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The ruling Liberal Democratic Party (LDP) in Japan is considering the possibility of scrapping a law that prevents the complete privatization of Nippon Telegraph & Telephone Corp (NTT). This move could potentially lead to the government selling its remaining stake in the company, worth over 4 trillion yen.

The LDP is discussing whether the proceeds from selling the government’s NTT stake should be used to fund planned increases in defense spending in the upcoming years. A project team within the party has been assigned to review this matter, and their recommendations are expected by November at the earliest.

Currently, the government holds a 33 percent stake in NTT. The LDP estimates that selling the stake over a 25-year period could generate approximately 200 billion yen annually, without significantly affecting the market’s demand and supply balance for NTT shares.

Akira Amari, the former LDP secretary general who chairs the discussion group, mentioned during the meeting that he has been tasked with reviewing the scrapping of the NTT law. This law requires the government to hold at least one-third of the shares in the company, which was privatized in 1985.

Amari believes that reducing the government’s influence on NTT’s operations through share sales would enhance the company’s international competitiveness. However, this discussion comes at a time when the government is planning a five-year revamp of its defense posture, which will require significant funding.

Prime Minister Fumio Kishida’s government aims to increase the country’s annual defense budget to 2 percent of its gross domestic product by fiscal 2027, which would require a combined spending of 43 trillion yen. However, the government has not yet clarified how this expansion will be funded during that period.

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