The Japanese government said on Monday it was selling 1.12m shares in Nippon Telegraph and Telephone back to the telecoms group for Y542.4bn ($4.9bn).
The sale ends Tokyo’s programme to reduce its stake in the former monopoly to the minimum of one-third it must hold.
The sale, one of the largest share sales by the Japanese government, had been anticipated after the ministry of finance said in January it had budgeted Y344.3bn from a planned sale of the shares.
However, it had not been clear at the time whether the government would offload its shares on the market or sell it back to the company.
The Japanese government has reduced its stake in NTT gradually over the years but has not sold any shares on the market since November 2000 when it sold 1.3m NTT shares at Y949,000 a share.
Since then the share price has slumped, making it difficult for the government to carry out another massive sale that would negatively affect the market.
NTT’s shares closed at Y483,000 on Monday.
In recent years, NTT has bought back its shares from the government, using funds raised by selling down its own stake in NTT DoCoMo, its highly profitable mobile phone subsidiary.
NTT has so far bought back Y672.6bn worth of its own shares from the government, not including the latest buyback.
This buyback follows the government’s sale of a $4.27bn stake in sale of its stake in Central Japan Railway during the summer.