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News

 

May 13, 2009

NTT Com Announces Financial Results
For Fiscal Year Ended March 31, 2009

TOKYO, JAPAN - NTT Communications Corporation (NTT Com) today announced that, in its non-consolidated financial results for the fiscal year ended March 31, 2009, net income increased 41.9% year on year to 89.0 billion yen, operating revenues decreased 2.4% to 1,127.1 billion yen and operating income decreased 3.7% to 100.8 billion yen. A special profit of 36.0 billion yen accrued from sales of real estate and stocks. Operating expenses decreased 2.2% to 1,026.3 billion yen.

All results are based on Japanese accounting principles.

BACKGROUND

The financial crisis triggered by the subprime loan problem in the United States has given rise to economic turmoil, including depressed stock prices and fluctuations in the currency markets. Since the second half of last year, the impact on the real economy, including the information and communications sector, has included reduced capital spending by businesses and declines in personal consumption. In the Japanese information and communication market, the collaboration among, and the convergence of, fixed/mobile, data/broadcasting and other services has advanced, and new services and business models based on consumer generated media (CGM), such as Q&A communities, blogs and social networking services (SNS), have been rapidly evolving.

BUSINESS STRATEGIES

In response to the rapidly changing business environment, NTT Com has been working to enrich and enhance its delivery structure for its enterprise services, global services and Internet-related business services, in order to better meet customer demands for "one-stop solution services that are both total and global" as well as demands for services that help achieve "a prosperous society and safe and comfortable lifestyles". In the fiscal year ended March 31, 2009, which was the second year of NTT Com’s growth strategy known as "Business Vision 2010", we worked towards focusing our corporate resources on our seven core business domain; solutions, network-management, security, global, ubiquitous, portal/engine and managed quality operation, and accelerated growth strategies that fully exploit the synergy among all the companies of the NTT Communications Group, keeping in mind the basic mission of "bridging", and branding these businesses under the concept of "ICT Solution Partner" and "'CreativE-life' for Everyone".

Under the above-referenced mission, NTT Com promoted the transformation of its business structure by focusing corporate resources on the company’s seven core business domain discussed above. NTT Com also directed its efforts toward training to foster the development of professionals to support these businesses, promoting consultant-style sales, reforming its delivery process, and improving the quality of its operations.

In enterprise services, the reorganization of business divisions by industry and business practices, the improvement of the business process and the enhancement of system engineering capabilities were all accelerated. In addition, as the ICT solution partner that solves customers’ management problems, the company directed its efforts towards offering customers high value-added solutions that meet their needs.

In global businesses, in response to the needs of Japanese and multinational customers for high quality services that provide seamless functionality both domestically and abroad, NTT Com also provided total, value-added ICT solutions that combine network integration services with data center, security and server management services, together with an expansion of its data center business and expanding its business to new geographic areas.

In the Internet-related businesses, by promoting sales activities and providing a diverse range of services centering on fiber-optic services, NTT Com aimed to expand the OCN- and Plala-brand ISPs’ customer base and leverage the comprehensive strengths of the NTT Com Group, including NTT Resonant and NTT Plala. NTT Com promoted its comprehensive range of Internet-related services such as ISPs, 050 IP telephone, video distribution and CGM services.

In accordance with the CSR Basic Policy of the NTT Com Group, NTT Com implemented several corporate social responsibility initiatives with regards to expanding its contribution to society, protecting the global environment and treating its employees with respect. The company worked towards achieving an affluent and sustainable society by providing information and communications services that bring new value and provide solutions to society on a global scale.

As a result of such activities, in addition to responding to increasingly diverse and sophisticated customer demands, the company created a well-grounded revenue structure enhancing the on-site customer support capabilities and interpersonal skills of its frontline personnel and emphasizing a "customer comes first" approach.

OPERATING RESULTS

Despite the global economic recession and its impact on Japan, solutions service revenue increased 4.1 billion yen, or 2.2%, to 197.0 billion yen and IP service revenue, including from OCN-brand Internet connection services, increased 19.8 billion yen, or 6.0%, to 354.0 billion yen. Due to users’ ongoing migration to IP-based communication services, data-communication revenue decreased 14.3 billion yen, or 9.7%, to 133.2 billion yen and voice-communication revenue decreased 36.5 billion yen, or 8.1%, to 413.8 billion yen. Total operating revenues decreased 27.3 billion yen, or 2.4%, to 1,127.1 billion yen.

