Softbank eyes free mobile-Web phone calls: sources

A man talking on a mobile phone walks past a Softbank shop in Tokyo October 26, 2006.

TOKYO (Reuters) - Softbank Corp (9984.T), in a tight race for customers in Japan's saturated mobile phone market, may offer free calls between users of mobile phones and Web-based phones, sources briefed on the matter said on Tuesday.

Softbank, Japan's third-largest mobile phone operator behind NTT DoCoMo (9437.T) and KDDI (9433.T), is also seeking to expand its Internet-based phone call business.

Softbank offers fixed-line Internet Protocol (IP) phones as part of its high-speed Internet service, which has also faced strong competition and has shrunk in recent quarters.

Softbank has conducted trials of free calls between mobile phone and Web phone users in three areas of Japan including the northern island of Hokkaido, but nothing has been decided on making it a nationwide service, a company spokesman said.

Free calls could cut revenue per user, an industry benchmark, but Softbank hopes to attract new customers and so boost total revenue, said a different company source who declined to be named as he was not authorized to speak on the matter to the media.

Softbank, which bought Vodafone's (VOD.L) Japan unit in 2006, has outpaced its competitors in signing up new mobile phone users with low-cost price plans and a marketing blitz.

It hopes to use that momentum to win new users to its high-speed Internet service, which faces competition from DoCoMo's parent Nippon Telegraph and Telephone Corp (9432.T).

Softbank's broadband business posted its second straight quarter of sales decline in July-September to 64.1 billion yen.

Shares in Softbank closed down 2.9 percent, underperforming the Nikkei average .N225, which fell 1.0 percent.

(Additional reporting by Mayumi Negishi, Editing by Michael Watson)