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NTT seen offering $3.5bn for Dell's IT services ops

TOKYO -- Nippon Telegraph & Telephone is expected to offer more than 400 billion yen ($3.52 billion) to buy Dell's IT services business in a move aimed at bolstering the Japanese company's presence abroad.

     NTT seeks to acquire the business, which consists mainly of Perot Systems and generates around $3 billion in annual revenue, through subsidiary NTT Data.

     NTT Data President Toshio Iwamoto will formally present an offer to Dell executives in the U.S. this week. NTT Data is expected to enter into exclusive negotiations on the purchase.

     Parent company NTT will help finance this bid for overseas growth. While the purchase price may change before a deal is concluded, the acquisition appears likely to go down as the group's third-largest ever.

     Founded by Ross Perot, who later ran for U.S. president, Perot Systems was bought by Dell in 2009. It designs, operates and administers information technology systems for customers including medical institutions and local governments, with particular strength in health care. NTT envisions building out from this business into financial technology, the Internet of Things, and other areas poised for growth, drawing on its own strengths.

     Dell seeks to sell off this noncore business to raise cash for a roughly $67 billion acquisition of data storage provider EMC. The U.S. manufacturer of personal computers is shifting its focus to servers, data centers and other IT infrastructure.

     NTT seeks a stronger footing in the U.S. IT services market from which to catch up with such front-runners as IBM and Accenture.

     Japan's former telephone monopoly earned just 14% of its revenue overseas last fiscal year. With demographic decline and other factors limiting the prospect of growth at home, the group has little choice but to expand abroad. It aims to raise overseas revenue by half to $22 billion by the year ending March 2018.

     Other Japanese telecom companies face a similar challenge. SoftBank Group bought U.S. wireless carrier Sprint in 2013, while KDDI has entered mobile phone markets in Mongolia and Myanmar.

     The global IT services market totaled $954.8 billion in 2014, according to U.S. technology market research company Gartner.

(Nikkei)

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