Japan's DDI, KDD, IDO announce merger plans

Signalling a further step in consolidation in the Japanese telecommunications market, three of the country's largest carriers announced yesterday plans to merge on October 1, 2000.

The merger ties DDI, a long distance and cellular carrier, KDD, the largest international carrier, and Nippon Ido Tsushin (IDO), a major cellular carrier in the Tokyo and central Japan areas and will create Japan's second largest telecommunications carrier with assets of 2.2 trillion yen ($US212.97 billion).

"DDI, KDD and IDO have agreed for a merger on an equal basis," announced DDI president Yusai Okuyama at a press conference here yesterday. Hours earlier, the three companies signed a merger memorandum and agreed the basic details toward a merger -- less than two months after beginning talks regarding the issue, Okuyama said.

Driving the urge to merge was a common feeling, termed a "sense of crisis" by Okuyama, that the three companies alone would not be able to compete with Nippon Telegraph and Telephone Corp. (NTT). The carrier has a virtual monopoly on the local market and carries the majority of long distance and cellular traffic. "We cannot by ourselves meet customer needs and survive in the 21st century," said Okuyama.

The feeling was echoed by Tadashi Nishimoto, president of KDD. His company recently acquired long distance carrier Teleway Japan. "Since the merger, we have made every effort to realise the synergies of the merger," he said. "However, I have been thinking if we wish to compete with carriers from many countries, including NTT, it is necessary to establish a more solid and stable management basis."

After the merger, the surviving company will be called DDI.

Going forward, the three companies plan to hold board meetings to approve the merger by late March 2000 to be followed by the signing of a merger agreement on the first day of the new financial year - April 1, 2000. Shareholder approval will be sought at general meetings scheduled for late June and, should all go to plan, the merger is expected to be take place on Sunday, October 1, 2000.

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