News Release zvws090805b

1. Analysis of consolidated results

(1) Consolidated results

Note:

With the application of the Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51" beginning in the fiscal year ending March 31, 2010, the designation of net income for the quarter attributable to NTT has been changed. For further details, please see (Reference) Statement of Financial Accounting Standards ("SFAS") No. 160, "Noncontrolling Interests in　Consolidated Financial Statements - an Amendment of ARB No. 51.".

In the first quarter of the fiscal year ending March 31, 2010, NTT Group took measures to expand broadband and ubiquitous services pursuant to its new Medium-Term Strategy entitled "Road to Service Creation Business Group" adopted in May 2008.

In the fixed-line communications market, the expansion of optical services and the accompanying shift from existing fixed-line telephones to optical IP telephones continued. Diverse services such as video distribution services were also deployed by various providers. Under these market conditions, in the next-generation network (NGN) segment, NTT Group endeavored to expand the "FLET'S Hikari Next" service area and the sale of services such as "Hikari TV" that take advantage of the capabilities of the NGN. NTT Group also made efforts to develop and market the "Hikari Link"¹ product series to increase demand for fibre-optic services. As a result of these efforts, the number of "FLET'S Hikari" subscriptions reached 11.79 million.

In the mobile communications market, with the market reaching saturation due to the increased penetration rate, the competition among carriers to acquire customers and enhance services is becoming increasingly fierce. Under these market conditions, NTT Group launched 13 handset models in the Summer of 2009 which included the first handset in Japan operating with "Android"². In addition, NTT Group enhanced video content by adding, to "docomo-doga," "Bee TV,"³ a broadcasting station that provides streaming video exclusively for mobile phones. NTT Group also lowered the minimum charges for "Pake-hodai Double," a two-tier flat-rate packet service, and took other measures to enrich billing plans. As a result of these measures, the number of mobile phone subscriptions reached 54.86 million, of which 50.25 million were FOMA service subscriptions, accounting for 91.6% of all subscriptions.

With respect to services for corporate customers, NTT Group continued its efforts to provide high value-added solutions tailored to customers' industries and business categories and to enhance its support capabilities adapted to the global business activities of the customers. In the area of SaaS,⁴ which reduces customers' information system installation and operation burdens, NTT Group collaborated with its business partners to develop safe and secure SaaS platforms and provide a wide range of services.

In its global businesses, NTT Group expanded overseas business sites to further improve services. To expand and enhance its networks, NTT Group reached a decision to acquire an American submarine cable business to further reinforce the infrastructure between Japan and the United States. NTT Group also announced plans to construct a new submarine cable for Asia.

As a result of these efforts, NTT Group's consolidated operating revenues for the first quarter of the fiscal year ending March 31, 2010 were 2,502.9 billion yen (a decrease of 3.5% from the same period of the previous fiscal year), consolidated operating expenses were 2,177.1 billion yen (a decrease of 2.0% from the same period of the previous fiscal year), consolidated operating income was 325.8 billion yen (a decrease of 12.4% from the same period of the previous fiscal year), consolidated net income before income taxes was 325.9 billion yen (a decrease of 16.0% from the same period of the previous fiscal year), and net income attributable to NTT was 139.6 billion yen (a decrease of 20.5% from the same period of the previous fiscal year).

Notes	1.	A series of household information devices that can connect to "FLET'S Hikari." The first product, the "Hikari Photo Frame," was launched in March 2009. The second product, the "Living Room PC" was announced to be launched in the quarter under review.
	2.	An operating system for mobile phones. It is characterized by an open development environment.
	3.	Provided by Avex Broadcasting & Communications Inc., a joint venture established by NTT DOCOMO and Avex Entertainment Corporation.
	4.	Software as a Service. A service for providing software applications to customers via networks.

*	NTT Group's consolidated financial statements are prepared in accordance with United States generally accepted accounting principles.

(2) Segment results
Results by business segment are as follows.

