NTT and Toyota enter into MoU concerning business and capital alliance agreement
Toyota Motor Corporation and NTT Corporation announced that they have entered into a memorandum of understanding (MoU) concerning a business and capital alliance upon approving a resolution at meetings of their respective board of directors. The purpose of this is to build a long-term and continuous cooperative relationship that enables the commercialization of smart city businesses, with each company being a core partner to share the same values and promote social development, with the aim of realizing smart cities, which continue to evolve in accordance with the needs of residents.
Purpose of the alliance and business overview
The companies state that in the automotive market, the automotive industry itself is undergoing a major transformation due to the complex combination of diversifying market needs, tightening environmental and safety regulations, the sophistication of advanced technologies, entrance by other industries, and the diversification of the mobility business.
Meanwhile, in the telecommunications market, the use of various digital services is advancing due to the rapid development of cloud services, IoT, big data, and AI. Digital transformation, which can make better-directed innovation a reality by analyzing and utilizing the data accumulated through the use of these services, is advancing worldwide.
As stated in "Toyota and NTT agree to collaborate on ICT platform R&D for connected cars―collaboration seeks to establish technologies for the creation of a Smart Mobility Society" announced in 2017, the two companies have already been collaborating in the connected car field. However, in response to these changes in the business environment, the two companies believe that it is necessary not only to seek to further strengthen the business foundations that they have been cultivating to date, but also, by further building the cooperative relations between them, to engage in the creation of new value that enables sustainable growth.
In particular, the two companies have initiated activities related to Smart Cities, which can solve various issues by improving the efficiency and sophistication of functions and services in cities and regions through the utilization of advanced technologies. Smart Cities also create new value, including comfort and convenience, and which they view as being an important area of focus in the future.
In early January, at CES 2020, Toyota announced the outline of a project to build a prototype city connecting all kinds of goods and services that support people's lives. The project will use the soon-to-be former site of the Higashi Fuji Plant of Toyota Motor East Japan, Inc. (in Susono City, Shizuoka Prefecture), which is scheduled to close at the end of 2020, to move verification initiatives forward in coordination with various partner companies and researchers toward the creation of a new city. Toyota named this city "Woven City" and is promoting efforts to make smart cities a reality.
Meanwhile, the NTT Group is collaborating with Fukuoka, Sapporo, Yokohama, Chiba, and other local governments, as well as companies, to solve various city and community issues. Under the Smart City initiative in Las Vegas, announced in December 2018, various collected data becomes the property of Las Vegas City, and by utilizing the most advanced AI, IoT, and ICT resource management technologies, the city is able to quickly detect, analyze, and predict incidents and accidents, and to optimally manage ICT resources. The group is promoting initiatives for deployment of such practices in other cities, as well. In addition, in July 2019, it established NTT Urban Solutions, Inc., which promotes smart urban development by utilizing ICT technologies in the utilization of the group-owned real estate. Also, in June 2019, it established NTT Anode Energy Corporation, which promotes business in the smart energy field, which is an important component of Smart Cities. Through these projects, the group is promoting initiatives to realize smart cities by making the most of company assets.
Amid these efforts, in order to maximize the impact of issue-solving and the addition of value enabled by transforming cities into Smart Cities and to improve regional and national strength, Toyota and NTT came to the conclusion that it is necessary not only for each company to engage in its own projects but also for both companies to work closely in jointly building and operating the "Smart City Platform" as a core foundation for realizing Smart Cities and introducing it in various cities in Japan, as well as worldwide. Therefore, the two companies have decided to enter into a business and capital alliance. The platform will offer value to all domains, from people, cars and houses, to everyday life, business, infrastructure, and public services related to residents, businesses, local governments, and the like. It will consist of Smart-City data management and information distribution, a digital twin based on such data (urban development simulation), and peripheral functions.
It is also to consist of a "platform of platforms" as a platform for individual Smart Cities and as a platform for linking with other Smart City platforms. As a precedent model, it will first be implemented in the Higashi-Fuji area of Susono City, Shizuoka Prefecture (Woven City) and in the Shinagawa area in Minato-ku, Tokyo (a part of the NTT block in front of Shinagawa Station), and will then be introduced to other cities in succession.
In the future, the companies will aim for further growth through the enhancement of the competitiveness of smart cities and the development of a sustainable society.
Overview of investment in the alliance
The two companies, as partners that share the same values and aim to develop society, will acquire each other's shares in accordance with the memorandum of understanding and as described below, in order to establish a long-term and continuous cooperative relationship that enables the commercialization of Smart City businesses, and in order to raise funds to research and develop, plan, design, construct, and implement the "Smart City Platform" and jointly promote the operation of Smart Cities, which continue to evolve in accordance with the needs of residents.
Toyota shall hold 80,775,400 shares of NTT's common stock (with the percentage to the total number of issued shares being roughly 2.07% and the total amount of shares acquired being valued at roughly 200 billion yen) by way of the disposition of NTT treasury stock through the third-party allotment of shares conducted by NTT.
Furthermore, NTT shall hold 29,730,900 shares of Toyota's common stock (with the percentage to the total number of issued shares being roughly 0.90% and the total amount of shares acquired being valued at roughly 200 billion yen) by way of the disposition of Toyota treasury stock through the third-party allotment of shares conducted by Toyota.
- Date of execution of the memorandum of understanding: Tuesday, March 24, 2020
- Share acquisition date (payment date): Thursday, April 9, 2020
Toyota and NTT understand that the alliance will not have a material impact on the consolidated accounts of both companies for the foreseeable future.
For more information, visit https://global.toyota/en.