Network Infrastructures Business
March 19, 2021
Kazuhiko Takeuchi
Senior Vice President and Member of the Board
NEC Networks & System Integration Corporation(TSE: 1973, NESIC)Self Introduction

Kazuhiko Takeuchi
Senior Vice President and Member of the Board
Executive General Manager,
Network Infrastructures Operations Unit

Career in brief
 Joined NESIC in 1985
 Successively held various responsible posts for sales/marketing,social infrastructure business and support service business Assigned to the present position in 2020.
2© NEC Networks & System Integration Corporation 2021

Network Infrastructures Business in NESIC

Providing construction and various services regarding
telecom carriers network and ICT infrastructure ofgovernments and broadcasters to support society(Segment)

DSL(Digital Solutions)

NWI (NetworkInfrastructures)

ESS (Engineering &Support Services )Marketing & Sales Operations Unit
Business Design Operations Unit
(Organization)

3

Digital Solutions BusinessUnit

Network Infrastructures
Business Unit

Engineering & Support
Services Business Unit

Five consolidated subsidiaries
such asQ&A Corporation

Four consolidated subsidiaries
such as K&N System
Integrations Corporation

Seven consolidated subsidiaries
including overseas subsidiaries© NEC Networks & System Integration Corporation 2021

Network Infrastructures Business in NESIC

Promoting growth strategy of “5G fields”(next generation high speed infra.)

toward “Digital x 5G” era※Collaborating with Business Design Operations Unit

<Biz. Areas>

Digital solutions field

ServiceICT SI

CloudWorkstyleInnovation services

NESIC’s synergies, owning
both knowhow of enterprise
ICT services and telecom.
infrastructures

Digital x 5G

Infrastructure

4G→5G
migration

Full 5G
5G infrastructure field

Medium-term
4© NEC Networks & System Integration Corporation 2021

Long-termNetwork Infrastructures Business in NESIC

Approx. 30% of company sales
DSL

112.8

Others10.3

Sales¥ 303.6
Bn.
(FY 20/3)

ESS

597.4

© NEC Networks & System Integration Corporation 2021

PublicNWI

51％

83.1
(27％)
Telecom49％Network Infrastructures in the Society
Creating safe, secure and plentiful society

by delivering information to every communities
and by watching the earth from outer-space and ocean-floor
Broadcasting

Ocean

Pleasant communities with ICT
innovation

Prompt & accurate
disaster info.

New normalsociety

Resilient lifeline infra.

Safe & secure life
by disaster prevention tech.
Mobile Comm Firefighting

6Road/Rail wayDisasterPrevention© NEC Networks & System Integration Corporation 2021

Aerospace

Local Gvmt

Watching fromouter-space &ocean-floor
No regional
information gap

Solid network supporting
industrial development

Competencies

Digital solution capabilities collaborating NESIC DX
platform with high technological capabilities and broadcustomer base1) Technological Capability& Knowhow

2) Nationwide support network

3) Digital solution capabilities
7© NEC Networks & System Integration Corporation 2021

Competence 1: Technological Capability & Knowhow

Broad business development leveraging hightechnological capabilities as a NEC group SIer into
multi-vendors SIStrengthsMarket Deep technological skill via product development/
evaluation/failure analysis as an NEC group Accumulated knowhow via maintenance &operation
 Broad technological capabilities from Wi-Fi tosatellite communication

Aerospace

Strengths in multi-vendors
environment
 System design capability corresponding tocustomer demand Orchestrating capability for complicating systems
 Solution capability directly collaborating withvendors’ developers
8© NEC Networks & System Integration Corporation 2021

Ocean
Firefighting(FF)DisasterPrevention(DP)Our strong areas
Strong areaof SIer with
its ownproducts
in the group

Broadcasting

RailroadElec. power
CATV
Telecom.

Strong areaof SIer
dealing withmulti-vendors
products

Competence 2: Nationwide Support Network

Nationwide service basis to support mission criticalcommunication infrastructures
Nationwide sales/maintenance system
Nationwide sales andmaintenance network of 400
bases to support highly reliablesocial infrastructure

Service delivery operation centre
24/7 logistics function withtechnical services such as
evaluations and repairs.

