NTT Headed for India - Analyst Blog

The severe economic recession and maturity of the Japanese telecom market have compelled Nippon Telegraph & Telephone Corp. (NTT) to look at other geographies. Industry sources say the company has started negotiations with Patni Computer Systems, the sixth largest software services exporter of India , to acquire 66% stake in the latter. Entry into India will unlock the $60 billion IT and ITES (IT enabled services) market to Nippon. In the last reported quarter, Patni generated approximately $166.75 million in revenue and around $33.7 million of net profit. 

Nippon, the largest telecom operator in Japan is facing strong competition in the Japanese wireless market and from the potential impact of low-cost, fixed-line services, such as “voice-over-Internet protocol" (VoIP). In order to maintain its leadership position, the company has taken various measures in the domestic telecom market and also decided to capture selected international opportunities to drive long-term growth. 

India is not a completely new field for Nippon. The company already has an agreement with HCL Technologies, another major software developer. Recently, NTT DoCoMo (DCM), the wireless subsidiary of Nippon, acquired a 26% stake of Tata Teleservices Ltd. for approximately $2.7 billion. Tata Teleservices is the sixth largest wireless carrier in India with more than 29 million subscribers. The merged entity known as TataDoCoMo has started rolling out its GSM network in select Indian metropolises and also applied for 3G mobile licenses.
 
Besides India, NTT Communications, the long distance and international phone businesses division of the parent Nippon, has consolidated its existing Atlanta POP (point-of-presence) in the U.S. as the main hub for global IP-VPN network. This facility provides extensive international private networks to various enterprises using Nippon’s broadband backbone.

Recently, NTT Communications acquired Integralis AG, a German firm specializing in IT security services. This will help the company to establish IP-VPN hubs in London and Paris in the European region. The company is also looking for new ventures in the Latin American region where it is expecting an expansion of the broadband market.
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