Vodafone wants to concentrate on mobiles

Vodafone, the world's largest mobile phone firm, owns about two-thirds of Japan Telecom, which includes the mobile service J-phone and the fixed-line business.

Vodafone has always said it wanted to concentrate on the profitable J-phone unit rather than the landline business.

The widely-expected sale sets a precedent in Japan, with two foreign firms striking a deal to sell a Japanese operation.

"We are confident that Ripplewood will continue to show the same high regard for Japan Telecom's customers, employees and suppliers and will be successful in growing the business further," Vodafone chief executive Arun Sarin said.

Cutting costs

It is Ripplewood's most significant investment in Japan, where the US fund has spent around 150bn yen investing in troubled companies in Japan over the last three years.

Ripplewood, which has funding from a group of banks including Citigroup, was the first foreign investor to buy a Japanese bank.

It took over the failed Long Term Credit Bank in March 2000 and relaunched it as Shinsei Bank.

Japanese papers have reported that, on completion of the acquisition, Ripplewood plans to cut costs, streamline data communications and then float shares in the unit.

But analysts say it will have its work cut out, with the popularity of cell phones and the internet seriously undermining the revenues of Japan's landline operators.