Cable & Wireless (C&W) on Tuesday night said it has upped its bid for a Japanese international telecomms carrier in a protracted takeover contest with Nippon Telegraph & Telephone (NTT).
C&W's bid for International Digital Communications of 110,577 yen ($A1413) per share comes in response to NTT raising up its offer for the local carrier earlier. The C&W bid is believed to be just slightly above NTT's offer price which NTT did not disclose.
The seesawing bids started in March when C&W said it wanted to increase its stake in Tokyo-based International Digital, which sells international telecomms services to corporate customers and consumers in Japan. NTT, Japan's largest telecomms provider, which International Digital had been courting for at least a year, responded with its own offer for the company. Then last month, C&W made a formal bid for International Digital of 107,372 yen ($A1372) per share in cash, putting a value of 67 billion yen ($A856 million) on the Japanese carrier.
International Digital's largest shareholders are C&W, Toyota Motor and trading company Itochu Corp. Each own 17.7 per cent of the company. Toyota will sell its stake to the highest bidder, according to yesterday morning's Nihon Keizai Shimbun newspaper, quoting an unnamed Toyota official.
Although International Digital runs a global network and has a strong list of customers in Japan, some analysts question the contribution the company will make to either of its suitors.
NTT, owing to ongoing deregulation, this year will begin offering full international services for the first time. However, as Japan's largest telecomms provider, NTT has the resources to build its own international network without International Digital's help, analysts say. In April, NTT also announced a broad deal with AT&T to provide network services for corporate customers.
But what a buyout of International Digital lacks in business sense, it may make up in symbolic value. Officials close to the negotiations acknowledge that even if C&W wins the bid, NTT doesn't necessarily lose. A former state-owned carrier that has been semi-privatised since 1985, NTT has long been criticised for restricting competition in Japan's telecomms market, the world's second largest.
C&W winning the hand of International Digital would be publicly viewed as an opening up of the Japanese market. As the first foreign takeover of a Japanese carrier, C&W's profile would be raised, while NTT could go ahead with its own international plans, perhaps freer from anticompetitive scrutiny.
While it is still too early to predict the outcome of the International Digital contest, officials familiar with NTT say the company's current top priority is ensuring the success of its new partnership with AT&T.
In April, the NTT officials said they were planning to offer value-added services over IBM's Global Network, a worldwide network that AT&T purchased from the computer vendor last year. NTT and AT&T in the coming months will set up a joint venture to manage the business, NTT officials said.