Japanese conglomerate Nippon Telegraph & Telephone (NTT), will take a 5% stake in compatriot electronics company NEC as part of an agreement to foster the development of 5G technology in Japan.
The agreement, estimated at 60 billion yen ($562 million), will make NTT the third-largest shareholder in NEC.
The two companies are expected to work on equipment for 5G core networks. Under the terms of the deal, NEC also will collaborate on NTT’s proposed Innovative Optical and Wireless Network, or IOWN, high-speed broadband infrastructure, according to published reports.
To promote open architectures such as O-RAN and to realize the IOWN initiative, NTT and NEC said they will set up a research and development structure at an early stage of their alliance.
In a statement, the companies said they will develop and sell globally a compact Digital Signal Processing (DSP) circuit plus optical transmission equipment incorporating this DSP circuit.
“The companies will also work with global operators and communication equipment vendors to promote O-RAN Alliance specifications while developing and selling globally competitive products compliant with such O-RAN specifications. In the future, the companies aim to attain top global market shares under NEC’s leadership. Through development, the companies will realize ultra-high speed processing, ultra-low latency and ultra-low power consumption in these products at a level that has never been attained before, by applying innovative devices utilizing optical and wireless technologies to base station equipment,” the statement reads.
NTT and NEC plan to make a joint effort at expanding their presence in the global market for wireless communications networks and will promote cooperation on developing future communication technologies beyond 5G
NEC also expects to use the agreement to accelerate its expansion overseas.
NEC has recently inked a deal with Japanese mobile network operator Rakuten Mobile, a subsidiary of Japanese e-commerce giant Rakuten, to jointly develop the containerized standalone (SA) 5G core network (5GC) to be used in Rakuten Mobile’s fully virtualized cloud native 5G network.
Under the terms of the agreement, Rakuten Mobile and NEC will jointly develop the containerized SA 5G mobile core to be made available on the Rakuten Communications Platform (RCP).
The two companies will collaborate to build a Japan-made 5GC, based on the 5GC software source code developed by NEC. Following the launch of its non-standalone (NSA) 5G service in 2020, Rakuten Mobile aims to launch its SA 5G service in Japan in 2021.
In March, NEC started to ship the first 5G radio unit it produced under a development partnership with Rakuten Mobile, enabling the operator to begin construction of its 5G network. Rakuten Mobile had selected NEC as its 5G equipment provider in June 2019.
Japanese carriers are in the process of expanding 5G infrastructure across the country. Mobile network operator NTT DoCoMo expects to attract 2.5 million subscribers in the 5G segment by March 2021. The telco, which launched 5G service in March, said it signed up 14,000 5G users at end-March.
The carrier’s 5G coverage is forecast to increase from current 500 base stations in 150 locations to 10,000 sites by June 2021 and 20,000 by March 2022. By March 2021, the Japanese carrier expects to reach 500 cities with its 5G technology.
Rival operator KDDI had also launched commercial 5G services in March in 15 prefectures across the country.The telco also said that it aims to expand its 5G offering nationwide in the summer.
KDDI also announced plans to install 10,000 base stations by the end of March 2021 and another 10,000 by the end of March 2022.
Meanwhile, SoftBank said it will initially provide 5G services in certain areas of Tokyo, Chiba, Osaka, Ishikawa, Aichi, Hiroshima, and Fukuoka prefectures
SoftBank also confirmed it aims to install over 10,000 5G base stations by the end of March 2023.