UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under the

Securities Exchange Act of 1934

For the month of February, 2018

Commission File Number 1-8910

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

(Translation of registrant’s name into English)

OTEMACHI FIRST SQUARE, EAST TOWER

5-1, OTEMACHI 1-CHOME

CHIYODA-KU, TOKYO 100-8116 JAPAN

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒    Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             


ANNOUNCEMENT OF FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2017

On February 9, 2018, the registrant filed with the Tokyo Stock Exchange information as to the registrant’s financial condition and results of operations at and for the three and nine months ended December 31, 2017. Attached hereto is a copy of the press release and supplementary data relating thereto, both dated February 9, 2018, pertaining to such financial condition and results of operations, as well as forecasts for the registrant’s operations for the fiscal year ending March 31, 2018. The consolidated financial information of the registrant and that of its subsidiary NTT DOCOMO, INC., included in the press release and the supplementary data relating thereto, were prepared on the basis of accounting principles generally accepted in the United States. The non-consolidated financial information of the registrant and that of each of the registrant’s three wholly-owned subsidiaries, Nippon Telegraph and Telephone East Corporation, Nippon Telegraph and Telephone West Corporation and NTT Communications Corporation, as well as the consolidated financial information of its subsidiary NTT DATA CORPORATION, included in the press release and the supplementary data relating thereto, were prepared on the basis of accounting principles generally accepted in Japan. The consolidated financial information of the registrant’s subsidiary Dimension Data Holdings plc, included in the supplementary data related to the press release, was prepared on the basis of International Financial Reporting Standards (“IFRS”). The financial information for the three and nine months ended December 31, 2017 in the press release is unaudited.

The earnings projections of the registrant and its subsidiaries included in the press release contain forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in the attachment.

The registrant’s forward-looking statements are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of the registrant in light of information currently available to it regarding the registrant and its subsidiaries and affiliates, the economy and the telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of the registrant and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from any future results that may be derived from the forward-looking statements, as well as other risks included in the registrant’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

No assurance can be given that the registrant’s actual results will not vary significantly from any expectation of future results that may be derived from the forward-looking statements included herein.

The information on any website referenced herein or in the attached material is not incorporated by reference herein or therein.

The attached material is a translation of the Japanese original. The Japanese original is authoritative.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

By  

  /s/ Takashi Ameshima

  Name:   Takashi Ameshima
 

Title:

  Vice President
   

Investor Relations Office

Date: February 9, 2018


Financial Results Release

    

February 9, 2018

[U.S. GAAP

 

For the Nine Months Ended December 31, 2017

  

 

Name of registrant

   :   Nippon Telegraph and Telephone Corporation (“NTT”) /
URL http://www.ntt.co.jp/ir/

Code No.

   :   9432

Stock exchanges on which the Company’s shares are listed

   :   Tokyo

Representative

   :   Hiroo Unoura, President and Chief Executive Officer

Contact

   :   Takashi Ameshima, Head of IR, Finance and Accounting Department /
TEL +81-3-6838-5481

Scheduled filing date of quarterly securities report

   :   February 13, 2018

Scheduled date of dividend payments

   :  

Supplemental material on quarterly results

   :   Yes

Presentation on quarterly results

   :   Yes (for institutional investors and analysts)

 

1.

Consolidated Financial Results for the Nine Months Ended December 31, 2017 (April 1, 2017 – December 31, 2017)

Amounts are rounded to the nearest million yen.

(1) Consolidated Results of Operations

 

     (Millions of yen)  
     Operating Revenues     Operating Income     Income before
Income Taxes
    Net Income
Attributable to NTT
 

Nine months ended December 31, 2017

     8,722,036        4.3     1,319,553        0.1     1,441,310        10.3     736,590        10.1

Nine months ended December 31, 2016

     8,360,497        (1.6 )%      1,318,554        17.0     1,307,197        16.6     668,728        10.7

 

Notes:   1.   Comprehensive income (loss) attributable to NTT:   For the nine months ended December 31, 2017: 811,781 million yen 38.0%
      For the nine months ended December 31, 2016: 588,306 million yen 12.3%
  2.   Percentages above represent changes from the corresponding period of the previous fiscal year.

