Japan Telecom Firms Planning on Merging

Japan Telecom Co., a major domestic phone company, plans to acquire International Telecom Japan Inc. in a deal that would create the country’s No. 2 telecommunications firm.

Japan Telecom vice president Haruo Murakami said today that the companies hope to reach a deal by the end of the month and complete the merger by October.

The combined company would have annual revenue of about $3.3 billion, behind only Nippon Telegraph & Telephone Corp., the world’s biggest telephone company.

It would be the first merger of major Japanese telecommunications carriers and would create the country’s first company to offer both domestic and international phone services.

NTT, the domestic telecommunications giant, will be allowed to offer international services only after completion of its planned split into two regional operators and one long-distance carrier.

Murakami declined to comment on the value of the transaction. He said that after the deal is completed, Japan Telecom may seek deals with other Japanese or foreign telecom firms, but no talks are ongoing.

Murakami said the companies had had off-and-on discussions about a combination since fall 1995. The latest talks began at the beginning of this month.

Late last month, Japan Telecom strongly denied a report in the daily Sankei Shimbun newspaper that it would buy International Telecom for about $660 million, saying it wasn’t even considering such a deal.

Murakami said the companies told regulators about the talks Thursday and that no objections were made.

Trading in Japan Telecom shares was suspended today by the Tokyo Stock Exchange after the news. ITJ isn’t publicly traded.