IHS Global Insight Perspective | |
Significance | The Japanese government is planning to sell the minority stake it holds in NTT back to the company. |
Implications | The move is partly to raise public funds to help finance overseas infrastructure projects undertaken by Japanese firms. |
Outlook | The move will also make sure that the government’s NTT holding does not exceed the one-third threshold required by law. |
The Japanese government plans to sell part of its stock holding in Japan’s largest telecoms company sometime in the next fiscal year, for around ¥300 billion (US$3.6 billion), Dow Jones reports. The move is partly to help finance overseas infrastructure projects undertaken by Japanese firms, a government official was quoted as saying. The government plans to channel roughly ?200 billion of the expected proceeds into the overseas investment and loan programmes of the Japan Bank for International Cooperation (JBIC), a government-affiliated lender. The official said that NTT was expected to buy stocks from the government in off-hours trading, but he declined to say when the transactions would take place.
Outlook and Implications
- Government to Sell Down Stake: The move comes after NTT, a former state monopoly, retired 7.97% of its outstanding shares earlier this month, boosting the government's stake to 36.6% from 33.7%. NTT plans to conduct a similar share-retirement again as early as the fiscal year (FY) 2011. This would raise the government's ownership in the company to around 40%. The government is obliged by law to own at least one-third of the company's outstanding shares. It is therefore planning to sell holdings in excess of the one-third threshold. This means the government is likely to sell a stake of around 6%.
- Attempts to Fund Overseas Venture by Japanese Firms: The move also underscores the government’s efforts to take better advantage of overseas demand to boost the country's moribund economy, where consumption is expected to remain largely sluggish for years to come. Helping Japanese firms to build and manage social infrastructure abroad is a key pillar of the government's long-term growth strategy adopted in June. The government reportedly hopes also to pass legislation next year to empower the JBIC, whose traditional role is to finance large-scale infrastructure projects in developing nations, to support companies doing business in advanced economies overseas.