Press Release

November 10, 2004

NTT Com Announces Interim Financial Results
For Fiscal Half Year Ended September 30, 2004

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, 2004. Operating revenues came to 525.3 billion yen, down 1.8% or 9.8 billion yen year on year. Operating income totaled 47.9 billion yen, down 30.5% or 21 billion yen, recurring profit came to 46.7 billion yen, down 31.3% or 21.3 billion yen, and interim net income amounted to 27.7 billion yen.


Company Vision

Since 2003, NTT Com has been evolving into a "Global IP Solution Company" to help customers solve problems and meet needs for advanced communications. To further this vision, NTT Com is focusing its future 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 information and communications is experiencing severe competition due to technical innovation, resulting in confusion and uncertainty as certain companies leave the market. At the same time, customer demands for seamless networks are diversifying as multinational corporations expand their activities to globalize their operations, particularly in China and India.

The Japanese market for information and communications is also experiencing intense competition due to the growing popularity of IP telephony and ongoing mergers and acquisitions. Moreover, IT's emerging role as an indispensable tool both for business and private life is intensifying customer demands for reliability and convenience. To satisfy these demands, businesses in the Japanese market must provide integrated services and adopt new business models.

NTT Com, aiming at capitalizing on the opportunities it sees in this changing environment, is creating comprehensive IT services that combine network reliability, assured security, IT asset management and international access.


As a Global IP Solution Company, NTT Com is strategically concentrating its resources on four growth-oriented domains to create a new base for earnings.

1. Solutions

NTT Com is creating new business models and lifestyles through services that offer true value and usefulness for the customer.

NTT Com helps corporate and government customers improve efficiency and reduce total cost of ownership. This is accomplished with services that combine platforms for security, mobile communications, managed services and more, as well as providing everything from network construction to server operation and monitoring. For example, solutions using employee-identification smart cards enable customers to monitor office entry/exit and employee cafeteria payments, creating a more secure and convenient office environment. Elsewhere, solutions are being developed to combine transportation and financial applications in a single smart card.

To make the Internet environment more friendly for individuals, NTT Com's "CoDen" concept provides personal solutions tailored to specific lifestyles. For example, NTT Com offers high-speed Internet, IP telephone and video communication in a fiber-optics package for households (CoDen Hikari service) and IP videophone communication (.Phone Personal V). The company's music download service (OCN Music Store) is the first offered by an ISP in Japan.

Principal solutions services (and related activities)

Comprehensive managed services for constructing and operating networks, from servers to applications.
Smart card solutions for employee-information security management.
Total mobile solutions for improved corporate efficiency and security involving multiple carriers and multiple devices.
Newly launched CoDen User Support Plan for going into customers' homes to set up Internet connections and provide instructions.
Newly launched CoDen service integrating high-speed Internet connection, IP telephone and video communication using fiber optics.
Newly launched .Phone Personal V service for broadband IP videophone.
Newly launched OCN Music Store for downloading music.

2. Network Management

NTT Com provides sophisticated networks and IT resources via seamless, secure and highly simplified one-stop services. During the interim period, the company launched its value-added AGILIT hosting service, which combines automated operation processes, IT infrastructure management and security. The company's integrated VPN solutions centralize all services, from applications to maintenance/monitoring, by freely combining various VPN services, including the construction of ubiquitous environments for mobile connection to VPN.

Principal solutions services (and related activities)

Newly launched AGILIT hosting service combining automated operation processes, IT infrastructure management and security.
Newly launched Group-VPN, an economical, easy-to-build broadband VPN service for businesses using ADSL technology.
Japan's first trial demonstration of compatible, interoperable RFID (radio frequency identification) tags.
Expansion of HOTSPOT service area for public wireless LANs.
Newly launched ubiquitous-solution service for unprecedented mobile connection to VPN at speeds up to 384 Kbps.
Newly launched .Phone Web Connect service for corporate Web conferencing.

3. Security

NTT Com provides comprehensive security services that incorporate state-of-the-art technology and comply fully with the BS7799 and ISMS security-management rating systems.

