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Japan-Update

NTT aims to ring up a quarter of its sales outside Japan

Telecommunications company partnering with Toyota, Intel in connected cars

NTT Docomo is testing its 5G communications technology to operate a self-driving bus.

TOKYO -- Nippon Telegraph and Telephone seeks to make 25% of its sales abroad by pursuing acquisitions and inviting overseas automakers to take part in its connected-car consortium, President Hiroo Unoura told The Nikkei in a recent interview.

Overseas operations accounted for about 17% of the telecommunications giant's 11.4 trillion yen ($101 billion) in group sales for the fiscal year ended March 31. Unoura seeks to expand this mainly via cloud and other information technology services.

NTT President Hiroo Unoura

"We are recognized more as an IT company than as a telecom overseas," Unoura said. If NTT generates a quarter of sales outside Japan "the impression that we are a domestic enterprise will change," he predicted.

Driving by wire(less)

Connected vehicles will form a major prong of this strategy. NTT decided in August to form a consortium in this area with such big names as Toyota Motor and Intel.

Unoura revealed plans to advance global connected-car standards governing the exchange of data between communications devices and cloud servers. "If the telecommunications format differs with each vehicle, it won't go smoothly," he said.

"If Japan is the only one left out of global standards, it would be a problem for Japanese industry," Unoura said.

NTT partner Toyota is set to make onboard communications hardware a standard feature of new cars sold in Japan and the U.S. by 2020. "We intend to continue expanding our circle of associates globally while assisting Toyota," Unoura said.

Data transfer will grow by leaps and bounds once 5G communications becomes mainstream. But penetration of connected cars could lag if network specifications -- and systems that process transfers between vehicles and cloud storage -- differ from one another. Automakers and telecom companies are working together to prevent such an outcome.

In Japan, Honda Motor announced in November a joint research effort with a telecom unit of SoftBank Group to explore connected cars utilizing fifth-generation tech. Internationally, the 5G Automotive Association came into being last year, with members including Audi and Vodafone of the U.K.

The NTT group prioritizes a global standard formed by a wide stretch of companies over a scramble for hegemony among rivals.

Shopping spree

An acquisition push is another plank of NTT's overseas platform. The group announced the purchase of South Africa's Dimension Data in 2010 and agreed last month to buy IT services provider Secure-24 of the U.S.

The company aims to pursue M&As "evenly in North America, Europe and Asia," Unoura said. "The profit margin of our domestic business is recovering, so we have the strength" to make such purchases, he explained.

NTT also aims to avoid a repeat of Verio, the U.S. web-hosting provider bought in 2000 that ended up spawning impairment losses.

Among domestic telecom competitors, SoftBank is financing global tech companies through the $100 billion SoftBank Vision Fund jointly backed by Saudi Arabia. KDDI is steadily developing offshore markets.

"It's not for me to say" what sets NTT apart from the other two rivals, Unoura said. But "the fact that we possess research and development facilities and systems is our strength," he stressed.

Unoura also indicated an intent to take on international competitors. "The answer lies in what sets us apart from global carriers," he said.

(Nikkei)

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