We would like to introduce some examples of initiatives for service creation addressed in NTT Group's Medium-Term Management Strategy.

Changes in the information communications market and NTT Group's initiatives are explained below.

In the information communications market, major changes are continuing to take place with the conversion to a broadband network.

In the information communication market, drastic changes are taking place. With the conversion to a broadband network advancing, convergence of fixed and mobile services, communications and broadcasting are taking place at an accelerating speed and new business models are being deployed by a variety of new businesses having entered this market that are different from conventional communications businesses. Amid these changes, pursuant to its Medium-Term Management Strategy, “Road to Service Creation Business Group” established in May 2008, NTT Group will promote expansion of an advanced broadband network and will create a variety of services using the network infrastructure.

NTT Group began the construction of the infrastructure for a fixed/mobile high-speed, large-capacity network earlier than others. It is about to complete the construction of infrastructure for realizing “service creation.”

For the fixed network services, NTT Group is promoting expansion of its B FLET'S service that connects to the Internet via high-speed, large-capacity fiber-optic lines - its service area now reaches approximately 90% of Japan, and by March 2011, NTT Group will make FLET'S Hikari Next, an NGN which is better quality and safer than B FLET'S, available in the entire B FLET'S service area.

On the other hand, with respect to broadband services that are categorized as mobile services, NTT Group launched a faster “FOMA HIGH-SPEED” service in 2006 which, from December 2008, is now available throughout Japan, in addition to the third generation network mobile service, FOMA, which was implemented in 2001 as a world first.

NTT Group is reforming its business structure by exploring new sources of income through “service creation.”

With respect to “service creation”, we hope to create new unprecedented services to private and corporate customers through collaboration with various business partners, in addition to the video services, digital cinema and digital signage services mentioned above and e-learning which will be introduced on the next page.
Through these efforts, NTT Group's business structure will be transformed to one centered around IP and solutions/new areas from the one centered around legacy business (fixed telephone lines, etc.), and the proportion of revenues from new core businesses is forecast to rise to 75% by March 31, 2013 from the 52% achieved in the fiscal year ended March 31, 2008.