A fund backed by the Japanese government said on Friday that it would offer financial support to bankrupt mobile phone service provider Willcom Inc as part of a deal that could shake up the country's telecoms industry.

Softbank Corp (9984.T), Japan's third-largest mobile phone operator, and private equity firm Advantage Partners will invest in Willcom as part of the deal, Willcom said.

Willcom will spin off a unit that offers services using next generation technology, in which Softbank and Advantage Partners will invest a combined 8 billion yen ($88 million), Willcom said.

The deal will give Softbank access to Willcom's roughly 4 million subscribers.

Last month Willcom filed for bankruptcy with 206 billion yen in debt and turned to the state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) for financial aid and to help it restructure.

source:reuters