 

     Basic Earnings
per Share
Attributable to NTT
    Diluted Earnings
per Share
Attributable to NTT
 

Nine months ended December 31, 2017

     367.98  (yen)      —  (yen) 

Nine months ended December 31, 2016

     325.64  (yen)      —  (yen) 

(2) Consolidated Financial Position

 

     (Millions of yen, except per share amounts)  
     Total Assets      Total Equity      NTT Shareholders’
Equity
     Equity Ratio
(Ratio of NTT
Shareholders’ Equity

to Total Assets)
    NTT
Shareholders’
Equity per Share
 

December 31, 2017

     21,528,070        11,993,834        9,376,545        43.6     4,736.86  (yen) 

March 31, 2017

     21,250,325        11,507,756        9,052,479        42.6     4,491.73  (yen) 

 

2.

Dividends

 

     Annual Dividends  
   End of the
first quarter
     End of the
second quarter
    End of the
third quarter
     Year-end     Total  

Year Ended March 31, 2017

     —          60.00  (yen)      —          60.00  (yen)      120.00  (yen) 

Year Ending March 31, 2018

     —          75.00  (yen)      —          —         —    

Year Ending March 31, 2018 (Forecasts)

     —          —         —          75.00  (yen)      150.00  (yen) 

Note: Change in dividend forecasts during the nine months ended December 31, 2017: None

 

3.

Consolidated Financial Results Forecasts for the Fiscal Year Ending March 31, 2018 (April 1, 2017 – March 31, 2018)

 

     (Millions of yen, except per share amount)  
     Operating Revenues     Operating Income     Income before
Income Taxes
    Net Income
Attributable to NTT
    Basic Earnings per Share
Attributable to NTT
 

Year Ending March 31, 2018

     11,750,000        3.2     1,590,000        3.3     1,695,000        10.9     880,000        10.0     440.00  (yen) 

 

Notes:   1.   Percentages above represent changes from the previous fiscal year.
  2.   Change in consolidated financial results forecasts for the fiscal year ending March 31, 2018 during the nine months ended December 31, 2017: None

 

– 1 –


*Notes:

 

        (1)    Change in significant consolidated subsidiaries during the nine months ended December 31, 2017 that resulted in changes in the scope of consolidation: None
        (2)    Adoption of accounting which is simplified or exceptional for quarterly consolidated financial statements: None
        (3)        Change of accounting policy
   i.    Change due to revision of accounting standards and other regulations: Yes
   ii.    Other change: Yes
      (For further details, please see “Summary Information (notes)” on page 3.)
        (4)    Number of shares outstanding (common stock)
   i.    Number of shares outstanding (including treasury stock):
                                     December 31, 2017    : 2,096,394,470 shares
                                     March 31, 2017         : 2,096,394,470 shares
   ii.    Number of shares of treasury stock:
                                     December 31, 2017    : 116,908,131 shares
                                     March 31, 2017         : 81,026,959 shares
   iii.            Weighted average number of shares outstanding:
                                     For the nine months  ended December 31, 2017 : 2,001,718,206 shares
                                     For the nine months ended December 31, 2016 : 2,053,571,790 shares

 

* This financial results release is not subject to the quarterly review.

 

* Explanation of earnings forecasts and other notes:

Forward-looking statements in this earnings release, such as forecasts of results of operations, are based on the information currently available to NTT and certain assumptions that we regard as reasonable and therefore actual results may differ materially from those contained in or suggested by any forward-looking statements. With regard to the assumptions and other related matters concerning forecasts for the fiscal year ending March 31, 2018, please refer to page 10.

On Friday, February 9, 2018, NTT will hold a presentation on its financial results for institutional investors and analysts. Shortly thereafter, NTT plans to post on its website explanatory details, along with the materials used at the presentation.

 

– 2 –


1. Summary Information (notes)

 

(1) Change in significant consolidated subsidiaries during the nine months ended December 31, 2017, that resulted in changes in the scope of consolidation: None

 

(2) Adoption of accounting which is simplified or exceptional for quarterly consolidated financial statements: None

 

(3) Change of accounting policy: Yes

Balance Sheet Classification of Deferred Taxes

On November 20, 2015, the FASB issued ASU2015-17 “Balance sheet classification of deferred taxes” which requires that all deferred tax liabilities and assets be classified as noncurrent on the balance sheet.

Effective April 1, 2017, NTT Group adopted this ASU prospectively and prior periods were not retrospectively adjusted.

Simplifying the Test for Goodwill Impairment

On January 26, 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment,” which replaces the two-step goodwill impairment test with the one-step goodwill impairment test. The amendments in this update require that an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The adoption of ASU 2017-04 would be permitted for goodwill impairment tests with measurement dates after January 1, 2017. NTT Group adopted this ASU for goodwill impairment test with measurement date on July 1, 2017.

