On a consolidated basis, the group posted operating revenues of 9,729.6 billion yen, a 3.0 % increase from the previous fiscal year, recurring profit of 648.6 billion yen, a 8.0 % increase, and net income of 602.6 billion yen, a 107.9 % increase.

The Japanese economy remained stagnant, with capital investment down sharply and other factors showing no sign of significant improvement, although there were indications of recovery in certain areas of consumer spending and residential construction towards the end of the year.

The telecommunications market entered a new era of full-scale competition in services, both domestic and international. Competition in domestic services included local as well as long-distance markets. Also, foreign companies began to operate in the domestic market on a full-fledged basis.
Cross-border and cross-business competition took place on a dramatic scale, as increases in inter-LAN communications and Internet users around the world fueled expectations of the growth potential in computer-based communications.

NTT, operating on a strong base of highly advanced digitized networks, strengthened its competitiveness and developed its international business by introducing new discount services, further developing and opening up the information market through the expansion of its optical fiber access networks according to market demand, and the development of services for computer-based telecommunications such as the Internet.

NTT enriched its Open Computer Network (OCN) service menu. It introduced "Super OCN" a secure, high-quality service designed for high-traffic Internet users such as universities and corporations, and "OCN Dial-Access Long" for Internet dial-up access by users who are on-line for extended periods of time. "Digital Access 1500" was added to existing services that provide easy-to-operate, low-cost leased lines for short and medium distances. "Digital Reach" was introduced for medium- to long-distance leased-line services.

The "Telesse" desktop multimedia telephone was launched for people who want simplified access to the Internet, thereby creating new demand for on-line communications between homes and offices.

Competitiveness was further strengthened by the introduction of new discount services. "Time Plus," launched in selected markets in February 1998, was made available nationwide. New service plans were added for "TeleChoice." NTT made INS services more flexible with "INS Area Plus," which enables users to pay a fixed fee to access the INS at distances of up to 20 kms for 10yen for 3 minutes (10yen for 4 minutes during late night and early morning periods). "INS Time Plus" is a new plan that offers local dialing at the rate of 10yen for 5 minutes (10yen for 7 minutes during late night and early morning periods).

The popularity of these new services enabled NTT to realize steadily rising profits with its ISDN and other information networks.

The NTT group worked to expand the market for its global services. NTT subsidiaries began providing Arcstar-brand services in September 1997 as a lead-up to full-scale participation in the international field following NTT's reorganization in July 1999. Arcstar services were extended to 16 countries and areas to meet the expanding telecom needs of individuals and corporations operating in the global environment. NTT America Inc., NTT's wholly-owned subsidiary, formed a strategic investment and business alliance with Verio Inc., a U.S.-based Internet service provider. It also began providing the Arcstar Internet service for corporate customers in the U.S. through its wholly owned subsidiary. NTT Worldwide Network Corporation became a signatory in the Japan-U.S. Cable Network Construction and Maintenance Agreement to help meet increasing demand for telecommunications in the greater Asia-Pacific region.

NTT developed its global business with a focus on Asia. StarHub, a consortium formed by British Telecom, two Singaporean firms and NTT, received licenses to provide basic telecommunications service and cellular mobile telephone services in Singapore. Preparations were made for launching these services in April 2000. NTT also established Beijing Telecom NTT Engineering Co., Ltd., a joint-venture company with Beijing Telecommunications Administration, and began providing system integration services, mainly in Beijing, shortly thereafter.

Personnel were reorganized to operate more efficiently_and to expand into new business fields. NTT finished outsourcing all directory assistance operations in September 1998. In December 1998, NTT established NTT Directory Services Co. to produce telephone books and handle information assistance operations, as well as to expand and develop business opportunities for telephone number information. In January 1999, NTT Infrastructure Network Corporation was set up to concentrate technical know-how for more effective operation of basic facilities.

NTT continued to carry out research and development (R&D) and capital investment aimed at the establishment of advanced telecommunications networks early in the 21st century, as well as the provision of high-quality telecommunications services to underpin socio-economic activity.

Recognizing the importance of reinforcing the company's business performance and financial performance as well as pursuing shareholders' interests over the long term, NTT intends to pay fair dividends to shareholders, balanced with the need for internal reserves. Based on this policy, NTT will pay a year-end dividend of 2,500yen per share, which, combined with the special dividend of 5,000yen due to the listing of NTT DoCoMo and the interim dividend of 2,500yen, brings the annual dividend to 10,000yen per share.

Internal reserves will be used for future operations, including R&D and capital expenditure for telecommunications networks, and to strengthen the corporation's financial performance.

