Press Release

November 9, 2007

NTT Com Announces Interim Financial Results
For Fiscal Half-Year Ended September 30, 2007

TOKYO, JAPAN – NTT Communications (NTT Com) today announced its non-consolidated financial results for the fiscal half-year ended September 30, 2007. Half-year operating revenue increased 2.7% year on year, or 14.7 billion yen, to 562.1billion yen. Operating expenses declined 3.2% or 16.6 billion yen to 498.9 billion yen and recurring profit increased 99.3% or 35.8 billion yen to 71.9 billion yen. Net income rose 120% or 21.5 billion yen to 39.5 billion yen. All results are based on Japanese accounting principles.


Japan’s information and communications market continued to evolve through expanding access to broadband, mainly via fiber-optic connections and services. A key result was the further proliferation of search engine-driven portal services, online video services and consumer-generated media, such as social-networking services and blogs. In addition, society became less layered, or "flatter," in terms of the speed of accessing and distributing information.

The ways in which companies and consumers interact became more varied, and ongoing progress in information and communication technology resulted in dramatic changes in lifestyles and corporate business models.

At the same time, the global information and communications industry continued to evolve in terms of its competitive environment. Mergers and acquisitions mainly among Internet-related companies, for example, led to further consolidation in the United States and Europe.


NTT Com’s operations continued to be guided by the desire to generate greater customer benefits from more effective linking of its six core business domains -- solutions, network-management, security, global, ubiquitous and portal/engine services -- as outlined in its Business Vision 2010 strategy for group growth.

Under a new branding concept called “ICT Solution Partner,” corporate business services were strengthened by;
Reorganization of business divisions on an industry-by-industry basis in April, and enhancing related system-engineering capabilities.
The new “Multi-Policy VPN for OCN” service enables users to connect to VPN by choice of group or client, rather than by location point under the previous arrangement
NTT Com's high-quality, highly reliable, leased-line service, Giga Stream, introduced Japan's first 40Gbps service.

In global services;
NTT Com inaugurated China’s first premium data center, based in Shanghai, to provide high-quality, highly reliable infrastructure and operations
An office was established in Tianjin, the NTT Com group’s eighth office in greater China including Hong Kong and Taiwan, enhancing the company’s one-stop profile in this market
In the United Arab Emirates, NTT Com became the first Japanese carrier to launch a global MPLS based IP-VPN service in the Middle East region. Telemark Services, a marketing services corporation in the Untied Kingdom, awarded NTT Com's global data VPN with top honors for customer satisfaction

To strengthen Internet-related business under a its branding concept “CreativE-Life for Everyone;”
NTT Com expanded sales of OCN Hikari with FLET’S, an optical-fiber access service, and offered enhanced e-mail security services (virus and spam protection) to users of its OCN ISP service
Launched My Address Plus, which enables users to obtain e-mail addresses with ".jp" domain names of user’s choice
A high-definition, multi-channel broadcasting service that NTT Com’s subsidiary had been offering via 4thMEDIA was added to the OCN Theater menu to further centralize video distribution services.

In the ongoing field trial for next-generation network (NGN) services, organized by NTT group, NTT Com in May enabled general users to experience and evaluate these services in terms of visual quality and usefulness for the Retransmission of Digital Terrestrial Television (DTT) over IP and the High-Definition IPTV Service trial


Overall operating revenue increased 2.7% or 14.7 billion yen to 562.1 billion yen. Solutions revenue increased considerably compared to the previous year, and operating revenue rose solidly among IP services for OCN-brand Internet access, IP-VPN, and wide-area Ethernet services. Revenue from voice and data communications, including leased lines and packet switching, continued to decline.

Costs rose moderately in conjunction with increased solutions revenue, but effective cost controls related to overall business resulted in operating expenses decreasing 3.2% or 16.6 billion yen to 498.9 billion yen. Operating income rose 98.5% or 31.4 billion yen to 63.2 billion yen, and recurring profit rose 99.3% or 35.8 billion yen to 71.9 billion yen.

1. Solutions service revenue rose 36.1% or 21.4 billion yen to 80.7 billion yen. A high value-added solution provision scheme was realized in August 2006 through the transfer of corporate business departments from NTT East and NTT West to NTT Com and through the reorganization of business divisions on an industry-by-industry basis in April 2007. The result has been an upgrading of consulting services that are now positioned to offer consulting tailored more closely to each customer's specific operational requirements. Client corporations undertook robust investment in information technology, with several large orders supporting profit growth.

