Japan Telecom, China Telecom dial a deal

By CNN's Kristie Lu Stout

TOKYO, Japan (CNN) -- Japan Telecom and China Telecom have signed a knowledge sharing agreement, just one week after rivals KDDI and China Unicom secured a similar pact.

Japan's number-three telco told CNN it signed a memorandum of understanding with China Telecom last week in Beijing to establish a comprehensive tie-up in mobile, fixed-line and Internet services.

The alliance reflects an escalating trend of Japanese telecom operators to aggressively chase market share beyond domestic borders.

Comprehensive alliance

"We are making an alliance around frame relay, ATM, leased line, IP, and mobile phone services," Japan Telecom spokesperson Kazumi Narihiro told CNN.

"We agreed to have an alliance but we have not decided details," she added.

The tie-up boosts Japan Telecom's competitiveness in the wireless world as bigger rivals KDDI and NTT DoCoMo expand in the region.

Japan Telecom's existing relationship with mobile giant Vodafone also readies the telco for a more significant regional presence.

Vodafone recently paid $5.3 billion to lift its stake in both Japan Telecom and its mobile arm J-Phone from 26 to 46 percent. The deal gives Vodafone more steering power to take the telco out of the shadow of Japanese mobile colossus NTT DoCoMo.

"We're already enjoying the benefits of the greater scope and scale that Vodafone gives us when we're purchasing so we're buying a lot of infrastructure, a lot of handsets," said J-Phone managing director John Thompson.

Japan's jump into China

Last week, KDDI and China Unicom also signed a MOU, sealing a pact that analysts say will boost third-generation wireless technology in China.

The deal grants Unicom access to KDDI's expertise in code division multiple access (CDMA) wireless technology, and gives KDDI a foothold into China's lucrative market of some 100 million mobile users. Last month, Japan's leading mobile operator NTT DoCoMo lifted its stake in Hong Kong's Hutchison Telephone.

DoCoMo said it would pay $30.44 million for an additional 6.37 percent stake in the company, bringing its total stake to 25.37 percent.

The Japanese mobile operator made the move hoping to leverage its board seat and accelerate the launch of third generation wireless services in the Hong Kong market.

Its parent, NTT, has already set up an office in Beijing and is rumored to be talking to Unicom.

NTT DoCoMo recently launched the world's first trial 3G wireless service, securing a lead in next-generation mobile offerings.

KDDI aims to launch its CDMA upgrade to challenge DoCoMo's 3G service this year, while Japan Telecom's mobile unit, J-Phone, plans to launch its 3G service in Tokyo next June.

The operator is also poised to be the first to offer 3G international roaming -- connecting customers from over 30 countries around the world.

Shares in Japan Telecom fell 4 percent to close at 2,640,000 yen on Tuesday.