May 13, 2003
NTT Com Announces Financial Results
For Fiscal Year Ended March 31, 2003
|TOKYO, JAPAN NTT Communications Corporation (NTT Com) today announced its non-consolidated financial results for the fiscal year ended March 31, 2003. The company had 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.
Innovations in IT continue to progress dramatically on a global scale, but decreased capital expenditure by corporations and depressed consumer spending resulted in unprecedented economic structural changes, thereby further complicating the recovery of the global economy. Nevertheless, Asian economies, especially China, developed rapidly in terms of consumer, manufacturing and labor markets.
Telecom and IT companies were forced to cope with strong demands from users for low-cost services, as well as develop new cutting-edge services based on the latest technology. New business opportunities began to appear, as corporations used IT to reorganize supply-chain management and other operations, as well as reduce costs. In the expanding markets of East Asia, especially China, new capital investment increased the demand for IT products and services. In Japan, carriers expanded the broadband environment, which helped to grow the overall IT market. New business opportunities are expected to emerge as a result.
NTT Com attained its goal of becoming a full-fledged Global IP Company during the year, using secure, high-quality services to meet diversifying needs for global Internet solutions. Offerings were enriched under the companys e-theater concept, turning global IP networks, data centers and platforms into an electronic stage for the provision of one-stop IP services.
The company enhanced its ability to support global needs, including by strengthening its marketing of NTT/VERIO IP-based global services through upgraded consulting and new business partnerships.
Business processes were improved by integrating resources for customer support and services, including operating systems, human resources and organizations, and by cutting costs.
As a result of completing its transformation into a Global IP Company, NTT Com became Japans number-one provider of IP services, including IP-VPN, during the year. NTT Com also led all carriers in Asia in terms of traffic handled in the region, thereby further solidifying the companys presence in the global marketplace.
The companys ratio of revenues from data/IP services versus voice services, known as the D/V ratio, a key benchmark of NTT Coms evolution, rose to 1.1 : 1, compared with 1 : 1 in the previous year.
The fourth annual World Communication Award (WCA) program presented NTT Com with the Best Carrier Asia-Pacific and Best Technology Foresight awards in recognition of the companys active development of the Asian market and standardization and commercialization of IPv6, respectively. NTT Com is the first Japanese carrier to receive these two awards in the same year.
NTT Com also obtained BS 7799 and ISMS Compatibility Evaluation System certifications as part of enhancing its security management capabilities.
As a result of these and other efforts, the company completed its transformation from a provider of conventional telephony to IP services, thereby consolidating its foundation as a Global IP Company.
Data and IP Service Revenues
Operating revenues totaled 637.3 billion yen, down 6.7% or 45.4 billion yen. The demand for IP-based services steadily grew, mainly among the companys OCN ISP services, but revenues for leased-circuit and packet-transmission services decreased.
1. OCN ISP Service Revenues
For OCN individual customers, we launched a variety of new services featuring high levels of security, simplicity and enjoyment:
Secure OCN was launched to provide corporate users with highly secure broadband Internet.
- OCN ADSL Access 12M (A) for broadband access
- OCN. Phone for IP telephony that allows ADSL users to use VoIP with existing telephone handsets and numbers
- OCN ADSL Kaitsuu Tokoton Support (OCN ADSL Set-up Support) to help first-time users begin to enjoy our ADSL services quickly
- Promotions offering OCN discounts, such as Debut Price and the Naruhodo 0 Yen Campaign
- More value through enriched online content and Personal Firewall Service for online security
- Integrated NTTPC Communications InfoSphere ISP service for individuals as an OCN service
- Commenced merging DreamNet service with OCN services by wholly acquiring DreamNet Corporation
OCN subscribers totaled approximately 3.5 million at the end of March 2003 and revenues came to 117.4 billion yen, up 15.2% or 15.4 billion yen.
2. Leased Circuit and Data Revenues
NTT Com enhanced its IP-VPN and transparent LAN Ethernet e-VLAN service lineup in response to a rising demand for broadband corporate networks. As a result of customers cutting network costs and integrating their operational bases, leased-circuit and packet-transmission networks were terminated and migrated to less expensive IP-based services. Main achievements during the year included:
Leased circuit and data revenues came to 388.2 billion yen, down 8.2% or 34.7 billion yen.
- Enriched the Arcstar IP-VPN service menu with value-added features, including IP multicasting, IPv6 communications and by adding ubiquitous features, such as mobile access functionality
- Expanded e-VLAN service area to nationwide level in Japan and enriched access network
- Introduced Ether Arc Stream, a secure, reliable and highly versatile broadband Ethernet service with guaranteed bandwidth
3. Solution Services
NTT Com introduced new solutions incorporating system integration and outsourcing services using IP network resources, which helped users to manage operations more effectively:
- Total outsourcing solutions, such as managed services and hosting, to help customers realize cost reductions, information management security and network maintenance/operation efficiencies
- Corporate network security services, such as GuardIT, backed by newly obtained BS 7799 and ISMS Compatibility Evaluation System certifications
- IT services for central and local governments, such as IC card and e-government solutions in line with the governments e-Japan strategy
4. Data Center Services
- NTT Com developed bundled services that combine IP networks with colocation, hosting and security features. Also, the Tokyo East data center began operating as one of the companys two main data centers in Japan.
Voice Service Revenues
Revenues came to 514.7 billion yen, down 13.1% or 77.5 billion yen. Main factors included the fixed-line markets 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. Two competitively-priced new services that package fixed-line telephone, OCN ADSL and mobile phone communications were introduced: the FL@T ONE fixed-fee service for corporations and the Shabericchi Plus service for individuals. New users for international call services were acquired through the launch of various discount services. New traffic was generated by marketing value-added telephony services such as Navidail and Tele-Gong.
FUTURE GROWTH STRATEGY
NTT Com announced in March a new business strategy to transform the corporation from a Global IP Company to a Global IP Solution Company to better meet the growing Internet-based needs of its users.
About NTT Communications Corporation (NTT Com)
NTT Com, a Tokyo-based subsidiary of Nippon Telegraph and Telephone Corporation, provides long-distance and international services for voice, video and data communication reaching more than 200 countries. NTT Com also provides world-class IP services under the NTT/VERIO brand, as well as managed data, multimedia and additional services under the Arcstar brand. For details, please visit www.ntt.com