Carlyle seeks investor for Willcom: sources

TOKYO Fri Aug 29, 2008 3:40am EDT

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TOKYO (Reuters) - U.S. private equity firm Carlyle Group CYL.UL is seeking a new investor for Willcom Inc as the Japanese mobile phone operator needs $1.8 billion to develop new technology services, four people familiar with the matter said.

Carlyle, which owns 60 percent of unlisted Willcom, has hired Merrill Lynch & Co MER.N, to find an investor to purchase new shares in Willcom, they said, asking not to be identified because the information is not public.

Carlyle is also willing to sell part of its stake, the financial sources said.

Electronic parts maker Kyocera (6971.T) owns 30 percent of Willcom and KDDI Corp (9433.T) holds 10 percent.

Willcom said in November it would need 200 billion yen ($1.8 billion) by the end of 2015 to develop new PHS technology to better compete against NTT DoCoMo Inc (9437.T), KDDI and Softbank Corp (9984.T).

In December, Willcom won one of two licences from the government to provide next-generation wireless Internet access. The technology enables quick Internet access on laptops and other mobile devices while users are on the move. KDDI obtained the other license.

Willcom has said it plans to start offering the new service using PHS or personal handy-phone system technology in October 2009, after launching a preliminary service in April of that year.

The company is Japan's dominant PHS mobile phone operator. PHS technology is cheaper to operate but has a shorter range and requires more base stations than other types of mobile phone technology.

Carlyle had planned to sell its stake in Willcom in an initial public offering and in 2006 hired Daiwa Securities SMBC Co, Morgan Stanley (MS.N) and Merrill Lynch to arrange the sale.

The plan was put on hold after the IPO market in Japan deteriorated.

Carlyle and Kyocera bought their stakes in Willcom from KDDI in 2004 for a combined 220 billion yen.

(Additional reporting by Kiyoshi Takenaka; Editing by Edwina Gibbs)

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