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Toyota Motor Corp. and Itochu Corp. on Wednesday announced their decisions to sell their 17.7 percent stakes in International Digital Communications Inc. to Britain’s Cable and Wireless PLC.

The announcements bring to an end a high-profile bidding war between C&W and Nippon Telegraph and Telephone Corp. that at times threatened to strain trade relations between Tokyo and London.

The announcements also came a day after NTT said it would not counter C&W’s latest offer, a move widely interpreted as stepping out of the fray.

C&W, which as a founding shareholder in IDC already owns a 17.7 percent stake, had offered 110,577 yen per share. IDC’s sales in fiscal 1998 were 75.2 billion yen.

With C&W obtaining a controlling stake in IDC — 53.1 percent — the Tokyo-based firm will become the first major Japanese telecom carrier to be put under the control of a foreign company.

The bidding war was filled with intrigue from the beginning, with reports that British Prime Minister Tony Blair had intervened on behalf of C&W and with NTT never making known the details of its secretive bids.

On April 15, C&W’s board of directors voted to accept NTT’s initial bid, but C&W immediately announced it would invoke its right as a founding shareholder to block the move.

On May 6, C&W launched a new bid for full control of IDC, offering 107,372 yen per share, only to have NTT raise its offer, which is believed to have been a share-swap proposal.

Finally, at the beginning of the month C&W fired the final shot by raising its bid to 110,577 yen per share. That sealed the deal, and NTT, which had intended to buy out IDC to hasten its entry into long-distance services, eventually bowed out.

Akihiko Ito, a senior analyst at Deutsche Securities Ltd., however, said that NTT’s international strategy will be little affected by its losing out on IDC. “I question the necessity for NTT to own its own network for international services,” he said. “There is a way to connect NTT’s network to those of other carriers. If NTT really needs IDC, it could have paid a higher price, since it has a large financial base.”

NTT plans to launch full-scale international services in October after it reorganizes into a holding company presiding over two regional companies and an international and long-distance carrier. NTT currently offers international services only through its affiliates.

Still, Wednesday’s development is significant in that it demonstrates that the rapidly globalizing telecommunications industry is placing more and more significance on the Japanese market — and that Japan is opening up to the oligopolies that are spearheading the drive.

Tokyo paved the way for foreign firms to enter the telecom market in February 1998 when it abandoned laws regulating the amount of foreign capital allowed in major telecom carriers.

C&W, however, is not the first arrival. Earlier this year, AT&T Corp. of the United States and British Telecommunications PLC decided to buy 15 percent stakes in Japan Telecom Co. as a way to increase their presence in Japan, the world’s second-largest telecom market.

Global telecom carriers have long salivated over the Japanese market and its concentration of multinational companies and their potential demand for data transmission services.

In addition to the strong market potential here, C&W has long-coveted IDC as a base for its Asian operations. “IDC makes a familiar partner for C&W because of the existing capital ties,” said Yutaka Shimbo, senior consultant at The Japan Research Institute. “And C&W may think that, if it loses IDC to NTT, its presence in Japan as well as Asia will significantly weaken.”

Although C&W is traditionally strong in the Hong Kong market, it has lagged behind megacarriers such as AT&T and BT in advancing to other parts of Asia, Shimbo said.

The takeover bid itself was something of a rarity in a corporate landscape populated by groups of companies with cross-shareholdings — a delicate balance that hostile take-over bids such as C&W’s would throw askew.

Despite this long-standing practice, the circumstances for the Western-style takeover bid for IDC were well-rooted.

IDC, a relatively small international carrier, was finding it difficult to survive on its own as deregulation intensified competition and lowered the border between international and domestic carriers.

While there is a view that hostile takeover bids will not spread in the country due to the business culture here, Shimbo expects that takeover bids will increase in the future, especially in the financial and telecommunications sectors.

“Japanese corporate customs, which pose barriers to hostile takeover bids, tend to deteriorate,” he said. “And in the financial and telecom sectors, it is comparatively easy for Western companies to bring their own knowhow such as infrastructure and product lines into the Japanese market.”

Other international carriers have found ways to combine with domestic carriers and become comprehensive operators, as seen in the merger between the former KDD and Teleway Corp. into KDD Corp. and in Japan Telecom’s absorption of International Telecom Japan Inc.

As for the deciding factor in C&W’s favor, these economically difficult days dictate that cash might have been the No. 1 priority, especially for cash-strapped Itochu Corp., though the general trading firm said that it reached the conclusion after considering prices and other conditions.

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