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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: johnd who wrote (34847)	11/26/1999 12:23:00 AM
From: Ian Davidson	Respond to of 74651

From the WSJ: November 26, 1999 Microsoft Aims to Buy MediaOne's Stake In Japan's 2nd-Largest Cable Company By ROBERT A. GUTH Staff Reporter of THE WALL STREET JOURNAL TOKYO -- Microsoft Corp. is in talks with MediaOne Group Inc. to buy the U.S. cable provider's controlling stake in Titus Communications Corp., the second-largest cable operator in Japan. The proposed deal is part of a broader push by the U.S. software giant into communications infrastructure in Asia, said people familiar with Microsoft's plans. Microsoft would purchase MediaOne's 60% stake in Tokyo-based Titus, the people said. Titus offers cable-based Internet, telephone and television services in a number of markets throughout Japan. The people familiar with the negotiations declined to comment on the value of the transaction. A report in the Nihon Keizai Shimbun, Japan's largest business daily, said Microsoft's investment in Titus would total 100 billion yen ($958.3 million), or about twice Titus's capitalization. Talks With Toshiba, Itochu "I would love to see Microsoft's participation in the industry as a partner with Titus," said Lee Daniels, president and chief executive officer of Titus, who declined to comment further. A Microsoft spokesman in Tokyo declined to comment on the negotiations. Executives from Microsoft's Redmond, Wash., headquarters will be in Tokyo next week to meet with Japan's Ministry of Posts and Telecommunications to discuss the proposed deal, said people familiar with the talks. The officials also will visit Toshiba Corp. and trading company Itochu Corp., to discuss buying out those companies' shares in Titus. Toshiba and Itochu each hold 20% of the cable operator. The Titus deal, if completed, would advance a recent push by Microsoft into high-speed network infrastructure in the Asian-Pacific region. In September, Microsoft joined Softbank Corp. of Japan and Global Crossing Ltd. of Bermuda in a $1.3 billion project to lay 18,000 kilometers (11,160 miles) of submarine cable throughout the region. Microsoft also is working with Softbank and a Japanese power company to bring wireless Internet access to Japanese homes starting next year. Demand for Software The availability of high-speed networks could help fuel demand for software and systems such as the products sold by Microsoft. And wireless connections might help accelerate the growth of the Internet in Japan, which has been impeded by the high per-minute phone charges levied by the former Japanese phone monopoly, Nippon Telegraph & Telephone Corp. Indeed, at the time the wireless deal was announced in August, the president of Microsoft's Japan unit, Makoto Naruke, said the software company's aim in that venture wasn't to earn profits in the telecommunications business, but to contribute to profits indirectly by expanding the Internet's reach in Japan. The addition of Titus to the stable of Microsoft's telecommunications ventures in Japan would give the U.S. company a foothold in Japan's small-but-growing market for cable access. Unlike in the U.S., penetration of cable services in Japan remains low. Titus, large by Japanese cable standards, has just 100,000 subscribers. The negotiations over Titus come as AT&T Corp. of the U.S. completes its purchase of MediaOne. AT&T has said it would shed MediaOne's international assets before the acquisition's close, expected in the first half of next year. In October, Microsoft agreed to pay $3 billion for MediaOne's 29.7% stake in British operator Telewest Communications PLC. Also last month, Deutsche Telekom said it will buy MediaOne's mobile-phone holdings in Poland, Russia and Hungary. Write to Robert A. Guth at rob.guth@wsj.com Ian