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Tuesday, 27 February, 2001, 08:13 GMT
Vodafone lifts Japan Telecom stake
Mobile phone user outside a Vodafone shop
Vodafone's latest move might edge rival BT out of Japan
Vodafone Group, the UK mobile phone operator, has announced that it has bought a 10% stake in Japan Telecom.

The stake is being sold by US operator AT&T.

The purchase price is $1.35bn (934m).

The deal raises Vodafone's stake in Japan Telecom to 25% and comes as a blow to British Telecom which has 20% of the Japanese operator and had been thought to be keen on buying AT&T's holding.

"Our purchase of AT&T's stake in Japan Telecom underlines our conviction of the inherent strength of the Japanese market," Vodafone chief executive Chris Gent said in a statement.

Full control ambition?

Analysts said the deal leaves Vodafone well placed to take full control of Japan Telecom while BT was likely to opt to sell its stake.

Shares in both Vodafone and BT have fallen substantially in recent weeks although investors have taken a more negative view of BT - the UK's former national telecoms monopoly - after its announcement on debt reduction plans failed to convince.

Japan Telecom shares closed up 140,000 yen at 1.84 million yen on Monday.

However, they remain 21% down on the year, compared with a drop of just 4% in the benchmark Nikkei 225 index.

Attractive mobile market

At present, Japan Telecom's largest shareholder is East Japan Railway Company, with 15.1%.

Vodafone acquired its existing 15% stake in December from two other Japanese railway companies, for 249.2bn yen ($2.15bn).

A 25% stake in Japan Telecom would effectively give Vodafone ownership of about 35% of mobile phone company J-Phone.

Analysts say Japan is an attractive market for mobile phone operators: There is relatively little competition, revenue per user is comparatively high and innovative technology has been taken up enthusiastically by consumers.

China alliance

Also on Tuesday, Vodafone said it had signed a strategic alliance agreement with China Mobile (Hong Kong).

The deal involves management co-operation, the sharing of technical expertise and joint research and development.

Vodafone said it intended to make CMHK its sole strategic partner in China and would wish to increase its 2% stake in the company if the authorities permitted further equity participation in CMHK by a foreign company.

Vodafone said chief executive Chris Gent had accepted an invitation to become a non-executive director of CMHK.

Mr Gent said the arrangements would "help to build on CMHK's position as the leading operator in one of the fastest growing, largest and most exciting markets in the world".

CMHK chairman and chief executive Wang Xiaochu said the alliance would take his company "one giant step closer to the goal of becoming a world-class, global wireless multi-media services provider".

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See also:

26 Feb 01 | Business
Vodafone in line for Japan deal
20 Dec 00 | Business
Vodafone gets bigger in Japan
09 Feb 01 | Business
Vodafone shares hit two-year low
07 Feb 01 | Business
Vodafone sets US float timetable
19 Feb 01 | Business
BP becomes UK's largest firm
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