Although the economies of some emerging nations slowed, the overall picture for the global economy generally was one of recovery, led by the U.S. economy, which steadily improved. On the other hand, the Japanese economy, while showing some signs of recovery, continues to experience a labor shortage and a weak yen, and the direction of the economy remains uncertain, as opinions on its macro environment are divided.
In this economic environment, many companies around the world are taking a more active business approach and are focused on further strengthening their own competitiveness. They are entering new fields and investing in growth markets, and building strong and flexible ICT foundations needed to support these activities.
(2) Business Strategies
In accordance with NTT Com’s "Vision 2015" growth strategy, NTT Com aims to achieve consolidated revenues of over 1.5 trillion yen by the fiscal year ending March 31, 2016, including a more than twofold increase in sales from outside of Japan compared with the fiscal year ended March 31, 2011. NTT Com designated the fiscal year ended March 31, 2015 as a year for transforming its business structure and accelerating growth in order to achieve its "Vision 2015" goals and for aiming to move from Asia’s leading ICT company to being a global ICT leader. Based on its "Global Cloud Vision," NTT Com’s strategy of using the migration of customers’ on-premise systems to the cloud as an opportunity to optimize their overall ICT environment and contribute to their business reform, NTT Com sought to continue to build on its service performance results.
In the area of services, NTT Com strove to expand its global seamless services and capabilities in order to provide a "seamless ICT solution" that optimally combines a variety of services, such as cloud, colocation, network, application, security and managed ICT services, in a way that utilizes NTT Com’s strengths as a telecommunications company. Specific measures taken by type of service were as follows:
○ Cloud Computing Platforms:
With regard to its " Enterprise Cloud" cloud service for corporate customers, in April 2014, NTT Com began offering companies the ability to connect to NTT Com’s data center colocation areas in the same network segment using SDN (Software-Defined Network) technology. NTT Com then began enabling companies to use a customer portal to set and change network settings for cloud-connected VPN and internet connections and cloud-based networks in October 2014. Through these and other initiatives, NTT Com expanded several of its capacities to even more smoothly accommodate the hybridization of its customers’ ICT environments. NTT Com also added a new service location in Japan, expanding its service areas to 12 locations in nine countries/regions. With regard to its " Cloudn" public cloud service, in February 2015, NTT Com launched a backup service through which customers are able to restore individual files.
Under the "Nexcenter" brand, NTT Com commenced provision of data center services at its Malaysia Cyberjaya 4 Data Center in April 2014, NTT Com entered into a stock purchase agreement with the shareholders of Lux e-shelter 1 S.a.r.l. ("e-shelter") to acquire a majority of the shares of e-shelter, the largest provider of data center services in Germany, further expanding its data center facilities both in Japan and abroad.
○ Data Networks:
NTT Com launched a number of advanced functions for "Arcstar Universal One," a corporate network service currently provided in 196 countries and regions. For example, in May 2014, NTT Com released "Arcstar Universal One Advanced Option," a cloud-based network function that uses NFV (Network Functions Virtualization) technology, and also launched "Arcstar Universal One Virtual," which allows customers to build virtual networks quickly and easily regardless of their existing network environment or the device being used. In addition, NTT Com strengthened its service offerings for "Arcstar Universal One Mobile," a mobile service for corporate customers, focusing on M2M (Machine-to-Machine) communication applications, by, among other things, expanding this service to provide global service coverage, which it launched in April 2014.
For "OCN mobile ONE," a mobile data communications service for consumers, NTT Com substantially increased the number of subscribers by adding new functions, revising rate plans, and undertaking other initiatives, such as offering "voice-enabled SIM cards," which allow users to make voice calls, starting from December 2014.
Further, in February 2015, NTT Com launched "OCN Hikari," which bundles the "FLET’s Hikari Next" fiber-optic service provided by NTT East and NTT West with "OCN," internet connection service and "OCN mobile ONE" to enable customers to use both services at discounted rates.
○ Voice Communications:
For corporate customers, in May 2014 NTT Com began providing the "Arcstar Contact Center," a cloud-based service that allows companies to migrate their contact center services to the cloud and enables them to flexibly increase or decrease the number of operators at such service centers and change contact center functions as needed in conjunction with the season, their campaigns, and other factors. In June 2014, NTT Com began offering "Arcstar Conferencing" internationally (which had previously been offered only in Japan), to provide conferencing services through video, phone and the Web. Further, with regard to its "Arcstar UCaaS" unified communication service, NTT Com announced in March 2015 that it would utilize the international platform of Arkadin International SAS, which it acquired in 2014, to globally and seamlessly provide the "Arcstar UCaaS Microsoft® Type" service, which uses "Microsoft Lync®," in addition to its currently-offered "Arcstar UCaaS Cisco Type" service.
