January 25, 2010 / 7:06 AM / 10 years ago

REFILE-UPDATE 2-Japan's KDDI to buy $4 bln Jupiter Telecom stake

(Fixes typo in first paragraph)

* To acquire Liberty Global’s entire 37.8 pct stake in cash

* Deal prices J:Com stock at 65 pct premium to Friday’s close

* KDDI strikes biggest deal as aim to shore up cable TV ops

* KDDI Q3 oper profit down 12.5 pct yoy (Adds background, details)

TOKYO, Jan 25 (Reuters) - KDDI Corp (9433.T), Japan’s No.2 telecoms firm, plans to buy a $4 billion controlling stake in the country’s biggest cable TV firm, seeking to increase its profile in cable TV as more traditional revenue streams stagnate.

In Japan’s biggest media & entertainment industry deal in at least a decade, KDDI will buy U.S. group Liberty Global’s (LBTYA.O) 37.8 percent stake in Jupiter Telecommunications Co 4817.Q, known as J:Com.

The surprise deal — KDDI’s biggest acquisition to date — sent J:Com shares up 14.4 percent to 94,000 yen after the announcement. KDDI closed down 2 percent.

The 361.7 billion yen cash deal prices J:Com shares at about 140,000 yen, or roughly a 65 percent premium to Friday’s closing price, the companies said in separate statements.

Sumitomo Corp (8053.T) will still hold a 27.7 percent stake in J:Com.

KDDI is chasing new revenue in cable TV through its Japan Cable Net Ltd subsidiary as sales stagnate from fixed and mobile lines in a saturated market.

The deal, expected to be completed next month, comes as KDDI struggles to grow, hemmed in between Japan’s former monopoly Nippon Telegraph and Telephone Corp (9432.T) and upstart Softbank Corp (9984.T), supplier of Apple Inc’s (AAPL.O) iPhone in Japan.

“This deal looks expensive for KDDI,” said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management.

“There’s limited scope for J:Com to break new territory or bring in new customers. I worry that Cable TV might end up eating into some of KDDI’s existing businesses, such as media distribution.”

KDDI, which also competes with NTT DoCoMo Inc (9437.T) in mobile phones, said its operating profit fell 12.5 percent to 125.83 billion yen in October-December, as both its mobile and fixed line revenues slipped. ($1=90.05 Yen) (Reporting by Mayumi Negishi; Editing by Hugh Lawson and Anshuman Daga)

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