(Bloomberg) -- A project team in Japan’s main ruling party is set to propose that controls on foreign ownership of Nippon Telegraph and Telephone Corporation be retained, even as it calls for abolishing a law regulating the former state monopoly.

The Liberal Democratic Party group will propose that the NTT law be rescinded in 2025, lawmaker Takayuki Kobayashi told reporters Friday. It is also set to advise that the government no longer be legally bound to hold one third of the shares, but will stop short of urging a selloff, Kobayashi said.

The group had begun discussions about the telecommunications giant, in which the government holds shares currently worth about ¥5 trillion ($33.8 billion), as Prime Minister Fumio Kishida sought ways to fund the country’s most ambitious military build-up since World War Two. Its focus then shifted to the overall legal status of the company. 

The one-third ceiling on foreign holdings should be abolished, but controls on investment from overseas could be maintained via the Foreign Exchange Law, Kobayashi said. 

The group’s leader, Akira Amari, said the plan would open the way for full privatization. He has in the past raised the possibility of selling the shares gradually over a period of decades to avoid affecting the market. 

Disposing of the shares would deprive the government of the regular income from dividends, and would provide only a temporary source of funding for the ramped-up defense spending. 

Amari has also suggested the funds gained from any sale should be plowed into improving competitiveness in the communications industry. 

Japan Ruling Party to Propose Abolishing NTT Law in 2025: Nikkei

Rival telecom firms including SoftBank Corp., KDDI and Rakuten Mobile in October urged the government not to abolish the law, citing concerns over fair competition given that NTT owns assets carried over from its previous status as a state-owned company.

The LDP group will also propose that a ban on appointing foreign directors to NTT be abolished to ease the way for overseas cooperation. Its proposal is set to be submitted for approval to the party’s policy research council board and subsequently to the premier. 

--With assistance from Isabel Reynolds.

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