Tokyo -UK's Vodafone Group yesterday won its bidding war with British Telecommunications (BT) to buy a 10 percent stake in Japan Telecom, becoming the top shareholder in the major Japanese carrier.
Vodafone said yesterday it had agreed to buy AT&T's stake in Japan Telecom for $1,35 billion, raising Vodafone's chunk of Japan's third-largest telecommunications operator to 25 percent from 15 percent.
The deal is good for Vodafone, even though it will pay a premium for the stock, because it expands the UK firm's beachhead in the exploding Japanese cellular phone market. It also boosts Japan Telecom's access to capital.
But the agreement was a blow to debt-laden rival BT, which had negotiated heavily with AT&T to buy the stake but could not come up with a compelling cash offer, sources said.
AT&T is unloading its Japan Telecom stake in response to NTT DoCoMo, Japan's dominant cellular phone operator, investing $9,8 billion in AT&T Wireless Group last December.
Although Vodafone will pay about '2,459 million (R164 679) a Japan Telecom share, 37 percent above yesterday's closing price on the Tokyo Stock Exchange, analysts said the deal was good for the UK phone group.
Kirk Boodry, a senior telecom analyst at Dresdner Kleinwort Wasserstein, said: "Vodafone is paying a slight premium, but on a fundamental evaluation basis, Vodafone is getting a good deal for AT&T's stake in Japan Telecom."
Kevin Foggarty at Teather & Greenwood said it was "realistic to assume" that Vodafone would approach BT with a view to acquiring the rival's Japan Telecom stake.
This would make sense for both companies, with BT in a "cash-strapped" position and Vodafone looking to expand in Asia. After the deal, BT will be Japan Telecom's second-biggest shareholder, with a 20 percent stake, followed by East Japan Railway, one of the founding companies, with a 15,1 percent stake.
BT shares initially slumped yesterday with debt worries clouding the group's forward strategy and ability to expand. But in late trade the stock rebounded and was up 3,7 percent from Monday's close.
Japan Telecom, which surged 8,2 percent on Monday on media reports that the deal was imminent, slid back 2,17 percent yesterday to '1,8 million on profit-taking.