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NTT to combine 3 units to create Japan's largest IT company

The telecom group aims to take on IBM and Google with the combination

The NTT group is taking on its biggest reorganization since 1999 to capture growing demand for data services. (Photo by Yumi Kotani)

TOKYO -- The Nippon Telegraph & Telephone group will launch a new company to oversee three major communications and data subsidiaries, forming Japan's biggest comprehensive provider of information technology, Nikkei has learned.

The Tokyo-based group will transfer shares in subsidiaries NTT Data, NTT Communications and South Africa-based Dimension Data to a new entity to be set up as early as this fall. The resulting company will provide corporate clients with a wide range of services, including cloud storage and data processing. The group envisions merging the units into a single company later.

Data-related services have become a key source of revenue for many businesses, thanks to demand from the "internet of things" and artificial intelligence. NTT hopes that bringing together NTT Data's expertise in corporate information systems and NTT Communications' ability to build information networks will enable it to take on global competitors like IBM and Google.

NTT is also considering consolidating the group's retail services under mobile phone provider NTT Docomo. Those plans would see Docomo's fiber-optic internet network "docomo Hikari" merged with a similar fiber-optic service under NTT Communications called "OCN Hikari."

That realignment would place all corporate clients under the new IT services company to be created in the fall.

NTT last underwent a major reorganization in 1999 when it became a holding company, splitting domestic telecom business between two subsidiaries and setting up NTT Communications for international operations. The group acquired Dimension Data in 2010 to expand its footprint overseas.

NTT Data, NTT Communications and Dimension Data together rang up sales of 4.2 trillion yen ($37.8 billion) in fiscal 2017, surpassing rival Fujitsu.

Despite efforts to expand operations outside Japan, NTT makes less than 20% of its sales abroad. Jun Sawada, who became president in June, sees major organizational change as key to boosting the group's competitiveness across the globe.

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