Britain’s Vodafone Group PLC announced Wednesday that it will purchase rival British Telecommunications PLC’s shares in Japan Telecom Co., making it the top shareholder of the Japan’s third largest telecommunications operator.
The deal, which will involve the sale of BT’s shares in Japan Telecom and its wireless subsidiary for 652.3 billion yen, will be completed by the end of August.
The transaction will leave Vodafone holding a 45 percent stake in Japan Telecom and 46 percent of J-Phone Communications Corp., the holding company of Japan Telecom’s mobile units.
Vodafone will issue new shares worth 3 billion pounds (about 525 billion yen) to finance the purchases.
“The average revenue of users in Japan is twice that in Europe. This is the key reason why a strong presence in Japan is so important for us,” Vodafone CEO Chris Gent said at a news conference in Tokyo. He said Vodafone plans to send up to five directors to Japan Telecom.
During the news conference, Gent took the wraps off a separate deal to buy BT’s 17.8 percent stake in Airtel Movil S.A. of Spain for 193.9 billion yen, which will bring Vodafone’s ownership in the No. 2 Spanish wireless operator to 91.6 percent. This deal is expected to be completed by the end of June, Vodafone said.
BT, which has been pinned down by 30 billion British pounds in debt and a steadily declining stock price, has been considering a reduction in its overseas operations, an area it once aggressively pursued.
Vodafone, meanwhile, had been seeking ways to secure a foothold in Japan’s mobile phone market, which is expected to be a test market for next-generation multimedia cellphones with much faster data transmission.
The J-Phone group is Japan’s third largest mobile operator with a market share of 16.4 percent, following NTT DoCoMo at 59.1 percent and the KDDI group, with 18 percent.
Vodafone’s new advancement may be another wake-up call for domestic telecom operators. The latest deal will better place the world’s largest mobile phone operator to compete with local market dominator, NTT DoCoMo, many industry analysts say. But Gent said Wednesday that the firm will initially vie for the No. 2 spot.
Vodafone already holds 25 percent of Japan Telecom, a share it achieved by buying a 15 percent stake from West Japan Railways Co. and Central Japan Railways Co. in December, and a 10 percent stake from AT&T Corp. in February.
During Wednesday’s news conference, Japan Telecom chairman Koichi Sakata brushed aside concerns about a foreign firm being the top shareholder, saying the Vodafone purchase will “surely serve national interests” because it will benefit both Japan Telecom and domestic manufacturers of telecom-related products.
When Japan Telecom formed a capital tieup with AT&T and BT in April 1999, it carefully prepared a plan to limit the voting rights of the two companies to 15 percent each to preserve its independence.
As a result, East Japan Railways Co. had been the top shareholder with a 15.1 percent stake.
Japan Telecom will maintain a cooperative relationship with BT in the area of research and development despite the cancellation of their capital ties, Sakata said.
Patrick Gallagher, BT’s group director for strategy and development, underlined Sakata’s remarks, saying at the news conference, “BT and our affiliates will continue to have commercial arrangements in support of the JT (Japan Telecom) business.”
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