Growth in the IP telephony market will see NEC float its Australian business solutions arm by late 2004.

The company expects the market to value the business solutions group -- which sells and maintains voice and data solutions -- to be valued at AU$350 million at the time of the float. The solutions division has already been structured as a wholly owned subsidiary of NEC Australia.

NEC Australia's executive director of strategic planning and corporate marketing, Brendon McManus, told ZDNet Australia  the burst of the dotcom bubble made contemplating the move before now pointless.

"The dotcom bust hasn't helped the valuations of such companies," he said. "Obviously now the market is beginning to pick up for ICT product across the board we're working to improve the profitability and value of the company."

As yet there are no moves to integrate NEC's broadband provider NEXTEP with the solutions group, McManus says. "At the moment that's a separated business, there are no plans to include that within business solutions," he said.

NEC recently floated its semiconductor division in Japan, but the Australian float will be a first for the company outside of its home country. "This would be the first subsidiary outside of Japan to be considered for a partial float," McManus said.

The company has established itself as a serious player at the top end of town. It recently stitched up an eight year call centre contract with the Australian Tax Office worth AU$100 million.

Voice over IP (VoIP) is an area where the company is seeing significant growth. "Not everybody's buying [VoIP] but certainly the market is swinging that way," McManus said.

Telecommunications analyst Paul Budde also believes the VoIP space is picking up. "[In the future] there will be very few people who will start installing PABX systems," he said. "There is definitely a lot of activity going on."

Budde cites Commander, which began life as a Telstra subsidiary 20 years ago, as a good example. What was hyped as being an explosive growth area a few years ago is actually starting to show promise, he says. "The growth in that market is all in the IP business," he said. "The technology is now much more developed than it was a couple of years ago."

A recent VoIP deal signed between Westpac and Telstra would go a long way to legitimise the technology, even though Telstra is unlikely to become a big player in the space, Budde said. "They won't be a big player in the market but it's a stamp of approval."

"We're reaching the maturity in the technology so it can actually be used," he added.

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