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NTT Data, NTT Comm, Dimension Data: Merging to Create $38B IT Services Giant?

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Nippon Telegraph & Telephone Corp. is set to merge three of its subsidiaries -- NTT Data, NTT Communications and Dimension Data -- into a new, massive IT company that will offer everything from IT consulting to cloud and communications. Combined revenues for the three units were $37.8 billion in 2017.

The business combination, expected to surface as soon as fall 2018, was first reported by Nikkei. The resulting company will likely be Japan's largest IT firm -- and the company's influence will extend worldwide.

A Closer Look: Dimension Data, NTT Data, NTT Communications

Ahead of the merger, the three NTT subsidiaries have the following scale and focus areas:

  • Dimension Data: Founded in 1983 and headquartered in South Africa, the $8 billion company employs 28,000 people across 47 countries.  Dimension Data's portfolio includes everything from IT consulting to digital transformation, cloud, managed and security services.
  • NTT Data: Founded in 1988 and headquartered in Japan, the $14.6 billion company (FY 2016 revenues) is an IT service provider with business operations in more than 50 countries. The company had 120,000 employees as of 20216. Key areas of expertise include everything from consulting and systems development to outsourcing.
  • NTT Communications: Founded in 1999 and headquartered in Japan, the company has offices in 41 countries and about 22,000 employees worldwide. The company offers cloud, network and data center services, along with consulting, application management and communication expertise.

Those three firms currently are part of NTT Group -- which also includes NTT Security (a Top 100 MSSP) and NTT Docomo (mobile). We don't know if the merger plan mentioned above includes the security and mobile assets.

According to Nikkei, NTT 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."

ChannelE2E has not independently confirmed the report. We've reached out to NTT for comment.

M&A Remains Hot

M&A activity across IT services, software and other technology markets is on pace to set a record in 2018, according to first-half estimates from Jegi. Several trends are driving the M&A activity -- including:

  • Aging baby boomers who are looking to sell their SMB businesses.
  • Midmarket companies seeking to scale.
  • Enterprise companies striving to accelerate digital transformations.
  • Private equity firms seeking to invest massive war chests from money they've already raised.
  • Tax cuts that leave companies flush with cash.
  • An urgent need to shift to managed, cloud and OpEx recurring revenue services.
Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.