Nippon Telegraph & Telephone Corp. (NTT), the largest integrated telecom operator in Japan, has received a shot in its arm to boost its cloud computing and integrated communications services business. Last July, NTT had taken a strategic move to acquire South Africa-based leading global IT solutions firm Dimension Data for a consideration of about $3.23 billion. Recently, the company announced that it has received approval from 93.42% of the shareholders of Dimension Data for this acquisition.
We believe NTT will try to integrate the Dimension Data business with NTT Communications, which offers IP VPN, data center and network security services to several large and geographically diversified business enterprises. Dimension Data has over 6,000 customers in 49 countries whereas; NTT Communications has more than 3,000 global customers throughout the world.
We believe the merged entity will become an international giant virtually offering a complete suite of integrated communications and IT services to any enterprise in any part of the world. As of now, NTT Communications has a solid presence in South-East Asia, Central & Eastern Europe, and East Coast of the U.S. Dimension Data is concentrated mainly on the West Coast of the U.S., Latin America, Western Europe, Africa, the Middle East, Australia, and the Indian subcontinent.
The acquisition of Dimension Data will give NTT the necessary scale and technology to formidably compete with other giant cloud computing firms, such as AT&T (T), Verizon Communications Inc. (VZ), BT Group Plc. (BT), Vodafone Group Plc. (VOD) and Orange.
We maintain our long-term Neutral recommendation for NTT. Currently it is a short-term Zacks #3 Rank (Hold) stock.
NIPPON TELE-ADR (NTT): Free Stock Analysis Report
Zacks Investment Research
