Vodafone secures 15% Japan Telecom stake
By Emily Bourne, Total Telecom
20 December 2000
Vodafone has secured a 15% stake in Japan Telecom at the lower than expected cost of 249 billion yen (US$2.2 billion) cash. The deal gives Vodafone a stronger presence in the lucrative Japanese market, and brings it nearer to its goal of control over mobile operator J-Phone.
Vodafone bought an 8.6% stake from West Japan Railway Company, and a 6.4% stake from Central Japan Railway Company. It now has a shareholding in Japan Telecom equal to that of U.K. rival BT and U.S. giant AT&T. However, AT&T is keen to offload some or all of its stake, and is reportedly in talks with BT about a possible sale. This could lead to a bidding war between Vodafone and BT.
"This transaction demonstrates Vodafone's confidence in the future of the Japanese telecoms market and the future prospects of Japan Telecom and J-Phone, which we believe will be a powerful force in an increasingly competitive Japanese marketplace," said Chris Gent, Vodafone chief executive.
Vodafone also holds a direct 26% stake in J-Phone, the Japanese operator's mobile unit which competes with NTT DoCoMo, and has 9.3 million subscribers. In addition, 3.9 million access the Internet through the J-Sky service, which competes with i-mode. BT has a 20% share in J-Phone (the remaining 54% is held by Japan Telecom).
A BT spokesman would not confirm reports the company was interested in AT&T's Japan Telecom stake, which it is under pressure to sell after allying with DoCoMo. He said the company had noted Vodafone's pledge to work with existing shareholders, and "that's the spirit in which we view the whole issue."
"We work very closely with Japan Telecom in that it is a key and very competitive market... We expect that Vodafone will play a part in that," he added. BT has said Western Europe and Japan are its key target markets for future expansion.
However, analysts expect control of J-Phone will come down to a bidding war between the two rivals. "If it depends upon price, Vodafone has the deeper pockets," Fanos Hira, telecoms analyst at Bear Stearns, told Reuters. "Few companies have their cashflow flexibility."
Vodafone said its involvement would give Japan Telecom access to global technology, content, expertise and a global network. Meanwhile, Vodafone gets increased control over J-Phone, which has already been granted one of the country's three 3G licenses. The company has set a launch target of December 2001 for its next generation mobile services.
Japan Telecom was originally founded by Japanese railway companies, and its largest shareholder remains East Japan Railway Company, with 15.11%.
Earlier media reports claimed Vodafone would pay as much as $2.5 billion for the stake. |
