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Sunday, April 25, 1999 Published at 10:48 GMT 11:48 UK

Business: The Company File

Global deal for Japan Telecom

British Telecom and its global partner AT&T have announced the first big foreign investment in Japan's telecommunications industry.

They have agreed to each buy 15% of Japan Telecom for a total of $1.85bn.

A statement says the three firms are planning a broad alliance in which AT&T and BT will integrate most of their Japanese operations with Japan Telecom's units.

The largest telephone companies in the United Kingdom and United States respectively say they expect this to be the first of several moves they make in building the $10bn global telecommunications joint venture unveiled nine months ago.

The joint venture, which has yet to be named, will provide global voice and data communications services, targeting in particular multi-national business customers and Internet service providers.

Considerable benefits

Analysts say the deal is the first large investment by major foreign companies in Japan's deregulating telecoms sector.

Japan Telecom Co is one of Japan's largest telephone operators, and provides leased-line and long distance services through fibre optic networks running along railway lines.

BT and AT&T were reported to have been initially seeking nearly 40% of Japan Telecom which would have given them a veto over major management decisions.
[ image: AT&T has been busy making deals]
AT&T has been busy making deals
The agreement could bring considerable benefits to BT and AT&T, allowing them access to corporate clients in Japan and kick-starting their data business via Japan Telecom's established network.

BT already has more than a dozen Asia-Pacific alliances, partnerships and joint ventures.

BT chief executive Peter Bonfield said: "This partnership between Japanese, European and US companies is ground breaking in telecommunications and builds substantially on BT's growing presence in Asia."

His AT&T counterpart, Michael Armstrong, added: "It's an extraordinary growth opportunity for all three companies and it is essential the global venture has a strong distributor in this key market."

Deregulation has opened the door for newcomers and foreign companies into Japan's growing telecommunication market - the world's second largest after the United States.

It is overwhelmingly dominated by former state monopoly Nippon Telegraph and Telephone Corp (NTT).

Japan Telecom, Japan's third largest long distance and international carrier, has been looking for a partner to survive tough competition, with many of its domestic rivals cutting rates for calls.

Industry analysts say more cross-border link-ups are inevitable with foreign firms forging ties with Japanese businesses to grab a share in Japan's growing telecommunications market.

Japan Telecom chairman Koichi Sakata said: "The agreement will strengthen further the company's position in the Japanese market with the backing of two such strong brands as BT and AT&T."

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