Change in Fiscal Year End of Certain Subsidiaries

As of April 1, 2017, certain of NTT’s consolidated subsidiaries changed their fiscal year ends from December 31 or January 31 to March 31, thereby eliminating a three-month or two-month lag between their fiscal year ends and NTT’s fiscal year end in NTT’s quarterly consolidated financial statements. The elimination of this lag was applied as a change in accounting policy. NTT did not make any retrospective adjustments to its financial statements as these changes did not have a material impact on the consolidated financial statements for the nine months ended December 31, 2016 or the year ended March 31, 2017. As a result of this change, NTT’s retained earnings have increased by ¥964 million, and its accumulated other comprehensive income (loss) and noncontrolling interests have decreased by ¥3,351 million and ¥2,012 million, respectively, as of the beginning of the current fiscal year.

 

– 3 –


2. CONSOLIDATED FINANCIAL STATEMENTS

(1) Consolidated Balance Sheets

 

     Millions of yen  
     March 31,
2017
    December 31,
2017
    Increase
(Decrease)
 

ASSETS

      

Current assets:

      

Cash and cash equivalents

   ¥ 925,213     ¥           766,581     ¥ (158,632

Short-term investments

     63,844       44,094       (19,750

Notes and accounts receivable, trade

     2,699,708       2,849,652       149,944  

Allowance for doubtful accounts

     (48,626     (52,835     (4,209

Accounts receivable, other

     505,145       658,418       153,273  

Inventories

     365,379       459,442       94,063  

Prepaid expenses and other current assets

     573,170       623,302       50,132  

Deferred income taxes

     228,590       —         (228,590
  

 

 

   

 

 

   

 

 

 

Total current assets

     5,312,423       5,348,654       36,231  
  

 

 

   

 

 

   

 

 

 

Property, plant and equipment:

      

Telecommunications equipment

     11,046,115       10,991,048       (55,067

Telecommunications service lines

     16,064,732       14,144,223       (1,920,509

Buildings and structures

     6,147,869       6,236,623       88,754  

Machinery, vessels and tools

     2,032,389       2,118,915       86,526  

Land

     1,292,685       1,306,405       13,720  

Construction in progress

     421,819       475,577       53,758  
  

 

 

   

 

 

   

 

 

 
     37,005,609       35,272,791       (1,732,818

Accumulated depreciation

     (27,286,588     (25,565,588     1,721,000  
  

 

 

   

 

 

   

 

 

 

Net property, plant and equipment

     9,719,021       9,707,203       (11,818
  

 

 

   

 

 

   

 

 

 

Investments and other assets:

      

Investments in affiliated companies

     484,596       507,216       22,620  

Marketable securities and other investments

     495,290       552,254       56,964  

Goodwill

     1,314,645       1,355,737       41,092  

Software

     1,209,485       1,197,194       (12,291

Other intangible assets

     453,918       412,118       (41,800

Other assets

     1,492,076       1,558,670       66,594  

Deferred income taxes

     768,871       889,024       120,153  
  

 

 

   

 

 

   

 

 

 

Total investments and other assets

     6,218,881       6,472,213       253,332  
  

 

 

   

 

 

   

 

 

 

Total assets

   ¥        21,250,325     ¥        21,528,070     ¥             277,745  
  

 

 

   

 

 

   

 

 

 

 

– 4 –


     Millions of yen  
     March 31,
2017
    December 31,
2017
    Increase
(Decrease)
 

LIABILITIES AND EQUITY

      

Current liabilities:

      

Short-term borrowings

   ¥ 227,207     ¥ 377,194     ¥ 149,987  

Current portion of long-term debt

     681,904       587,451       (94,453

Accounts payable, trade

     1,612,996       1,365,246       (247,750

Current portion of obligations under capital leases

     14,430       13,011       (1,419

Accrued payroll

     443,308       402,755       (40,553

Accrued taxes on income

     239,755       163,304       (76,451

Accrued consumption tax

     75,083       99,517       24,434  

Advances received

     324,342       389,937       65,595  

Other

     512,368       516,082       3,714  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     4,131,393       3,914,497       (216,896
  

 

 

   

 

 

   

 

 

 

Long-term liabilities:

      

Long-term debt (excluding current portion)

     3,168,478       3,154,018       (14,460

Obligations under capital leases (excluding current portion)

