British Telecom is reportedly considering taking a #1 billion stake in Japanese telecomms operator DDI.
The stake, thought to be up to 30 per cent, in Japan's second largest domestic carrier, would be the latest in a string of investments in Asia this year by BT.
BT refused to comment on the report in the 'Sunday Telegraph', but said the Asia-Pacific region is becoming an increasingly important region.
"BT sees Asia-Pacific in general as an important part of its strategy," said a BT spokesman. "BT is very much focused on Europe and you are increasingly seeing us in Asia-Pacific."
Reports of an investment by BT in DDI, which is also a major mobile phone operator in Japan, say BT's chief executive Sir Peter Bonfield has been holding talks with his counterpart Yusai Okuyama, and that a deal is imminent.
BT has already announced a number of strategic investments in Asia this year, most recently a 23.5 per cent stake in LG of South Korea, and a 33 per cent stake in Binariang of Malaysia.
In June BT's joint venture with Marubeni in Japan, called BT Communications Services, was awarded a type-1 telecomms licence. The company is planning to build a fibre optic ring in Tokyo next year.
Analysts said the deal would be good for BT, because it would boost its presence in the mature Japanese telecomms market and because it would get a good price because of the instability in Japan's economy.
"It wouldn't surprise me. Nobody has really got their Asian side sorted out that well," said Chris Lewis, an analyst at the Yankee Group Europe. "I think it is good in the sense that the price is probably a lot better that a few months ago."
BT made over #1 billion profit on the sale of its stake in MCI, so has plenty of money to spend. "BT has to be seen to be spending wisely by the shareholders, rather than just sitting on the money," said Lewis.
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