KDDI Corp. and Tokyo Electric Power Co. have reached a basic agreement to integrate their fiber-optic communications networks next spring, sources said Monday.

KDDI is currently the sixth-largest player in the business in terms of number of subscribers, and Tepco is the fifth. Their combined services will become the fourth largest, with subscribers totaling about 390,000.

There were 4.63 million subscribers to fiber-optic communication services as of the end of 2005, according to data from the telecommunications ministry. The KDDI-Tepco service will trail those of Nippon Telegraph and Telephone East Corp., Nippon Telegraph and Telephone West Corp., and Usen Corp.

KDDI operates its fiber-optic services under the brand name Hikari-Plus, while Tepco offers its services under Tepco Hikari.

As the first step toward the merger, the companies are expected to market their fiber-optic broadband services under one brand name as early as June and increase the number of subscribers, the sources said.

In the meantime, KDDI will begin assessing the value of Tepco’s services as the merger is likely to take place with KDDI purchasing all or part of the utility’s networks, the sources said.

The merger costs are estimated to be several dozen billion yen.

KDDI will seek tieups in the field with other players as well, the sources said.

KDDI has been successful in its au mobile phone business but has been struggling in fixed-line services.

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