Press Release

November 11, 2003

NTT Com Announces Interim Financial Results
For Fiscal Half Year Ended September 30, 2003

TOKYO, JAPAN — NTT Communications Corporation (NTT Com) today announced its interim non-consolidated financial results for the first six months of the current fiscal year, through September 30, 2003. The company had operating revenues of 535.2 billion yen, down7% or 40.4 billion yen year on year, operating income of 69 billion yen, down 7.7% or 5.8 billion yen, and recurring profit of 68.1 billion yen, down 6.6% or 4.7 billion yen. Interim net profit came to 10.9 billion yen as a result of extraordinary losses of 34.8 billion yen, which included evaluation losses on overseas investments.


In accordance with the company’s vision of becoming a "Global IP Solution Company," NTT Com is developing IP solutions on a worldwide basis to achieve total customer satisfaction. In addition, marketing activities are being fully aligned to the company’s growth model, which is based on four core business domains: solutions, network management (including ubiquitous networks), security and global services.

Changes in market environment and business base

The global market for data communications remains in flux due to ongoing technology innovation and price competition. At the same time, the build-up of telecommunications infrastructure, as highlighted by the rapid spread of broadband, is encouraging greater and broader application of IT by corporations and consumers.

With networks and IT becoming indispensable elements of both corporate and private life, customers are increasingly demanding carriers to provide highly reliable network services. Moreover, the globalization of corporate and individual activities has created needs for global-scale IT services and support. This is clearly evident in East Asia, where economic expansion, particularly in China, has led to the rapid development of IT markets.

NTT Com regards this environment as a great business opportunity, and intends to capitalize on this opportunity by providing comprehensive IT services that offer network reliability, service quality and security.


As part of realizing its vision of becoming a Global IP Solution Company, NTT Com is concentrating resources in four growth-oriented domains to create a strong, new base for earnings.

We are providing solutions that best meet the specific needs of varied customers.

We support corporate and government customers with open IT systems and IP migration services. We also provide solution services such as IC card-based verification and payment platforms, system integration based on VoIP technologies and total outsourcing.

We have made major contributions to the strengthening of IT in Japan’s national and local governments, including through the national government’s e-Japan project. Many local governments have adopted our "eLWISE" multipurpose, non-contact IC card system for public information systems — known as the Basic Residential Resisters Network System — recognizing its superior data capacity and security features.

Our aim is to become a full-service business partner for customers by providing network management and other solutions that enable companies to enhance service reliability and business efficiency, reduce total cost of ownership and realize other tangible benefits.

Services for individuals are aimed at enhancing the Internet experience based on our "CoDen" concept of providing the IT-based means for modern new lifestyles. Under this concept, NTT Com has been offering and expanding its "cocoa" service, an Internet-based file-sharing service that individuals can access anytime or anywhere from their PCs or mobile phones.

Principal solutions services (and related activities)

Support for greater use of IT by the national government and by local governments ("eLWISE" multipurpose non-contact IC card system)
Strengthened presence in the IP telephony market through services such as "OCN .Phone" for residences, "OCN .Phone Office" for SOHOs and VoIP services for ISPs and cable television operators.
".Phone IP Centrex," an IP-based enterprise telephony service that integrates voice and data to help companies reduce total costs and realize new ways of doing business.
More functionality of three major solutions for individuals ("cocoa," "WIDE plan" and "OPEN plan"), based on the "CoDen" concept of enhancing individuals’ lifestyles and creating new IT-based culture.

Network management (including ubiquitous networks)
We are providing complex networks and IT resources via seamless, secure and simply-managed one-stop services.

In July 2003, NTT Com launched in-house one of Japan’s largest centrally managed networks to demonstrate the forthcoming "Managed Office-IT" service. This new service is aimed to enable corporate and government customers to manage their administrative infrastructure in an effective, integrated manner while substantially reducing costs. The one-stop service will include not only housing and hosting for in-house networks and data centers, but also comprehensive outsourcing of corporate networks, data center-based housing and hosting, and management of office servers and client PCs.

We are enhancing our hosting services through collaboration with partners in Japan and overseas to develop next-generation platforms and added-value ERP solutions.

We are increasingly commercializing ubiquitous network technology, including wireless LAN Hotspot services. We now have hotspots in approximately 600 locations, including cafes, hotels and other commercial facilities, as well as public places such as airports and train stations. At the same time, we are complementing conventional monthly payments and daily-use prepaid cards with innovative new billing plans, such as charging based on volume of use.

Principal network management services (and related activities)

In-house model of the "Managed Office-IT" service for integrated management of administrative infrastructure, including client PCs and office servers.
Two top-level OCN hosting services: "Mail & Web Pro," an OCN hosting service, and "OCN Hosting VPS" for business partners.
Developed hosting services that link with ".NET Platform," Microsoft’s next-generation network business platform, to prepare for next-level hosting services.
Developed "PowerPortal," a web tool for the interactive management of hosting services.
Content that is both fun and useful, including "OCN" broadband media, to expand revenues.
Expanded secure mobile-solution services, such as "Mobile Connect," for enhanced efficiency in business.
IPsec functionality for client software, to support ubiquitous access to "Arcstar IP-VPN" via the Internet.
Broadband ethernet services, such as an expanded "e-VLAN" menu and the "Super HUB" service for small LAN-to-LAN communications.
Connectivity to ".Phone Centrex" via "e-VLAN" and "Arcstar IP-VPN."

