Toyota Telecom?
Seeking diversification, auto giant looks to telecommunications sector
November 11, 1997: 12:57 p.m. ET
TOKYO (Reuters) - Japanese auto giant Toyota Motor Corp. said on Tuesday that the telecommunications business would form a major part of its long-term strategy, but declined to comment on reports of a planned merger between its affiliate Teleway Japan Corp. and international telecoms firm Kokusai Denshin Denwa Co. Ltd. (KDD).
"We have not heard that KDD and Teleway Japan have reached an agreement to merge," a Toyota spokesman said. "As they are independent companies which make their own business decisions, we cannot comment further."
Earlier, mass-circulation daily Asahi Shimbun said KDD and domestic long-distance carrier Teleway had reached a basic agreement to merge next autumn.
Teleway said in a statement on Tuesday that the report was inaccurate, while KDD President Tadashi Nishimoto said Teleway was a major candidate for a merger given the value of Teleway's nationwide optical fiber network in Japan.
Toyota currently owns a 38.3 percent stake in Teleway, but is expected to boost that to over 50 percent under a new share allocation scheme announced by Teleway in September.
Toyota, seeking to expand away from its mainstay auto business into new, lucrative niches, may need to forge an alliance in the telecommunications sector, analysts say.
They said Toyota's forays into telecom so far have been unsuccessful and it would not be able to survive in that market without some sort of alliance.
Toyota said the telecom business would play an important role in its long-term business strategy.
"Toyota is aiming to form in the 21st century what we call an Intelligent Transport System (ITS), which develops around car production as the core and in which the telecom business will play an important role," the company spokesman said.
The ITS is an all-encompassing transport system that would include electronic cashless toll booths, unmanned vehicles and a system to provide real-time information to drivers, he said.
"In an era of mega-competition, we should not stick to conventional ways. We are always thinking about what business opportunities are available and what we can do," he added.
Toyota already has stakes in 15 domestic telecom service firms including Teleway, International Digital Communications Inc. (IDC), a second-tier international telephone operator, and cell phone operator Nippon Idou Tsushin Corp (IDO).
In March last year, Toyota formed Toyota Digital Cruise Inc. to provide telecom services including Internet-related services and software development.
In addition to telecommunications, Toyota is also dabbling in areas such as housing and marine engines.
Toyota said it hopes to make its non-automobile businesses profitable by 2000, with sales from those businesses reaching one trillion yen ($8.0 billion), 10 percent of its corporate total. Early this year, the company said that its sales from non-automobile sectors stand at 707 billion yen ($5.65 billion), about 6.6 percent of overall group sales. |
