JAPAN ACTS TO COOL U.S. ANGER ON TELECOMS DISPUTE Japan has sought to assure the U.S. It is not trying to keep foreign equity in a new Japanese international telecommunications company below the legal limit of 33 pct, a Post and Telecommunications ministry official said. In a letter sent yesterday, Postal Minister Shunjiro Karasawa told U.S. Commerce Secretary Malcolm Baldrige that the ministry does not object to foreign participation by those U.S. Firms that have expressed interest. But it does oppose any foreign international telecommunications carrier having a management role, he said. The move appears to be an effort to dampen U.S. Opposition to the planned merger of two rival firms seeking to compete with the current monopoly <Kokusai Denwa Denshin Co Ltd>, and to reduce the share held in any KDD rival by U.K.'s Cable and Wireless Plc <CAWL.L>, industry analysts and diplomats said. One of the rival firms, <International Telecom Japan Inc> (ITJ) has offered a stake in the company to eight U.S. Firms including General Electric Co <GE>, Ford Motor Co <F> and Citibank NA <CCI), and two European companies, ITJ president Nobuo Ito said yesterday. Cable and Wireless holds a 20 pct share in a second potential KDD rival, <International Digital Communications Planning Inc>, along with <C Itoh and Co>. Merrill Lynch and Co Inc <MER> and Pacific Telesis International Inc <PAC>, both of the U.S., Hold three and 10 pct shares respectively. The Post and Telecommunications Ministry has urged the merger of the two firms because it says the market can only support a single KDD competitor. It has also rejected management participation by an international common carrier, such as Cable and Wireless, arguing no international precedent for such a stake exists. Cable and Wireless Director of Corporate Strategy, Jonathan Solomon, yesterday again told ministry officials he opposes a merger proposal that would limit Cable and Wireless' share to less than three pct and total foreign participation to about 20 pct, the ministry official said. Channeling the U.S. Firms into a single merged competitor would most probably result in diluting Cable and Wireless' share, industry analysts said. "Eventually the ministry will get what it wants -- one combined competitor," Bache Securities (Japan) Ltd analyst Darrell Whitten said. "Political ... Leverage may get the total foreign share up to a certain amount, but you won't find any one company with an extraordinarily large holding," Whitten said. Western diplomatic sources were more blunt. "They (the ministry) don't want to see Cable and Wireless with a reasonable share and they think of all sorts of strategies to reduce that share," one said. Fumio Watanabe, a senior Keidanren (a leading business organization) official who has been trying to arrange the merger, will present a new outline of his proposal on Thursday, the ministry official said.