Japanese Authorities Raid Vodafone Division

Japanese authorities yesterday raided the offices of mobile phone company J-Phone, owned by Vodafone, as part of an investigation into alleged price-setting.

Japan's fair trade commission stormed the headquarters of the Japanese mobile phone company to search for evidence that J-Phone prevented retailers from reducing the price of handsets needed for its picture messaging services Sha-Mail and Move Sha-Mail.

Sha-mail services, launched over a year ago, have been heralded by Vodafone as proof that customers are interested in more than simply sending text messages and voice calls. The picture messaging services already have over seven million subscribers in the country.

As the company tries to increase the amount of money that it makes from data services J-Phone has been used as proof that customers will spend more money on mobile phones if they are offered specific services.

Sha-Mail handsets helped J-Phone increase its share of the local market, although it still lags behind Japan's top mobile phone firm NTT DoCoMo, which grabbed a large slice of the action with its i-mode wireless internet service.

Vodafone confirmed the raid had taken place but refused to comment on the investigation.

The fair trade commission is understood to be investigating allegations that J-Phone prevented retailers from cutting the price of the new handsets when they were launched.

Since then J-Phone's rivals NTT DoCoMo and KDDI have introduced their own picture messaging services which has increased competition in the market. Sources close to the investigation said last night that they suspected a retailer had complained to the commission.

US-based communications group Qwest yesterday offered to swap almost $13bn (£8.2bn) of its old debts for new debt in a private deal which would help reduce its $26bn debt.