KDDI's J:COM purchase comes under regulatory scrutiny

Japan's KDDI move to improve its growth prospects by buying a big stake in Jupiter Telecom (J:Com) has hit a speed bump as news broke that financial regulators are looking into whether its plan is legal.

If regulators find there has been any wrongdoing, KDDI may have to pay an $884 million fine. Since KDDI's pending acquisition would make it the largest shareholder in J:COM, it's required to make a public offer for the shares and get shareholder approval.

This latest development comes only weeks after KDDI put a $4 billion bid on the table to acquire a 38 percent stake in J:COM from Liberty Global. KDDI's impending purchase of a large stake in J:COM is obviously strategic for two reasons: not only would it enable them to reach 3.2 million residential subscriber homes, but have access to another fiber network besides incumbent provider NTT.   

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