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NTT shrugs off Brexit to make UK base for global expansion

Japanese telecom feels favorable taxes and talent make London ideal HQ

NTT Ltd. opened for business on July 1 in London and will eventually employ about 40,000 people in over 70 countries and regions. (Photo by Minoru Satake)

LONDON -- Britain's likely exit from the European Union may have convinced many Japanese companies to flee the U.K., but not telecommunications giant NTT Corporation.

It is bringing 28 of its international businesses under one roof, NTT Ltd., with the $11 billion entity to be headquartered in London.

"Brexit is a negative, but NTT Ltd. is not a manufacturer or logistics company," Jun Sawada, president and CEO of parent NTT Corp. told Nikkei Asian Review in an interview. "Brexit will not have a direct impact on our business, and we consider any Brexit impact to be temporary."

Sawada explained that for companies that relied on tariff-free trade, "a U.K. outside the EU may not be attractive, but as a tech company, that is the wrong view."

One of the world's biggest telecoms, NTT's reach extends into cybersecurity, big data, mobile services and other fields. The Japanese conglomerate will use its London office as a base to solidify and expand overseas operations.

British Prime Minister Theresa May welcomed the news, commenting that, "Britain has a long standing and proud reputation as a global tech leader, and it's fantastic that NTT Ltd. has chosen London" for its overseas headquarters.

When British Foreign Secretary Jeremy Hunt -- now a candidate for prime minister -- went to Japan recently, he visited NTT Corporation headquarters.

The corporation had shortlisted seven cities other than Tokyo for its overseas headquarters.

"We based our assessment on tax, regulations and talent. Regardless of Brexit, as a business environment, London was number one," Sawada said. London's global appeal, rich talent pool and digital mindset all factored significantly into the decision.

Other big tech companies have also recently announced plans to expand their U.K. operations. Among them is Facebook, which will open its third London office, creating 500 new technology jobs in the process.

Sawada suggested that the U.K.'s relatively open approach to data -- compared to the EU's strict data protection and privacy regulations -- makes it attractive for tech companies. "Looking at the blueprints and structures [for using data] that are likely to develop in the near future, Brexit will be a plus for the U.K.," he said.

The CEO also noted that if Brexit resulted in the U.K. embracing a more open information system similar to Japan's 'free flow of data with trust,' he would welcome the change.

Uncertainty has plagued Britain since Prime Minister May announced her resignation and a leadership tug of war broke out in her Conservative Party. While the date for Brexit has been postponed to October, parliament continues to wrangle over terms of the deal.

Sawada pointed out that a no-deal Brexit could be problematic, as it would leave the U.K. without any formal agreements with its European neighbors. "What would be an issue is if, for example, they stop the freedom of movement of people, and do not solve the confusion for a long time," he said. "If it is a no-deal Brexit, then it is important for the U.K. to be prepared."

The formation of NTT Ltd., which consolidates the overseas operations of NTT Communications, Dimension Data, NTT Security and other subsidiaries, is "a very big step" for the conglomerate's future strategy, Sawada said.

NTT Ltd. will employ around 40,000 people in over 70 countries and regions. It is aimed at making the conglomerate less reliant on its Japanese mobile communications business, in which wireless unit NTT Docomo generates roughly 60% of group operating profit.

As the U.S. and China continue their standoff over Huawei, Sawada said, "Considering geopolitics and alliances, NTT will prioritize the U.S. in our approach."

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