KDDI looks to take smaller stake in J:COM, source says

8 Feb 2010

Japan’s second largest telecoms group KDDI Corp will scale back its aspirations for Japanese cable network operator J:COM, by buying a reduced stake in the firm from its owner US-based Liberty Global, Reuters reports an unconfirmed source as saying. It is understood the decision follows a ruling from local regulators that KDDI’s original plan was illegal.

TeleGeography’s GlobalComms Database notes that on 25 January this year KDDI Corp struck a deal to acquire a 38% stake in local cable TV operator Jupiter Telecommunications (J:COM) from Liberty Global Inc in a USD4 billion cash deal that if ratified, would give KDDI more new subscribers and access to a fibre network. The deal struck is reportedly equivalent to a premium of 44% on Jupiter’s closing share price at the tme of the announcement. KDDI’s had hoped the investment would have given it access to a potential 3.2 million households for telephony services and simultaneously reduce its reliance of using NTT’s fibre-optic networks. However, soon after the deal hit an obstacle with the news that financial regulators were investigating the legality of the plan and were looking to slap an USD884 million fine on KDDI. Lawyers raised a question that, as the purchase would give KDDI a one-third stake in J:COM and make it its biggest single shareholder, it needed to make a public tender offer for the shares and seek shareholder approval. At the time, KDDI spokeswoman Kayo Sekine was quoted as saying: ‘We will cooperate if the FSA should make a formal request for information and adhere to any FSA guidance,’ although she declined to comment on the rumoured USD884 million fine. KDDI now plans to lower its purchase to a less than 33% stake in J:Com, said the unnamed source with ‘direct knowledge’ of the matter.

Japan, KDDI (au)