NEC & System Integration : Network Solutions Business【1,188KB】

Network Solution Business

June 12, 2024

Yukinobu Noguchi, Senior Vice President

NEC Networks & System Integration Corporation

(TSE: NESIC, 1973)

© NEC Networks & System Integration Corporation 2024

Progress of Medium-Term Management Plan

* Forecast figures are as of April 26, 2024

FY25/3 targets have been revised in light of the business environment.

• Results and forecasts (¥ Bn.)

				97
		83.1		Social
	79.2	80.0	infrastructure
		25
Net sales				Telecom.
				carriers
Gross profit margin	23.8%			72	etc.
		21.5%
Operating income				14.0
(to sales)	9.8	9.4	9.0	(14.4%)
	(12.4%)	(11.3%)	(11.3%)
	FY23/3	FY24/3	FY25/3	FY25/3
	(Result)	(Result)	(Forecast)	(Medium-term
				target)

• Structural reform of telecom carrier business completed
  Planning to improve gross margin in FY25/3
• • Cross-BUresource shift
  • Streamlining including in-house production and consolidation of floors
• Aiming for targeted growth of the social infrastructure business

2 © NEC Networks & System Integration Corporation 2024

Overview of the Network Solutions (NWS) Business

Basic Policies

Providing highly reliable network systems with multi-vendor SI by leveraging comprehensive SI capabilities for diverse network systems to meet high-level demand from customers, together with nationwide maintenance and operation systems

Strengths of the business

• ICT infrastructure comprising highly-skilled engineers (No. of beyond 5G professionals: over 1,000)
• Industry expertise through collaboration with NEC
• Ability to provide comprehensive solutions in a one-stop manner, from SE to maintenance and operations

Business area

1. Network business
2. Beyond 5G business
3. Social infrastructure business

3 © NEC Networks & System Integration Corporation 2024 *Beyond 5G: Most advanced radio network technologies including 5G, 6G, high-speed WiFi, LPWA, etc.

Business Strategy

Maximizing the NWS business by focusing on the business of co-creation with customers

using unique technologies through cooperation with venture firms

in addition to pursuit of deeper cooperation with NEC

Network business

• Telecom. carrier infrastructure
• Local NCC
• Governments and public areas

Beyond 5G business

• 5G social implementation

Social infrastructure business

• Space and national securities
• Marine ✓ Media

• Pursuing open system business area, such as O-RAN and Whitebox, in greater depth
• Making it a service business by providing operation DX solutions
• Entering the mission-critical areas by using large-scalenetwork-SI technologies cultivated through the telecom carrier business
• Launching the business of co-creation with customers by providing industry-specific solutions based on characteristic infrastructure products and wireless technologies
• Entering the area of direct sales in addition to pursuing cooperation with NEC in greater depth
• Expanding from dedicated machines to the open system area by using multi-vendor SI technologies

4 © NEC Networks & System Integration Corporation 2024

Network Business

Expanding the business volume by entering new network-SI area

Telecom carrier: O-RAN			Governments and public areas: Mission-critical areas
Nationwide deployment of	Making the network more advanced for the DX of operations
wireless x cloud computing technologies
			Postal	Common network infrastructure
			services	(24,000 offices across Japan)
[Areas where we serve]	⚫	Areas where we build networks	Entries to some deployed	To integrated SI
		businesses completed
Relay stations and	- Cloud environment
- Site systems
GC stations	- Verify and evaluate	Electric	Network for digitalized control of electric power systems
Tens of thousands			power	(Power plants and substations across Japan)
of bases across Japan	⚫ Maintenance	- Advancing the private communication	Differentiation with operation
	network of control systems	solutions in addition to optical
	- Services provided in fields	- DX of operations in power plants and	x local 5G
	substations
	- Various documents
	- 24/7 year round
			Ministries	Prefectural information network
			and agencies	(physical and virtual infrastructures)
Cross-telecom-carrier deployment		Fully integrated services with a nationwide system
through cooperation with KNSI*

