NEC, Sumitomo Electric to Acquire OCC

NEC and Sumitomo Electric Industries announced on Tuesday they purchase Yokohama based communication cable maker, OCC by buying all share of OCC Holdings, which has 100% share of OCC, from fund managed by Tokyo based investment firm, Longreach Group. NEC controls around 75% of OCC with 25% share by Sumitomo Electric. NEC and Sumitomo Electric decided the acquisition for growth in optical fiber submarine communication system business when the communication submarine cable demand is expected to expand due to higher demand for broadband service worldwide. OCC reported the sales doubled to 17.464 billion yen for the year ended March 2008 from 8.9 billion yen in previous year. The submarine communication cable represents around 60% of the sales with balance of the land communication cable. NEC estimates the world optical fiber submarine cable market is more than 200 billion yen in the year ended March 2008. NEC expects the market keeps growing gradually to annual 300 billion yen level. The firm estimates the supply is around 65,000-70,000 kilometers annually, of which OCC has more than 20% share and no.3 position.