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Technology Stocks : Vodafone-Airtouch (NYSE: VOD) -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (3133)	5/2/2001 7:26:52 AM
From: MrGreenJeans	Read Replies (1) \| Respond to of 3175

Vodafone to boost Japan Telecom stake (UPDATE: Updates with Vodafone and analyst comments) By Eriko Amaha TOKYO, May 2 (Reuters) - Vodafone Group Plc (quote from Yahoo! UK & Ireland: VOD.L) said on Wednesday it would boost its stake in Japan Telecom Co, strengthening its position in the world's second-largest telecoms market while indebted rival British Telecoms (quote from Yahoo! UK & Ireland: BT.L) bows out. The world's largest mobile phone operator said it was paying a total of 652 billion yen ($5.34 billion) for BT's stakes in Japan Telecom and its wireless arm, J-Phone. The move will enable Vodafone will increase its stake in Japan Telecom to 45 percent from 25 percent. ``Vodafone is extremely excited about strengthening its presence in Japan,'' Vodafone chief executive Chris Gent told a news conference. ``This acquisition will create the opportunity to improve the operations of J-Phone,'' said Gent. Analysts said the move reflected Vodafone's drive to solidify its foothold in the $97 billion market where third-generation (3G) phone services will be launched by NTT DoCoMo Inc in October, ahead of most other industrial countries. ``Japan is attractive for Vodafone because it has leading 3G mobile technologies,'' said Hironobu Sawake, senior analyst at ING Baring Securities. ``Vodafone also wants to venture into the home turf of DoCoMo,'' he added. Under the deals, expected to be completed by August, Vodafone will buy a 20 percent stake in J-Phone, taking its stake to 46 percent, and 4.9 percent of J-Phone's regional operating units from BT. In addition to its expansion in Japan, Vodafone said it had agreed to buy a 17.8 percent stake in Spanish mobile operator Airtel from BT for 1.77 billion euros. To finance the deals, Vodafone said it will sell new shares to raise about three billion pounds ($4.29 billion). BT said the deals were worth 4.8 billion pounds and would reduce its debt by 4.4 billion pounds. CHALLENGING DOCOMO Analysts said the Vodafone move highlights the appeal that the Japanese market has as a testing ground for future wireless services that promise high-speed Internet access, data, video and CD-quality music services. ``Vodafone's focus will be the wireless business and they will likely introduce some measures to beef up J-Phone's operations,'' said Shinji Moriyuki, an analyst at Daiwa Institute of Research. J-Phone currently holds 16 percent of Japan's mobile phone market while DoCoMo has 60 percent. Vodafone's Gent made no bones about its intention to challenge DoCoMo. ``Our next objective (J-Phone's) is to become number two and give DoCoMo a hard time,'' Gent said. ``Internationally, they are way behind us... They have a lot of catching up to do.'' The addition of BT's 20 percent stake will boost Vodafone's holding in Japan Telecom to nearly half and put it within striking distance of majority control of J-Phone, the Japanese company's crown jewel. Vodafone already holds direct stakes in the mobile operator and its regional units. Gent strongly suggested that a listing of J-Phone was a likely ``If Japan Telecom thought of listing its mobile subsidiary, we will support that,'' he said. Another Vodafone official said it was possible that J-Phone could be spun off from the unprofitable fixed-line operations of Japan Telecom within 18 to 24 months. The deal marks Vodafone's third sizable acquisition of Japan Telecom shares since December. It completed its latest purchase only this week, buying U.S. telecoms giant AT&T Corp's (NYSE:T - news) 10 percent Japan Telecom stake for $1.35 billion in cash. That made it the largest stakeholder, with 25 percent. JAPAN TELECOM SHARES SOAR On Wednesday, shares in Japan Telecom shot up 17.86 percent to a high for this year of 2.64 million yen, surging for a second consecutive session on expectations that cash-rich Vodafone would bolster the Japanese company's fortunes as it prepares for a costly launch of third-generation mobile services. Vodafone said the deal valued Japan Telecom at 2.37 million yen per share. Nobuaki Kurisu, chief fund manager at Sumisei Global Investment Trust Management Co Ltd, said the deal was good news for Japan Telecom as it could benefit from Vodafone's strong financial backing. But he said attention is focusing on how Vodafone's increased investment in Japan Telecom will strengthen it in its battle against DoCoMo. ``Over the longer term the market will be more concerned with how much Vodafone's acquisition and the possible increased cash investment will actually strengthen Japan Telecom and J-Phone in its competition against DoCoMo,'' he said. Hironori Tanaka, an analyst at Morgan Stanley Dean Witter, also said the upside potential of shares in Japan Telecom was limited because the deals would likely come under close scrutiny of the actual benefits once the hype surrounding the move died down. ``Investors will begin to look at what Vodafone will do with Japan Telecom, and in particular with its mobile arm J-Phone,'' Tanaka said. UBS Warburg was the lead adviser in the deals. In London, Vodafone Group Plc shares traded sharply lower before the official London market opening after it announced the 3.0 billion pound share placing, one of the biggest share issues seen in London. The stock changed hands at 196.15 pence by 1005 GMT, down 4.85 percent from Tuesday's close. Email this story - Most-emailed articles - Most-viewed articles