NTT Sees Revenues Decline, but Returns to Profitability with Broadband Growth

The Nippon Telegraph and Telephone Group posted a profit of 233.4 billion yen (US$2 billion) for its recently completed fiscal year, reversing a loss of 835 billion yen for the prior year. The improved performance was largely attributed to cost cutting measures, while the company acknowledged continued fixed line losses and declining voice revenues in a new era of broadband competition. Highlights from some of NTT's major divisions include:


NTT East returned to profitability, reporting operating revenues of 2,352.2 billion yen (down 8.6% from the previous year). Recurring profit amounted to 63.3 billion yen (up 743.2% from the previous year). Net profit came to 3.0 billion yen (compared to a net loss of 186.7 billion yen in the previous year).


NTT East observed that the telecom market structure in Japan has dramatically changed over the past year with the wider adoption of broadband Internet access and a rapid shift from fixed lines to mobile and IP communications. Telecom carriers compete for subscriptions by lowering ADSL rates, IP telephones are increasing in number, and electric power companies continue to enter the fiber optics broadband-access business.


IPv6 trial services were launched targeting B FLET'S optical access customers


NTT East has established a new subsidiary, NTT BroadbandPlatform, to provide wireless LAN access service.


NTT East has purchased an equity interest in JSAT Corporation and transferred its satellite assets to JSAT to provide a number of new services, especially to outlying islands.


NTT East is continuing its "management rationalization" efforts and expanding the outsourcing of work to various subsidiaries or outside parties. Under this approach, NTT Service Prefecture Co. is responsible for sales and customer service work, NTT-ME Prefecture Co. is responsible for facilities operation, and NTT Business Associe Prefecture Co. is responsible for shared support issues.


NTT West also returned to profitability, reporting operating revenues of 2,215.0 billion yen (down 8.0% from the previous year), and ordinary income of 44.9 billion yen (compared to 170.4 billion yen in ordinary losses in the previous year). Net profit totaled 19.3 billion yen (compared to 355.3 billion yen in net losses in the previous year).


NTT West noted that the pace of competition in its markets has accelerated with the rapid growth of subscribers to ADSL, CATV and optical access services. In response, NTT West has lowered the price and boosted the throughput rates for its ADSL and B-FLET optical access services. The company has also launched a flat-rate WLAN access service ("FLET'S SPOT").


NTT West helped establish NTT SOLMARE Corp., which offers a content distribution service using terminals connected to optical networks and installed in public places.


NTT West is teaming with Kadokawa Shoten Publishing Co. to distribute a broadband-only "web cinema" service


Under its ongoing restructuring, NTT West will focus only on basic operations and strategy, while outsourcing other operations -- including day-to-day customer service, facilities operations, SOHO and mass marketing, and shared operations -- to newly-established group companies.


NTT Communications reported operating revenues of 1,152.0 billion yen, down 9.7% or 123.0 billion yen year on year, recurring profit of 143.2 billion yen, up 90.6% or 68.1 billion yen, and net income of 13.6 billion yen, compared with a net loss of 410.7 billion yen a year earlier.


NTT Communications said it has attained its goal of becoming a full-fledged "Global IP Company," as its ratio of revenues from data/IP services versus voice services (known as the benchmark D/V ratio) passed the 1:1 mark.


Overall data revenues declined 6.7% to 637.3 billion yen, as demand for IP-based services steadily grew, mainly among the company's "OCN" ISP services, but revenues for leased-circuit and packet-transmission services decreased.


Overall voice revenues came to 514.7 billion yen, down 13.1% or 77.5 billion yen. The main factors for the decline included the fixed-line market's continuing shrinkage, paralleled by a decrease in general telephone subscribers, as well as the migration of traffic from fixed to mobile and fierce price competition.
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