Last updated : December 7, 2012

Thank you for your continued understanding and 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.

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

December 2012

• *1.Wi-Fi…A brand name certifying interconnectivity among wireless LAN devices. It is a registered trademark of the Wi-Fi Alliance. In this context, it refers to the Wi-Fi wireless LAN environment.
• *2.Solutions…Identifying issues that customers are facing and providing systems and other means capable of resolving them.
• *3.Cloud, Cloud Services…Form of service that provides software and hardware through a network.
• *4.Please see Topics of Main Subsidiaries for more information about Centerstance, Inc.
• *5.Please see “Towards the Next Stage” for details of the initiatives.