BT may sell Japan, Spain stakes to Vodafone

British Telecommunications PLC (BT) is in talks to sell its interests in Japan Telecom Co. including its stake in the mobile division J-Phone Communications Co. Ltd. to rival Vodafone Group PLC.

The discussions also include Vodafone acquiring BT's stake in Spain's Airtel Moviles SA, BT and Vodafone confirmed Tuesday. An agreement is expected to be announced in days and could come as early as Tuesday, according to a report in the Financial Times' online edition. The Japan Telecom deal will be valued at over 3 billion pounds (US$4.3 billion), the report said.

Including the sale of the stake in Airtel Moviles, the value of the deal could amount to between 4 billion and 5 billion pounds, according to Nigel Hawkins, telecommunications analyst at brokerage firm Williams de Broë PLC in London, who said he is not surprised by the imminent deal.

"BT has been talking about selling assets to reduce its net debt for a while now," he said, noting that BT's debt load is 30 billion pounds.

Recently it seemed BT was looking to retain its Japanese assets. The British carrier last month entered into an option contract with Japan Telecom to buy stakes of about 5 percent in each of J-Phone's three regional mobile companies for a total of 68 billion yen (US$546.2 million). However, it seems reducing BT's debt is more urgent than the company's need to expand in Japan.

"Decreasing the net debt takes precedence (over acquiring new stakes)," said Hawkins.

Last week Vodafone completed an earlier announced acquisition of 10 percent of Japan Telecom from AT&T Corp. for $1.35 billion. On April 12 the mobile phone giant completed the purchase of 15 percent of the Japanese carrier from West Japan Railway Co. and Central Japan Railway Co. for 1.43 billion pounds.

A purchase of BT's shares would bring Vodafone's interest in Japan Telecom from 25 percent to 45 percent. Vodafone's current 26 percent holding in J-Phone would come to 46 percent. Adding BT's 18 percent of the shares in Spain's Airtel Moviles would bring Vodafone's share in that company to 91 percent, the Financial Times said.

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