NTT to absorb Verio operations into regional units

NTT Communications plans to absorb Verio, the network and managed hosting company it acquired in 2000, into three of its regional units in a bid to increase its competitiveness, the company said Thursday.

Verio’s U.S. operations will become part of NTT America, its European operations will be transferred to London-based NTT Europe, and NTT Singapore will take over the company’s operations in Southeast Asia, said Tei Gordon, a spokesman for NTT Communications in Tokyo. A global business division will also be established to oversee the needs of global clients, the company said.

“It will help us streamline our ability to provide services to customers,” said Gordon of the reorganization. Users can expect to see more convenience from the reorganization because the regional NTT units will be able to provide more of a one-stop shopping service for networking and hosting services. At present, users have sometimes been required to seek some services from Verio and others through additional contracts from NTT.

NTT cited the U.S. market as one area where such one-stop service was becoming increasingly important, particularly as the regional operators begin to encroach on its business space.

NTT Communications, a subsidiary of Japan’s Nippon Telegraph and Telephone, bought Verio in September 2000 for approximately $5.5 billion in a deal that sparked a U.S. government review of the deal on national security concerns. The U.S. Federal Bureau of Investigations (FBI) was concerned that its ability to tap Verio’s Internet lines would not be hindered by the deal, which effictively saw a major U.S. telecom infrastructure provider getting acquired by a company in which the Japanese government was the major shareholder.

On Wednesday NTT Communications presented its half-year business results. The company, which also offers consumer long-distance, Internet and corporate networking services in Japan, recorded revenue of ¥548 billion ($4.7 billion) for the April to September period, up 4 percent on the same period a year earlier. Net income was ¥3 billion, down 90 percent on that of the same period in 2004.