July 31, 2003
Furukawa Electric Co., Ltd. (President: Hiroshi Ishihara; hereinafter referred as "Furukawa Electric ") and Sumitomo Electric Industries, Ltd. (President: Norio Okayama; hereinafter referred as "SEI ") have reached a fundamental agreement to consolidate the two companies' wireless technology operations and to establish a joint venture company.
Following the business consolidation, rationalization and efficiency will be promoted in the wireless technology operations, a stable operating base that can respond to digital terrestrial broadcasting will be established, and the related wireless business will also be expanded. The new joint venture company will strive to become the top player in this field.
1. Background of Business Consolidation
Digitalization of terrestrial TV broadcasting in Japan has generated the increased demand for new digital transmission facilities. Digitalization consists of three phases: the first phase has taken place in 2003 in key stations of Tokyo, Osaka and Nagoya area. The second phase will conclude by 2006 (key stations in other prefectures ) and third phase by 2010 (nationwide rebroadcast stations).
However, because new installation of digital transmission facilities is a heavy burden to the broadcasters , the market is becoming more competitive due to minimal investment caused by the shared use of antennas and towers and price reduction that reflects recent economic situation.
In due consideration of this harsh business environment, SEI and Furukawa Electric had been individually enhancing their business operations. The two companies decided that drastic measure is necessary to promote rationalization and efficiency and to establish stable operating basis. In order to expand their wireless technology business, SEI and Furukawa Electric concluded a fundamental agreement of business consolidation.
2. Content of Consolidation Agreement
- Establishment of joint venture company
Furukawa Electric and SEI will consolidate their wireless technology operations into a joint venture company. Details on consolidation other than those mentioned above are still under consideration. The new joint venture company is scheduled to start business in April 2004. - Scope of consolidated business
- Development, production, sales, maintenance, construction, and export of broadcast antennas, fixed communications aerials, etc., and feeder components, supporting hardware, antenna towers, and station buildings required for construction of these systems.
- Development, production, sales, maintenance, construction, and export of antennas for mobile communication base stations, and feeder components and supporting hardware required for construction of these systems.
- Ownership
Furukawa Electric: 50%, SEI: 50%. - Facilities, employees, and location
Decided through discussion between the two companies, so that competitiveness will be maximized.
3. Other
- The number of employees is scheduled to be about 100. The new company will be located Furukawa Electric's Yokohama Office and in SEI's Osaka Works.
- Target annual sales: 10 billion yen.