The investment, to be made on July 10, will give NTT a 4.8% stake in NEC as its main network equipment supplier hopes to crack the dominance of Huawei Technologies, Ericsson, and Nokia in 5G network infrastructure.
NEC and NTT also said they plan to work together on post-5G technologies, including all-photonics networking and computing technologies being developed by NTT. ( 5G race)
Japan started its 5G service this year, lagging behind the United States and China, among other industrialized nations. ( 5G race)
Previously state-owned NTT, which has wireless carrier NTT DoCoMo Inc under its wing, has a strong preference for domestic suppliers for core networks, as it is involved in government projects.
Japan has effectively banned government purchases of equipment from Huawei in efforts to boost national security. ( 5G race)
But Japanese network equipment companies, such as NEC and Fujitsu, have limited global presence, with little cost competitiveness compared to overseas rivals.
NEC CEO Takashi Niino told reporters that the company aims to leverage the latest alliance to boost its negligible share in the global base stations market to 20% by 2030.
NTT is actively seeking capital alliances globally in key areas of technology, such as self-driving and smart cities.
Toyota Motor Corp has mutually invested about $1.8 billion in developing smart cities.
The company and Mitsubishi Corp have jointly taken a stake of 30% in Dutch digital mapping company HERE Technologies.