Corporate restructuring issues under the holding company structure – The NTT Case in Japan

Huy Dinh, Nishino Kei, Achmad Rizzqi Maulana, Gek Pin Koh and Yang Liu

MPRA Paper from University Library of Munich, Germany

Abstract: ABSTRACT This research paper focused on the corporate restructuring of Nippon Telegraph Telecommunication (NTT Group) under the pure holding company structure in 1999 and its implications. In order to understand the holding company structure, we introduced the concept of "internal capital markets" and explained its application within the framework of NTT Group. Next, we gave an account of the background events leading to NTT Group's corporate restructuring in order to understand the reason for choosing and keeping the holding company structure. Our research methodologies include interviews with NTT Group's management and data from public sources. Finally, to analyze the effect of the holding company structure to NTT Group, we conducted a hypothetical valuation analysis using the free cash flow model. Comparing the market value of NTT Group with our valuation results, it appeared that the market has undervalued NTT Group. We concluded our report with some suggestions on how NTT Group might be able to increase their market value.

Keywords: HOLDING COMPANY STRUCTURE; RESTRUCTURING; INTERNAL CAPITAL MARKET; VALUATION (search for similar items in EconPapers)
JEL-codes: C80 L20 L22 M10 (search for similar items in EconPapers)
Date: 2010-12-01, Revised 2010-12-09
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