Vodafone Group PLC has agreed to acquire a 15 per cent stake in Japan Telecom Co. (JT), the Financial Times newspaper reported Monday. The U.K.-based wireless operator “is understood to have reached an agreement” to acquire shares held by West Japan Railway Co. and Central Japan Railway Co., the paper said. The two railway companies own 10.2 per cent and 7.6 per cent of JT, respectively, as a legacy of JT’s founding under the administration of the former Japanese National Railways.
“We really can’t comment on press speculation,” a Vodafone spokeswoman said.
Such an acquisition would put Vodafone in the ranks of JT’s top shareholders, along with East Japan Railway Co., which holds 15.1 per cent; and AT&T Corp. and British Telecommunications PLC (BT), which jointly hold 30 per cent through holding companies.
Vodafone would thus gain a more significant position in the hot Japanese wireless market. It already owns between 23 and 27 per cent of each of three wireless holding companies operated by J-Phone Communications Co., a joint venture with JT and BT.
“Vodafone is obviously looking to consolidate its position in the Japanese market. Predominantly it’s trying to gain expertise and experience in the Japanese market because Japan is advanced in data services; the operators there are quite aggressive in their mobile Internet services,” said analyst Paolo Pescatora of U.K.-based research and consulting company Ovum Ltd.
In a related story, BT is in talks about acquiring further shares in JT from AT&T, according to press reports. AT&T formed a partnership with JT rival NTT DoCoMo Inc. last month leading it to explore disposing of its JT stake.
AT&T spokesman Phil Coathup said his company has decided to split its JT holdings, divesting itself of the 5 percent held by AT&T Wireless Group Inc. “In terms of who we will divest that to, we’re still discussing it,” he said. He declined to confirm specific negotiations with BT but said, “During the course of our business we talk to all sorts of people.”
BT spokesman Michael Wadley confirmed his company’s interest in potentially acquiring further JT shares from AT&T, but added, “It’s up to what happens with AT&T first. We’re obviously not going to preempt them until they’ve decided what they’re doing. There’s no firm commitment at the moment.”
Pescatora predicted that Vodafone would ultimately push BT entirely out of JT.
“It’s very unlikely that BT will remain a shareholder, because as we’ve seen also in Spain for Airtel (Movil SA) and the other cooperations that BT and Vodafone have, it looks like BT is really looking to exit those cooperations, because they see Vodafone as a competitor. What we’ll probably see now is that Vodafone will buy the stake from the railway companies and that it will most likely acquire the stake held by AT&T.”
BT, saddled with some 18.7 billion pounds (US$27 billion) of debt, has announced plans for corporate restructuring and a spin-off of some divisions into partially public companies.
“BT is focusing on reducing debt, so it may look to say: in Japan, we can make a profit on the disposal of our assets, and use that to reduce group debt,” said Pescatora.
AT&T Corp., in Basking Ridge, N.J., can be reached at http://www.att.com/. BT, in London, can be reached at http://www.bt.com/. Japan Telecom, in Tokyo, can be found online at http://www.japan-telecom.co.jp/. Vodafone, in Newbury, England, can be reached at http://www.vodafone.com/.
