NEC Strengthens Global Software Business to

Support Communications Service Providers～Acquisition of NetCracker～

June 27, 2008ＮＥＣ

President Kaoru Yano

© NEC Corporation 20082

Agenda

１．Growth strategy and the aim of acquisition

２．NetCracker's profile and its position

３．Business strategy after the acquisition

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１．Growth strategy and the aim of acquisition

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Market and Competition Overview

While the Japanese market has matured, global market is expanding rapidly

Global market are following the lead of the Japan in NGN/Wireless Broadband

Commoditization of hardware and price pressure continue to impact the hardware market

NEC's Growth Strategy"Expansion into global business"

"Enlargement of non-hard business"

Japan Overseas

Hardware

SoftwareService

Current Business Area

Mid-term focusBusiness Area

© NEC Corporation 20085

Overseas

Software Products/Services

Portfolio and Business Strategy

ManagementSystems

ServiceApplications

Service PF

NW Infrastructure（Mobile/Broadband

equipment)

"Leverage the know-how and expertise gained from the NGN" "Position NEC for growth in the "Management Systems" market"

Japan

Today's AnnouncementStrategic Acquisition

of U.S. Software Vendor(NetCracker)

Mid to Long Term Growth Directions

Hardware

© NEC Corporation 20086

IP Network

Importance of Management SystemsM

obile

Net

wor

k

Inte

rnet

Service variety over the integrated networks make "Management Systems," especially "Operation Support Systems" a critical requirement

NGNManagement System

Fixe

dN

etw

ork

VideoDataTelephone CellPhone

VideoDataTelephone CellPhone

MngmtSystem

PastMngmtSystem

MngmtSystem

MngmtSystem

OSS

Fulfillment

Assurance

Billing

BSS

BSS: Business Support SystemOSS: Operation Support System

• Quick installation of new services

• Improvement of business efficiency

Various combination of services and tariffs

Necessity of improvement

© NEC Corporation 20087

OSS market forecasted at +6~7% (CAGR) growth owing to investment of NGN related new service OSS represents a 20% of overseas communications market (US$150B*)

Operation Support System (OSS) Market Forecast

Source: “Gartner Forecast：Operations Support Systems, Worldwide,2000-2011” Maritina Kurth, June 18, 2007: GJ08295．

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2007 2008 2009 2010 2011

(Mill

ions

of

US

D）

APAC / Japan N. America S. AmericaW. Europe E. Europe Mid.East / Africa

6.8％CAGR (07-11E):

OSS Market by Region

* NEC estimate (FY2011)

APAC/Japan

NorthAmerica

WesternEurope

© NEC Corporation 20088

２． NetCracker's profile and its position

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NetCracker's Profile Corporate Overview

Company name: NetCracker Technology CorporationEstablishment: October 1993Business area: Providing OSS software and servicesHeadquarters: Waltham, Massachusetts, USACEO: Mr. Andrew FeinbergNumbers of Employees： Approximately 1,000

StrengthCore focus is the high growth "Fulfillment and Provisioning" solutionUnique and strong technical capabilities in software and system integration including "Web base automatic fulfillment tool" with close interaction to support customersGlobal customer base including communications service providers in the US and Europe

© NEC Corporation 200810

Positioning of NetCracker

ＮＧＮ

ＩElement & Service Management

IT Service

Network Service

FMobile Application

AMultimedia Application

ＤBilling, Call Center

EBilling

Telephone networkGDomestic SI

HInventory

BNetwork Management, BillingLegacy

Network

CElement Management, Provisioning

"Positioning of similar players with representative products"Provision of business assistance information

Managing the Condition of Network Elements

NetCracker corresponds to "Service Layer" and "NGN" combined growing business area

Adaptability to New Network Migration

HighIntelligence

NetCrackerFulfillment

© NEC Corporation 200811

NetCracker's Business Performance and its footprint

Customers include major carrier mainly in North America and European

SprintTELUS

Time Warner TelecomCOVAD

FranceTelecom/OrangeUPC

SwisscomMTS

Comstar

TelstraTNZ

Oceania Market

Rapid Growth in OSS

M$ Sales

2006 2007 20080

40

80

120

160

（planned）

Europe/Russian Market

North America Market

© NEC Corporation 200812

３．Business strategy after the acquisition

© NEC Corporation 200813

Operation after the AcquisitionWholly-owned subsidiaryContinue current structure (Management & Employees）

Continuous use of the brand

Management

Development・SI

Sales

Board member

NetCracker's MarketNEC's Market

Management

Development・SI

Sales

NEC NetCracker

Structure after the Acquisition

Collaboration

ManagementNEC board representation

Development & SIContinue NetCracker product developmentJoint development plans

SalesUtilize both NetCracker/NECsales channels(Japan & Oversea)

Collaboration

© NEC Corporation 200814

Synergies as a Result of the AcquisitionEnd to End NGN service solutions by incorporating

NetCracker products and SI capabilities in NEC businessOperation Support System is a gateway to IT

Operations Support

NEC

Service Platform(SDP)

ElectronicSettlements

Network Platform(NW Infrastructure)

SaaS

IPTV

・・・・

End UsersTerminals

IT/NW Infrastructure

Information/Communication /Broadcasting services

NetCracker

Synergies

Service Intro.Support

Service QualityManagement

BillingManagement

Business Support

Synergies

© NEC Corporation 200815

Expansion of IT and Network SolutionsExpand IT and Network solutions through the integration of NetCracker's OSS product and SI capabilities with that of NEC's full-layer technological strengths

Global Expansion

NW

Integration

IT

Japanese Market Global Market

Network Infrastructure

Service Platform

OSS

Network Service

IT Service

Starting from product level,

and expanding to IT/Network solution through synergy

NetCrackerNetCracker

© NEC Corporation 200816

0

1000

2000

3000

2008 2009 2010 2011 2012年 度

売上

高(億

円)

新規

既存

Business Goals

Aiming to attain leading position in global IT/Network business

Aiming to attain leading position in global IT/Network business

Expect 200 billion yen business as a

result of acquisition

Sales of Management System Business

New

Old

Sales(100 mil yen)

Fiscal Year

© NEC Corporation 200817

Attachment

© NEC Corporation 200818

NetCracker's strength in fulfillment and OSS

Highly versatile products in the fulfillment area

SI service capabilities backed by skillful engineers ⇒Client-based business

NetCracker's OSS Business

Expanding OSS business centered on fulfillment

Fulfillment(Service Support)

Assurance(Service/Quality Management)

Billing(Rating & Charging)

＋

System manages and operates service

set-up and order receipt

System managesservice content

quality, customer requirements and claims

System manages confirmation of

content use, billing and charges

© NEC Corporation 200819

About ＯＳＳ

OSS (Operations Support System) is an essential system for CSP to streamline networks, service resources and provide communications services.Systems become increasingly important as service diversification and IP implementation progress.

OSS: Operations Support System

OSS: Operations Support System

Design, Allocate, Activate, Deliver

Rating &Charging

Order entry Bill ClaimService/Quality

Management

Customer Relations

Fulfillment Assurance Billing

Network Interface

Network fault &

Performance

Usage time/data volume

Mobile Wireless LANBroadband

NetworkNetwork

End UserEnd User

Transport Access

Service

© NEC Corporation 200820

About Fulfillment