The British takeover marks a rare victory for a foreign firm in a country unused to takeover battles and often reluctant to cede power to overseas companies.

Two key shareholders -- Toyota Motor Corp and Itochu Corp -- said they would each sell their 17.7 per cent holdings in IDC to the British firm.

Cable and Wireless, which already holds 17.7 per cent of IDC, will now have control of the Japanese firm.

"After a comprehensive review of the purchase price and other factors our company has decided to accept C&W's takeover bid offer," a Toyota spokesman said.

An Itochu spokesman told AFP the firm would also sell its entire stake to the British concern.

After a bruising two-month bidding war NTT, Japan's former state telecom monopoly, said late Tuesday it would not submit a new offer for IDC.Thatleft Cable and Wireless with the highest offer on the table, valuing IDC at 69 billion yen ($575 million), against NTT's reported 68 billion yen offer.

"The price battle has been reaching our limit," an NTT spokesman said.Cable and Wireless will be the first foreign company to take a controlling stake in a Japanese telecom firm, although IDC is relative small fry in the international telecom world.

"It was very positive as an indicator of how Japan will fight mergers and acquisitions in the future," said Paul Saferstein, telecom analyst at Morgan Stanley Dean Witter in Tokyo.

"It was favourable to see all parties involved were looking at the pricing point and the economics of the deal. Economics historically has not been a primary driver in transactions," in Japan, he said.

IDC was not being sold cheaply, he said. The price has climbed since Cable and Wireless' first bid, which valued the firm at 62.4 billion yen.

The British company is sure to look now at moving into the domestic Japanese telecommarket, which Saferstein valued at some seven trillion yen.

"IDC really doesn't get them too far, apart from the brand name. They already have a global network," he said.

"How they go into the domestic market is the next question. That might mean forming a relationship with another carrier, but there are not many to choose from."

Major Japanese telecom players like DDI Corp and Japan Telecom Co Ltd already offer international services.

For NTT losing the battle will bring an inital setback to its debut in the international telecom market.