voice service which was launched in December 2004.
Since the beginning of this fiscal year JAPAN TELECOM has taken several fundamental measures to improve operating profit of the Otoku Line business, while the most of its customer acquiring activities had been previously focused on outbound sales through call center (soliciting potential customers through telephone calls) and on sales agencies, at the initiation stage of the Otoku Line business started from December 2004. In concrete terms, JAPAN TELECOM focuses on its direct sales for large-sized enterprises, and transferred agency management and other responsibilities to JAPAN TELECOM INOVOICE Co., Ltd. (Head Office: Minato-ku, Tokyo; Representative: Ikuo Kimura) in October 2005, which was established as a joint venture with INVOICE INC. (Head Office: Minato-ku, Tokyo; Representative: Ikuo Kimura).
Following such changes in the Otoku Line business strategy, JAPAN TELECOM had reviewed the future usability of its assets relating to the sales agency used in the customer acquiring activities for small and medium sized enterprises and residential customers. As a result of this review, JAPAN TELECOM accrued loss for assets of low utilization and limited reusability in the future and thereby recorded loss on contract revision relating to sales operation change.
2. Impacts on consolidated financial results
The Company recorded approximately 18.8 billion yen loss on contract revision relating to sales operation change as special loss in the 3rd quarter for the fiscal year ending March 31, 2006.
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