Vodafone increases stake in Japan Telecom

The Vodafone Group announced today it has secured an additional 21.7% stake in Japan Telecom, giving it management control over the carrier and its wireless subsidiary J-Phone.

In a deal valued at $2.7 billion, Vodafone will acquire 693,368 shares of Japan Telecom stock, half of which will come from East Japan Railway, the carrier’s largest stockholder behind Vodafone. With a total ownership stake of 66.7%, Vodafone will control the Japan Telecom board, which controls J-Phone, Japan’s third largest wireless operator with 11 million subscribers.

Vodafone officials said Japan is a large part of its global strategy, which features having some of the greatest levels of subscriber penetration in the world as well as the highest degrees of technical savvy through the wide adoption of wireless data.

Analyst predict Vodafone will sell Japan Telecom’s fixed-line assets to concentrate on the more lucrative wireless business, a move that has precedence in Vodafone’s other acquisitions and takeovers.

Whether Vodafone follows its standard formula of rebranding the company with the Vodafone name remains to be seen. Strategis Group analyst Jake Saunders said Vodafone might run into problems trying to make J-Phone another cookie-cut Vodafone company, with the most obvious obstacle being the fact Japanese does not use the Roman alphabet.

Saunders said Japan also has a much more sophisticated wireless consumer market than Vodafone encounters in its other markets and might reject any attempts the carrier makes to radically change the way J-Phone markets its service or conducts its business.