Overview of Interim Consolidated Settlement

With further advances in broadband, which enables the rapid transmission of large amounts of data, and in ubiquitous computing, which enables the exchange of information at any time and from anywhere, the market environment continues to undergo dramatic change. It is under these conditions that NTT Group has focused its efforts on the promotion of the Medium–Term Management Strategy.

• In the field of FTTH services, through aggressive campaigns and robust marketing of an enhanced service lineup, the number of B FLET’S subscribers surpassed 4 million.
  
  
• For FOMA, NTT’s third generation mobile phone services, NTT Group has expanded and upgraded its handset offerings and expanded services areas. As a result, FOMA subscribers account for more than 50% of total mova and FOMA subscribers. The shift from mova is thus proceeding at a healthy pace.
  
  
• Internet connection and Internet portal services and upper–layer services such as video distribution services were consolidated within NTT Communications Corporation. The aim is to two–fold: to increase NTT Group’s business efficiencies and to realize synergies among the various services, thereby providing even more attractive services to customers.
  
  
• For corporate services, for the purposes of providing customers with one–stop service and achieving more efficient utilization of management resources, we conducted a review of NTT Group’s customer service account system in August.
  
  
• Moving towards the construction of the Next–Generation Network, we announced the interface conditions for and started accepting applications to participate in field trials that are to commence in December 2006.
  
  

• Operating revenues were 5,249.3 billion yen, an increase of 17.8 billion yen (0.3%) from the corresponding period in the previous year, the first year–on–year increase in three fiscal years. The increased revenue reflects expansion of B FLET’S and other IP–related services and increased contribution by the solutions businesses.
  
  
• Continued efforts to reduce personnel and other expenses were offset by increases in handset costs and other marketing–related expenses, with the result that operating expenses increased 89.7 billion yen (2.0%) from the previous year, to 4,557.8 billion yen.
  
  
• While operating income fell 71.9 billion yen (9.4%) from the corresponding period in the previous year, to 691.5 billion yen, this figure is well on target to achieve the goal of “increased revenue, increased income” over the full year, as it represents a 57.6% achievement of the figure for operating income figure (1,200 billion yen) in the annual plan.
  
  

• There has been no change to the projected annual results announced in May 2006.
  
  
• Forecasts are for operating revenue of 10,800 billion yen and operating income of 1,200 billion yen, meaning increases in both operating revenue (58.9 billion yen) and operating income (9.3 billion yen) from the previous year.