After spending most of the weekend denying reports of what everyone else seemed to know, yesterday KDD Co, Japan’s largest international telecommunications company, did announce that it and Teleway Corp plan to merge next October 1. The deal which had been mooted for sometime, will see the two companies join KDD’s undersea fiber-optic cable and Teleway’s high-capacity domestic optic fiber network. According to Teleway, the deal is the basis for an aggressive expansion of sales in both domestic and international markets. KDD currently controls more than 60% of Japan’s international call market. Although Teleway is yet to turn around a profitable year it is also attractive to KDD because of the company’s cash resources. Teleway is the focus for cash-rich Toyota Motor Corp, the world’s third-largest carmaker, to move into the telecoms market. Teleway has more than $15bn in cash and short-term deposits. In September, Toyota said it would lead a 49.8bn yen rescue of Teleway. In return, Toyota’s stake in Teleway was expected to jump to more than 50% from 38.3%. Toyota also owns 27.2% of privately held IDO Corp, a cellular phone operator, and 17.6 percent of International Digital Communications Inc, an overseas carrier that competes with KDD. KDD’s and Teleway’s combined sales of 431bn yen in the year to March 31 would rank it the fourth-largest telecommunications company in Japan after NTT, DDI Corp and Japan Telecom Co.
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