NTT on New Company Rumors: 'Nothing Is Decided'

**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from April and May.**

Nippon Telegraph & Telephone Corporation (NTT) dismissed reports that it will form a new company from three of its subsidiaries.

The South Africa-based new outlet TechCentral reported on Thursday that Dimension Data, which is owned by NTT Corp., would join NTT’s communications unit (NTT Communications). The Tokyo-based Nikkei news outlet reported over the weekend that Dimension Data, NTT Com and NTT Data would all merge together. The article claimed that the deal would likely take place in the fall and create “Japan’s biggest comprehensive provider of information technology.”

NTT in a statement Monday shrugged off the rumors.

“We hereby inform that today’s article of Nikkei Newspaper and yesterday’s article of Nikkei xTECH concerning that NTT intends to establish a new company to manage its domestic and overseas IT services within the year is not based on any announcement we have made and nothing is decided,” the company released in a statement.

An NTT America spokesperson did not respond to a Channel Partners inquiry about how the rumored merger might affect partners and customers. Its parent company will discuss its second-quarter earnings in a conference call on Tuesday, and TechCentral suggests that an announcement about the reorganization will take place in the middle of the week.

Ovum’s Mike Sapien

Mike Sapien, Ovum‘s chief analyst for enterprise services, noted that NTT Corporation has taken a “hands-off” approach with its variety of subsidiaries. Two byproducts of that strategy are brand confusion and another is a tendency of the units to compete against each other, Sapien said.

“It makes a lot of sense to centralize many of the IT and telecom assets into tighter organizations to better address the market especially in the U.S.,” Sapien said. “Customers and vendors are confused by the separate brands of NTT (NTT Security, NTT Data, NTT Communications and Dimension Data) in the U.S. market and offering many competing and overlapping services. This may give NTT Corporate the ability to make better sense of its assets, vendor relationships, capabilities and brand that they own and provide a stronger centralized approach to customers and vendors in the U.S.”

We spoke to NTT America’s Rob Westervelt two years ago about his vision for the company’s indirect sales channel.