NTT Buys Back Subsidiaries to Compete in the Global Market

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Telecom giant NTT has changed its official company name from "Nippon Telegraph and Telephone" to simply "NTT."

The enactment of the 2024 revised Act on Nippon Telegraph and Telephone Corporation paved the way for the name change.

Effective from July 1, the widely used abbreviation "NTT" was adopted as the official company name. The action follows its approval at the general shareholders' meeting and from the Ministry of Internal Affairs and Communications.

The previous name had been in use since the company's privatization in 1985. A corporate decision was made to change it because the relative weight of fixed-line telephones and other traditional services had declined, and the name had become increasingly detached from the services the company actually provides.

A Game of Catch Up

In the information and communications field, Japanese companies are lagging far behind the giant American IT companies, which are collectively known as "GAFAM" (Google, Apple, Facebook, Amazon, and Microsoft).

Hopefully, the name change will mark the genesis of a new NTT. The group hopes to harness its full strength and make its presence felt on the world stage.

NTT is looking to expand its business by developing IOWN (Innovative Optical and Wireless Network). This is a next-generation technology that combines high-speed communications with reduced power consumption. For the project, it is collaborating with NTT Data Group, a listed subsidiary of the company that manages IT services and data center businesses in Japan and overseas.

*NTT Data Group President Hiroshi Sasaki (left) and NTT Data President Masanori Suzuki shake hands in Tokyo on June 26.*

Demand for Data Centers

With the spread of artificial intelligence (AI) and other cutting-edge technologies, demand for data centers is rapidly increasing worldwide. NTT Data Group has the third-largest global share of data centers. And NTT is investing more than ¥2 trillion JPY (almost $14 billion USD) to make it a wholly owned subsidiary.

Meanwhile, the growing use of data centers and AI is expected to increase electricity demand both domestically and overseas.

At the Osaka Kansai Expo, NTT is exhibiting a server that uses IOWN to reduce power consumption. Impressively, it uses only one-eighth the level needed by conventional servers. Hopefully, the company will also adopt IOWN for its data center business to strengthen its international competitiveness.

*NTT Docomo Building in Tokyo's Chiyoda ward.*

Bringing Home the Spin-offs

Since privatization, NTT has spun off major businesses, including mobile phones. This responded to the government's desire to promote fair competition. However, this has also been one of the reasons why the company has fallen behind overseas IT competitors.

Recognizing this, NTT has been working to reintegrate its subsidiaries. It started with NTT Docomo, which became a wholly owned subsidiary in 2020. Incorporating NTT Data Group as a wholly owned subsidiary is seen as the last step in the group's restructuring.

DoCoMo has yet to become more competitive in the domestic mobile phone sector. The question now is how it should tap into the group's collective strength to increase its competitiveness in the global market. Management needs to draw up a clear strategy and then effectively implement it.

Author: Editorial Board, The Sankei Shimbun

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