UPDATE 2-Softbank shares fall as phone limits may be lifted

* Government says plans to make rules to lift SIM locks

* Move seen benefiting DoCoMo, hurting Softbank-analyst

* Softbank and DoCoMo say would consider lifting SIM locks

* Softbank down 3.6 pct, Docomo up 0.3 pct

(Adds analyst comment, background)

TOKYO, April 5 (BestGrowthStock) – Shares of Softbank Corp (9984.T: )
slid more than 3 percent on Monday on news Japan’s government
planned to make it easier for mobile phone users to switch
operators while keeping the same phone.

The move to lift restrictions blocking the use of different
SIM cards in a mobile phone is expected to encourage some
subscribers to switch to NTT DoCoMo (9437.T: ), which has the
strongest coverage area, and hurt iPhone provider Softbank, whose
network is not as strong.

“Many users switched to Softbank from Docomo when iPhone was
launched (in Japan), but lifting the lock on SIM cards could be a
good opportunity for Docomo to win back users,” said Hironobu
Sawake, a telecoms analyst at J.P. Morgan.

Daisuke Iwai, an official at Japan’s communications ministry,
said that the government planned to work with mobile phone
operators to lift the lock on SIM cards, but that the timing of
such a move and other details had yet to be decided.

The Nikkei newspaper reported over the weekend that the
government would outline guidelines in the next few months and
implement the change by the end of the year, aiming to boost
competition and lower fees for consumers. [ID:nTOE63200G]

Currently, mobile phone handsets in Japan are developed
exclusively for a particular service provider. By removing limits
on SIM card use, callers will be able to switch phone operators
without changing handsets.

“Network quality would become very important if the lock on
SIM cards is lifted. Softbank, which has made it a priority to
make profit and loan payments, would need to invest more on its
network,” J.P. Morgan’s Sawake said.

Softbank last week lifted its capital expenditure for the
2010/11 financial year to 400 billion yen ($4.24 billion) from
the around 300 billion yen previously planned. Most of the
increase is likely to go to network building, said Softbank
spokesman Fumihiro Ito.

Shares of Softbank, Japan’s No. 3 mobile phone operator,
which has benefited from its status as the sole provider of
Apple’s (AAPL.O: ) iPhone in Japan, slid 3.6 percent to 2,253 yen.
Industry leader DoCoMo gained 0.3 percent to 143,500 yen.

Second-ranked KDDI (9433.T), which uses a different
communication standard from Docomo and Softbank, rose 0.3 percent
to 481,500 yen. The benchmark Nikkei average (.N225: ) advanced 0.5
percent.

Spokesmen from both Softbank and DoCoMo said they would
consider lifting SIM locks if that would please customers.

“But it should be decided by the operators themselves, not be
made an obligation by the government,” said Softbank spokesman
Ito.

Investment

(Reporting by Nobuhiro Kubo; Editing by Chris Gallagher and
Joseph Radford)

UPDATE 2-Softbank shares fall as phone limits may be lifted