○ Applications and Content:
In April 2014, NTT Com launched a cloud-based virtual desktop service, "Enterprise Virtual Desktop Infrastructure," through a new U.S.-based platform for its corporate customers. In July 2014, NTT Com also expanded its provision of "Enterprise Mail," a cloud-based e-mail service, to a newly-constructed platform in Singapore and began sales in the APAC region (excluding Taiwan, where "Enterprise Mail" had already been offered). In July 2014, NTT Com launched "Data Federation" services, which enable the sharing, management and updating of information such as employees’ contact information that is commonly used in multiple cloud services. In January 2015, NTT Com also launched "ID Federation," a cloud-based service that enables access to various applications, including cloud services, using a single ID, on a trial basis.
In December 2014, NTT Com added a new search function that enables users to search through their saved photos for facial expressions, such as "smiles" or "winks," using the "Facial Expression Search" function of its "MyPocket" online storage service. In July 2014, NTT Com also launched the "MyPocket Developer Program" for applications and web services developers and companies in order to promote the development of new services in collaboration with "MyPocket."
○ Solution Services
In June 2014, NTT Com added a number of functions and features to its "WideAngle Managed Security Service," such as enhanced security information and event management (SIEM) by improving its detection rate of unknown security threats, including targeted threats, by up to 500%. In December 2014, NTT Com also announced its plan to launch "Zero day Attack Protection" in Japan, a security service to counteract targeted threats, zero-day attacks and other threats.
In April 2014, NTT Com launched "Global Management One," which provides standardized services, quality and rates worldwide for its one-stop ICT management service and is designed to manage ICT environments, including the applications, cloud services, on-premise environments and networks that are used worldwide by corporate customers.
In addition, NTT Com launched the "NTT Communications API Gateway," which enables customers to use their own IT systems to directly browse and customize information regarding the application, operation and management of NTT Com IT services, and includes a variety of services for API specifications.
In the area of sales, NTT Com accelerated its efforts at global integration through its Global Account Management Systems (GAMS), pursuant to which the Global Account Manager (GAM) and National Account Manager (NAM) in each country work together to provide solutions to issues that customers encounter as they seek to develop their businesses globally.
In addition, efforts to endorse cross-selling among NTT Group companies, increase collaborative partnerships with various businesses both within Japan and worldwide, and engage in sales promotions based on lively communications using global integrated sales force automation (SFA) resulted in a steady increase in orders for large-scale projects.
NTT Com constructed an "ICT Consulting Division" in August 2014 in an effort to expand its capacity to provide management solutions proactively to its customers, strengthen its relationships not only with companies’ IT departments, but also with their management teams, management strategy departments and business departments, and identify its customers’ potential needs.
In the area of operations, NTT Com modified its operations systems to increase their efficiency and competitiveness by integrating its overseas network service operations into Virtela, a company NTT Com acquired in January 2014, while also integrating its cloud service operations into Netmagic Solutions, a company it acquired in 2012. NTT Com also worked to further improve the overall quality (including speed) of its operations by automating and standardizing processes, utilizing advanced technologies, and adopting cutting-edge techniques, such as the application of AI functions to the operation processes of its "Global Management One."
In addition, in order to promote global seamless management, NTT Com promoted the development of an ERP system that will be shared globally throughout its ICT systems. In terms of personnel management, NTT Com continued its efforts in global human resource development by continuing to hire foreign nationals, continuing itsforeign trainees program, which include young employees, and also promoted the exchange of employees with its acquired companies and overseas subsidiaries.
(3) Operating Results
NTT Communications Group’s consolidated operating revenues increased for the second consecutive fiscal year, increasing by 33.0 billion yen (2.7%) over the prior fiscal year to reach 1,263.4 billion yen. However, operating income decreased 8.1 billion yen (6.3%) over the prior fiscal year to 119.8 billion yen.
Although revenues from NTT Com’s cloud computing platforms increased 12.0 billion yen (22.8%) over the prior fiscal year to 64.9 billion yen, and revenues from applications and content increased 1.5 billion yen (4.3%) over the prior fiscal year to 38.4 billion yen, data networks revenues decreased 20.6 billion yen (5.3%) over the prior fiscal year to 370.8 billion yen, voice communications revenues decreased 26.5 billion yen (8.9%) over the prior fiscal year to 269.9 billion yen, and solutions services revenues decreased 0.8 billion yen (0.5%) over the prior fiscal year to 149.8 billion yen. As a result, NTT Communications’ total non-consolidated operating revenues decreased 34.0 billion yen (3.6%) over the prior fiscal year to 909.9 billion yen.
As a result of decrease of communication network charges from lower voice communications revenues, total operating expenses decreased 13.7 billion yen (1.7%) over the prior fiscal year to 816.8 billion yen.
As a result of the above, operating income decreased 20.3 billion yen (17.9%) over the prior fiscal year to 93.1 billion yen and net income decreased 11.6 billion yen (13.1%) over the prior fiscal year to 77.2 billion yen.