Press Releases 2006

SOFTBANK announces modifications to the consignment agreement for call center operations

Mar. 28, 2006

SOFTBANK CORP. (“SOFTBANK”) announced that its consolidated subsidiary SOFTBANK BB Corp. (Head office: Minato-ku, Tokyo; Representative: Masayoshi Son; hereinafter “SOFTBANK BB”), JAPAN TELECOM CO., LTD. (Head office: Minato-ku, Tokyo; Director and CEO: Hideki Kurashige; hereinafter “JAPAN TELECOM”), and BB Call Corp. (Head office: Shinjuku-ku, Tokyo; President and CEO: Yoshihiko Yokoyama; hereinafter “BB Call”) agreed on modifications to the consignment agreement for call center operations, entered into by the three parties above.

1. Outline

The SOFTBANK Group (“the Group”) is in a comprehensive business alliance with BB Call. Based on this alliance, SOFTBANK BB has an inbound contract for call center operations (total payment of 209.205 billion yen during the period from 2004 to 2010, with remaining payment of 167.505 billion yen as of the end of February 2006). JAPAN TELECOM also has contracts for call center operations with BB Call, including an inbound contract (total payment of 83.493 billion yen during the period from 2004 to 2010, with a remaining payment of 69.802 billion yen as of the end of February 2006), an outbound contract (no agreement on the total payment), and a leasing contract to procure a part of the communications facilities and other outbound operation facilities (total payment of 110.93 billion yen during the period from 2004 to 2011, with remaining payment of 19.788 billion yen as of the end of February 2006. However, BB Call has already transferred the leasing contract for communication facilities to another company in June 2005).

Taking into consideration the current and future operational volume and in view of the aim of their comprehensive business alliance, SOFTBANK BB, JAPAN TELECOM, and BB Call have recently agreed on modifications to the above-mentioned inbound contract, invalidation of the outbound contract, and purchase of the leasing contract to provide the outbound operation facilities. The details are as follows.

2. Major modifications

(1) Inbound contract

1) Modification of the contract period

Former contract From August 2004 to May 2010
New contract From March 2006 to February 2015

2) Modification on the order/payment unit

Former contract Per fixed number of committed booths (total payment fixed)
New contract Per work hours of service personnel (total payment variable, but with the minimum outsourcing hours guaranteed)

3) Scope of outsourced services

Former contract Inbound service concerning the telecommunication services provided by SOFTBANK BB and JAPAN TELECOM
New contract All inbound, outbound, and operational services outsourced by the Group

(2) Outbound contract

Invalidated with the change in the scope of outsourced services in the inbound contract.

(3) Leasing contract to procure facilities for outbound services

This leasing contract has been invalidated with the purchase of all leased assets for 16.498 billion yen. Provision for losses due to impairment of these purchased assets has already been recorded in the third quarter for the fiscal year ended March 2006, under loss on contract revision relating to sales operation change.

3.Impacts on consolidated financial results

With this change in outsourcing contract, the unit of outsourcing to BB Call will change from “fixed number of committed booths” to “work hours of service personnel,” resulting in a payment that reflects the actual service volume. In addition, expanding the scope of outsourced services to include all the services provided by the Group is expected to enable the contract to apply to a wider range of the Group’s businesses, including the mobile business.

This contract modification involves no payment, such as for temporary costs. Therefore, the impact on the consolidated financial results for the fiscal year ended March 2006 is expected to be minor.

[Notes]
  • *Inbound operations: includes customer services through telephone, email, and other communication mediums, related to the services provided to current and potential customers by the Company’s consolidated subsidiaries.
  • *Outbound operations: includes marketing operations through telephone, email, and other communication mediums, related to expanding the sale of services currently provided or scheduled to be provided to current and potential customers in the future by the Company’s consolidated subsidiaries.
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