9© NEC Networks & System Integration Corporation 2021

Network total operation centre
Inquiry acceptance,
24/7 security monitoringand network operation

Data centre

Providing stable service withuser viewpoint with 3 data
centres that can mutually backupCompetence 3: Digital Solution Capabilities

Create digital solutions services withexisting assets x DX platform
NESIC’s
DX platform

Existing assets
Broad business fields
and customer base
Accumulated businessknowhow
Maintenance andoperation bases

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Multi cloud
coordination

× Multi connectivity（network, device, etc. ）Data analysis© NEC Networks & System Integration Corporation 2021

Via digital solution
service creation

Solution capability
society &＝ forcustomers(Value enforcement)

Newcompetence

FY March 2021 Performance*Net sales and operating income for the FY 2019/3 and FY 2020/3 has been recalculated to reflect
the change in the content of business segments. (FY2019/3 figures are un-audited)

Net sales

Operating income

 5G related biz increases
 Acquiring FTTH improvement
demand to eliminate digital divide Improving sales mix (increase of SI area) Strengthening business capability(¥ Bn.)(Results from reorganization at April 2020)

 Promoting on-site reform with DX

CAGR +5%
79.5

83.1

CAGR +29%
908.1

5.1

In Companysales

118.5

(28%)

(27%)

(27%)

FY19.3

FY20.3

FY21.3e© NEC Networks & System Integration Corporation 2021

To SalesReorganization
effectProfit increase
with larger
growthexpenditure

9.8%

9.4%

FY20.3

FY21.3e6.4%
FY19.3

Growth Strategy ofNetwork Infrastructures Business

12© NEC Networks & System Integration Corporation 2021

Business Environment
Brisk demand in both telecom and social infrastructure fields
Telecom

Investment in the expansion of 5G areas is increasing
despite a downward revision of mobile fees.
 Core networks: Developing to support higher speed and lower latency
communication
 Base stations: Bringing forward two years or more than planned (at least 210Kstations by 2023)
 Use of 5G: A number of demonstration trials began for disaster management,enhanced efficiency at plants, worksites and offices, and other purposes

Social infra.

Construction of social infrastructure for Society 5.0 andSuper City accelerates.
 The launch of a digital agency triggered the acceleration of municipal
governments’ digital transformation (DX).
 Strong construction of FTTH networks towards the elimination of the digital divide.
 Brisk disaster management construction projects in preparation for majordisasters

13© NEC Networks & System Integration Corporation 2021

Growth Strategy Perspective
Expand business to resolve social and customer issues- Synergy between DX, telecom and social infra businesses (realization of “Digital x 5G”) Business modelBusiness using DX

Valueadded
business*Cycle of growth
between DX andinfrastructurebusinessesDX
operations
Cost-based
business

Social public
infrastructurebusinessSystemSIInfra.
construction

Local 5GFire
fighting

Disasterprevention

Railways

Electricpower

CATV

Ellipse size represents
future potential.
14

Social infrastructurewith DX© NEC Networks & System Integration Corporation 2021

Carriers’
4G

Super City concept& 6G

Business solving social
issues using local 5G

Carriers’5G

Innovativeness ofExpand market share and service fields network
taking an opportunity of 5G
technologies

Point 1: Business Using DX

Contribute to super-city concept to solve social issues
TargetSocialservices

DXusage

Platform

Social/regional issues（Super-city）

Telecom carriers
Broadcasters

Services fir disaster prevention/mitigation,
efficient operation and regional vitalization

Platform
Local
FF BI against disaster
5G
Business expansion to new fields
leveraging knowhow of infrastructure development and operationOperation

Infrastructure

15

Telecom© NEC Networks & System Integration Corporation 2021BroadcastCATVFF/DPLifelineutilities…

Point 1: Business Using DX (e.g. Fire-fighting data analysis service)
Use big data from fire-fighting and expand to other fire departments
to increase NESIC’s share
City M’s Fire Department

Fire Departments around City M

Currently
operatingFire-fighting data analysis
service (Fire-fighting BI)

Expansion tootherdepartments
To all of Japan

Analysis and visualization using
DXsystems and external data（Bolstering fire-fightingcapabilities)

Joint use
Encouraging joint use of services
to gain orders systems from neighbor cities/regions

Retaining existing customers
and capturing competitors’customers

Offering new value to*BI = Business Intelligencecustomers
Infrastructure

City M’s fire-fighting
command center system(existing customer)
16© NEC Networks & System Integration Corporation 2021

