In a complex deal with another major shareholder - East Japan Railway - Vodafone will increase its stake in Japan Telecom from 45% to 66.7% through a public tender offer.

Under the offer, Vodafone will pay 450,000 yen ($3,834) in cash for each Japan Telecom share, a 37% premium to the average closing price of Japan Telecom's shares over the last 20 days.

'No decision' on fixed-line sale

It will not take on any additional debt to complete the deal.

Since last year, Vodafone has been raising its holdings in Japan Telecom and its wireless units, consolidating a foothold in the world's second-largest telecoms market by taking stakes from AT&T and UK rival BT Wireless (now renamed MMO2).

J-Phone plans to launch third-generation (3G) services next June, offering Vodafone the chance to get hands-on market experience of the technology, which promises super-fast data and voice transmission.

The Vodafone chief executive said the group has made "no decision or no plan" on whether to sell Japan Telecom's fixed line operations now that it has management control.

The two firms are "already in detailed discussions" on how to improve the profitability of the fixed line business, Mr Gent said at a press conference in Tokyo.

KDDI delays 3G start

Vodafone's bid coincided with news from KDDI, Japan's third biggest mobile operator, that it will delay the launch of its third generation mobile phone services from this autumn to April 2001.

All three Japanese mobile operators have now announced delays in the start of 3G services. NTT DoCoMo, which has 50.9% of the Japanese market, is due to launch services next month.

Vodafone's shares held up in a falling market on Thursday morning, down 1 penny at 140.5p by 0959 GMT, while the FTSE 100 blue chip index was down 95.6 points at 4662.1.