Nippon Telegraph & Telephone (NTT) has offered to buy a stake in International Digital Communications, a move that could launch a bidding war between NTT and Cable & Wireless PLC (C&W) over the Japanese international carrier.
Tokyo-based International Digital offers international telecomms services, including voice, Internet access and corporate leased lines. Japan's telecomms market is currently separated into international and domestic markets, but by July ongoing deregulation will erase those lines. Ahead of those changes, both Japanese and foreign carriers are scrambling for partnerships to better compete in the opened Japanese market, the world's second largest market for telecommunications services.
Details of NTT's bid for the company were not disclosed, though a spokeswoman at the company confirmed that negotiations between NTT and International Digital are underway.
"We have sent a proposal but that's all we can comment on at this time," said a spokeswoman at NTT. Executives at the companies did not return calls seeking comment.
The NTT bid will likely pit the Japanese telecomms giant against C&W, which is vying for a larger stake of International Digital, people familiar with International Digital said last week. C&W currently holds a 17.7 per cent stake of the company.
International Digital has long been considered an NTT acquisition target. Under deregulation, NTT from July will be able to offer full international service for the first time. An equity stake in International Digital would tighten NTT's connection with a company with a decade of international experience.
But to win International Digital's hand, any suitor will have to convince International Digital's other majority shareholders to sell their stakes in the company. Trading company Itochu and Toyota Motor, both own 17.7 per cent of the company, while San Francisco-based AirTouch Communications holds a 10 per cent stake in International Digital.