To brace for competition triggered by deregulation, Japan Telecom Co. and International Telecom Japan Inc. said Mar. 12 they will merge around October. It will be the first between Japanese telecommunications firms.

Japan Telecom, the nation’s No. 2 long-distance telephone company, and ITJ, the nation’s No. 3 international carrier, said they expect to reach a final agreement on the merger before the end of the month. The deal is aimed at strengthening the firms’ competitiveness in the telecommunications market, which is undergoing drastic liberalization at home and abroad.

Haruo Murakami, vice president of Japan Telecom, told a news conference that the firm first approached ITJ in autumn 1995 with the aim of forming a strategic alliance to complement each other’s businesses. ITJ last week responded that they would begin full-scale negotiations for a merger, according to Murakami.

The name of the new company is expected to be Japan Telecom, he said, because it is easy for foreigners to understand. “Unless we create such cooperative alliances, we won’t be able to be competitive enough to meet the needs of our customers, whose activities are becoming increasingly global,” Murakami said, stressing the significance of offering seamless services worldwide.

The government is expected to submit to the Diet on Mar. 14 a bill to revise the Nippon Telegraph and Telephone Corp. Law that would realign the telecommunications giant as one long-distance firm and two regional carriers under the wing of a holding company by fiscal 1999. NTT will be allowed to enter the international telecommunications business even before the enforcement of the revised law, and it has already set its sights on expanding its business abroad. For example, it has obtained a license to offer services in major European countries and has set a new quota for overseas investment for fiscal 1997.

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