Vodafone eyes Japan Telecom

September 17, 2001 Posted: 0717 GMT

LONDON (CNN) -- British mobile phone giant Vodafone has said it is holding talks with Japan Telecom's second-largest shareholder to take a controlling interest in the carrier.

Vodafone, which holds a 45 percent stake in Japan Telecom, said in a statement it was discussing with East Japan whether to purchase all or part of its 15 percent stake in Japan's third-largest carrier.

JR East confirmed the talks with the world's largest wireless carrier, which said that discussions "may or may not lead to a public tender offer to acquire up to 21.7 percent of Japan Telecom's shares."

With a combined 66.7 percent stake, Vodafone would be able to secure management control over Japan Telecom and more importantly, its crown jewel mobile unit J-Phone Communications, Reuters reported.

The British company already is set to hold a direct stake of nearly 40 percent in J-Phone, apart from its investment in Japan Telecom, after it was consolidated into a single company from four separate units in November.

J-Phone offers technology test bed

For Vodafone, the Japanese market represents a vital test bed for third-generation mobile-phone services, designed to provide users with w-mail, Internet services and voice and video images.

Japan is bringing in 3G this year, before the technology becomes more widely available around the world, but there are question marks over how efficient the new technology is.

Vodafone owns a global network of mobile and telecoms firms, mainly through majority stakes, and has been moving aggressively into Japan over the last 10 months. Vodafone became Japan Telecom's largest stakeholder by buying stakes from other founding railroad companies and former shareholders British Telecommunications and AT&T Corp, Reuters said..

The Nihon Keizai Shimbun business newspaper said at the weekend that Vodafone will spend about 220 billion yen ($1.9 billion) in buying extra shares in Japan Telecom.

Japan Telecom shares were up 2.72 percent in early morning trade at 302,000 yen, outpacing its rivals Nippon Telegraph and Telephone Corp, Japan's top carrier, and number-two KDDI Corp, according to Reuters.

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