May 14, 2004
NTT Com Announces Financial Results
For Fiscal Year Ended March 31, 2004
|TOKYO, JAPAN NTT Communications Corporation (NTT Com) today announced its non-consolidated financial results for the fiscal year ended March 31, 2004. The company had operating revenues of 1,106.6 billion yen, down 3.9% year on year, and recurring profit of 113.0 billion yen, down 21.1%. Although extraordinary losses were booked for the revaluation of shares held in NTT USA, Inc. and other affiliates, net profit rose 77.7% to 24.1 billion yen.
Ongoing technological innovation and economic globalization contributed to an increasingly dynamic telecom sector and further change in the company's operating environment. Broadband usage in Japan grew quickly, while usage charges fell to the world's lowest levels.
Information and communication technology (ICT) became even more important in both daily life and business. As customer needs diversify, ICT companies have adapted their business models to meet new requirements.
The ICT industry moved toward integrated solutions and managed services, focusing on valued-added performance finely tuned to customer needs.
In March 2003, the company adopted a new business model based on its vision of becoming a Global IP Solution Company. Competitors began following similar strategies, making it critical for NTT Com to be the first to meet diverse customer needs by offering the latest in innovative services.
To realize the vision of becoming a Global IP Solution Company within this challenging environment, NTT Com leveraged its existing communications infrastructure to provide timely services in four core business domains:
As a result of determined efforts to comprehensively upgrade corporate performance, NTT Com strengthened and expanded sales activities, improved operations and reduced costs.
- High value-added solution services with cutting-edge performance
- Network management services for one-stop management of complex networks and ICT resources
- Total security services for people, processes and technologies
- Global services to seamlessly support customers' worldwide business activities
Significant earnings growth was achieved in the four core domains and further progress was realized in firmly establishing NTT Com as a Global IP Solution Company.
In global services, NTT Com aggressively provided reliable IP services using extensive IP networks in the United States, Europe and Asia. The overall performance of international business improved dramatically thanks to improved results in Asian operations and Verio Inc.'s profitability on an EBITDA basis.
In solution services, the company expanded its involvement with systems integration, data centers, security, and platform services while helping customers improve operational efficiency and reduce total cost of ownership through open ICT systems and IP migration. The company acquired the operations of Crosswave Communications Inc., the first to offer WLAN Ethernet services in Japan, thereby solidifying NTT Com's position in the market for corporate broadband services. In addition, the company's personal solutions services lineup was enhanced by expanding and strengthening CoDen services.
In network management services, NTT Com moved on a number of fronts toward its goal of creating a ubiquitous networked environment for Internet-accessible appliances and other devices. The company spearheaded the formation of the Ubiquitous Open Platform Forum, in cooperation with 13 leading Japanese appliance manufacturers and Internet service providers, and initiated a pilot project to test a TD-CDMA broadband wireless service.
In security services, a security advisory board of outside experts was established. To enhance the security quality of NTT Com services, a security operations center was opened on a full-scale basis. NTT Com is further bolstering security services through such solutions as smart card applications and other promising opportunities.
1. Voice Transmission Service Revenues
As the demand for fixed phone services declined, NTT Com pursued revenue from domestic voice services by generating new traffic, such as by bundling IP services, enhancing communication with mobile devices and lowering rates for these services. The company increased market share and boosted revenues from international service through aggressive marketing and rate lowering. Efforts were made to increase the overall profitability of voice services.
Operating revenue from voice transmission services totaled 482.6 billion yen, down 6.2%.
2. Data Transmission Services
NTT Com's broadband subscriber base topped four million in November 2003 as the company steadily boosted its share of the broadband market. The "OCN" ISP service was embraced by a broad range of customers, from individuals to enterprises, due to surging demand for IP services and expanded OCN offerings, including the introduction of IP telephony as a standard OCN feature. In IP-VPN and other corporate data transmission services, the company expanded access services, broadened IP telephony services and launched new rate plans.
Operating revenue from data transmission services totaled 309.1 billion yen, up 3.2% from the previous fiscal year. Operating revenue from OCN services reached 123.9 billion yen, up 5.6%, and subscribers grew to 4.12 million as of March 31, 2004.
3. Leased-Circuit Services
NTT Com added bandwidth and both enhanced and expanded service level agreements in an effort to maintain revenue on a par with the previous fiscal year. Nevertheless, revenue declined as customers shifted to other services, such as low-cost IP-VPN.
Operating revenue from leased circuit services was 178.3 billion yen, down 16.6%.
4. Related Business
NTT Com combined its strengths in IP network services and other value-added services such as data centers, security and managed services (system monitoring and administration). Total solution services were promoted aggressively.
Operating revenue from related business totaled 136.4 billion yen, up 10.1%.
NTT Com will accelerate growth by expanding its core business domains in solutions, network management, security and global services. In accordance with the company's vision of becoming a Global IP Solution Company, NTT Com will carefully identify diverse customer needs and meet them with a broad range of integrated, value-added services featuring cutting-edge performance.
About NTT Communications Corporation (NTT Com)
NTT Communications is the long-distance and international communications subsidiary of Nippon Telegraph and Telephone Corporation (NTT), one of the world's largest telecommunications companies. The NTT Com group is recognized as one of the top IP service providers worldwide, offering world-class IP services under the NTT/VERIO brand together with Verio Inc., its U.S.-based wholly-owned subsidiary. NTT Com also offers Arcstar-brand global services for managed data and multimedia services. The company has garnered several awards for outstanding performance and customer service, including Best Carrier - Asia Pacific in 2002. For more information, please visit www.ntt.com