NTT Group emerges stronger from reorganization

After undergoing a comprehensive process of reorganization, the giant Nippon Telegraph and Telephone (NTT) Corp. of Japan has emerged stronger and better positioned to operate in the highly competitive telecommunications sector, not just in Japan but also internationally.

In July 1999, NTT was reorganized into a holding company infrastructure that fully owns, among other business units, two regional companies -- NTT East Corp. NTT West Corp. -- and one long-distance company, NTT Communications.

For its part, NTT Communications is currently pursuing the creation of its global business network through investments and business participations in overseas carriers and telecoms service providers in Asia as well as North America. Among its principal overseas projects in Asia, the young company already has sizable investments in Singapore, and the Philippines.

The new business structure means that the inherent strengths of the old NTT have been completely redefined and effectively optimized as the $6.5 billion organization with 224,000 employees adapts to the realities of the new operating environment brought about by rapid globalization, deregulation, and heightened competition.

The holding company is now able to promote highly focused research and development activities and disseminate these results, unify and coordinate the activities of each subsidiary, and actively promote Group operations. The good news from the transformation is that NTT Communications has been spun off to operate as a fully private corporation providing not only inter-prefectural telecoms services but international business as well.

According to NTT president Jun-ichiro Miyazu, the reorganization of NTT has made it possible "to maximize the value of the NTT Group as a whole," Miyazu explains that the reorganization has four principal merits.

"First, by becoming a group centered around a pure holding company, we can plan a unified group strategy and make the most efficient use of our management resources, deriving considerable synergy with our subsidiaries."

"Second, now that all our Group companies are focused on specific operations, with each one being its own profit center, the incentive to boost earnings is much improved and they will be able to respond swiftly and more effectively to changes in the business environment."

"Third, we will be able to concentrate our research and development firepower and the results of R&D will more easily flow to and benefit the entire Group."

"Finally, with our entry into the international telecommunications business, the reorganization has opened up the opportunity to provide our customers with a seamless, global, end-to-end service."

As early as April 1998, NTT invested in US-based Verio, an Internet service provider as a first step toward management participation in global and domestic US IP services. In the same year, NTT's Arcstar Managed Frame Relay Service connected with IBM's frame relay network, and also started providing international ATM (asynchronous transfer mode) service. Furthermore, it connected Japan, the US mainland and Hawaii to provide Pan-Pacific multimedia communications, and also worked to open up frame relay services between Japan and China through Beijing Telecom NTT Engineering Co.

In 1999, a major step was taken to collaborate with US-based AT&T in the fast-growing market for corporate network solutions to serve large and mid-size multinational businesses and industries.

In the Asia-Pacific region, NTT is providing telecoms technology and services through licensees in Singapore. It also has investments in Sri Lanka Telecom. Through submarine cable projects, NTT Communications is aiming to build a global network that will bring its presence to the Americas, Europe, Asia and Oceania.

The words of NTT Communications president Masanobu Suzuki says it all: "We put customer benefit and customer value first, both in our traditional domestic services and in our new international services."