On the eve of their merger, the heads of Japan Telecom Co. and International Telecom Japan Inc. said Sept. 30 the new firm aims at becoming a leading company in the industry by offering seamless services from domestic to international services at lower prices than competitors.

Amid stiff competition at home and abroad, Japan Telecom, the nation's No. 2 long-distance telephone company, and ITJ, the nation's No. 3 international carrier, merge into one company today to become the nation's first firm to offer international, long-distance and local services. "By connecting our networks, we will be able to reduce our costs," said Koichi Sakata, president of Japan Telecom. "It is our task to make the equation of 1 plus 1 equal 3."

Sakata will take the same position at the new company, which will be known as Japan Telecom. It aims at annual sales of 500 billion yen by the 1999 business year, up from 400 billion yen this year, according to a company spokesman.

Since the merger was announced in March, however, industry rivals have either formed alliances or begun offering both international and domestic services by establishing subsidiaries, diminishing the significance of the tieup.

Kokusai Denshin Denwa Co., the nation's leading international carrier, has agreed to have cooperative relationship with DDI Corp., the No. 1 long-distance carrier, and Teleway Corp., another long-distance carrier. DDI is also seeking to form an alliance with International Digital Communications Inc., which offers international services.

"As competition among carriers intensifies, this is the only right decision, to merge with Japan Telecom," said Toru Ogawa, executive vice president of the new company and former head of ITJ. "In the long term, compared to just an alliance, our merger will be able to offer convenient and price-competitive services." The two leaders also said they will keep close contact with other carriers, both Japanese and foreign, and seek a new alliance if necessary.