I would like to present here a brief introduction to “NTTis... 2012 Winter Edition,” and to take this opportunity to thank all shareholders for your continued support.

First, I would like to report on our main initiatives during the first half of the fiscal year ending March 31, 2013.

In the fixed-line communications field, in order to expand the use of “FLET'S Hikari” services and to improve its customer support services, NTT Group not only lowered the monthly charges for certain services but also took measures aimed at expanding Wi-Fi^*1 use scenarios.

In the mobile communications field, in an effort to expand the use of smartphones, NTT Group continued to improve and enhance its handset lineup, many of which are compatible with “Xi” (read “Crossy”), and also started providing a new flat-rate data billing plan together with the launch of the “Raku Raku Smartphone.”

With respect to upper layer services and solutions^*2 business, NTT Group made efforts to enhance its service menu for cloud services^*3. For example, NTT Group launched “Photo Collection,” a service that enables photos and videos to be accessed on smartphones and various tablet devices through a network.

With the objectives of expanding NTT Group's global businesses and acquiring innovative cloud-related technology, NTT Group entered into an agreement with Centerstance, Inc.^*4, a U.S. company, to acquire all of its shares.

As a result of these efforts, NTT Group's consolidated operating revenues for the first half of the fiscal year ending March 31, 2013 increased for the third consecutive year (an increase of 82.8 billion from the same period of the previous fiscal year) due to, among other things, the expansion of smartphone sales. However, this increase in operating revenues could not offset the increase in operating expenses, and operating income decreased ¥22.5 billion from the same period of the previous fiscal year.

With respect to the full-year forecast for the fiscal year ending March 2013, in the mobile communications field, which is a fiercely competitive environment, NTT Group will promote the migration from conventional mobile phones to smartphones and also continue to implement and strengthen initiatives aimed at retaining long-term users. As a result, the initial forecast for operating income announced in May 2012 has been revised downward by ¥80.0 billion.

In light of these circumstances, NTT Group announced on November 8 its initiatives going forward aimed at establishing a path towards earnings recovery and growth.^*5

NTT Group as a whole will realize growth and transformation by setting “Global Cloud Services” as the cornerstone of NTT's business operations going forward. In addition, NTT Group will comprehensively strengthen its existing “Network Service” competitiveness by streamlining its business operations.

Specifically, NTT Group will aim to double overseas sales to US$20 billion by the fiscal year ending March 31, 2017 and increase the proportion of corporate sales represented by overseas sales to 50% or more. In addition, NTT Group will reduce costs related to fixed-line/mobile communications service by at least ¥400 billion (compared with the fiscal year ended March 31, 2012) by the end of the fiscal year ending March 31, 2015, and will lower the ratio of capital expenditures to sales (“Capex to Sales”) to 15% by the end of the fiscal year ending March 31, 2016. Through these efforts, NTT Group will work towards EPS growth of 60% or more (compared with the fiscal year ended March 31, 2012) by the fiscal year ending March 31, 2016.

In this drastically changing information and telecommunications market, NTT Group will aim to become a “Value Partner” that customers continue to select by pursuing growth by self-transformation.

Finally, NTT Group will continue to enhance and strengthen shareholder returns. With respect to dividends, as announced in May 2012, NTT Group set the interim dividend at ¥80 per share and increased the annual dividend per share by ¥20, from ¥140 to ¥160. In determining the level of dividends going forward, NTT will consider a comprehensive range of factors, including operating performance, financial condition and the dividend payout ratio, while taking into account stability and continuity.

With respect to the repurchase of common stock by NTT, in September 2012, the Board of Directors resolved that NTT may acquire up to a maximum of 42 million shares of its outstanding common stock, for up to ¥150.0 billion, by the end of March 2013. Based on this resolution, NTT had acquired 13 million shares of its common stock for a total purchase price of ¥50.0 billion as of the end of October 2012.

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

December 2012