LONDON (CNNfn) - Investors applauded speculation that British Telecommunications and AT&T are close to taking a 30 percent stake in Japan Telecom, after the U.K. company's stock jumped over 3 percent in London.
Analysts said BT is actively looking to do a deal in Japan and believe Japan Telecom is a logical target given the limited choice.
"We know that BT is looking at something in Japan . . . it appears to be something significant. Personally, I assume it's Japan Telecom," one London-based analyst, who asked not to be named, told CNNfn.
The markets welcomed the news as European and U.S. telecom companies have widely disregarded Asia, despite a growing recognition that the industry must globalize.
"It is important to be in Japan, but none of the Western telcos have a developed strategy as yet," said the analyst.
The Japanese market is the second-largest in the world after the U.S. but it is almost impossible to break into as a startup. "Japan is very insular and as a consequence is very difficult to get into. You're either in it as a local player or you're not," the analyst added.
BT's shares started rising Friday after a Japanese newspaper reported that the U.K. company and its U.S. partner were in advanced negotiations with Japan Telecom Co. to buy a combined 30 percent stake.
BT's stock was up 3.39 percent in London at 1,007, after shedding 10 percent in the previous four sessions.
AT&T shares were ¾ higher at 82-7/8 in early trading in New York.
Nihon Keizai Shimbun reported that BT is expected to take a 20 percent stake and AT&T will acquire 10 percent, adding that the two firms were set to pay an estimated total of 150 billion yen ($1.3 billion).
Japan Telecom is the third-largest long-distance carrier in Japan, after Nippon Telegraph and Telephone Corp. and DDI Corp.
BT declined to comment to CNNfn on the report. A spokeswoman for a Japanese unit of AT&T similarly told Reuters the company couldn't comment.
The report quoted unnamed industry sources as saying the size of their respective stakes may change as Japan Telecom hopes BT and AT&T will take equal stakes.
Japan Telecom is capitalized at $4.62 billion against NTT's $150.86 billion.