UPDATE 1-Disney to enter Japan cellphone market in spring

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TOKYO, Nov 12 (Reuters) - Walt Disney Co DIS.N, the No.2 U.S. entertainment company, said on Monday it plans to enter the Japanese mobile phone market early next year using local carrier Softbank Corp's 9984.T network.

Disney, which plans to halt its U.S.-based mobile phone service at the end of the year, is betting on the popularity of its Tokyo resort to help it gain share in the world’s biggest market of third-generation phones.

Disney would use Japan’s No. 3 mobile phone carrier Softbank’s for its mobile service and sell its phones at Softbank’s 2,464 stores in Japan, the two firms said in a release.

Disney, whose U.S. mobile phones allow parents to track a child's location, took a $30 million charge last year when it shut down another phone service, Mobile ESPN, which it ran on space rented on Sprint Nextel Corp's S.N network.

The tie-up with Disney would secure Softbank stable revenues from leasing unused basebands, but Disney’s entrance into Japan increases competition in an already-saturated mobile market.

Initial costs of building base stations have prevented many would-be entrants into Japan's mobile phone market, dominated by NTT DoCoMo Inc 9437.T, No. 2 KDDI Corp 9433.T and Softbank. Disney would be the first company to launch mobile phones in Japan by renting space from a carrier.

In Japan, carmakers and telecom ventures have used carriers’ networks, but the basebands have been used to enable car navigation or PC data transmission. (Reporting by Mayumi Negishi and Noriyuki Hirata; Editing by Malcolm Whittaker)