Fresh shake-up in Japan telecoms

KDDI president Tadashi Onodera (C) hopes to 'counterbalance NTT'

Two of the biggest players in Japan's telecom market are to merge in a $1.1bn (£630m) deal.

The country's number two firm KDDI has taken over the fixed-line phone unit of Tokyo Electric Power Company (Tepco) to square up to telecom giant NTT.

The mobile arm of KDDI is doing well, but its landline business has flagged as Japanese consumers turn to internet based phone services.

The takeover is the latest in a string of deals in the Japanese phone sector.

Japan Telecom, one of the biggest players, was sold by US fund Ripplewood Holdings to internet group Softbank last year.

PoweredCom, the Tepco subsidiary being handed over to KDDI and the fourth biggest player in the market, is mainly focused on providing telecom services to big companies.

The two have agreed to push ahead with a fibre-optic network, to rival NTT's plan to have half its 60 million users on super-fast fibre lines by 2011.