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NTTis... Autumn 2012

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Message from Hiroki Watanabe, Representative Director and Senior Executive Vice President

In recent years, the information and telecommunications market has continued to undergo major changes and developments.
Hiroki Watanabe, Representative Director and Senior Executive Vice President in charge of NTT Group’s business strategy, looks back at NTT’s business activities to date and discusses its policies going forward.

How would you evaluate the results for the fiscal year ended March 31, 2012?

Hiroki Watanabe Representative Director and Senior Executive Vice President

Operating revenue and operating income for the fiscal year ended March 31, 2012 increased for the second consecutive fiscal year. As for the Medium-Term Management Strategy announced in May 2008, NTT Group worked towards its five indices, under the slogan of “Service Creation.” With respect to NTT Group’s transformation of its business structure, revenues from its IP businesses and solutions*1 businesses represented 70% for the fiscal year ended March 31, 2012 and NTT Group anticipates achieving its forecast of 75% for the fiscal year ending March 31, 2013. NTT Group also achieved a surplus in Hikari services, a core service of its fixed-line communications business for the fiscal year ended March 31, 2012. With respect to global businesses, NTT Group achieved sales of 11.6 billion dollars and reached its target one year ahead of schedule. With respect to the ratio of capital expenditures to sales (“Capex to Sales”), NTT Group will continue to make improvements by enhancing the efficiency of capital expenditures. Lastly, with respect to consolidated operating income, NTT Group anticipates substantially achieving its business forecast of 1,280 billion yen for the fiscal year ending March 31, 2013.

Medium-Term Management Strategy Achievements

How do you view the changes of the information and communications market surrounding NTT Group?

In the information and telecommunications market, “migration to social networking” has developed and social network services have expanded tremendously.
“Migration to cloud,” which enables the efficient use of cutting-edge services on an on-demand basis without the need to “own” servers or software, has also developed.
In addition, there has been a “migration to multi-devices,” which enables the use of the same services without regard to differences in types of devices, such as smartphones, tablet PCs and others. These changes have been taking place on a global scale, and the convergence of different services (cooperation / integration) is advancing rapidly.
We view these major market changes as opportunities and are aware that how NTT Group responds to such changes will be the key to future growth.

What specific measures is NTT Group taking?

NTT Group is currently focusing on, and anticipates future growth in, the three areas of “Application / Contents,” “Big Data*2 / M2M*3 Solutions” and “Data Centers*4 / Cloud Businesses.”
In the area of “Application / Contents,” NTT Group will continue to provide various services by utilizing its extensive customer base.
In the area of “Big Data / M2M Solutions,” NTT Group will provide various types of solutions in order to increase added value to corporate customers.
In the area of “Data Centers/Cloud Businesses,” NTT Group will, in addition to providing local government cloud and medical cloud services domestically, respond to the outsourcing needs of global businesses. In the North American market, where cutting-edge services are being created, NTT Group plans to launch a new brand and build a framework that will enable NTT to compete locally. While sales in these three areas were approximately 680.0 billion yen for the fiscal year ended March 2012, NTT Group aims to increase the sales for the fiscal year ending March 31, 2013 to 860.0 billion yen, a revenue increase of nearly 30% in a single year.

1. Application / Contents 2. Big Data / M2M Solutions 3. Data Centers / Cloud Businesses

Finally, please tell us your goals with respect to NTT Group's future business strategy.

NTT Group will respond to the major changes and developments in the information and telecommunications market and will continue to provide safe and secure services through utilization of its collective strength. NTT Group will strive to become a company that will always have its customers' trust.
This fall, NTT Group will develop a new medium-term management strategy by taking into account its initiatives in the focus areas mentioned above and announce such strategy to all of our shareholders and investors. Further, by working to increase profits and improve capital efficiency, NTT Group will aim for net earnings per share (EPS) growth of more than 60% in the medium term and for an increase in share price.

  • *1.Solutions
    Identifying issues that customers are facing and providing systems and other means that are capable of resolving them.
  • *2.Big data
    A collection of high volume and complex structure data, which are difficult to manage and process with traditional technology, including textual information posted on SNS and word-of mouth websites, images, charts and voice.
  • *3.M2M
    Machine to Machine. A technology or mechanism designed for equipment to mutually and autonomously exchange information. By utilizing M2M for the collection, monitoring and control of data from remote locations, it facilitates a streamlined operation process, advancement of services and the creation of new services.
  • *4.Data center
    A term used to refer to a facility specialized in the installation and operation of a variety of computer and data communication devices, such as servers.
NTTis... Autumn 2012
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