     25,568       23,680       (1,888

Liability for employees’ retirement benefits

     1,599,381       1,645,420       46,039  

Accrued liabilities for point programs

     103,047       102,115       (932

Deferred income taxes

     166,751       137,675       (29,076

Other

     497,132       504,835       7,703  
  

 

 

   

 

 

   

 

 

 

Total long-term liabilities

     5,560,357       5,567,743       7,386  
  

 

 

   

 

 

   

 

 

 

Redeemable noncontrolling interests

     50,819       51,996       1,177  
  

 

 

   

 

 

   

 

 

 

Equity:

      

NTT shareholders’ equity

      

Common stock, no par value

     937,950       937,950       —    

Additional paid-in capital

     2,862,035       2,841,567       (20,468

Retained earnings

     5,626,155       6,092,304       466,149  

Accumulated other comprehensive income (loss)

     1,562       73,402       71,840  

Treasury stock, at cost

     (375,223     (568,678     (193,455
  

 

 

   

 

 

   

 

 

 

Total NTT shareholders’ equity

     9,052,479       9,376,545       324,066  
  

 

 

   

 

 

   

 

 

 

Noncontrolling interests

     2,455,277       2,617,289       162,012  
  

 

 

   

 

 

   

 

 

 

Total equity

     11,507,756       11,993,834       486,078  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   ¥        21,250,325     ¥        21,528,070     ¥             277,745  
  

 

 

   

 

 

   

 

 

 

 

– 5 –


(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

NINE-MONTH PERIOD ENDED DECEMBER 31

Consolidated Statements of Income

 

     Millions of yen  
     2016     2017     Increase
(Decrease)
 

Operating revenues:

      

Fixed voice related services

   ¥             919,161     ¥             858,886     ¥ (60,275

Mobile voice related services

     651,378       706,412       55,034  

IP / packet communications services

     2,842,376       2,860,996       18,620  

Sale of telecommunications equipment

     650,100       641,991       (8,109

System integration

     2,123,736       2,479,868       356,132  

Other

     1,173,746       1,173,883       137  
  

 

 

   

 

 

   

 

 

 
     8,360,497       8,722,036       361,539  
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Cost of services (excluding items shown separately below)

     1,751,417       1,700,865       (50,552

Cost of equipment sold (excluding items shown separately below)

     654,772       675,388       20,616  

Cost of system integration (excluding items shown separately below)

     1,496,570       1,774,817       278,247  

Depreciation and amortization

     1,082,890       995,564       (87,326

Impairment losses

      

Goodwill

     53,294       18,864       (34,430

Metal cables

     —         124,800       124,800  

Other

     12,698       744       (11,954

Selling, general and administrative expenses

     1,990,302       2,111,441       121,139  
  

 

 

   

 

 

   

 

 

 
     7,041,943       7,402,483       360,540  
  

 

 

   

 

 

   

 

 

 

Operating income

     1,318,554       1,319,553       999  
  

 

 

   

 

 

   

 

 

 

Other income (expenses):

      

Interest and amortization of bond discounts and issue costs

     (28,168     (25,276     2,892  

Interest income

     13,176       14,093       917  

Income from arbitration award

     —         147,646       147,646  

Other, net

     3,635       (14,706     (18,341
  

 

 

   

 

 

   

 

 

 
     (11,357     121,757       133,114  
  

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings (losses) of affiliated companies

     1,307,197       1,441,310       134,113  
  

 

 

   

 

 

   

 

 

 

Income tax expense (benefit):

      

Current

     369,479       421,822       52,343  

Deferred

     55,362       35,763       (19,599
  

 

 

   

 

 

   

 

 

 
     424,841       457,585       32,744  
  

 

 

   

 

 

   

 

 

 

Income before equity in earnings (losses) of affiliated companies

     882,356       983,725       101,369  
  

 

 

   

 

 

   

 

 

 

Equity in earnings (losses) of affiliated companies

     14,247       12,050       (2,197
  

 

 

   

 

 

   

 

 

 

Net income

     896,603       995,775       99,172  
  

 

 

   

 

 

   

 

 

 

Less – Net income attributable to noncontrolling interests

     227,875       259,185       31,310  
  

 

 

   

 

 

   

 

 

 

Net income attributable to NTT

   ¥ 668,728     ¥ 736,590     ¥               67,862  
  

 

 

   

 

 

   

 

 

 

Per share of common stock:

      

Weighted average number of shares outstanding (Shares)

     2,053,571,790       2,001,718,206    

Net income attributable to NTT (Yen)

   ¥ 325.64     ¥ 367.98    
  

 

 

   

 

 

   

 

