I would like to present here a brief introduction to “NTTis... 2011 Winter Edition,” and to take this opportunity to thank all shareholders for your continued support.

In the first half of the fiscal year ending March 31, 2012, NTT Group worked to expand broadband and ubiquitous services pursuant to its “Road to Service Creation Business Group” Medium-Term Management Strategy.

In the fixed-line communications field, we worked to deploy services that will lead to the enhancement of new use scenarios for FLET’S Hikari, including Wi-Fi use.^*1  We took measures to expand the range of broadband users by launching in eastern Japan the two-tier low fixed rate service “FLET’S Hikari Light,” for customers without any previous experience with using, or with few opportunities to use, the Internet.

With respect to the mobile communications field, we enhanced our handset lineup in response to the rapid increase in the popularity of smartphones. We also expanded the service area for “Xi” (read “Crossy”) services, which were launched in December 2010, to six major urban areas nationwide, in addition to Tokyo, Nagoya, and Osaka.  NTT Group also unveiled new billing plans, including a flat-rate option, and our first Xi-enabled tablet devices.

With respect to upper-layer services and solutions business, we continued to expand the content of our video and e-learning services, and worked to enhance the service menu of the cloud computing services. In addition, we launched “Arcstar Universal One,” a VPN^*2service with four different plans varying reliability levels and costs that enables corporate customers to deploy cloud-based network.
In the global business, we worked to enhance our service infrastructure by, among other things, acquiring overseas businesses and establishing overseas subsidiaries. NTT Group also established  committees consisting of all NTT Group companies to address issues such as NTT Group’s global strategies and human resources.  In addition, we established the Global Business Office to perform overall coordination of NTT Group’s efforts and reinforced our global strategy implementation structures.

In the first half of the fiscal year ending March 31, 2012, while voice-related service revenues declined, IP-related revenues increased as a result of growth in the number of FLET’S Hikari subscribers and an increase in the sales of smartphones.  System integration revenues increased due to an increase in the number of consolidated subsidiaries, including the addition of Dimension Data Holdings plc.  As a result, operating revenues increased by ¥155.5 billion compared to the same period of the previous fiscal year.  Despite the increase in operating income for NTT Communications and NTT DATA as well as for consolidated subsidiaries, operating income for NTT Group was ¥41.5 billion as a result of the decrease in operating income in each of NTT East, NTT West, and NTT DOCOMO.  However, we revised the forecast for operating income upward by ¥10.0 billion from the initial forecast announced in May 2011 to ¥35.1 billion, as we anticipate further growth in smartphone sales and an increase in operating income as a result of cost controls in fixed-line services during the second half of the fiscal year.

With respect to shareholder returns in the fiscal year ending March 31, 2012, we have decided to set the interim dividend at ¥70 yen per share and plan to increase the annual dividend per share by ¥20, from ¥120 to ¥140.  In determining the level of dividends, while considering stability and continuity, NTT will take into account a comprehensive range of factors, including operating performance, the dividend payout ratio, and its financial situation.

Also, on November 9, 2011, the Board of Directors decided to cancel approximately 125 million shares held as treasury stock and to acquire up to a total not to exceed 44 million outstanding shares of its common stock at a total amount not to exceed ¥220.0 billion by the end of March 2012.

I would like to conclude this message by thanking our shareholders in advance for your further understanding and support.

December 2011