JAPAN ACTS TO COOL U.S. ANGER ON TELECOMS DISPUTE
Japan has sought to assure the U.S. It is
not trying to keep foreign equity in a new Japanese
international telecommunications company below the legal limit
of 33 pct, a Post and Telecommunications ministry official
said.
    In a letter sent yesterday, Postal Minister Shunjiro
Karasawa told U.S. Commerce Secretary Malcolm Baldrige that the
ministry does not object to foreign participation by those U.S.
Firms that have expressed interest.
    But it does oppose any foreign international
telecommunications carrier having a management role, he said.
    The move appears to be an effort to dampen U.S. Opposition
to the planned merger of two rival firms seeking to compete
with the current monopoly <Kokusai Denwa Denshin Co Ltd>, and
to reduce the share held in any KDD rival by U.K.'s Cable and
Wireless Plc <CAWL.L>, industry analysts and diplomats said.
    One of the rival firms, <International Telecom Japan Inc>
(ITJ) has offered a stake in the company to eight U.S. Firms
including General Electric Co <GE>, Ford Motor Co <F> and
Citibank NA <CCI), and two European companies, ITJ president
Nobuo Ito said yesterday.
    Cable and Wireless holds a 20 pct share in a second
potential KDD rival, <International Digital Communications
Planning Inc>, along with <C Itoh and Co>. Merrill Lynch and Co
Inc <MER> and Pacific Telesis International Inc <PAC>, both of
the U.S., Hold three and 10 pct shares respectively.
    The Post and Telecommunications Ministry has urged the
merger of the two firms because it says the market can only
support a single KDD competitor.
    It has also rejected management participation by an
international common carrier, such as Cable and Wireless,
arguing no international precedent for such a stake exists.
    Cable and Wireless Director of Corporate Strategy, Jonathan
Solomon, yesterday again told ministry officials he opposes a
merger proposal that would limit Cable and Wireless' share to
less than three pct and total foreign participation to about 20
pct, the ministry official said.
    Channeling the U.S. Firms into a single merged competitor
would most probably result in diluting Cable and Wireless'
share, industry analysts said.
    "Eventually the ministry will get what it wants -- one
combined competitor," Bache Securities (Japan) Ltd analyst
Darrell Whitten said.
    "Political ... Leverage may get the total foreign share up
to a certain amount, but you won't find any one company with an
extraordinarily large holding," Whitten said.
    Western diplomatic sources were more blunt.
    "They (the ministry) don't want to see Cable and Wireless
with a reasonable share and they think of all sorts of
strategies to reduce that share," one said.
    Fumio Watanabe, a senior Keidanren (a leading business
organization) official who has been trying to arrange the
merger, will present a new outline of his proposal on Thursday,
the ministry official said.
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