I first heard the rumor two weeks ago, while on vacation in Japan: Vodafone (NYSE:VOD) would sell its Japanese mobile phone unit to holding company SoftBank.

SoftBank is one of three companies to acquire a license for a new Japanese mobile phone network, set to begin operating in 2007. The company's interest in Vodafone-Japan is not a huge surprise, given the potential cost savings provided by Vodafone's existing network and 15 million Japanese customers. Buying Vodafone would let SoftBank more quickly offer wireless service to its broadband (Yahoo! Bb) and fixed-line (Japan Telecom) customers as well.

However, something funny must have happened on the way down the aisle, because recent reports have U.S. private equity firms Cerberus Partners and Providence Equity Partners entering the fray with a $15 billion bid.

No matter who makes the winning bid, Vodafone has apparently decided it wants out of Japan, which is somewhat understandable. The company's attempt to standardize its equipment and handsets across Europe and Japan hasn't worked out well, given Japan's appetite for frequently updated models of unique, gadget-intensive phones. In addition, competition is set to increase in the Japanese mobile market in the near term. Local number portability goes into effect later this year, and Softbank and the two other new carriers will soon begin operating under the licenses and spectrum rights they recently acquired.

When our Motley Fool Inside Value newsletter service originally recommended Vodafone last July, Japan supplied the company's greatest proportion of revenues and highest revenue per unit. It was also the only market where the company saw its revenue shrink in the last year. Although Vodafone has improved its customer acquisition the last few months, NTT DoCoMo (NYSE:DCM) and especially au (owned by KDDI) have gained much more ground in the last couple of years.

Vodafone's recent move is just another part of the ever-changing global telecom industry. AT&T (NYSE:T) is set to acquire BellSouth (NYSE:BLS), which would consolidate the ownership of Cingular Wireless. The industry saw even more consolidation with the recent Sprint Nextel (NYSE:S) merger. Rumors are also circulating that Verizon (NYSE:VZ) wants to buy out Vodafone's 45% stake in Verizon Wireless, in order to better compete against Cingular.

If a sale goes through for Vodafone's Japan assets -- regardless of whether it works out anything with Verizon -- Vodafone will find itself flush with cash, and I suspect it will be looking for an outlet. I'll be interested to see whether it reinvests that cash in its business or rewards shareholders with a special dividend -- or does both.

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Nathan Parmelee owns shares in NTT DoCoMo but has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.