Japan's Aeon to launch cheap smartphone service

TOKYO, March 31 Mon Mar 31, 2014 7:00am EDT

TOKYO, March 31 (Reuters) - Aeon, Japan's largest retailer by revenue, plans to offer a cut-rate smartphone service for about half the monthly fees charged by the country's three dominant operators.

Japan's smartphone services for light users are particularly expensive compared with other developed markets, according to data from the Telecommunications Ministry.

Aeon, which runs a range of retail operations from shopping malls to banks, said on Monday that it will offer its service in partnership with Japan Communications, a mobile virtual network operator (MVNO) that rents access to other companies' networks and typically offers less-expensive mobile plans.

Users of MVNO services have been growing sharply in recent years in Japan.

Aeon's monthly charge for a two-year contract including the cost of the phone will be 2,980 yen ($28.95), excluding tax, for unlimited data services. That compares with about 5,700 yen a month for a basic smartphone plan at all three of Japan's leading wireless carriers NTT DoCoMo, KDDI's au and SoftBank.

Aeon will sell Google Nexus 4 smartphones manufactured by South Korea's LG Electronics, offering slower speeds and limited web-surfing functions to keep down prices, it said.

The company said its initial sales target is a modest 8,000 units to gauge demand before considering its next step. ($1 = 102.9250 Japanese Yen) (Reporting by Yoshiyasu Shida and Ritsuko Shimizu; Writing by Chang-Ran Kim; Editing by David Goodman)