JAPAN TELECOM MERGER COULD INVOLVE U.K.,U.S. FIRMS Cable and Wireless PLC <CAWL.L> and the Pacific Telesis group <PAC.N> may take part in a proposed merger of two rival firms seeking to enter Japan's international telecommunications market, a senior industry official said. Fumio Watanabe, head of a telecommunications committee with the Federation of Economic Organisations (Keidanren), told a news conference Japanese shareholders in the two consortiums agreed that the U.S. And British companies will be invited to participate in the new merged firm. The planned linkup will satisfy Tokyo's request that only one private company should enter the market. The two consortiums, <International Digital Communications Planning Inc> (IDC) and <International Telecom Japan> (ITJ), were set up in 1986 to compete with monopoly <Kokusai Denshin Denwa Co> (KDD) after the market was deregulated in 1985. Watanabe said the Post and Telecommunications Ministry wanted only one competitor for the time being because of the size of the Japanese telcommunications market and that foreign investors will only be allowed to hold a minority stake. He estimated the two foreign firms' share in the merged consortium at less than three pct and added that even the largest shareholders could own only some five pct . Cable and Wireless and Japanese trading house <C. Itoh and Co.> each have a 20 pct stake in the IDC consortium while Pacific Telesis and Merrill Lynch and Co. Inc. <MER.N> jointly hold 13 pct . ITJ is headed by a rival group of trading houses. Several firms including Toyota Motor Corp. <TOYO.T> belong to both. Watanabe said progress was being made towards a merger agreement and added that Japanese industry agreed with the government on having only one private consortium as two companies might invest "excessive" amounts. He said talks with Cable & Wireless will continue this week.