5

© NEC Networks & System Integration Corporation 2024

* K&N System Integrations Corporation

Network Business: Local NCC

Accelerating expansion into new areas, including the businesses of supporting worksite DX based on maintenance and operations (equipment management, visualization, automation with AI, etc.) and local DC, in addition to optical network infrastructures

Segregated management (vertical)

Platform-based management

Field data	Existing		Open data
system

Operation

DX solutions

• Scattered data (hard to collect)
• Managed by different persons (dependent on individual skills)
• Non-real-timemanagement (erroneous judgments)

DX-platform for operational integration

• Data integration and management
• Real-timevisualization
• Prompt data utilization

Creating new value with synergy

Facilities control	Geographical
information
Facility	Design data
information
Task history	Disaster
information

Further expansion of solutions based on operations

			Pursuing the area in greater depth
	Vendor lock-in network
Network	Making the network open	by taking advantage of multi-vendor SI
open	Expensive/Not flexible/	[Whitebox]
solutions	System selection + SI + Maintenance and operations
Not expandable

6 © NEC Networks & System Integration Corporation 2024

Beyond 5G Business

Focusing efforts on launching a market for the social implementation of next- generation networks, by using characteristic products and companywide assets

Lineup of products tailored to purposes

NEC Magnus

HFR (South Korea)

Thoroughly eliminating barriers to the introduction of local 5G to encourage customers to experience the implementation

[High-output and integrated]

[Expandable and discrete]

All-in-one local 5G system integrated

with the core network

Portable high-performance base station, with all elements integrated in a single box

✓ One-box	✓ Non-SI	✓ Powerful
✓ Compact and	✓ Low price	✓ Compatible with
power-saving		outdoor use

7 © NEC Networks & System Integration Corporation 2024

SI model

Preparing to offer rental equipment in addition to one requiring initial investment

Central and local governments

NEC market and others

Co-creation model

Implementation of local 5G in practical operations

(Small starts)

Local 5G evaluation and

value verification

Expanding areas of applications while checking the effects

Manufacturing, construction, electric power, transportation, and others

Beyond 5G Business: Use Cases

Industry-specific local 5G solutions developed through co-creation with the customers

in markets where demand for next-generation networks has been actualized

Use case (1): Manufacturing industry	Use case (2): Construction industry
Manufacturing site	Surveillance	Construction site	Drone
	camera
Manufacturing		Construction	Heavy
line
		machinery
	IoT
Communication			Communication

- Manufacturing and quality control	Integrated command system	- Checking conditions of remote control, etc.
- Centralized management of events		- Workers' communication
- Real-time data sharing		- Management of design and work data

8 © NEC Networks & System Integration Corporation 2024

Social Infrastructure Business: Space and National Securities (1)

Expanding the business on an ongoing basis by pursuing cooperation with NEC in greater depth

in light of the activation of the security area

Further, expanding the direct sales area with open systems, aiming to maximize the business of the Group

National security business

• Construction of infrastructure facilities
• SI of NEC systems
• SI of open systems (network and IT systems)

Key point

Reinforcing the framework for taking actions in response to market activation and business expansion

• Development of engineers

(Open system engineers, PM, and SE)

• Conforming to security standards

on our own

(Information and physical security frameworks)

• Accelerating the development and

proposal of a solution lineup

(Lineup related to local 5G and energy)

Further expansion of SI areas

Coordination with NEC

• Undertaking SI projects en bloc
• Expanding the area of maintenance and operations

SL business

• Enhancing the resilience of security bases

• Expanding areas of digitalization

Multi-vendor SI

• Deployment to national security related companies

9 © NEC Networks & System Integration Corporation 2024

Social Infrastructure Business: Space and National Securities (2)

Expanding high-quality,cost-competitive solution business by taking advantage of our capability of

identifying qualities and multi-vendor SI capabilities, which were cultivated through cooperation with NEC

Satellite ground station

Total solution

Antennas

Radome		Multi-vendor
Shelter

Optical transmission

Peripheral equipment

To space-related

System integrationcompanies

(Newspace)

Focus

• Discovering and partnering with global vendors
• Ability to control vendors
• Acquiring high-level product knowledge
• Ability to make proposals in new areas

10 © NEC Networks & System Integration Corporation 2024