AT&T;, BT in Talks for Japan Venture

AT&T; Corp. and British Telecommunications are close to buying a stake in Japan Telecom Co., adding a third partner to their $10-billion alliance and accelerating their entry in the Japanese market, a senior official at the Japanese company said Friday.

BT will buy 20% and AT&T; will buy 10% of Japan Telecom, the country’s fourth-largest phone company, for about $1.3 billion, Nikkei English News reported, without naming sources. A deal could be reached by the end of March, said the official.

BT and AT&T;, which expect this summer to complete their venture to sell voice and data services to multinational companies, need direct links to customers in the $111-billion Japanese market to compete with rivals such as MCI WorldCom Inc. They would be the first foreign companies to become major shareholders in a Japanese telecom firm.

“It’s a fantastic move,” said John Nichol, a portfolio manager at Ohio Public Employees Retirement System, which owns 4.81 million AT&T; shares. “It gives them a big footprint there right away.”

Officials at AT&T; and BT, the largest U.S. and British phone companies, declined to comment.

Japan’s phone firms are seeking alliances to help them compete with Nippon Telegraph & Telephone Corp., the world’s largest phone company, after its split into three companies in July. Entering the venture would let Japan Telecom use AT&T; and BT networks to transmit voice and data globally.

AT&T; shares fell $2.50 to close at $79.63, while BT American depositary receipts rose $1.88 to close at $163.50, both on the New York Stock Exchange.