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Softbank announced on Monday the beginning of a “price war” among Japan’s telecoms carriers, just hours before Tuesday’s introduction of a market-wide number portability regime designed to make it easier for customers to switch mobile phone providers.

Masayoshi Son, the company’s president and chief executive officer, said customers defecting from other telecom operators would be able to choose between two options: a discount of Y200 per month off whatever package their former provider was offering them; and a range of services provided free for the first time, including all calls made outside peak hours to other Softbank subscribers.

With his usual panache, Mr Son declared in front of a packed hall of press and analysts: “Our mission is to make mobile prices [in Japan] the lowest in the world.”

The number portability regime, a government initiative, allows consumers to change carrier without changing numbers. By declaring the price war ahead of number portability, Mr Son has done what the other main carriers had dreaded – trimmed margins further in a highly competitive market.

Analysts had feared that Mr Son, who previously slashed internet fees against rival NTT, would trigger a price competition in the mobile phone market which would cut into the $79bn revenue earned by Japan’s wireless operators.

But the question is whether Softbank’s move would provoke mass switching. Sceptics argue that number portability is unlikely to take off in Japan, which traditionally has an extremely low rate of defections.

But a survey of 100,000 people published this year by Mitsubishi Research – regarded as the most authoritative by analysts – found that about six in 10 people surveyed saw the ability to switch to a cheaper service more easily as a “merit” of number portability.

On top of this, 5 per cent of customers – about 4.5m people – were “eager” to change their phone when the new regime arrived.

Taking the two results together, price-cutting could be an effective weapon.

But there are problems with the Softbank strategy. The first is that if other telecoms carriers lose customers to rivals, they could be tempted to follow suit by slashing prices too.

NTT DoCoMo, the dominant market player, had made clear it would not start a price war but said it was prepared to cut prices if forced. Noriaki Ito, DoCoMo head of strategy, told the Financial Times in a recent interview: “Because of number portability we might have to lower prices to win the battle.”

But Softbank is a highly leveraged company compared with rivals DoCoMo and KDDI. And analysts says it had the least resources to sustain itself in a protracted price war.

Softbank’s other problem is that it has announced price cuts before it has corrected the defects that have kept it at number three – with a gap in market share that has been widening rather than narrowing.

Speaking before Softbank’s announcement of a price war, Kazuyo Katsuma, telecoms analyst at JP Morgan, said the outcome of number portability was “heavily dependent on what Softbank will do”.

She said there was little point in Softbank cutting prices before it had solved its coverage problem by building enough base stations. Softbank’s network is much worse than its rivals’.

Although Mr Son has promised to close the gap by March, analysts were extremely sceptical about this timetable.

But Ms Katsuma estimated that doing so would certainly take until next summer, perhaps even another two years. And before this happens Softbank could lose market share rather than gain it.

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