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To: zbyslaw owczarczyk who wrote (10101)	3/7/1999 11:54:00 PM
From: pat mudge	Respond to of 18016

Tomorrow's news: C&W may make an offer for IDC By Paul Abrahams and Michiyo Nakamoto in Tokyo Cable and Wireless, the UK-based telecoms group, is considering making an offer to take control of International Digital Communications (IDC), the Japanese international telecoms operator. But the move could run foul of NTT, the country's telecoms giant, which is also keen to acquire a significant stake in IDC. The potential contest between C&W and NTT underlines the rapid rationalisation of the Japanese telecoms industry as the market deregulates. It also highlights the growing interest of foreign investors in taking control of Japanese companies. The British group, which already owns 17.6 per cent of IDC, has approached the group's main shareholders Itochu, the trading company, and Toyota, the automotive group. Together, the holdings would give the British group a controlling 52.8 per cent stake. C&W would also like to acquire the stakes of the remaining shareholders. These include AirTouch of the US, which owns 10 per cent of IDC and is in the process of being taken over by Vodafone, the UK mobile phone operator. C&W's offer is understood to value the equity of the company, which has about ¥28bn in net debt, at about ¥60bn (£305m). The reason for the apparent low valuation is that IDC's sales in the fiscal year ending this month are expected to fall from ¥80.9bn to ¥77bn, while profits before tax are predicted to drop from ¥6.4bn to ¥2.4bn. International telephony in Japan is suffering from the rapid encroachment of call-back services and plunging prices. Junichiro Miyazu, NTT's president, said last month his company intended to forge an alliance with IDC that would include taking a capital stake in the company. NTT cannot begin international operations until July when new deregulation measures are implemented. C&W will probably make its offer in the next two to three weeks. C&W and NTT are understood to have completed due diligence of IDC. "We are observing the situation," said NTT. "At this point, three months before we even start international operations, we cannot determine whether the price we might have to pay is high or low. If the price is too high, we may decide to give up. It is not necessary for NTT [to acquire IDC] and it may even be cheaper to build our own network." The history of C&W's stake is controversial. It is a founding shareholder, but was only able to acquire its stake in 1987 after the direct intervention of Margaret Thatcher, then prime minister. Some analysts believe C&W's possible move may be aimed merely at driving up the price NTT eventually has to pay for IDC. >>> >>>> C&W calling Japan Dick Brown may no longer be its chief executive, but Cable and Wireless has taken to heart his doctrine of selling or buying control of its minority investments around the world. The UK telecommunications group is considering taking over IDC, the Japanese international operator of which it has owned 17.6 per cent since 1987. At first sight, this seems strange. Although buying IDC would accord with the Brown doctrine, it goes against C&W's strategy of reducing its exposure to international telephony. IDC hardly looks like a must-have. International call rates in Japan are being squeezed hard by call-back services and the weak economy. IDC's profits are thought to have fallen by two-thirds last year. The outlook is little better. Deregulation this summer will allow the mammoth domestic operators into the overseas market. So why bother? One reason is to gain access to IDC's small but fast-growing internet transmission business. Having paid 3.5 times sales for MCI's US internet unit last year, coughing up perhaps one times sales or £300m for an immature Japanese counterpart seems potentially attractive. It also gives C&W a platform to build a Japanese network. One worry is that NTT, the largest domestic operator, is eyeing IDC as a way into the international market. But NTT cannot bid until deregulation occurs in July. C&W should bid soon or not at all. >>>>>

To: zbyslaw owczarczyk who wrote (10101)	3/8/1999 12:52:00 PM
From: Peppe	Read Replies (1) \| Respond to of 18016

ZO, My apologies, ny one product I should have been more specific; I meant one "group" of products, ie ATM. Specifically, ATM WAN products. CSCO has ethernet switching (which generates more revenue than routers,btw), ATM lan and WAN, IP Dial, IP VPN routers, SS7 voice gw, etc. LU and NT plan to have all of the above and also have DWDM, SONET and Circuit switch voice products. That's why, at best, to Siemens, NN is a one "category" company that can help fill a void. I'm sorry if I didn't represent my thoughts clearly enough. Cheers, Peppe