KDDI Corp and Tokyo Electric Power Company (TEPCO) have begun talks to create a full-scale alliance with the clout necessary to take on rival and market leader Nippon Telegraph and Telephone (NTT). The proposed tie-up comprises two key components: a capital alliance that will see TEPCO selling part of its stake in fixed line telco PoweredCom to KDDI, and a business alliance that will see TEPCO jointly running broadband-related services with its new partner.
TEPCO owns fibre-optic networks that rival NTT’s infrastructure and can be used to provide broadband services. During its current fiscal year the power utility plans to invest as much as JPY44 billion (USD394 million) in expanding its optical fibre systems, double the figure spent in 2004, and in so doing keep pace with NTT East Co. TEPCO’s activities in the country’s communications markets to date have been stymied by its lack of a full-blown mobile business, and lack of national network coverage. The tie-up with KDDI follows failed merger talks with ISP Internet Initiative Japan earlier this year.