NTT to Fully Exit NEC, Booking ¥189 Billion Gain

NTT announced it will fully divest its 4.90% stake in NEC, a move expected to generate an approximately ¥189 billion gain on its individual financial statements in the fiscal year ending March 2027. The sale, conducted through a combination of off-market transactions with institutional investors and participation in NEC’s tender offer, marks a strategic shift following a five-year collaboration.

The decision to exit NEC stems from a reassessment of NTT’s investment portfolio after a period of collaborative development in areas like O-RAN, IOWN/APN, and submarine cables. NTT and NEC have established a working relationship that does not require a capital tie-up to continue fostering these partnerships. The company intends to sell 32,559 thousand shares via market transactions and another 32,559 thousand shares through NEC’s share buyback, priced at ¥3,462 per share.

Despite the significant size of the anticipated gain, NTT clarified that its consolidated net income will not be affected. The stake in NEC is categorized as a financial asset measured at fair value through other comprehensive income, meaning the gain will be recognized as a special profit on NTT’s individual accounts rather than flowing through to the consolidated bottom line. The projected ¥189 billion figure is based on current estimates and is subject to change depending on the final sale price and other conditions.

The sale of the NEC stake represents a material portfolio adjustment for NTT. While the transaction will provide a boost to individual company profits, the decision highlights a shift in NTT’s investment strategy, prioritizing continued collaboration over direct capital ownership.