NTT Communications to Acquire 70% Stake in Frontline Systems

11th May 2011. TOKYO, JAPAN and SYDNEY, AUSTRALIA— NTT Communications Corporation (NTT Com) and Frontline Systems Australia Pty Ltd (Frontline) today announced that NTT Com will purchase 70% of the issued shares of the Australian firm, which provides IT infrastructure, IT consulting and managed services. Financial terms have not been disclosed however press speculation is in the order of A$63m.

One of Australia’s largest independent integrators, Frontline is a provider of ICT services, particularly those related to server and database technologies. Its subsidiary Harbour MSP has a solid reputation for its managed services and data center system integration. The company was established in 1993 and has grown into Australia’s largest, premier infrastructure solutions provider, with forecasted sales of A$277m this fiscal year ending June 2011. Frontline has data centers, warehousing and sales operations in Brisbane, Sydney, Canberra, Melbourne, Adelaide and Singapore.

The alliance will enable NTT Com to expand its range of high-quality global ICT services to meet multinational companies’ growing needs for globally seamless, one-stop solutions for networks, infrastructure and cloud provisioning. It follows NTT Com’s purchase of global IT services firm Dimension Data in 2010 for US$3.2bn and locally, its 2009 purchase of 51% of SAP consulting business Extend Technologies.

“This acquisition confirms and fortifies our strategy to be the ICT partner of choice both globally and now locally in Australia and New Zealand. The addition of the managed IT infrastructure professionals at Frontline Systems and its subsidiaries is a perfect complement to our subsidiary NTT Australia’s well-established network business serving the rapidly evolving enterprise cloud market in the ANZ region,” said Sadao Maki, Senior Executive Vice President of NTT Com.

“As an organisation poised for further growth in the Australian market and beyond, Frontline views the involvement of NTT Com as an investor with tremendous excitement,” expressed Steve Murphy, CEO of Frontline. “The alliance will mean that Frontline is bolstered by NTT Com’s depth of knowledge and resources in networking and communications, while we continue to extend service offerings beyond our core strengths in infrastructure and managed services.”

Working closely with other NTT Group companies in Australia such as Dimension Data, NTT Com will provide high-quality ICT services for enterprises by integrating Frontline’s server-related technologies with the NTT Group’s network-integration, software-development and maintenance capabilities. NTT Com will also accelerate cloud services development by utilizing Frontline’s subsidiary Harbour MSP’s data center-related technologies.

In a recent ZDnet interview, Frontline CEO Steve Murphy commented that Frontline would continue to operate as a separate entity with the current management at the helm. “It’s a capability and leverage play and not a direct integration,” said Murphy. “Frankly, that’s what attracted me to the arrangement.” In addition, NTT’s balance sheet, as a major corporation, will enable Frontline to do “bigger and better things”, as well as gaining access to the larger company’s customers and vice versa. He said that the NTT relationship with Frontline initially came about organically, with discussions about an investment starting in about September 2010. NTT has been one of the longest customers of its hosting business Harbour MSP.

About NTT Communications Corporation
NTT Communications provides a broad range of global networks, management solutions and ICT services to customers worldwide. The company is renowned for reliable, high-quality security, hosting, voice, data and IP services, as well as expertise in managed networks and leadership in IPv6 transit technology. NTT Communications’ extensive infrastructure includes Arcstar™ Global IP-VPN and Global e-VLAN, as well as a Tier-1 IP backbone reaching more than 150 countries in partnership with major Internet service providers, and secure data centers in Asia, North America and Europe. NTT Communications is the wholly-owned subsidiary of Nippon Telegraph and Telephone Corporation, one of the world’s largest telecoms with listings on the Tokyo, London and New York stock exchanges.
In Australia, NTT Com currently has about 30 staff and represents Japanese networks and customers locally. The company’s investment will give it access to Frontline’s national footprint and sales team, and Frontline will gain from NTT’s own capabilities. But Frontline won’t be swallowed up into the broader NTT group.

About Frontline Systems Australia
Established in 1993, Frontline Systems is a privately held IT business headquartered in Sydney Australia with 200+ employees. Frontline is built around the provisioning of Managed Services, Professional Services and Enabling Infrastructure to its large client base in Australia and Singapore. Its clients include the very largest of Australian businesses from telecommunications, banking and government.

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