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June 25, 2020

NTT Corporation
NEC Corporation

Alliance for Joint Research and Development and Global Rollout of ICT Products Utilizing Innovative Optical and Wireless Technologies

NTT Corporation (headquartered in Chiyoda-ku, Tokyo: Jun Sawada, President and CEO; "NTT") and NEC Corporation (headquartered in Minato-ku, Tokyo: Takashi Niino, President and CEO; "NEC") today agreed to form a capital and business alliance for the purpose of joint research and development and the global rollout of ICT products utilizing innovative optical and wireless technologies. The companies aim to improve their corporate value by expanding sales of products applying jointly developed technologies through this alliance. In addition, through these initiatives, the companies will contribute to enhancing industrial competitiveness of Japan and further ensuring safe and reliable communication infrastructure, playing leading roles in working with numerous communication equipment vendors.

1. Background

Looking ahead into the world of Society 5.0 and Post COVID-19, social and industrial digital transformation (DX) is accelerating, and communications infrastructure, which is the foundation for connecting vast amounts of data that connect people and things, is expected to increase capacity and become more sophisticated. This communication infrastructure is also required to be more safe and reliable as a core infrastructure. Such trends are common in countries around the world, and various players have entered the field as they conduct business activities globally.

Under these circumstances, NTT is promoting innovative research and development that promotes transformation of the world based on its medium-term management strategy, "Your Value Partner 2025". Specifically, NTT has launched its IOWN initiative as a future research and development vision, and is working with global partners on innovation through, among others, developing game-changing technology.

NEC is focusing its efforts on Solutions for Society, and creating new business models and services through co-creation with various partners, utilizing network technologies such as 5G and digital technologies, including AI, biometrics and security.

Through this alliance, NTT and NEC will jointly develop cutting-edge technologies and globally competitive products that utilize both companies' strengths and originate from Japan, as they collaboratively form an optimal sales framework in order to further roll out such technologies and products to the global market.

2. Overview of Capital and Business Alliance

To promote open architectures such as O-RAN and to realize the IOWN initiative, NTT and NEC will set up a research and development structure at an early stage of their alliance, and will focus their efforts on the following objectives.

(i)By development and utilization of cutting-edge technologies, the companies will develop and sell globally a compact Digital Signal Processing ("DSP") circuit - featuring both world leading performance and low power consumption, as well as quality that meets market needs and greater value from the customer point of view - plus optical transmission equipment incorporating this DSP circuit.

(ii)Working with global operators and communication equipment vendors, the companies will promote O-RAN Alliance specifications while developing and selling globally competitive products compliant with such O-RAN specifications. In the future, the companies aim to attain top global market shares under NEC's leadership. Through development, the companies will realize ultra-high speed processing, ultra-low latency and ultra-low power consumption in these products at a level that has never been attained before, by applying innovative devices utilizing optical and wireless technologies to base station equipment.

(iii)The companies will develop innovative technologies and optical/wireless devices contributing to the realization of NTT's IOWN initiative. As part of the development, the companies will enable greater capacity, higher functionality and lower costing submarine cable systems, large capacity, low latency and automatic/autonomous space communication, and more sophisticated technologies to ensure infrastructure network security.

Since the joint research and development ranges over various areas and requires medium-to-long-term research and development, NTT and NEC have determined that it is important to create an amicable and cooperative relationship by which both companies are able to enjoy long-term benefits, to set up a joint research and development structure at an early stage of their alliance, and to aim for the acquisition of and acceleration in efforts to develop products, services and intellectual properties that can gain a global competitive advantage; therefore, NTT will acquire 13,023,600 shares of NEC's common stock through the issuance of new shares and disposition of treasury stock by way of third-party allotment conducted by NEC (4.8% of its outstanding shares after the third-party allotment).

3. Overview of Parties to Capital and Business Alliance

(1) Overview of NTT

(i) Company Name NTT Corporation
(ii) Head Office 5-1, Otemachi 1-Chome, Chiyoda-ku, Tokyo
(iii) Representative Jun Sawada, President and CEO
(iv) Content of Business Formulation of management strategy for the whole NTT Group and promotion of basic research and development
(v) Stated Capital JPY 937,950 million
(vi) Establishment April 1985

(2) Overview of NEC

(i) Company Name NEC Corporation
(ii) Head Office 7-1, Shiba 5-chome, Minato-ku, Tokyo
(iii) Representative Takashi Niino, President and CEO
(iv) Content of Business Public Solutions Business, Public Infrastructure Business, Enterprise Business, Network Services Business, System Platform Business and Global Business
(v) Stated Capital JPY 397,199 million
(vi) Establishment July 1899

4. Schedule

(i) Execution Date of the Capital and Business Alliance Agreement June 25, 2020
(ii) Date of Issuance of New Shares and Disposition of Treasury Stock by way of Third-Party Allotment July 10, 2020 (scheduled)

5. Supplemental material


NTT Corporation

Public Relations Office

NEC Corporation

Public Relations Office, Corporate Communications Division

Information is current as of the date of issue of the individual press release.
Please be advised that information may be outdated after that point.