– 6 –


Consolidated Statements of Comprehensive Income

 

     Millions of yen  
     2016     2017     Increase
(Decrease)
 

Net income

   ¥             896,603     ¥ 995,775     ¥ 99,172  

Other comprehensive income (loss), net of tax:

      

Unrealized gain (loss) on securities

     1,117       42,466        41,349  

Unrealized gain (loss) on derivative instruments

     (2,415     737       3,152  

Foreign currency translation adjustments

     (97,527     61,778       159,305  

Pension liability adjustments

     8,173       5,670       (2,503
  

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     (90,652     110,651           201,303  
  

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

     805,951       1,106,426       300,475  
  

 

 

   

 

 

   

 

 

 

Less – Comprehensive income attributable to noncontrolling interests

     217,645       294,645       77,000  
  

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) attributable to NTT

   ¥ 588,306     ¥             811,781     ¥             223,475  
  

 

 

   

 

 

   

 

 

 

 

– 7 –


(3) Going Concern Assumption

None

(4) NTT Shareholders’ Equity

1. Dividends

Cash dividends paid during the nine months ended December 31, 2017 were as follows:

 

Resolution

   The shareholders’ meeting held on June 27, 2017

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends paid

   ¥120,922 million

Cash dividends per share

   ¥60

Record date

   March 31, 2017

Date of payment

   June 28, 2017

 

Resolution

   The Board of Directors’ meeting on November 10, 2017

Class of shares

   Common stock

Source of dividends

   Retained earnings

Total cash dividends declared

   ¥150,484 million

Cash dividends per share

   ¥75

Record date

   September 30, 2017

Date of payment

   December 11, 2017

2. Treasury stock

On December 12, 2016, the Board of Directors resolved that NTT may acquire up to 33 million shares of its outstanding common stock for an amount in total not exceeding ¥150 billion from December 13, 2016 through June 30, 2017. Based on this resolution, NTT repurchased 21,693,800 shares of its common stock for a total purchase price of ¥106,763 million between December 2016 and March 2017. NTT also repurchased 8,893,400 shares of its common stock for a total purchase price of ¥43,235 million in April 2017 and concluded the repurchase of its common stock authorized by Board of Directors’ resolution.

On September 25, 2017, the Board of Directors resolved that NTT may acquire up to 30 million shares of its outstanding common stock for an amount in total not exceeding ¥150 billion from September 26, 2017 through March 31, 2018. NTT repurchased 26,946,400 shares of its common stock for a total purchase price of ¥150,000 million between October 2017 and December 2017, and concluded the repurchase of its common stock authorized by Board of Directors’ resolution.

 

– 8 –


(5) Subsequent Events

NTT DOCOMO’s repurchase of its common stock

On October 26, 2017, the Board of Directors of NTT DOCOMO resolved that NTT DOCOMO may acquire up to 120 million shares of its outstanding common stock for an amount in total not exceeding ¥300,000 million from October 27, 2017 through March 31, 2018.

On December 11, 2017, the Board of Directors of NTT DOCOMO resolved that NTT DOCOMO may acquire up to 93,248,787 shares of its outstanding common stock by way of tender offer at an amount in total not exceeding ¥250,000 million from December 12, 2017 through January 15, 2018. Based on this resolution, NTT DOCOMO repurchased 75,678,037 shares of its common stock at ¥202,893 million on February 6, 2018, 74,599,000 shares of which NTT sold back to NTT DOCOMO at ¥200,000 million. Due to NTT DOCOMO’s repurchase transactions, NTT’s ownership interest in NTT DOCOMO decreased from 66.7% to 66.0%. NTT expects to recognize the difference between the consideration paid to the non-controlling interest holders and the decrease in the carrying value of such non-controlling interests resulting from this transaction as an adjustment to “Additional paid-in capital” in the consolidated balance sheet as of March 31, 2018.

The Board of Directors of NTT DOCOMO also resolved that NTT DOCOMO may acquire up to 44,321,963 shares of its outstanding common stock * by way of repurchases on Tokyo Stock Exchange for an amount in total not exceeding ¥97,107 million * from the next business day following the expiration of the tender offer through March 31, 2018. NTT DOCOMO did not make repurchase by way of repurchases on the market in January 2018.

 

  * The number of shares remaining after subtracting the number of shares acquired by way of tender offer from the maximum limit of 120 million shares and the amount remaining after subtracting the total amount used to repurchase the shares acquired by way of tender offer from the maximum limit of ¥300,000 million.