Partly due to one-time commissions for large-scale transactions, operating expenses increased 12.9 billion yen, or 2.6%, to 510.0 billion yen. Telecommunications equipment usage costs decreased 23.6 billion yen, or 7.8%, in part due to decreased voice-communication revenue. Depreciation, disposal of fixed assets and other miscellaneous costs decreased 13.2 billion yen, or 8.5%. Total operating costs decreased 23.4 billion yen, or 2.2%, to 1,026.3 billion yen.

As a result, operating income decreased 3.8 billion yen, or 3.7%, to 100.8 billion yen. However, net income increased 26.2 billion yen, or 41.9%, to 89.0 billion yen, including a special profit of 36.0 billion yen from sales of real estate and stocks.

MEASURES FOR FISCAL 2009

During the fiscal year ending March 31, 2010, in order to achieve the goals of the "Business Vision 2010" growth strategy under a severe business environment, NTT Com will further accelerate the strengthening and expansion of its growth sectors, namely, enterprise businesses, global businesses and Internet-related businesses, with "bridging" as the core conceptual framework of the company’s mission.

Specifically, in enterprise and global services, NTT Com will strengthen its provision of expert consultation sales as its customers’ true ICT solution partner as well as continue to provide one-stop, total and value-added ICT solutions to meet the needs of Japanese and multinational customers for high quality services that provide seamless functionality both domestically and abroad.

Particularly, in global services, since FY 2007, NTT Com has been strengthening its infrastructure by laying new submarine cables between Japan and Russia, establishing global premium data centers in Shanghai, Hong Kong and Vietnam as well as expanding its footprint.

To accommodate the global expansion, NTT Com will further develop premium data centers in countries such as England, the United States and Singapore and expand its overseas offices, which NTT Com currently has in 50 cities of 21 countries and regions, to cities such as Saint Petersburg in Russia and Brussels in Belgium.

In Internet-related business, in particular, regarding the deployment of the B2B2C business, NTT Com is endeavoring to build a new business model in the field of marketing solutions for enterprise customers in collaboration with Digital Forest Inc.

In addition, the number of NTT Plala’s Hikari TV members has exceeded 550,000 and NTT Com will continue to develop services that are attractive to its customers, including by expanding its service areas for IP retransmission of terrestrial digital broadcasts, aiming to increase subscriptions to 1.1 million in total by the end of the fiscal year ending March 31, 2010.

Further, NTT Com is working towards securing new operating revenue sources by developing and providing cutting-edge services including the development of services that enable seamless use of services on mobile phones and PCs and the enhancement of search functions in collaboration with NTT DOCOMO and NTT Resonant.

Based on the "Business Vision 2010" growth strategy, NTT Com intends to further refine the company’s seven core business domain and further develop its business in the growth areas referenced herein in unison with the NTT Communications Group.

Attachments

I.Non-Consolidated Comparative Balance Sheets

II.Non-Consolidated Comparative Statements of Income

III.Non-Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets

IV.Business Results (Non-Consolidated Operating Revenues)

V.Non-Consolidated Comparative Statements of Cash Flows

About NTT Communications Corporation

NTT Communications provides a broad range of global networks, management solutions and IT services to customers worldwide. The company is renowned for delivering reliable, high-quality security, hosting, voice, data and IP services; its expertise in managed networks; and its leadership in IPv6 transit technology. NTT Communications’ extensive infrastructure includes Arcstar™ Global IP-VPN and Global e-VLAN, as well as a Tier-1 IP backbone reaching more than 150 countries in partnership with major Internet service providers, and secure data centers in Asia, North America, and Europe. NTT Communications is the wholly-owned subsidiary of Nippon Telegraph and Telephone Corporation, one of the world’s largest telecoms with listings on the Tokyo, London and New York stock exchanges. Please visit www.ntt.com/index-e.html.

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