Japanese networking and information and communication technologies provider NEC’s subsidiary NEC Africa has conducted a share-exchange deal with local Internet Protocol (IP), advanced networking and security solutions company XON.

The deal would strengthen both companies’ IP and networking capabilities and services in Africa, as well as in the broader Europe, Middle East and Russia region.

Under the terms of the deal, XON acquired 49% of the shares in NEC Africa, while NEC Africa acquired a 25% stake in XON.  The value of the deal was not disclosed.

Both companies would benefit from shared support and IP services throughout Europe, Middle East, Africa and Russia and would also share their customer bases, training and skills development initiatives with each other.

Speaking at the signing of the deal on Tuesday, NEC Africa president and MD Eugene le Roux noted that four overarching areas of synergy had been identified, including telecommunications, enterprise business services, public sector services and energy and renewable-energy systems.

“We found synergies with XON within each of the four pillars and the results of a tie-up are remarkable, which led us to formalise our relationship with them.

“We see major synergies within the networking space, public safety, energy and networking. Globally, NEC derives about 50% of its international revenue from networking services and the synergies between NEC Africa and XON complement our capabilities to provide services in Africa.”

Midrand-based XON, which provided its services within South Africa and six sub-Saharan African countries, and NEC Africa shared few clients, improving the value of the deal, specifically in terms of growth opportunities in Africa, XON CEO Carel Coetzee said.

XON had capabilities in providing smart management and solutions for infrastructure, including smart cities and energy systems, as did NEC Africa, and the companies would aim to develop their skills cooperatively for their Europe, Middle East, Africa and Russia operations.

“We are excited about the change that NEC's world-class solutions, renowned for reliability in its advanced range of telecommunications network infrastructure, public safety, renewable energy and systems platform solutions, could bring to Africa.

“Its portfolio is designed to enable new consumer and enterprise services, improve the overall network service experience and efficiencies, and help to increase the average revenue per user for telecommunications and Internet service providers,” said Coetzee.

Le Roux further said that the deal would boost NEC Africa’s black economic-empowerment rating to level three and that the company’s customers in Africa would gain use of XON's network operations centre (NOC) and security operations centre (SOC).

The NOC and SOC solutions help to accelerate network, system and security performance and perform root-cause analysis for ongoing issues experienced by clients.

“There is also a wider regional synergy around sharing of IP competencies and security competencies across Europe, the Middle East, Africa and Russia.

“Through the deal, we are able to provide end-to-end solutions from mobile access, aggregation and backhaul to the core network, IP/MPLS [multiprotocol label switching] layer integration and, from a business management perspective, management and billing of network and Internet services,” he added.

NEC and XON have both invested in cloud systems, software-defined networking and network function virtualisation. NEC believed it was well positioned to roll out these new technologies into Africa following the share exchange.