 

– 9 –


[Note]

 

 

 

The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

 

 

 

– 10 –


LOGO

 

Financial Results for the Nine Months    Ended December 31, 2017 February 9, 2018

 


LOGO

 

The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.
*                “E” in this material represents that the figure is a plan or projection for operation.
**                “FY” in this material indicates the fiscal year ending March 31 of the succeeding year.
***                “3Q” in this material represents the 9-month period beginning on April 1 and ending on December 31.
Financial Results for the Nine Months Ended December 31, 2017 1 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Table of Contents
Highlights
Contributing Factors by Segment    Topics    (Reference) Major B2B2X Initiatives    (Reference) NTT R&D Forum 2018    (Reference) Mobile World Congress 2018                – A Group Exhibition On Display    Appendix
Financial Results for the Nine Months Ended December 31, 2017 2 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Highlights
Both Operating Revenues and Operating Income increased.
Financial results are steadily progressing in line with the annual plan.
Status of Consolidated Financial Results
Operating Revenues Ą8,722.0 billion (increase of Ą361.5 billion [4.3%] year-on-year)
Operating Income Ą1,319.6 billion (increase of    Ą1.0 billion [0.1%] year-on-year)    Net Income *1 Ą736.6 billion (increase of Ą67.9 billion [10.1%] year-on-year)
Overseas Sales $14.45 billion (increase of    $2.26 billion [18.6%] year-on-year)
$0.66 billion
Overseas Operating Income *2     $0.78 billion (increase of    $0.24 billion [43.5%] year-on-year)
*1 Net income represents net income attributable to NTT, excluding noncontrolling interests.
*2 Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets.
Financial Results for the Nine Months Ended December 31, 2017 3 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Contributing Factors by Segment
Increase in Operating Revenues and Operating Income in the Long Distance and International Communications business and the Data Communications business segment.
Operating Revenues (Year-on-year: +361.5) (Billions of yen)
Mobile 66.8 Long distance and communications 296.2 Other Regional international business business * 8,722.0 communications communications business business 126.4 Data 55.6 61.3 communications 8,360.5 business
FY2017 4-12
2,379.3 1,631.9 3,595.7 1,460.8
FY2016 4-12 FY2017 4-12
Operating Income (Year-on-year: +1.0)
Regional Long distance and
Mobile Data communications international Other communications communications business communications business * business business business
5.7 22.1 1.5 74.8 58.0
1,318.6 1,319.6
FY2017 4-12
255.7 76.6 833.6 89.1
FY2016 4-12 FY2017 4-12 *Includes adjustments such as elimination
Financial Results for the Nine Months Ended December 31, 2017 4 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Topics
Increased Profitability of Network Services
Expansion of NTT’s User Base
• Mobile Subscriptions: 75.68 million mobile subscriptions (net increase of 0.80 million)
(Included in the above) Kake-hodai & Pake-aeru: 40.60 million subscriptions (net increase of 3.53 million)
• FTTH Subscriptions: 20.46 million subscribers (net increase of 0.40 million)
(Included in the above) Hikari Collaboration: 10.66 million (net increase of 1.91 million)
Growing number of Wi-Fi area owners*: 681 (net increase of 124)
* Total number of large-scale corporate or local government customers. Excludes small-scale restaurants, etc.
Financial Results for the Nine Months Ended December 31, 2017 5 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Topics
Promotion of the B2B2X Model
Continued to expand collaboration efforts with corporations and local governments by supporting their digital transformation in various fields, such as sports, transportation and manufacturing in an effort towards creating new value and solving social issues and challenges
Expansion of Global Cloud Services
Acquisition of Secure-24, a provider of managed services in the U.S.
Shareholder returns
Completed share buybacks on December 8, 2017: Ą150.0 billion    Aggregate amount of FY2017 share buybacks: Ą193.2 billion
Progress of
“Tokyo 2020 Medal Project: Towards an Innovative Future for All”
Number of used mobile phones and other devices collected (as of the end of December 2017): approximately 2.40 million devices
Financial Results for the Nine Months Ended December 31, 2017 6 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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(Reference) Major B2B2X Initiatives                in FY2017 3Q
Demonstrated a pleasant flight experience by monitoring babies’
Aviation
Oct. conditions through the utilization of hitoe®
(Established “Airplane without crying babies!?” project)
Manu- Began the commercial provision of the FIELD system
facturing Oct.
through the utilization of edge computing
Contributed to the further development of Sapporo by Auto Oct. carrying out automated driving on public roads in central city areas
Agri- Demonstrated power-saving efforts in agriculture and water
culture Oct.
environments through the utilization of corevo®
Enter- Produced a new Kabuki experience through the utilization of Kirari! by enabling two tainment Nov. actors to perform together through virtual reality (connected Ponto-cho and Miyakawa-cho in the performance of “Miyako Musubi Yume-no Renjishi”)
Sports Initiated collaborative experiments on athletes’ performance Nov. and brain information processing
Tourism Began demonstrations that predict the flow of people through the utilization of AI Nov. and control air conditioning using optimal device control technology
KOBE CHIKAGAI
Financial Results for the Nine Months Ended December 31, 2017 7 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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(Reference) NTT R&D Forum 2018
â– “NTT R&D Forum” (on an invitation basis only) Date and Time Thursday, February 22, 2018 and    Friday, February 23, 2018    10:00 – 17:00 Place NTT Musashino R&D Center    Tokyo, Japan
Exhibits
Introduce the latest research findings, including    research efforts on the B2B2X model, in    each of the categories of Media & UI, corevo, IoT,    Network and Security, and Basic Research
(e.g.) ・New value creation utilizing corevo (AI)    ãƒ»IoT utilizing edge computing    ãƒ»Immersive Telepresence Technology—Kirari!                (enabling ultra-high presence experiences)
Financial Results for the Nine Months Ended December 31, 2017 8 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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(Reference) Mobile World Congress 2018
– A Group Exhibition On Display
â– Display leading and advanced B2B2X business models utilizing AI, IoT and 5G
Through the
â– exhibition, NTT aims to introduce new value created in collaboration                with a wide range of partners in various business sectors
MWC 2018 Overview
Business Meeting Duration
Area    Monday, February 26, 2018
– Thursday, March 1, 2018    (four days) Venue    
B2B2X and 5G
Area    Barcelona, Spain
Number    of companies holding    exhibitions*    2,300
*Based on 2017 data
The exhibition area will be displayed in 5 zones
(1) Sport & Culture    (4) Agriculture    (2) Mobility & Logistics    (5) Life & Environment    (3) Manufacturing
Financial Results for the Nine Months Ended December 31, 2017 9 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Appendix


