NTT Com puts cards on table with cloud buys

David Molony/Ovum
01 Nov 2013

NTT Communications has surprised the global services industry with two acquisitions in the US. The deals bring the Japan-owned enterprise services provider’s spending in ICT services to nearly $2bn in less than two years, and place it in the vanguard of telco cloud network provisioning for enterprises.

NTT Com announced this week that it has reached agreements to take control of Virtela Technology Services of Denver, Colorado and RagingWire Data Centers of Sacramento, California. These acquisitions are important for the whole sector, and not just because together they make a big splash. NTT Com is bidding nearly $1 billion – $525 million for 100% of Virtela and $350 million for 80% of RagingWire – for another stake in the global cloud services infrastructure.

Ovum estimates that the company has spent $2 billion in a series of ICT-related acquisitions in the last 22 months alone. That is the biggest telco outlay in cloud service assets since Verizon’s $1.4 billion acquisition of Terremark in 2011.

The nine acquisitions NTT Com has made, starting with Netmagic Solutions in India in January 2012 and extending across Europe and the Americas, represent arguably the biggest expansion of global ICT services by a tier-1 telco since BT Global Services made 30 deals between 2005 and 2010. And NTT Com’s tally does not include Dimension Data, a separate purchase by its parent domestic telco in 2010.

Its latest acquisitions are a statement of intent

NTT Com’s acquisitions are important because they make clear its intention to lead the way in telco cloud provisioning for enterprises. It is taking on the rest of the global telecoms industry on its own terms.

NTT Com was, for a time, a maverick global telco, slow to develop its global MPLS platform, strong on IPv6 but suspicious of Ethernet, preferring Juniper systems to Cisco, and all with homegrown security. Three years ago it was building its own applications for IP telephony and videoconferencing. Now it has all the vendors on board, owns Microsoft and SAP integrators in Europe and the US, and has developed its security portfolio in the time-honored way – by buying established independent vendors such as Integralis and rebranding them.

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