ANALYST COMMENT

 

NTT envisages ICT powerhouse focused on global business, says GlobalData

Following the announcement on 7th August 2018 by Nippon Telegraph and Telephone Corporation (NTT Corporation) that it plans to merge NTT Communications, Dimension Data, NTT DATA, NTT Security and NTT Innovation Institute to create a $38bn global enterprise ICT powerhouse—NTT Inc—by the third quarter (Q3) of the fiscal year ending 31 March 2019,

Siow Meng Soh, Technology Analyst at leading data and analytics company GlobalData, says:

“The integration elevates NTT’s position as a global enterprise ICT powerhouse encompassing data centers, application and IT services, managed security, R&D and systems integration (SI) under one roof. Post integration, NTT Inc will have a broad portfolio with extensive network coverage, more than 140 data centers, six European markets, and the US (West Coast, East Coast) with facilities in Toronto, Canada; Sao Paulo, Brazil; and Johannesburg, South Africa. The new entity will have 163,000 employees and $38bn in revenue with 53% of business coming from outside the domestic market.

“The new entity gains access to the security practice, which was borne from the previous acquisitions of Integralis, Secode and Earthwave. It has approximately 1,500 employees and security operations centers in 10 markets. With cloud, the new company will be able to offer a strong global capability from approximately 10 countries and 18 locations. It also stands to gain a strong unified communications and collaboration (UCC) capability, an area where Dimension Data led the group as well as many competitors.

“The integration will over time remove some grey areas and ambiguity and improve efficiencies in the way its security and cloud businesses operate. For example, while it is sensible to consolidate the security capabilities under NTT Security, the three entities—NTT Com, NTT DATA, and Dimension Data—need to maintain and build separate sales and consulting capabilities to be successful in the market.

“However, there are many challenges with integration. With the movement of people, office locations and setting up business processes, there will also be the balance between stabilizing the business vs. customer acquisition. As a new entrant, NTT Inc does not have the same brand equity as the other pillars. This is exacerbated by the fact that each entity has made many acquisitions in the past, in different markets and they continue to operate with their own brands.

“Very few companies have been able to pull off both being a telecom provider, which is the core of NTT Communications, and a network, software and systems integrator, which is more the strength of NTT DATA and Dimension Data. NTT Corporation has taken another major step to foster collaboration across the three entities. However, it is maintaining the management structure of NTT DATA, management autonomy, and brand for now. This shows that the company recognizes the difficulties in trying to achieve full integration in one go. As a result, the integration of NTT DATA will take a longer time since it is retaining the current management and brand.”

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