For the current fiscal year that will end on March 31, 2000, NTT forecasts non-consolidated operating revenue of 1,701 billion yen, recurring profit of 93 billion yen and net income of 77 billion yen. On a consolidated basis, NTT forecasts operating revenue of 10,236 billion yen, recurring profit of 713 billion yen and net income of -133 billion yen.

After adjusting the cumulative effect of a change in accounting principle for income tax, net change in Retained earnings for the fiscal year ending March 31, 2000 will increase 477 billion yen.

All financial information stated in this release has been prepared on the basis of Japanese accounting principles.

MILLENNIUM BUG (Y2K) PROBLEM

Compliance Status

(1) Policy

NTT, having responsibility for much of Japan's telecommunications infrastructure and recognizing the Y2K problem to be a crucial managerial issue, has taken great precautions in implementing Y2K countermeasures to ensure that telecommunications services continue on a stable, uninterrupted basis.

(2) Organization

NTT began implementing measures to handle the Y2K problem, such as evaluating internal systems, as early as March 1995, then launched a project to deal with the problem among all group companies in November of the same year. A project to deal with Y2K problems in systems sold to NTT customers was started in December 1997.

NTT, as part of the preparations for its reorganization in July 1999, made large-scale changes in its systems and organizational structure, including dividing the company into four provisional headquarters, each of which was given a Y2K Compliance Committee. The Solution for System Crisis (SOS) Committee coordinated Y2K measures among the headquarters and ensured that efforts continued unabated after the headquarters were set up.

(3) Compliance Status

NTT's computer system that makes up its telecommunications services is divided into two, the node system for network equipment, and business and customer support systems for billing, network design and management.

(a)

Node systems (network equipment) NTT's network systems for telecommunication services use a four-digit date format. Interconnections, transmissions and switching do not, moreover, involve date-based data processing, so NTT anticipates no obstruction of communications in these systems. Tests conducted with the systems, now completed, revealed no problem. Since date-sensitive information, such as accounts clearing, is not exchanged between NTT and other telecommunications companies, there should be no connection problem with such services. Some video transmission services that use two-digit as well as four-digit date formats needed to be modified. This work has been completed. Manufacturers who have provided NTT with systems for network services, such as toll-free services, have been asked to make necessary compliance modifications in their hardware and/or operating systems by the end of June 1999.

(b)

Business and Customer Support Systems NTT aims to complete Y2K required modifications of business and customer support systems by the end of June 1999, in conjunction with work being carried out for the NTT reorganization. The breakdown of Y2K compliance work for key systems, including node, business and customer support systems as of December 1998 was:      Systems requiring modification: 38%    Systems not requiring modification: 37%    Systems being discontinued or upgraded: 25% Among the above, the compliance status of NTT-designated "crucial" systems as of March 1999 was:      Completed modifications for node systems: 92%    Completed modifications for support systems: 85%    Completed simulation tests for node systems: 81%    Completed simulation tests for support systems: 66%

(c)	In the future, to further ensure that NTT is fully ready to provide stable, reliable service in the coming millennium, the corporation is considering conducting simulated interconnections with other telecom carriers and general companies and commissioning outside personnel to conduct audits.

Expenses for Y2K Measures

NTT has been promoting the digitization of networks since the 1980s and uses the four-digit date format for switches. In 1992, NTT adopted a four-digit date format for its internal business and customer support systems. NTT has made capital investment for new developments with respect to the Y2K problem.

The estimated cumulative cost for all Y2K modifications made to existing systems is 4 billion yen. These expenses are being treated as special development costs as part of NTT's reorganization.

Following the reorganization in July 1999, expenses will be allocated as ongoing maintenance and repairs, or development costs.

Contingency Plan

As a provider of telecommunications infrastructure, NTT has always had contingency systems and procedures in place to handle disasters, such as earthquakes. In addition, NTT has always given high priority to designing vital equipment and key operational systems with high reliability for customer support and telecommunications services.

Since the date and time of Y2K problems can be accurately predicted, unlike general disasters, it is possible to prepare for the problem and take necessary precautions based on the level of estimated danger. In accordance with the government's Y2K action plan, NTT is preparing its own Y2K contingency plans based on existing contingency plans and procedures, but with special consideration of the unique factors characteristic to this problem. These contingency plans will be completed by the end of June 1999.

After the reorganization in July 1999, each newly formed company will develop its own contingency plans and specific preparedness systems, encompassing everything from customer support to vendors. These plans will continue to be implemented until April 2000.

Tomoyoshi Kosugi or Kenya Nakatsuka
NTT Public Relations
Telephone: (03) 3509-3101