AT&T Japan Cashes In On Its Domestic Networking Operations

AT&T and Internet Initiative Japan Inc. have announced an agreement following which IIJ will acquire AT&T Japan’s operations focused on domestic Japanese outsourcing services, including approximately 1,600 domestic Japanese business customers and approximately 250 AT&T employees who support these customers, an official report has revealed.

According to the report, AT&T will continue to maintain a strong presence in Japan. This includes operations and employees dedicated to AT&T Global Network infrastructures in Japan. As such, the acquisition does not affect AT&T’s infrastructure in Japan, which includes four global network service nodes, remote access infrastructure for corporate clients, significant international subsea cable capacity, and an Internet Data Centre.

“Japan is one of the top destinations for our multinational clients and remains an important market for AT&T. We intend to maintain a strong presence in Japan, but it makes strategic sense for us to sell our domestic customer base and supporting operations in Japan to IIJ,” Bernard Yee, vice president AT&T Asia Pacific, said. “The sale will enable AT&T to focus on its core strength — providing global managed connectivity and application services to multinational corporations that operate on a global basis.”

The report also discloses the price of the acquisition, which is of approximately ¥9.2 billion, or of approximately US$100 million, based on the exchange rate on May 31, 2010. The two companies have pledged to complete the transaction on September 1, 2010, with full-year revenues from the domestic Japanese outsourcing business being estimated at approximately US$300 million for 2010. In conjunction with the agreement, AT&T has established a new subsidiary to ensure the smooth transition of customers, employees and business operations to IIJ. Finally, AT&T intends to exercise a call option on NTT's 15-percent stake in AT&T Japan, contingent upon the closing of the transaction.