BT has agreed to sell its Japan Telecom and J-Phone stakes to Vodafone.
BT and Vodafone have confirmed that subject to negotiations, BT will sell its stakes in Japan Telecom (JT) and its J-Phone mobile subsidiary to the world’s largest mobile operator. The deal would raise Vodafone’s stake in JT to 45% and its stake in J-Phone to 46%, while giving BT more than $4 billion to reduce its debt mountain.0
BT always stated that Japan was one of its core markets. But realistically, for a firm that is $46 billion in debt, tying up capital in minority stakes in companies that are themselves making heavy investments isn’t a good strategy. Exiting JT is a sign that BT may be starting to get on the right track.
Vodafone, meanwhile, will now effectively own over half of J-Phone, although it will not yet have management control. J-Phone has always looked like Vodafone’s target – while it’s been happy to buy mixed fixed and mobile operators such as Mannesmann, it’s generally been quick to dispose of their fixed line interests. Gaining control of J-Phone would give Vodafone a stronger presence in the world’s second largest mobile market, as well as early experience in 3G. J-Phone plans to roll out its 3G service in June 2002, ahead of the bulk of European operators.
However, it’s not yet clear whether Japan Telecom will be prepared to let Vodafone take control of J-Phone. And if the relationship turns sour, despite Vodafone’s strong hostile takeover experience a bid for Japan Telecom – closely controlled by various allied railway companies – might be just too difficult.
If Vodafone does end up controlling J-Phone, the problems won’t end there. The operator only has 16% market share, compared with DoCoMo’s 60%. Its J-Mode mobile Internet service has failed to captivate Japanese consumers. And despite DoCoMo’s recent postponement of its 3G roll out to September, the dominant operator will still have a major head start. Still, if anyone stands a chance of taking on DoCoMo on its home turf, it’s got to be Vodafone.
