C AND W OFFERED ROLE IN NEW JAPAN TELECOM COMPANY
A Japanese businessman announced plans for
a new telecommunications firm in which Britain's Cable and
Wireless Plc would be a core company.
    However, the plan, unveiled by senior Federation of
Economic Organizations official Fumio Watanabe, does not
specify what stake Cable and Wireless would have.
    "The share holdings of the core companies should be equal,"
Watanabe said in a statement. "The actual percentage of
shareholdings should be agreed by the core companies."
    He said the eight core companies will provide directors for
the firm.
    "The new company shall immediately set to work on the
feasibility study of constructing a new cable for itself,"
Watanabe said.
    Watanabe has acted as mediator between two rival groups,
one of which included C and W, seeking to compete against
<Kokusai Denshin Denwa Co Ltd>, which now monopolizes Japan's
overseas telephone business.
    The Post and Telecommunications Ministry has said it wants
only one competitor to KDD and has backed Watanabe's efforts.
    A British source, who declined to be identified further,
said the proposals could open the door to further talks between
C and W <CAWL.L> and the other firms involved.
    C and W had earlier rejected a reported proposal which
would have given it a five pct share in the new
telecommunications firm, compared to the less than three pct
stake Watanabe originally proposed. C and W has a 20 pct stake
in one of the two firms Watanabe has proposed should merge.
    The British source said the decision not to specify the
exact shareholdings of the core companies could leave the door
open for further discussion.
    "It's probably a sensible approach on their part," the
British source told reuters.
    C and W has also been pushing hard for permission to lay a
new cable between Japan and the U.S.
    The proposed merger has sparked an international row, with
British government sources threatening retaliatory action
against Japan for what they see as discriminatory practices
against foreign firms.
    The sources said last Friday that one option for Britain
would be to revoke licenses of Japanese banks and securities
companies operating in London.
    The U.S. Has also attacked the original merger plans,
saying that both rival consortia should be licensed.
    Asked about participation by other U.S. And European firms,
Watanabe said, "They will not be core companies but if they wish
they could participate." Under the Japanese law, total foreign
participation would be limited to one-third.
    "It might be wise for C and W to join the new firm which has
the support of many influential backers and work within this
for the realization of their ideas," Watanabe told reporters.
    The other core firms are Mitsubishi Corp <MITT.T>, Mitsui
and Co <MITS.T>, Sumitomo Corp <SUMT.T>, Matsushita Electric
Industrial Co <MC.T>, Toyota Motor Corp <TOYO.T>, C Itoh and Co
<CITT.T>, and <Pacific Telesis International Inc>.
    Watanabe said that his latest proposal represented his
final effort.
    If it fails to satisfy the British government, it will be
up to the Japanese government to explain its position, he said.
 REUTER
