NTT to buy 15 percent stake in RP Long Distance

NTT to buy 15 percent stake in RP Long Distance

TOKYO (AFP): Japan's telecoms giant Nippon Telegraph and Telephone Corp. said Friday it would advance into Asia, buying a 15-percent stake in Philippine Long Distance Telephone Co. for US$758 million.

"We believe that NTT will contribute to PLDT's growth now and in the future," said Manuel Pangilinan, president of the Philippine firm.

"There is also the potential to contribute new technology in the future," he told a news conference here.

Under the deal PLDT, the Philippine's top telecoms carrier, will also take over Smart Communications Inc., the country's second largest carrier and the top Philippine mobile phone firm.

NTT will take up its stake in PLDT in two steps. First it will exchange its 372-million-dollar stake in Smart in return for 7.8 percent of PLDT.

Secondly it will subscribe for new PLDT shares worth 386 million dollars, equivalent to 7.2 percent of the enlarged firm. PLDT is currently controlled by its top shareholder, First Pacific Group, itself controlled by the Indonesian Salim Group.

But this deal will give NTT two seats on the board and will propel the Japanese firm into the Asian telecom market, which it regards as a priority.

Under deregulation of the Japanese telecoms industry NTT, the former state monopoly, will make its debut as an international carrier next month.

"PLDT has a major role in the region as a whole," said Masanobu Suzuki, NTT executive vice president. "We regard Asia to be a priority place and in particular PLDT to us was a high priority company," he said.

The Japanese firm will continue to look for partners across Asia, where there was still room to develop the telecoms network, he said.

"We would like to continue to seek new investment opportunities into the future," Suzuki said.

NTT more than doubled group net profit in the past year to a record 602.7 billion yen ($4.9 billion), thanks to the strong performance of its mobile unit NTT DoCoMo Inc.

The telecoms giant has turned its eye towards mobile communications, warning the market for fixed-line subscribers is close to capacity.

For the Philippines the deal will dramatically redraw the country's telecoms landscape.

The enlarged PLDT will command a strong 70 percent market share in the Philippines for both fixed line and mobile subscribers, the firm's Pangilian said.