<1> Regional telecommunications business segment

Consolidated operating revenues in the first quarter of the fiscal year ending March 31, 2010 were 960.7 billion yen (a decrease of 3.5% from the same period of the previous fiscal year). Despite an increase in IP-related revenues due to an increase in FLET'S Hikari subscriptions, consolidated operating revenues decreased due to the decline in revenues from fixed-line telephones in conjunction with the decline in fixed-line subscriptions and other factors. On the other hand, consolidated operating expenses in the first quarter fell to 944.7 billion yen (a decrease of 4.0% from the same period of the previous fiscal year) due to decreases in expenses and depreciation and amortization expenses and other factors. As a result, consolidated operating income for the first quarter of the fiscal year ending March 31, 2010 was 16.1 billion yen (an increase of 43.9% from the same period of the previous fiscal year).

Number of subscriptions

Notes	1.	FLET'S Hikari includes NTT East's B FLET'S and FLET'S Hikari Next (launched on March 31, 2008) services and NTT West's B FLET'S, FLET'S Hikari Premium, FLET'S Hikari Mytown, and FLET's Hikari Next (launched on March 31, 2008) services.
	2.	The figures for Optical IP Phone indicate number of channels (in thousands).

<2> Long-distance and international communications business segment

Consolidated operating revenues for the first quarter of the fiscal year ending March 31, 2010 were 308.1 billion yen (a decrease of 1.1% from the same period of the previous fiscal year). Despite increases in OCN, VPN-related services and other IP-related revenues and increase in revenues from corporate solutions businesses, the decline in conventional fixed-voice related revenues and other factors reduced consolidated operating revenues. Consolidated operating expenses for the first quarter decreased to 283.2 billion yen (a decrease of 0.1% from the same period of the previous fiscal year) due to lower telecommunication facility usage fees in conjunction with the decline in fixed-voice related revenues. As a result, consolidated operating income for the first quarter of the fiscal year ending March 31, 2010 was 24.9 billion yen (a decrease of 10.8% from the same period of the previous fiscal year).

<3> Mobile communications segment

Consolidated operating revenues for the first quarter of the fiscal year ending March 31, 2010 decreased to 1,084.8 billion yen (a decrease of 7.3% from the same period of the previous fiscal year) due to a decrease in mobile voice related revenues caused by penetration of the new handset purchase methods and a decline in handset sales revenues. On the other hand, consolidated operating expenses decreased to 834.4 billion yen (a decrease of 4.7% from the same period of the previous fiscal year) as a result of a decrease in revenue-linked expenses attributable to a decrease in the number of handsets sold. As a result, consolidated operating income for the first quarter of the fiscal year ending March 31, 2010 was 250.4 billion yen (a decrease of 15.2% from the same period of the previous fiscal year).

Number of subscriptions

Notes	1.	The number of Mobile phone service subscriptions and FOMA service subscriptions include communication module service subscriptions.
	2.	Effective March 3, 2008, FOMA services subscriptions became mandatory for subscription to "2in1" service. Such FOMA services subscriptions to "2in1" services are included in the above numbers of Mobile phone service subscriptions and FOMA service subscriptions.
	3.	The number of subscriptions for i-mode service represents the total of FOMA and mova subscriptions combined.

<4> Data communications segment

Consolidated operating revenues for the first quarter of the fiscal year ending March 31, 2010 increased to 270.1 billion yen (an increase of 11.7% from the same period of the previous fiscal year) as a result of the expansion of consolidated subsidiaries and the increase in revenues from financing businesses. On the other hand, consolidated operating expenses for the first quarter rose to 248.9 billion yen (an increase of 13.0% from the same period of the previous fiscal year) due to higher revenue-linked expenses. As a result, consolidated operating income for the first quarter of the fiscal year ending March 31, 2010 was 21.2 billion yen (a decrease of 1.9% from the same period of the previous fiscal year).

<5> Other segments

In other segments, efforts to increase business efficiency in the real estate and financing businesses continued while NTT Group aggressively promoted the construction and power businesses, system development, and advanced technology development businesses. As a result, consolidated operating revenues for the first quarter of the fiscal year ending March 31, 2010 were 261.2 billion yen (a decrease of 2.4% from the same period of the previous fiscal year) and consolidated operating income was 11.2 billion yen (a decrease of 21.2% from the same period of the previous fiscal year).