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Progress of Broadband Services


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Number of Subscribers for Fixed Broadband Services
FLET’S ADSL
Number of Subscribers *1 *2 (Thousands) FLET’S Hikari (including Hikari Collaboration Model)
22,000 Hikari Denwa 21,644 21,175 21,235 21,276 20,858 20,972 20,540 20,691 791
919 881 849 819
955 20,853 20,000 1,019 987 20,457 20,386 [11,894] 20,294 [10,145] [10,655]
19,903 20,053
19,704 [9,574] 19,520 [7,854] [8,744] [5,912] [6,917]
18,000
17,984 18,039 17,924 17,759 17,862 16,000 17,545 17,655 17,451
14,000
~
2016.6 2016.9 2016.12 2017.3 2017.6 2017.9 2017.12 2018.3E
Changes from the Preceding Quarter (Thousands)
FY2016 FY2017
FY2016 FY2017E 4-6 7-9 10-12 1-3 4-6 7-9 10-12 4-12 FLET’S Hikari *1 261 183 199 150 241 92 72 404 794 800 Opened connections *3 786 649 672 750 851 627 625 2,103 2,857 2,900 FLET’S ADSL (34) (32) (32) (36) (38) (32) (31) (100) (134) (128) Hikari Denwa *4 *5 77 93 111 104 104 62 59 225 385 280
*1 Number of FLET’S Hikari (including Hikari Collaboration Model) subscribers includes B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light, FLET’S Hikari Lightplus, and FLET’S Hikari WiFi Access provided by NTT East, B FLET’S, FLET’S Hikari Premium, FLET’S Hikari Mytown, FLET’S Hikari Next, FLET’S Hikari Mytown Next, FLET’S Hikari Light and FLET’S Hikari WiFi Access provided by NTT West, and wholesale services (Hikari Collaboration Model) provided by both NTT East and NTT West.
*2 Figures in [ ] represent the number of subscribers to “Hikari Collaboration Model,” the wholesale provision of services by NTT East and NTT West to service providers.
*3 Number of opened connections excludes openings as a result of relocations.
*4 Numbers for Hikari Denwa include wholesale services provided to service providers by NTT East and NTT West.
*5 Numbers of Hikari Denwa subscribers are presented in thousands of channels.
Financial Results for the Nine Months Ended December 31, 2017 10 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Number of Subscribers for Mobile Broadband Services
Number of Subscribers * (Thousands) LTEXi
80,000 FOMA
74,880 75,114 75,361 75,678 76,200 72,943 73,588 71,614
60,000
39,893 41,281 42,671 44,544 45,659 46,908 48,200
50,000
40,000
20,000
31,721 31,662 30,917 30,336 29,455 28,453
27,478 26,200
0
2016.6 2016.9 2016.12 2017.3 2017.6 2017.9 2017.12 2018.3E
Changes from the Preceding Quarter (Thousands)
FY2016 FY2017
FY2016 FY2017E 4-6 7-9 10-12 1-3 4-6 7-9 10-12 4-12 LTE(Xi)+FOMA 650 1,330 645 1,292 234 247 317 799 3,916 1,300
* Number of subscribers for Mobile Broadband Services includes Communications Module Service subscribers
Financial Results for the Nine Months Ended December 31, 2017 11 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Number of Subscribers for Video Services
Number of Subscribers (Thousands) FLET’S TV Transmission Services * Hikari TV
5,000
4,505 4,521 4,544 4,571 4,588 4,607 4,632 4,492
4,000
1,445 1,464 1,489 1,521 1,551 1,570 1,592 1,602
3,000
2,000
3,047 3,041 3,032 3,023 3,021 3,018 3,015 3,030 1,000
0
2016.6 2016.9 2016.12 2017.3 2017.6 2017.9 2017.12 2018.3E
* Number of subscribers to FLET’S TV Transmission Services includes wholesale services provided to service providers by NTT East and NTT West.
Financial Results for the Nine Months Ended December 31, 2017 12 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Financial Information


