Vodafone's Japan Telecom slipped into the red for the first time last year.

The group, the third largest telecoms firm in Japan, racked up a net loss of 66bn yen ($528.6m; �326m) in the financial year ending in March 2002.

But it has vowed to return to profitability quickly by restructuring its ailing fixed-line business.

The losses from the traditional fixed-line business wiped out the profits of the mobile business, J-Phone, one of Vodafone's prize assets.

Sell-off time?

Japan Telecom will now adopt a holding company structure for the fixed line business, in a move interpreted as a precursor to a sell-off.

Shares in the group jumped last week after media reports that a buyer was already lined-up.

The group has now set itself the target of making 48bn yen in the current business year, which ends in March 2003.

The stock climbed 1.2% on Tuesday, ahead of the results announcement that came after the stock market had closed.

The news from Japan comes as parent company Vodafone reported a �13bn pre-tax loss.

The British company seized a controlling 67% stake in Japan Telecom last September.