Samsung Electronics Co, the world's third-biggest phone maker, is in talks to supply high-speed mobile phones to Vodafone Group Plc's Japanese unit, entering the nation's US$3.9 billion handset market for the first time.
Samsung, based in Seoul, plans to sell phones to Vodafone KK, Japan's smallest wireless operator behind NTT DoCoMo Inc and KDDI Corp, by next "summer," according to company officials involved with the talks.
The South Korean company lost global market share last quarter to Nokia Oyj and Motorola Inc, which have agreements to supply handsets to DoCoMo. Vodafone may get access to Samsung's handsets which include the world's slimmest model and a phone equipped with a hard drive that can store up to 750 songs.
"Japan is a key market in the sense that Samsung has no presence there while it has a great global name," said Jae Lee, an analyst at Daiwa Institute of Research in Seoul who rates Samsung Electronics stock as "outperform." "Japanese consumers tend to go for the sophisticated models, and I bet Samsung is looking to offer something that's equipped with the latest technologies."
Sophia Kim, a Samsung spokeswoman, and Vodafone's Tokyo-based spokesman Matthew Nicholson declined to comment. Newbury, England-based Vodafone Group already buys Samsung phones for markets outside of Japan.
"Sophisticated Technology" Japanese operators and handset makers said they are expecting more competition when subscribers will be allowed to switch carriers while keeping the same numbers from next year.
Tokyo-based Vodafone K.K now sells phones made by Nokia, the world's largest mobile-phone maker, Sony Ericsson Mobile Communications AB, Sharp Corp, NEC Corp and Toshiba Corp for its third-generation network that allows faster downloads of music and video clips and interactive online games.
"Japan is attractive because of the size of the market and they have much more sophisticated technology," said Graeme Sinclair, a Singapore-based investment director at Aberdeen Asset Management. "Still, it would be difficult for Samsung as the domestic players have a strong presence."
Sharp, NEC, Toshiba, Matsushita Electric Industrial Co and Fujitsu Corp supply 70 percent of all handsets sold in Japan, according to MM Research Institute Ltd in Tokyo.
Samsung already competes in Japan against local consumer electronics makers such as Matsushita Electric Industrial Co. and Sony Corp. in the flat-screen television market.
Shares of Samsung closed 1.2 percent lower at 602,000 won on the Korea stock exchange, while the benchmark Kospi index slid 1.2 percent to 1321.04.
DoCoMo, whose biggest supplier is Matsushita, is planning to buy high-speed phones for the first time from Nokia and LG Electronics Inc. in the coming year. KDDI said in August it will purchase handsets from South Korea's Pantech Co. to cut expenses.
"For Japanese operators, foreign handsets are good news because they can cut procurement costs," said Michito Kimura, an analyst at researcher IDC in Tokyo. "Samsung's biggest advantage is it can offer handsets to operators that are about ?10,000 (US$86) cheaper than domestic makers such as NEC."
Japan had a total of 89.7 million cell-phone subscribers at the end of last month, of which 41 million are on third-generation networks.
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