Announcement Concerning Recognition of a Special Loss in a Subsidiary
SOFTBANK CORP. (hereafter “the Company”) announces that the board of directors of SOFTBANK MOBILE Corp. (hereafter “SBM”; Head office: Minato-ku, Tokyo; Representative: Masayoshi Son), a consolidated subsidiary of the Company, resolved the recognition of a loss on retirement of non current assets relating to certain telecommunications equipment at the board of directors meeting held today. The details are as follows:
1. Recognition of a special loss relating to the termination of second-generation (“2G”) mobile phone service
As previously announced, SBM will terminate its 2G mobile phone service on March 31, 2010. Certain telecommunications equipment used exclusively for 2G mobile phone service in the SOFTBANK Group's Mobile Communications business is scheduled to be removed upon such termination. This equipment is currently being depreciated using the straight-line method for the period commencing from the Company's acquisition of Vodafone K.K. (currently SBM) in April 2006 to the scheduled termination of 2G service in March 2010.
In addition, in June 2009, a new frequency for the next generation mobile phone service (hereafter “next generation service”) was assigned to SBM. Accordingly, management conducted a review of its remaining non-exclusive 2G telecommunications equipment to determine which would be used for the next generation service and which will be removed. For the telecommunications equipment to be additionally removed, a loss on retirement of non current assets was recorded for the third quarter ended December 31, 2009. As the assets to be removed upon termination of 2G service were determined following such review, management is now able to reasonably estimate the removal and other costs. These estimated removal costs are included in the loss on retirement of non current assets recorded in the consolidated statements of income for the third quarter ended December 31, 2009.
The breakdown of costs is as follows:
|Equipment removal cost||JPY 17,884 million|
|Loss on retirement of telecommunications equipment||JPY 6,453 million|
|Total||JPY 24,338 million|
2. Recognition of a special loss relating to third-generation (“3G”) mobile phone telecommunications equipment
The SOFTBANK Group continues its efforts to efficiently execute its capital expenditure, and SBM has several initiatives in place for this purpose. SBM manages its capital expenditures by combining proactive investments and enhanced efficiency to meet growing network traffic demands. SBM has reviewed and optimized the number of vendors for part of its telecommunications equipment, used for the wireless network facility of 3G mobile phone service, in order to reduce capital expenditures and maintenance costs. During the course of this optimization, certain existing wireless network equipment required replacement, and previously used equipment was retired. Due to the retirement and removal of these assets, a loss on retirement of non current assets of JPY 22,555 million was recorded in the consolidated statements of income for the third quarter ended December 31, 2009.
3. Impact on Financial Results
The Company recorded the loss on retirement of non current assets of JPY 46,894 million as a special loss for the third quarter ended December 31, 2009.
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