Fire-fighting command center systems
in neighbor cities/regions

Point 2: Expand Market Share and Service Fields after the Shift to 5G

Expand service fields taking an opportunity of 5G
Business model
DX &services

Maintenance andoperation
BPO services

Expandbusiness fields

Infra.
construction

Basestations

Increase
market share Accelerate the shift to services usingbusiness expertise- Support the operation of virtual networks▌Core networks (Increasing speed and shift tosoftware) Shift from product SI to software SI(virtualization) in line with the shift to 5G- Ability to handle cutting-edge technologies
and personnel development▌Base stations

Increase market share on the basis of KNSI
- Increase efficiency in construction through DX

Cultivating customers
17© NEC Networks & System Integration Corporation 2021

Utilization of5G Lab

Use of businessexpertise
Expand technology
fields & guide newCore
customers to otherservices
networks▌Expansion of service businesses

Point 3: Business Solving Social Issues Using Local 5G
Capitalize on our full support capability
to create businesses solving social issues- Ability to build infrastructure (base stations and core networks) for carriers and to provide services SystemServices

Services using DX(solutions to social issues)

ICT systems and the cloud

InfrastructureCore networks
Base stations
DesignSI

Construction Test

License application

Total service
18

Create services solving social
issues through demonstration
trialsPrioritize creation of markets for local
governments and CATV operators
which are our strengthCreate killer content to drive thepopularization of local 5G

Build local 5G infrastructure
Offer one-stop services
Operation
Maintenance

SIMoperation© NEC Networks & System Integration Corporation 2021

(leveraging the capability of constructing
infrastructure for carriers)

Packaging ofsolutions

Point 3: Business Solving Social Issues Using Local 5G
Creating regional problem solution service with CATV operator~”Regional service platform”~■Leveraging local 5G environments
onto high-speed network for medical,
industrial and administration usage＜Usage scene＞

Remote exam.

Automated farmmanagement

Smart factory

Monitoring of rivers

Local 5G network connecting facilities inTokushima prefecture

Local 5G
4.7GHzRegional BWA

Network of CATV Tokushima
Local 5G
4.7GHz19© NEC Networks & System Integration Corporation 2021

Core system

Points 2&3: Step Up Engineer Development & Expand Service Fields
Use 5G Lab to step up engineer development and toexpand service fields
Step up development of 5G engineers

BPO services

Accelerate education and the verification andevaluation of technology in a multi-vendor
environment for cutting-edge technologies (e.g.
wireless, virtualization and slicing)

Provide BPO services from theperspectives of customers andvendors
Example BPO services
 Software verification for carriers and vendors
 Integrated services from consulting and license
application to construction and operation of local 5G

 Verification of applications and services to connect via
5G
Wireless propagation simulation and 3D simulation (in a plant)

Increase the number of 5G-related
engineers to four times the current number(FY 2020/3 → FY 2022/3)
20© NEC Networks & System Integration Corporation 2021

Step into the local 5G businessusing 5G technologies forcarriersNetwork Infrastructures Vision
Creating safe, secure and plentiful society

by delivering information to every communities
and by watching the earth from outer-space and ocean-floorBroadcasting

Ocean

Pleasant communities with ICT
innovation

New normal
society

Aerospace

Local Gvmt

Watching fromouter-space &ocean-floor

Create with Digital×5G
Prompt & accurate
disaster info.

Resilient lifeline infra.

Safe & secure life
by disaster prevention tech.
Mobile Comm Firefighting

21

Road/Rail way

DisasterPrevention© NEC Networks & System Integration Corporation 2021

No regional
information gap

Solid network supporting
industrial development

Cautionary Statement
Forecasts and targets of results mentioned in this document are future
estimates and are thus inclusive of risks and uncertain factors since they arenot based on definite facts. Please be aware that a variety of factors could
cause actual results to differ significantly from those projected. The major
factors affecting actual results include the economic climate and social trends
surrounding the business of this Company’s group, consumer trends vis-a-vis
systems and services provided by this Company’s group, as well as pressure
to lower prices and ability to cope with the market in response to intensifiedcompetition.
Factors affecting results are not limited to the ones mentioned above.
There were inter-segment transfer of some businesses and other changes
in April 2020. Segment information for the FY 2019/3 and FY 2020/3 hasbeen recalculated to reflect the change in the content of business segments.
(FY2019/3 figures are un-audited)22© NEC Networks & System Integration Corporation 2021

NEC Networks & System Integration Corporationis committed to increasing customer value byredesigning future communications from the user’sperspective.

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