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NTT says not joining U.S. MCI takeover battle
Reuters Story - October 22, 1997 06:13
%JP %CORA %TEL %US %GB %MRG 9432.T WCOM BT.L MCIC 9431.T V%REUTER P%RTR
By Yuko Inoue
TOKYO, Oct 22 (Reuters) - Japanese telecommunications giant
Nippon Telegraph and Telephone Corp said on Wednesday
that it wanted no part in a heated takeover battle taking place
in the U.S. telecommunications market.
NTT president Junichiro Miyazu told a news conference that
the battle among WorldCom Inc , GET Corp and British
Telecommunications Plc for MCI Communications Corp
was irrelevant to its global strategy.
"It's a fight among companies trying to get into the
lucrative U.S. local-call market," Miyazu said. "We are simply
looking...because we have no plan to move into the U.S.
local-call market in a big way."
MCI, a U.S. long-distance phone operator which was to merge
with BT, has become the top prize in a corporate takeover battle
in the United States. WorldCom unveiled a surprise $30 billion
stock bid for MCI on October 1, only to be countered by a $28
billion cash bid by GET Corp.
Analysts said NTT was not expected to enter into strategic
partnerships with specific foreign carriers for the time being,
although it could seek tie-ups with Asian carriers after 1999.
"NTT is now devoting itself to forming a strategy for the
realignment scheduled for 1999," said Toshiho Sato, an analyst
at UBS Securities Ltd.
"NTT has yet to have a clear vision of its global
strategy...but if NTT tries to seek partners to compete with
global telecom giants, it could be with Asian carriers," she
said.
With the Japanese government still owning two thirds of
NTT's outstanding shares, NTT is not a takeover target, analysts
said.
Some analysts said, however, Japan's biggest international
carrier Kokusai Denshin Denwa Co may become a takeover
target next year when the government abolishes regulations which
limit foreign ownership in KDD.
"KDD will become the biggest takeover target for foreign
carriers," said Makio Inui, an analyst at Salomon Brothers
(Asia), citing its strong name brand, large number of top
Japanese corporate clients and its relatively small market
capitalisation.
Inui said KDD's market value exceeds 680 billion yen ($5.61
billion), although it is valued presently at around 400 billion
yen ($3.30 billion). He sets a share price target of 10,600 yen.
From the middle of this year, KDD's business was no longer
restricted to international services, and it plans to move into
Japan's competitive domestic long-distance phone market using an
undersea optic fibre cable looping around Japan.
The government plans to abolish a law which limits foreign
ownership of KDD to 20 percent in 1998.
Shares in KDD closed up 240 yen at 6,250 yen on Wednesday as
investors cheered the news.
But KDD has no intention to merge with foreign carriers for
now, said Toshiaki Iba, an analyst at ING Baring Securities
(Japan).
"KDD's top priority now is to move into the domestic
long-distance market through tie-ups with Japanese long-distance
carriers. It would never agree to be taken over," he said.
-- Tokyo equities desk (813) 3432-8595
email: tokyo.equities.newsroomreuters.com
($1=121 yen)
