TOKYO: Nippon Telegraph and Telephone Corp. and NEC Corp. said Thursday that the Japanese companies have agreed to form a capital and business alliance to jointly develop fifth-generation, or 5G, large-capacity ultrahigh-speed wireless communications technologies.

Under the agreement, NTT will invest 64.4 billion yen in NEC, planning to acquire an equity stake of 4.8 percent in the electronics and machinery giant to become its third-largest shareholder. The telecommunications giant will buy new NEC shares to be issued on July 10 under a third-party allotment scheme.

The NTT-NEC alliance will aim to increase its role in developing the 5G infrastructure, which is indispensable to supporting autonomous driving, remote medicine and other services, as Japanese companies have been lagging behind their overseas rivals, including Chinese telecom giant Huawei Technologies Co.

The two companies will work on developing key devices to control the networks for 5G services, which started in the country in March.

"We'll develop high-value-added sophisticated domestic technologies with a reliable partner," NTT President and Chief Executive Officer Jun Sawada told an online press conference, suggesting that the two firms will conduct research and development under the alliance from a medium- to long-term perspective.

NEC President and CEO Takashi Niino said, "We'll aim for the top share" in the global market for cutting-edge base stations.

The two companies will also cooperate in promoting the Innovative Optical and Wireless Network (IOWN) Global Forum, a next-generation optical technology-based network initiative proposed by NTT, to prepare for an expected start around 2030 of sixth-generation, or 6G, networks that would be up to about 10 times faster than the 5G networks.

NTT said in March that it and Toyota Motor Corp. will invest 200 billion yen in each other for their collaboration in developing smart cities connecting self-driving vehicles and housing equipment with the internet.

NEC is jointly developing 5G-related technologies with major Japanese cybermall operator Rakuten Inc.

JIJI Press