Taking three listed contractors at once, and becoming Exeo Group (2018)

Integration for scale, or a change in what the business is made of

The heart of this decision is not expansion for its own sake but the fact that it struck at the structure of the telecom-construction industry itself, in which the NTT designated-contractor system had kept regional firms independent of one another. Absorbing the leading independents of Chubu, Kansai and Kyushu simultaneously — by share exchange, and so without cash — stretched a business based on the Tokyo region to national scale at a stroke, and became the occasion for loosening a structure dependent on a single customer. That the effects appeared immediately in the following year’s results is, read the other way, evidence that all three targets were sound regional leaders with healthy earnings of their own.

That said, the 2018 integration and the 2021 renaming and segment reorganization are closer to the truth if they are read not as self-contained events but as the entrance to a run of changes still under way. The goal of splitting revenue in thirds between telecom carriers, urban infrastructure and system solutions was set only recently, and the M&A that accelerated after the renaming has pushed the number of group companies sharply higher. How to reconcile growth in scale with the build-out of governance appears likely to remain an open question for a company that describes itself as turning from a telecom contractor into a comprehensive infrastructure-services group.