Under the agreement, AT&T and BT will each take a 15 per cent stake in Japan Telecom. Both companies will appoint executive and non-executive directors in the company and will be offered senior management positions.

The deal is part of a strategic and operational partnership aimed at enhancing Japan Telecom's ability to deploy new services and technologies to serve customers in Japan, the companies said in a press release.

Japan Telecom will also become the sole distributor of AT&T and BT global venture branded services and a preferred supplier of services to the global venture. The alliance will cover markets in the US, Europe and Japan.

"The agreement will strengthen further the company's position in the Japanese market with the backing of two such strong brands as AT&T and BT," Koichi Sakata, chairman of JapanTelecom, said in a news release. "It will also give Japanese customers access to exciting new products and services that the two companies' new proposed global venture will bring."

This is the first AT&T-BT joint investment since the two companies announced an $11 billion joint venture for their international operations in July. That Anglo-American venture has yet to receive final regulatory approval.

Japan Telecom had been looking for a partner to survive tough competition, with many Japanese telecom companies cutting rates for domestic and international calls.