TOKYO -- KDDI will invest in online brokerage Kabu.com Securities and establish a holding company for finance-related subsidiaries, diversifying its revenue sources as smartphones transform the way customers access such services.
The Japanese mobile carrier announced Tuesday that it will spend as much as 91.4 billion yen ($827 million) on a tender offer that will fetch a 49% stake in Kabu.com. That equates to 559 yen per share, a 6% premium over Tuesday's closing price. Mitsubishi UFJ Financial Group will remain the majority shareholder after the deal, which is scheduled for completion within 30 business days from late April. Kabu.com will be delisted thereafter.
Smartphones provide an access point for services in the budding field of financial technology, offering mobile carriers a chance to maximize their customer bases as growth in their core business slows.
Kabu.com is Japan's fifth-largest internet securities company with about 1.1 million accounts. KDDI -- Japan's second-biggest wireless carrier with about 40 million subscribers -- hopes to cultivate new demand in the financial field, using large amounts of data gathered from its subscribers.
With banks and insurance companies already under its umbrella, securities are the last piece in KDDI's plan to enter the financial industry. It will set up Au Financial Holdings to manage services and determine their overall direction.
The company will consolidate these services under the Au brand. Kabu.com will be renamed Au kabucom Securities, and digital Jibun Bank will become Au Jibun Bank. KDDI will also raise its stake in Jibun Bank to 64% from 50%, reducing MUFG's position to 30%.
KDDI seeks to develop services in the retail, entertainment and education fields in conjunction with financial ones. If it can learn more about customers' financial circumstances, the company will be able to provide services for various age groups with the help of big data.
English-language school Aeon and the operator of educational entertainment center KidZania are both under the KDDI umbrella. When a child enters school, for example, the company will be able to provide both insurance and English conversation services.
The push into finance is also defensive as mobile carriers struggle worldwide amid intense competition. In Japan, subscriber growth for fiscal 2017 was just 3%, down from nearly 6% growth in fiscal 2014 and fiscal 2015. NTT Docomo, the largest of Japan's three major wireless carriers, will cut prices for plans by 20% to 40% this spring. E-commerce company Rakuten, meanwhile, will enter the industry as well.
The headwinds are particularly strong for KDDI. The company's Au brand has struggled to cope with the rise of low-cost smartphones more than its two domestic rivals, with the number of subscribers at the end of December down 1% from a year earlier. The carrier's subscriptions are up overall when its low-cost-smartphone operations are included, but the flight from its main brand is significant. The flux in its user base has been a weakness compared with NTT Docomo, which has more reliable customers such as seniors.
KDDI has outlined plans to invest 500 billion yen in growth fields outside the communications segment in the three years from fiscal 2016. In addition to Aeon, it has invested 79.3 billion yen in Kakaku.com, which runs Tabelog, a crowdsourced review website for restaurants. The company has already announced 420 billion yen worth of deals.