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July 27, 1987

JAPANESE TELECOMMUNICATIONS MERGER TALKS BREAK DOWN AGAIN

By CBR Staff Writer

Proposals put forward by IDC, International Digital Communications Inc to International Telecom Japan Inc to create a separate company to operate its planned PPAC trans-Pacific cable as well as merging the two consortia were peremptorily dismissed according to Cable and Wireless at a meeting in Japan yesterday. Cable and Wireless has a 20% shareholding in IDC and is adamant that a merger between the two consortia is not on because ITJ regards the laying of a new cable across the Pacific as unnecessary, at least for another six years: it intends to lease capacity from the current monopoly operator Kokusai Denshin Denwa, which has in the interim rather spoiled the ITJ arguments of excess capacity and lack of demand by agreeing to build its own fibre optic trans-Pacific cable in partnership with AT&T. IDC sees ITJ’s idea of using KDD facilities as no competition at all and a flagrant denial of participation by foreign companies in Japanese industry. This is despite Prime Minister Yasihiro Nakasone’s recent announcement that there is no objection to two international telecoms licences being granted. Cable & Wireless says it would be satisfied either if the new plan were accepted or if the Japanese government agreed to give two separate licences to IDC and ITJ. Final talks on the proposals will be held between ITJ and IDC next week.

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