May 12, 2006
NTT Com Announces Financial Results
for Fiscal Year Ended March 31, 2006
|TOKYO, JAPAN NTT Communications (NTT Com) today announced its non-consolidated financial results for the fiscal year that ended March 31, 2006.
Operating revenues totaled 1,127.8 billion yen, up 3.5% or 37.8 billion yen year on year, and recurring profit 71.8 billion yen, up 5.7% or 3.8 billion yen. Net income rose 27.8% or 6.8 billion yen to 31.4 billion yen, including special profits of 69.0 billion yen (comprising 43.7 billion yen from the sale of shares in Philippine Long Distance Telephone Co. and 22.3 billion yen in distributable income from the dissolution of NTT Investment Singapore Pte. Ltd.) and special losses of 46.1 billion yen (comprising revaluation losses of 11.5 billion yen on holdings in JSAT Inc., 19.1 billion yen on holdings in NTT USA, Inc. and 10.1 billion yen on holdings in NTT Europe Ltd.). All results are based on Japanese accounting principles.
The global market for information and communication technologies (ICT) experienced intensified competition because of technological innovation, economic globalization, and rapid progress in service convergence, including fixed and wireless communications convergence, communications and broadcasting convergence, and triple-play offerings of Internet access, VoIP and video service. Users continued to shift away from fixed-line phones, leased circuits, frame relay and other conventional services, toward VoIP, IP-VPN and other IP-based services.
Competition intensified and new markets emerged due to the massive reorganization of the telecom industry in the United States and increasing demands of multinational customers operating in China, India and other parts of Asia.
NTT Com, anticipating the business opportunities resulting from such developments, is attempting to meet sophisticated customers needs by providing comprehensive, one-stop ICT solutions and creating new business models.
Guided by its vision of becoming a Global IP Solution Company, NTT Com added ubiquitous services to its four core business domains solution, network management, security and global services and thereby moved closer to the goal of offering ubiquitous networking.
NTT Com also reorganized operations to enhance its customer focus and ability to respond more quickly to market changes. NTT Com reorganized company-wide value chains and business practices, and introduced training systems that better develop frontline empowerment and character quality. By placing top priority on customers and market needs in its business practices and services, NTT Com expects to increase revenue in strategic growth areas, and transform its earnings structure.
As a result of these operations, revenues in voice (excluding IP services), IP and solution services showed steady growth while revenues in data service (excluding IP services) declined due to the severe competition and the shift toward inexpensive IP services.
In global services, the Global Business Division was established and subsidiaries were reorganized geographically into European, American and Asian regions, intended to strengthen competitiveness and earnings. A new Indian subsidiary enabled faster response to local needs. NTT Com was recognized for offering the Best Customer Care at World Communication Awards 2005.
In solution services, corporate customers were offered one-stop solutions to reduce the total cost of ownership and improve productivity and operational efficiency. For individuals, the company strengthened its lineup by offering expanded security services and the next-generation OCN IPv6 service.
In network management services, NTT Com offered outsourcing solutions that simplify customers complicated networks and IT resources, while enhancing seamlessness and security. These were offered through seamless, secure services under a simplified, one-stop format for increased customer value.
In ubiquitous services, NTT Com offered value-added solutions converging fixed and mobile networks. The new Smart Biz Kit enabled users to securely access corporate internal systems via mobile devices.
In security services, NTT Com provided comprehensive security solutions using the latest ICT and IC-card technologies to control facility access, protect hardware assets, and prevent unauthorized breaches.
The company responded to the newly implemented Personal Information Protection Law by providing related training for all employees, strictly prohibiting the removal of PCs from office premises, and running vendor checks. In view of the critical role of compliance to ethical business practices, promotion managers were assigned to oversee compliance and conduct compliance training for all directors and employees. In addition, the newly established Corporate Social Responsibility Committee issued its first CSR report.
1. Voice Services
Operating revenues from voice transmission services (excluding IP services) rose 7.3%, or 32.1 billion yen, to 472.7 billion yen. Despite the challenging conditions of the market, revenue rose with the help of various services including the Pl@tinum Line service and toll-free service.
2. IP Services
Operating revenues from IP services rose 9.2%, or 25.5 billion yen, to 303.8 billion yen. The number of subscribers to OCN-brand Internet access services totaled 5.29 million at the end of March 2006, aided by strong sales of the OCN Hikari with FLETS service. Integrated VPN services, which offer various combinations of four different VPN services, also contributed to revenue growth.
3. Data Communications Services
Operating revenues from data communications services (excluding IP services) dropped 16.8%, or 35.8 billion yen, to 176.9 billion yen. Simple, highly reliable services helped to partly offset the decline in revenue due to users shifting to IP-VPN.
4. Solutions Services
Operating revenues from solutions services rose 10.5%, or 13.2 billion yen, to 139.0 billion yen, thanks to comprehensive solutions including data centers, security services and managed services (monitoring and operation).
Other operating revenues, mainly for the leasing of facilities and resale of products, increased 8.5%, or 2.7 billion yen, to 35.2 billion yen.
Going forward, NTT Com intends to strengthen its core business domains, including market-in global security solutions and corporate mobile solutions, to provide customers with one-stop services, developing new business models and meeting business challenges as an ICT Solution Partner.
About NTT Com
NTT Communications is a subsidiary of Nippon Telegraph and Telephone (NTT) Corporation (NYSE: NTT) - one of the world's largest telecommunications companies. NTT Com provides high-quality, technologically advanced network management, security and solution services to consumers, corporations and governments on a global basis, with a special focus on the Asia-Pacific region. Its world-class backbone network, combined with the networks of partner companies around the world, offers access to more than 200 countries. NTT Com Group has more than 30 companies in the Asia-Pacific region, Europe and the Americas. The company has garnered several awards for its leading edge technologies, outstanding performance and customer service, including "World Communication Awards Best Customer Care - 2005." For more information, please visit http://www.ntt.com