BT, AT&T deal for Japan Telcom
Special to CNET News.com
March 19, 1999, 5 p.m. PT
TOKYO--AT&T and British Telecommunications are close to buying a stake in Japan Telecom, adding a third partner to their $10 billion alliance and accelerating their entry in the Japanese market, a senior official at the Japanese company said.
BT will buy 20 percent and AT&T will buy 10 percent of Japan Telecom, the country's fourth-largest phone company, for about 150 billion yen ($1.3 billion), Nikkei English News reported. An agreement could be reached by the end of March, said the Japan Telecom official.
BT and AT&T, which expect this summer to complete their venture to sell voice and data services to multinational companies, need direct links to customers in the $111 billion Japanese market to compete with rivals like MCI WorldCom.
"It's a fantastic move," said John Nichol, a portfolio manager at Ohio Public Employees Retirement System, which owns 4.81 million AT&T shares. "It gives them a big footprint [in Japan] right away."
Officials at AT&T and BT, the largest U.S. and U.K. phone companies, declined to comment.
An investment in Japan Telecom would be the latest sign that foreign companies are ready to bet on a recovery in Japan's economy, the world's second-largest.
AT&T already has a joint venture with 25 Japanese corporations, including KDD, Fujitsu, and Hitachi, to offer Internet access and other services to business. The venture, formed in 1984 and called AT&T Jens, was the country's first commercial Internet service provider.
BT already has a license to provide phone services in Japan, through a joint venture called Harmonix with Marubeni, a Japanese trading company. The companies are building a fiber-optic network and also have licenses to offer wireless local phone services in Tokyo, Osaka, and Nagoya.
Even so, BT and AT&T need a strong presence in Japan to outrun MCI WorldCom, the first foreign company granted a license to offer phone services there.
Earlier this week, MCI WorldCom chief executive Bernard Ebbers said his company is digging up streets to build its network in Japan and is close to signing an agreement with a large real estate company to get access to customers' buildings.
The Japan Telecom purchase would also enable BT and AT&T to participate in Japan's next generation of cellular phone services, which Japan Telecom is developing in a joint venture with Nissan Motor and AirTouch Communications.
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