During the interim period, NTT Com launched the Personal Data Protection Strategy Total Solution service, which combines preventative information-security solutions with liability insurance for security breeches. The service is yet one more way that NTT Com creates secure environments.

Principal security services (and related activities)

Newly launched Personal Data Protection Strategy Total Solution (in conjunction with Tokio Marine & Nichido Fire Insurance Co., Ltd.).
Trial demonstration of planned Cyber Security Net Service for satellite distribution of anti-virus pattern files and security patches (conducted with satellite operator JSAT Corp.).

4. Global Services

NTT Com creates seamless, one-stop global services to support multinational business activities.

UEFA EURO 2004™, for example, used the high-quality hosting system of NTT Com's U.S. subsidiary company Verio Inc. to handle 500 million page-views. In India, NTT Com set up an office to directly serve multinational software developers and call centers, and also launched an international MPLS-type IP-VPN service, a first for a Japanese carrier.

Principal global services (and related activities)

Newly launched Japanese-language version of UEFA EURO 2004 website and member-only UEFA EURO 2004 premium site (fee-based).
Newly launched G-V2oIP service for global voice/video integrated solutions.
Newly launched international MPLS-type IP-VPN service in India.


Revenues from fixed-line telephone services declined due to intensifying competition, and revenues from leased-circuit services showed an expected decline as customers continued shifting to low-cost IP services. Revenues from data communications, including IP services, however, showed firm growth.

Overall, operating revenues and recurring profit both declined year on year, reflecting the severity of competition in the market.

1. Voice Communications Services

Revenues from voice communications services declined due to the shrinking market for fixed-line telephone services and intensifying competition in the IP telephony market. In Japan, NTT Com supported revenue levels by securing more relay traffic for fixed-line-to-mobile communications. In international telephone services, the company's revenue strategy focused on growing market share through aggressive marketing and reduced call rates.

Operating revenues for voice communications services came to 229.8 billion yen, down 6.3% or 15.4 billion yen year on year.

2. Data Communications Services

Data communications service revenues grew steadily as customer needs for IP services expanded. As of September 2004, approximately 4.36 million users were subscribing to NTT Com's OCN ISP service, which has been enhanced with high-speed ADSL.

Operating revenues for data communications services came to 168.1 billion yen, up 11.7% or 17.5 billion yen year on year.

3. Leased Circuit Services

Leased circuit service revenues declined due to competition from cheaper IP-VPN and VPN services that leverage the Internet. For those customers who place maximum priority on quality, reliability and security, however, NTT Com launched a simple, highly reliable leased circuit service called Giga Stream.

Operating revenues for leased circuit services came to 70.1 billion yen, down 20.4 % or 18 billion yen year on year.

4. Other Services

NTT Com aimed to increase revenues from other value-added services, including hosting and various services that leverage its extensive and highly advanced facilities.

Operating revenues for other services came to 12.6 billion yen.

5. Related Businesses (System Integration, etc.)

NTT Com steadily increased revenues from related businesses, including value-added services that provide comprehensive solutions for customer facilities and systems, such as data-center, security and managed (monitoring and operation) services.

Operating revenues for related businesses came to 44.5 billion yen.


Voice communications service revenues will continue to decline due to the increased use of IP telephony and the competitors' launch of direct fixed-line phone services. In response, NTT Com will work to maintain revenues with innovative new offerings, such as the direct IP-to-fixed-line phone service using fiber-optics broadband for business users, as well as the Pl@tinum Line service, which aggressively reduces call rates for individuals and small/home offices (SOHOs).

Leased circuit revenues are also expected to be impacted negatively as customers continue to shift to low-cost IP services. NTT Com will counter this trend with continued cost cutting and strategic concentration of corporate resources in IP services, which represent the company's main source of new revenues.


(Based on accounting principles generally accepted in Japan)

(Based on accounting principles generally accepted in Japan)

(Based on accounting principles generally accepted in Japan)

(Based on accounting principles generally accepted in Japan)

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 over 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 "Best Global Carrier - 2004." For more information, please visit http//