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January 21, 1987


By CBR Staff Writer

The Japanese Ministry of Posts and Telecommunications says the two consortia competing for a second international telecommunications licence in Japan, International Digital Communications, IDC, led by Cable & Wireless and C Itoh; and International Telecom Japan, ITJ, are considering merging. IDC says, however, that no-one has approached it about merging with ITJ, although it did send a team of officials to Tokyo last week to explain the company’s position to Japanese officials and the media. The Ministry is understood to be initiating the idea because it is unhappy about the 20% shareholding Cables holds in IDC – but it does not have the final say – the Ministry for International Trade and Industry, MITI, is the senior ministry, while the Postal ministry is under pressure from the current monopoly supplier of international telecommunications, Kokusai Denshin Denwa, KDD. KDD has every reason for wanting the Cables-Itoh consortium to be blocked, because the rival grouping, with little real comunications expertise, only wants to rent capacity from KDD rather than establishing its own network. MITI is in favour of opening up international trade and it knows the inclusion of Cable & Wireless is important in that it would put Japan on the end of the UK company’s planned global fibre-optic highway. Cable & Wireless director of corporate strategy Jonathan Solomon claims that the possibilities of the two consortia merging or even two licences being given are equally probable outcomes. The problem here is that the Ministry for Posts and Telecommunications is under the thumb of KDD, and KDD is under the thumb of international companies such as AT&T and British Telecom, which are looking to block IDC. The irony of the situation is that Japan as the world’s second biggest economy could have less to say in international communications than some of the tiny European PTTs. Cables has a 20% shareholding in IDC, C Itoh 20% and Pacific Telesis 10%, Merrill Lynch has 3% and the balance is held by Japanese banks and industrial companies, advised by NTT; ITJ is entirely made up of Japanese corporations, and is being advised by Kokusai Denshin Denwa.

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