JAPAN, BRITAIN DISAGREE ON TELECOM MERGER

  Cable and Wireless Plc &lt;CAWL.L> is
  resisting attempts to merge two Japan-based telecommunications
  firms in the hope that overseas political pressure will force a
  change in those plans, a company executive said.
      Cable and Wireless, which holds a 20 pct stake in one of
  the two Japanese firms, is opposed to plans to reduce its share
  to three pct in the merged firm, director of corporate strategy
  Jonathan Solomon told reporters.
      That plan, put forward by a senior member of the powerful
  business organization Keidanren with the tacit backing of the
  Post and Telecommunications Ministry, has caused a storm of
  protest from abroad that Japan is seeking to exclude foreign
  firms from a meaningful position in the market.
      Pacific Telesis Group &lt;PAC.N> of the United States also
  holds a 20 pct stake in one of the newly formed consortia,
  &lt;International Digital Communications Inc> (IDC).
      Solomon said that both British Prime Minister Margaret
  Thatcher and U.S. Secretary of State George Schultz have
  written to the Japanese government about the planned merger.
      A key U.S. Senate committee, Commerce Secretary Malcolm
  Baldrige and Trade Representative Clayton Yeutter have also
  expressed opposition to the merger, he said.
      The Post and Telecomunications Ministry reiterated again
  that it sees no need for two competitors to &lt;Kokusai Denshin
  Denwa Co Ltd>, which holds a monopoly on international calls
  from Japan. The ministry has also suggested that foreign
  shareholders not hold managerial positions in the new firm.
      In an attempt to hammer out an agreement, Solomon today met
  Fumio Watanabe, the senior Keidanren officer trying to arrange
  the merger. But the two sides remained deadlocked.
      At stake is C and W's 400 mln dlr project to lay fibre
  optic cables between Japan and Alaska, to form part of its
  global network.
      "C and W wants to start right away on the project, such as
  application and other procedures," said Watanabe, who is also
  chairman of &lt;Tokio Marine and Fire Insurance Inc>. The Japanese
  side is saying that the decision on such a plan should be left
  with the new firm, after the merger.
      "These decisions (on the merger) were made in consideration
  of Japan's economic conditions and legal systems. I told him we
  are not a colony or something," said Watanabe.
  

