BluStellar brings a clearer path to SoA earnings

Research evidence excerpt

BluStellar brings a clearer path to SoA earnings

Macquarie Equity Research NEC Corp

Earnings estimates

CSG acquisition and segment restatement

CSG: NEC has announced it completed the acquisition on 15 May 2026 (release). We assume

partial consolidation from 1Q FY3/27E and c.10.5 months of contribution in FY3/27E, with

full-year contribution from FY3/28E. CSG had US$1,228m sales and US$119m operating

profit (OPM 9.7%) (release).

NEC acquired CSG for US$80.70/share, or c.US$2.9bn, funded through cash on hand and

new debt, with no equity financing planned. At ¥155/US$, the CSG acquisition implies cash

consideration of roughly ¥450bn, funded through cash on hand and new debt (¥300bn in our

estimates). Assuming the purchase price allocation follows NEC’s 1:1 assumption between

identifiable intangibles and goodwill, the CSG deal could result in roughly ¥200bn each of PPA

intangibles and goodwill at ¥155/US$, with annual PPA amortisation of c.¥13–14bn over 15

years.

Segment restatement of NESIC, Netcracker and CSG: NEC is also reorganising its segment

structure: Netcracker and CSG, which were included in the Telecom Services sub-segment of

the Social Infrastructure segment until FY3/26, will be reclassified into Overseas IT Services

within the IT Service segment. NESIC’s IT services business was also included in the Telecom

Services sub-segment of the Social Infrastructure segment until FY3/26, and it will now move

into Domestic IT Services within the IT Service segment. The legacy telecom equipment

business will be positioned under the Network Infrastructure sub-segment within Social

Infrastructure.

Figure 3 - Overseas IT sub-segment sales breakdown

1,200 SWS UK KMD Avaloq Netcracker

CSG Other overseas IT Total overseas IT