2. IP service revenue rose 4.0% or 6.3 billion yen to 163.8 billion yen due to higher revenue from wide-area Ethernet services and IP-VPN services and growth in OCN-brand ISP service subscriptions, which exceeded 6.57 million at the end of September 2007.

3. Voice transmission service revenue declined 2.1% or 4.9 billion yen to 227.6 billion yen as call revenue continued to decline in a shrinking market typified by fewer fixed-line contracts and the shifting of voice transmission from fixed-line to mobile phone services, expansion of e-mails. NTT Com responded with a sustained effort to increase revenue through provision of a variety of packaged solutions, such as toll-free services, and aggressive marketing of its PL@TINUM LINE discount calling plan.

4. Data communications services (excluding IP) declined 6.9% or 5.5 billion yen to 75.5 billion yen due to customer migration to IP services – IP-VPN and wide-area Ethernet services – from leased circuit services. Efforts to sustain revenues included offering Giga Stream with an Ethernet interface.

Despite some cost increases experienced in conjunction with changes in the growth of solutions-related revenue, overall operating expenses declined 3.2% or 16.6 billion yen to 498.9 billion yen as the result of operating process and value chain rationalizations; decreased purchasing of goods and services by standardized procurement processes; and overall cost controls, including effective control of capital investment, across all business areas. Recurring profit increased 99.3% or 35.8 billion yen to 71.9 billion yen.

As a result, operating income rose 98.5% or 31.4 billion yen to 63.2 billion yen. Net income rose 21.5 billion yen to 39.5 billion yen, reflecting a special profit of 12.0 billion yen accruing from the portion of the employees’ pension fund that the company managed on behalf of the government being returned to the government. Special losses of 9.6 billion yen included revaluation of NTT America, Inc. and other companies and reserve for point services.


NTT Com will bolster its overall business platform by continuing to link its six core business domains according to the plan outlined in its Business Vision 2010 strategy for group growth.

For corporate business operations, the company, as an “ICT Solution Partner,” will enhance its problem-solving consulting services by focusing on on-site consulting tailored more closely to each customer's specific operational requirements and by providing high value-added ICT solutions such as system and network integration. For example, the company will function as a one-stop supplier for advanced ICT solution services embracing fixed/mobile communications and expand its business to meet the needs of corporate customers. Strong efforts will be made to sustain its track record of delivering high-quality, highly advanced services.

Turning to global services, NTT Com will continue to focus its efforts on maintaining internal infrastructure and enhancing the corporate scheme for advancing service quality in order to function as a total ICT solutions provider delivering comprehensive network, data center, hosting, and security services. The company also will expand business activities supporting Japanese and foreign clients with global operations. In addition to current data communication services, the company will provide high valued-added solutions such as global data centers.

For the purpose of strengthening its Internet-related business under the branding concept “CreativE-Life for Everyone,” NTT Com has made possible ID sharing between the “goo” portal and OCN ISP accounts and has introduced My Affiliate, an affiliate-marketing service for promotion of Web-based businesses. In October, NTT Com group launched “goo Home”, a social-networking service. These developments represent the fruits of NTT Com’s efforts to more effectively meet diversified customer needs and enrich their Internet experience. NTT Com will continue to enhance its B2B2C business by developing highly advanced services promoting the business-to-consumer interface.


1. Non-Consolidated Comparative Balance Sheets
(Based on accounting principles generally accepted in Japan)

2. Non-Consolidated Comparative Statements of Income
(Based on accounting principles generally accepted in Japan)

3. Non-Consolidated Statements of Changes in Shareholders' Equity and Other Net Assets
(Based on accounting principles generally accepted in Japan)

4. Business Results (Non-Consolidated Operating Revenues)
(Based on accounting principles generally accepted in Japan)

5. Non-Consolidated Comparative Statements of Cash Flows
(Based on accounting principles generally accepted in Japan)


For more information
(Mr.) Takaaki Mitani or (Mr.) Toru Maruta
Accounts and Finance Department,
NTT Communications
Tel. +81 3 6700 4311
For more information, please contact.