Headquartered in Tokyo, Japan, NTT Communications, one of the largest telecommunication companies worldwide, has made public their decision to acquire 2 U.S. based cloud companies in a deal that is worth approximately $875 million. NTT already announced their decision to purchase Virtela Technology Services Incorporated for $525 million, just a short while before this second publication. To further dominate the cloud market, they have also decided to obtain an 80% stake in RagingWire for $350 million.
As Japanese communication firms experience a rapid reduction in domestic growth, NTT felt the squeeze and decided to pursue new international business. In regard to the acquisition of Virtela, Naoki Fujiwara, chief fund manager for Shinkin Asset Management Co. said, “NTT is seeking a growth engine overseas as the Japanese market is shrinking. NTT’s infrastructure business is weak, so it has saved time by buying an established business.”
Under the terms of the deal, Virtela will become a fully owned subsidiary of NTT Communications which. Virtela currently deals with clients in over 190 countries while providing them with software access online through managed networks, security and cloud services.
At the same time, NTT was looking to control the international data storage sector as it already had established data centers in the United Kingdom and Hong Kong. The 80% stake in California based RagingWire will surely help data storage expansion efforts overseas and also figures to significantly boost NTT in the global cloud marketplace.
In a statement to the press, RagingWire noted, “The acquisition will more than double NTT’s data centre space in the US, which will enable the company to respond to high demand for data centre services in North America. (This was) critical to increasing our overall capacity.”
While NTT does acknowledge the decrease in their ‘voice’ business, they expect revenue from cloud services to skyrocket to more than $2 billion by 2016.