Japan's top telecommunications provider Nippon Telegraph and Telephone Corp. plans to make its publicly listed subsidiary NTT Data Group Corp. a wholly owned unit to boost the competitiveness of its overseas businesses, which are mainly run by the unit, sources close to the matter said Thursday.
Provided by Kyodo News
NTT, which already holds around 58 percent of NTT Data Group shares, will purchase the rest of the unit's stock in a tender offer, the sources said, adding the total investment for the reorganization will top 2 trillion yen ($14 billion). The unit will then be delisted from the Tokyo Stock Exchange.
The purchase is aimed at speeding up decision-making by ending the situation where the parent company and subsidiary are both publicly listed with separate shareholder accountabilities, they said.
NTT said Thursday it will vote on the plan at a board meeting later in the day. NTT Data Group runs businesses related to information technology services and data centers, which are in high demand amid the expanded use of generative artificial intelligence technology.
The move is the latest by NTT, whose top shareholder is the Japanese government with around one-third of its shares, to reorganize its operations in response to changing market conditions, with demand for landlines decreasing but that for IT services expanding.
Turning NTT Data Group into a wholly owned unit would be the largest investment by NTT since it spent around 4 trillion yen to purchase all shares of mobile phone carrier NTT Docomo Inc. in 2020.
The predecessor of NTT Data Group spun off from NTT in 1988. It was listed on the Tokyo Stock Exchange in 1995 and assumed its current company name in 2023. It booked revenues of 4.64 trillion yen and a net profit of 142.45 billion yen in the business year that ended in March.