Structural Reform of NTT East and NTT West

The NTT Group is carrying out fundamental structural reform as outlined below, aimed at rebuilding the financial base of NTT East and NTT West, which has become weakened by drastic changes in market structures and the competitive environment, and at revising the companies' cost structures.

Reducing personnel costs
1. Adopting a fundamental outsourcing strategy, and diversifying employment types
Order-taking, SOHO sales, equipment maintenance and operations, repair work, etc. are being moved to outsourcing companies in each region (prefecture or block of prefectures) (target date: May 2002)
Around 60% of NTT East/West personnel -- about 60,000 employees (East: about 25,000; West: about 35,000) -- are being transferred to these outsourcing companies. If existing subsidiaries (ME, etc.) are counted, the number is about 100,000 employees (East: about 39,000; West: about 59,000).
A plan is being introduced whereby transferred employees age 51 or over will be retired from NTT East and NTT West and rehired by the outsourcing companies (initially expected to be about 55,000 employees [East: about 24,000; West: about 31,000]).
Wage levels of rehired employees (51-60) will be reduced by 15 to 30 percent according to region, with measures taken to mitigate the effect.
2. Further carrying out of personnel reallocation within the Group
Reallocation from NTT East and NTT West to other Group companies will be expanded to the original plan of about 4,300 employees (East: about 1,600; West: about 2,700) to about 6,500 employees (East: about 2,700; West: about 3,800).
3. Increasing the number of voluntary retirements based on the restructuring plan
The original plan for 8,200 retirees (East: 3,200; West: 5,000) is being increased to 16,400 (East: 6,400; West: 10,000).
(In addition to the 7,000 employees so far [East: 2,700; West: 4,250], by the end of December 2001, 9,400 personnel will retire [East: 3,700; West: 5,750].)
4. Other labor conditions changes
A revision of benefits packages and policies, including the retirement benefits plan, special allowances, regional allowance, transfer stipend, employee benefits, etc., will be made reflecting the shift to performance-based personnel and wage system.

Deeper cuts in capital investment
Reduction in capital investment by about 90 billion yen (East: 40 billion yen; West: 50 billion yen) starting from fiscal 2002

Further reductions in various other costs

Lowering the NTT East and NTT West contribution to core R&D spending
Selling off real estate, etc.