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New Year's Message from the President

I wish all of you a happy and prosperous New Year.

Last year Japan suffered great damage from natural disasters, particularly the earthquake in Hokkaido and the torrential rain and massive typhoon in western Japan. I would like to express my heartfelt sympathy once again to the victims of these disasters.

With regard to the business environment, we have entered a period of uncertainty characterized by great changes in the international situation and the coexistence of globalism and localism. Nevertheless, the Japanese economy has continued to expand stably, albeit at a slow pace, and further growth is expected as we look forward to the hosting of major sporting events in Japan: the Rugby World Cup this year and the Tokyo Olympic and Paralympic Games in 2020.

In the sphere of information technology, thanks to the rapid progress of the Internet of Things, big data, and AI, we are experiencing a global digital transformation that is bringing positive changes to people's lives using ICT in a wide variety of ways. We can also expect further great changes in this field in the future.

Against this background, while upholding our three fundamental shared values of "connect," "trust," and "integrity," the NTT Group is continuing to support this digital transformation of customers' lives as well as pursuing our own transformation.

In November last year, we announced our new medium-term management strategy, Your Value Partner 2025. As "your value partner," the NTT Group aims through our business activities to resolve social issues together with you, our partners. We believe that the resolution of social issues will contribute to the realization of a digitalized, smart society ("smart world"), which will in turn contribute to Society 5.0 and the achievement of the sustainable development goals (SDGs) advocated by the United Nations.

Towards the resolution of social issues, this medium-term management strategy will be based on four pillars: (1) Support our customers' digital transformations; (2) Accelerate our own digital transformation; (3) Leverage talent, technologies, and assets; and (4) Promote ESG management and enhance the returns of shareholders to improve corporate value.

As the main fiscal goals of this strategy, our targets are a 50 percent increase in earnings per share (EPS) within five years and the improvement of our return on invested capital (ROIC). Considering that EPS will in principle grow as a result of increasing profits, we aim to combine investment in growth fields with cost reduction through improvement in productivity.

2019: Consolidating the Foundations and Launching Policies to Realize the Goals of Your Value Partner 2025

This year, the NTT Group will consolidate the foundations and embark upon the policies needed to achieve the goals of the medium-term management strategy.

In addition to offering 5G pre-commercial services from September this year, we will promote the personalization of services through measures such as the bold review of mobile phone charges planned for the first quarter of fiscal 2019 ending March 2020. The policies to realize the medium-term management strategy will include the expansion of the B2B2X model using digital services and data management, enhancement of the competitiveness and acceleration of growth of our global business through "One NTT," promotion of NTT Group's unique new urban solutions (digitalization) program, and the further improvement of natural disaster countermeasures to ensure safe and stable ICT infrastracture. With the launching of the smart city project in Las Vegas in the spring, we will accelerate our initiatives toward the realization of a smart world.

The NTT Group asks for your understanding and high expectations of our business activities as we continue to strive to resolve social issues.

Jun Sawada
President & CEO
Nippon Telegraph and Telephone Corporation
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