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Japan's NEC stakes claim in Philips' European business

Japanese electronics maker NEC said yesterday it will merge its office communications-equipment business in Europe with that of Dutch giant Philips and take a controlling stake in the new company.

In a move aimed at boosting its market share in Europe, NEC will take a stake of about 60 percent in the new business and Philips the remainder, the Japanese company said in a statement.

The new firm, which will employ about 900 people, will also include Philips' company communications activities in the Middle East and Africa.

Investment

NEC declined to say how much it would invest in the new company but the Nihon Keizai Shimbun reported earlier that the Japanese giant would spend up to three billion yen (US$25 million) including the stock purchase.

"This joint venture will strengthen NEC's global position in the telecom market and we are expecting to grow sales of Univerge solutions to global customers on top of the continued sales of the Philips portfolio," said Kazuo Tsuzuki, a vice president at NEC.

"It will support NEC's growth ambition by using the strong market position of Philips' Business Communications [operations] in the European enterprise communications market," he said.

NEC, the fifth-largest player in the sector with a global share of seven percent, aims to narrow the lead of rivals such as Canada's Nortel Networks, Germany's Siemens and US firm Avaya which all have 15 percent to 20 percent of the market.

The combined global market share of NEC and Philips comes to 10 percent, the Nihon Keizai business daily said.

Major player

NEC is already a major player in the office communications-equipment market in Asia, where it has a share of 27 percent, and in North and South America where it controls 10 percent to 12 percent, it said.

However, it has yet to make significant inroads in Europe, where it has a share of only about 1 percent.

NEC has been supplying office communications equipment such as PBXs (private branch exchanges) to the Dutch consumer electronics maker since an alliance was forged in 2003.

The latest deal, which is conditional upon regulatory approvals, is expected to be completed in the second quarter of next year.
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