BT, Vodafone go 3G in Japan

The phones of the future may transform communication

UK telecoms firms BT and Vodafone Airtouch have gained a foothold in the third generation mobile phone market in Japan.

Japan's regional J-Phone mobile phone companies have been granted licences for third generation (3G) multimedia mobile phone services.

British Telecom, Vodafone Airtouch and Japan Telecom are partners in the company which controls these regional firms.

The award of the licences by Japan's Ministry of Posts and Telecoms means the nine J-Phone companies can prepare to launch 3G services in December 2001.

Third generation services are expected to include broadcast quality video as well as full internet access on the move.

Huge investments

DDI Corp and NTT DoCoMo have also been awarded licences.

BT and its partners are investing up to 700bn yen (£4.4bn) in future J-Phone operations following a share issue in the J-Phone companies earlier this year.

The share issue means that J-Phone Communications Company, the partners' vehicle for pursuing 3G opportunities in Japan, holds more than 50% of the equity in the regional J-Phone operating companies.

More investment will be needed for new networks and the supporting infrastructure for 3G services.

Ownership of J-Phone Communications Company is split between Japan Telecom, with a 54% stake, Vodafone Airtouch with 26% and BT with 20%.

Shares hit

BT and America's AT&T jointly hold 30% equity in Japan Telecom.

The cost of winning licences for, and establishing, 3G mobile services, has been rising for the telecoms firms, who expect it to be a hugely lucrative market.

In the UK, where BT and Vodafone are arch rivals, the UK government made more than £4bn from each of the five 3G licences.

Similar estimates and higher are now being predicted for other European countries, a thought which has led to recent falls in the share prices of telecoms firms.