NTT Communications Corporation (NTT Com) announced today that its non-consolidated financial results for the fiscal year ended March 31, 2012 saw net income decrease 15.5% year on year to 58.3 billion yen, operating revenues decrease 5.1% to 981.0 billion yen and operating income increase 13.4% to 105.7 billion yen. Operating expenses shrank 6.9% to 875.2 billion yen. All results are based on Japanese accounting principles.
Although some observers suggested that Japan’s economy gradually recovered from the effects of the Great East Japan Earthquake and floods in Thailand during the year, the outlook remained uncertain due to the slowdown in global economic growth, the European debt crisis, the continuing strength of the yen, the downturn in consumer confidence and the restrictive effect on economic activities caused by Japan’s limited supply of electricity. At the same time, ICT needs became increasingly sophisticated and diverse due to factors such as the accelerated global expansion of corporate activities, the market for cloud services shifting into high gear, the increasingly ubiquitous environment resulting from the rapid popularization of smartphone and tablet devices, and the popularization of social media. Furthermore, the structure of the ICT market rapidly evolved and global competition both intensified and diversified.
NTT Com is striving to become a global ICT services leader that customers worldwide choose as their optimal partner, and the company also aims to further improve its strengths, especially in Asia. Both objectives are central pillars of the company’s Vision 2015 growth strategy and corporate slogan "Global ICT Partner - Innovative. Reliable. Seamless." By FY 2015 NTT Com aims to achieve group operating revenues of 1.5 trillion yen, including more than double the FY 2010 level of global sales.
In FY 2011, the first year of Vision 2015, NTT Com fundamentally re-examined its business processes and upgraded on-site (field) capabilities, aiming to return to the growth track by leveraging inherent strengths. Changes were implemented rapidly and boldly, and were focused on providing services that enable customers to achieve enhanced value. In addition, measures were taken group-wide to achieve more seamless services, user coverage, operations and human resources.
In August 2011, resources and know-how dispersed throughout the company were restructured into three aggregated functions - sales, services and operations - placing a special emphasis on the keywords "service-orientation" and "seamlessness." The goal has been to optimize these functions under a restructured organization to realize greater competitive advantages.
In sales, the top priority was placed on sales skills and the development of new markets by proposing services that enable customers to enhance their value. Also, to offer greater value through more seamless global operations, innovative new changes were introduced in frameworks and procedures, such as establishing a structure for global account management and increasing the use of sales force automation for greater effectiveness and efficiency.
In services, related technologies as well as services were strengthened, structures were created for unified operations in all stages, from planning and technical evaluation to development and support, and new services were launched by leveraging development resources from the perspective of total optimization.
In accordance with the company’s Global Cloud Vision, total ICT outsourcing offerings were expanded to cover everything from networks and data centers to servers, applications and security, all on a seamless, end-to-end, one-stop basis to meet the needs of cloud customers. Also, cooperation among service units was strengthened for improved service development and delivery.
Specific measures taken by type of service were as follows:
- System Integration
In response to trends in the ICT field and changes in customers’ business models, NTT Com upgraded its global network to connect customer offices worldwide and migrated customers’ on-premise systems to cloud services. As a result, globally seamless, one-stop operations were realized and customers were offered total outsourcing services that helped them to improve their productivity and efficiency.
- Cloud Platforms
Cloudn was launched as a new public cloud service offering abundant APIs and priced attractively within the industry’s lower pricing tier. The Tokyo 5 Data Center began operating as a highly eco-minded facility with advanced disaster preparedness features. Construction started on the Tokyo 6 Data Center, which will become the metropolitan area’s largest data center, and the Cyberjaya 3 Data Center in Malaysia.
- Applications and Content
New services, such as Biz Mail and Biz Desktop, met customer needs for ICT outsourcing and telecommuting. Group subsidiary NTT Plala saw contracts for its Hikari TV fiber-optic cable service reach two million in March 2012, and the company launched its Hikari TV Dokodemo and Hikari TV Mobile services for smartphone and tablet users.
- Data Networks
In response to increased market demand for cloud and global services, NTT Com launched Arcstar Universal One, a new network service for corporate clients, and expanded overall service coverage to 159 countries. Two new services were launched to meet rapidly expanding mobile needs: the mobile data communication service OCN Mobile Entry D and the closed mobile service Arcstar Universal One Mobile.
- Voice Communication
Two new IP phone services compatible with smartphones and tablet devices were started: 050 plus and 050 plus for Biz. Also, the Arcstar Unified Communication Service offering globally seamless voice communication for multinational companies was enhanced with the launch of the UCaaS (Unified Communications as a Service) Plan, which provides access to multiple means of communication on a flexible cloud-basis, and the expansion of the SIP Trunking Plan for wider external dialing.
And finally, in the area of operations, productivity was enhanced through total optimization. For example, operations in which all procedures had been handled on a service/product basis were standardized and simplified for improved efficiency. In addition, global operations were optimized by reorganizing territories by language, platform equipment was simplified by introducing new methods and internal IT systems were aggregated through elimination and consolidation.
In addition, NTT Com enhanced its capabilities to provide value-added ICT services and meet the demands of multinational companies by acquiring Frontline Systems, an Australian provider of IT infrastructure, IT consulting and managed services. Also, an agreement was reached to acquire a stake in Netmagic Solutions, a leading provider of datacenter services in India.
Operating revenues declined again in the 2011 fiscal year. Voice transmission services revenues decreased 8.2% to 324.2 billion yen, IP services revenues were down 1.9% to 374.4 billion yen, data communications services revenues decreased 13.7% to 78.3 billion yen and solution services revenues declined 1.0% to 179.7 billion yen. Total operating revenues decreased 5.1% to 981.0 billion yen.
On the positive side, tighter cost controls lowered expenses for purchases of goods and services by 5.5% to 429.5 billion yen. Access charges decreased 10.4% to 236.5 billion yen due to lower voice transmission service charges. Total operating expenses declined 6.9% to 875.2 billion yen.
As a result, operating income increased 13.4% to 105.7 billion yen and net income decreased 15.5% to 58.3 billion yen, which included the booking of special profits of 3.7 billion yen on sales of real estate and special losses of 9.5 billion yen on reduced stock valuations.