We are providing total security services based on the most up-to-date technology and our expertise as a certified corporation under the BS7799 and ISMS standards.

During the interim period, we enhanced the functionality of "Safety Pass" by launching secure mobile services for corporate users. We also launched an electronic ticket service that combines e-money and IC card technologies. Going forward, we will develop more advanced, user-friendly services for multipurpose applications, including public and banking services. We will also work with mobile phone companies to develop handsets with IC chips, as well as form alliances and other collaborative relationships with a range of new partners in Japan and overseas.

Principal security services (and related activities)

Security checks and information via the "OCN Security WEB" service to encourage customers to use simplified, user-friendly security services.
Fully operational "Security Operation Center" (SOC) for security operations outsourcing.
Highly reliable security solutions, such as the "GuardIT" total security service, to help customers protect their security.
"Safety Pass" electronic ticket service with "Chocom" Internet e-money functionality.
"Safety Pass Mobile" service for mobile access to corporate networks.
Fully operational "BLADE" service, incorporating the PKI verification platform, electronic contracts, accounting ASP and other services for specific applications.

Global services
We are developing seamless global services to support the international activities of our customers. We are expanding our global IP services and global Tier 1 backbone, as well as global IP-VPN services incorporating data centers worldwide.

We have launched the "Global Disaster Recovery Solution" to help multinational companies avoid network crises in times of natural disasters or blackouts. The solution links data centers in Japan with premier NTT/VERIO data centers on the east and west coasts of North America for the emergency backup and recovery of data and applications.

In addition, NTT Com is helping to pioneer the next-generation IPv6 Internet by launching related services in Australia, Hong Kong, Korea, Taiwan, and the U.S., following previous launches in Europe, Japan and Malaysia.

We have also launched a content-distribution platform that content providers use for multicasting in Japan. In addition, we are participating in an international project to promote IPv6 in China.

Principal global services (and related activities)

"Global IP-VPN Solution Package" for one-stop construction and total management of seamless private networks in 124 countries.
"Global Disaster Recovery Solution" in Japan and the eastern and western United States.
"NTT/VERIO Web Hosting" as an official IT partner of UEFA Euro 2004™.


Income from IP services and other growth fields showed solid growth in the interim period. Operating income declined, however, due to contraction of the fixed-line telephone market, Japan’s prolonged economic slowdown and reduced incomes from voice telephony and dedicated-line/data businesses due to increased pressure resulting from the industry-wide adoption of competing Myline services. Recurring profit was in line with our initial forecast.

Data and IP Service Revenues
Although IP service revenue showed solid growth based on strong demand, a decline in revenues from leased-circuit services held total revenues to 289.9 billion yen, down 7.1% or 22.1 billion yen year on year.

The ADSL market continued to grow due to increasing demand for broadband services. "OCN" ISP services steadily increased ADSL market share, accumulating approximately 3.95 million subscribers as of the end of September. Growth was supported by offering more diverse access choices, enhanced security and other value-added services, enriched IPv6 services and higher quality due to the company’s strengthened backbone network.

IP, Leased Circuits and Data
Corporate customers continued to aggressively cut network costs and streamline their IT assets due to prolonged weakness in the Japanese economy. Companies increasingly transitioned away from leased circuits (dedicated-line, frame-relay and packet services) and shifted toward "Arcstar IP-VPN," "e-VLAN" and other services that combine the benefits of broadband with lower costs.

For corporate customers, we expanded the reach and diversity of our access choices, adding, for example, mobile access to "Arcstar IP-VPN" and "e-VLAN." As a result, we capitalized on demands for lower network costs and greater bandwidth. We also enhanced network management and other value-added services and expanded into new markets for next-generation enterprise networks.

System Integration and Others
In the field of IP network services, one of NTT Com’s key strengths, we aggressively developed total solutions that integrate data center, security and managed (monitoring and operation) services.

Voice Service Revenues
Voice service revenues came to 245.3 billion yen, down 6.9% or 18.2 billion yen year on year. The decline was due to the bundling of IP services with existing voice services and expansion of mobile services to counter revenue lost through contraction of the fixed-line market. Performance was also affected by measures taken to reduce costs associated with telephone services, aiming at greater overall profitability.

For the year, declines in revenues are forecast for telephone and data/leased-circuit services. Nevertheless, we expect to improve earnings by aggressively continuing to cut costs while developing key IP business domains that are rapidly becoming new pillars of the company, namely, solutions, network management (including ubiquitous networks), security and global services.

In international business, where the balance between revenues and expenditures has been improving substantially, we expect to achieve a surplus in fiscal 2005.


1. NTT Communications Corporation
(Based on Japanese accounting principles)

2. NTT Communications Corporation
(Based on Japanese accounting principles)

(Based on Japanese accounting principles)

4. NTT Communications Corporation
(Based on Japanese accounting principles)

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