Vodafone aims for controlling stake in Japan Telecom

The Vodafone Group revealed today it is maneuvering to take control of Japan Telecom by announcing it is in discussions with the Japanese wireless and wireline carrier’s shareholders.

Vodafone, already Japan Telecom’s largest shareholder, said it is negotiating with various shareholders to acquire up to 21.7% of Japan Telecom’s shares. That would give Vodafone a 66.7% stake in the carrier and control of the board.

Perhaps more importantly to Vodafone is that such a stake would clinch management control over J-Phone, the third largest wireless carrier in Japan. In November, Vodafone will directly own 39.7 percent of J-Phone, after its four separately held subsidiaries merge. A Japan Telecom buyout would give Vodafone direct control over the company, spearheading its wireless operations in Japan. Analysts have speculated that Vodafone might sell off Japan Telecom’s wireline assets entirely, concentrating only on the wireless business.

Yankee Group analyst Roger Entner said Vodafone is tired of sitting back and watching other company’s run its mobile ventures, and difficulties with Verizon over Verizon Wireless may be Vodafone’s motivation to control Japan Telecom outright.

“If you don’t own the majority stake, you’re the silent partner,” said Entner, Yankee’s wireless mobile services program manager. “The marriage between Verizon and Vodafone is quite difficult now. Vodafone wants to avoid that in future ventures.”

Vodafone is reportedly in negotiations with Japan Telecom’s second largest shareholder, East Japan Railway, over its 15.1 percent stake. No other shareholders have been named in the discussions.