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Details of Consolidated Statement of Income
Operating Revenues (Year-on-year: +361.5) SI revenues and sale (Billions of yen) of telecommunications Other revenues equipment
0.1
IP/packet 348.0 Voice related communications services revenues services revenues 8,722.0
5.2 18.6
Systems Integration: +356.1 8,360.5 Fixed voice: (60.3) Telecommunications Mobile voice:    +55.0                 equipment:    (8.1)
FY2016 4-12 FY2017 4-12
Operating Expenses (Year-on-year: +360.5)
90.1 75.6
249.3 Depreciation
Personnel expenses Other expenses expenses and loss on disposal of assets
125.7 Expenses of goods and for purchase services 7,402.5 and other expenses
7,041.9
FY2016 4-12 FY2017 4-12
Financial Results for the Nine Months Ended December 31, 2017 13 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Details of Consolidated Balance Sheet
(Billions of yen)
21,528.1 [+277.7] 21,250.3
Liabilities Liabilities
9,691.8 9,482.2
[(209.5)]
Assets Assets
21,528.1 Other
21,250.3 52.0 [+1.2]
Other [+277.7]
50.8
Equity Equity
11,507.8 11,993.8
[+486.1]
Retained earnings Retained earnings 6,092.3
5,626.2 [+466.1]
Treasury Stock Treasury Stock (568.7) (375.2)
[(193.5)]
March 31, 2017 December 31, 2017
Financial Results for the Nine Months Ended December 31, 2017 14 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Details of Consolidated Cash Flows
Billions of yen
Cash flows from operating Cash flows from activities investing activities FCF Cash flows from (A) (B) (A) + (B) financing activities
2,040.8 *Effect of non-business day
1,966.8
2,000
(249.6) (251.1)
+297.0 +223.0
Acquisitions of subsidiaries 1,000 including Dell Services (FY2016)
[+299.4] 632.9 335.9 (249.6)
0 (251.1)
+74.0
(492.9) (539.4)
Increase in (1,000) Net Income
[+99.2] (46.5) Decrease in borrowings
(1,407.9) [(40.9)] (1,630.9)
(2,000)
Increase/Decrease period of the previous from fiscal the year same
FY2016 FY2017 4-12 4-12
* The effect of the last day of the nine-month period ended December 31, 2016 and 2017 having been a non-business day, resulting in the increase in accounts receivable because of the due date of a portion of accounts receivable being, instead of the last day of the period, the first business day of the following month.
Including the effect above, Cash flows from operating activities were 1,715.8 billion yen for the nine-month period ended December 31, 2016 and 1,791.2 billion yen for the nine-month period ended December 31, 2017, and the FCF amounts were 84.9 billion yen and 383.3 billion yen, respectively.
Financial Results for the Nine Months Ended December 31, 2017 15 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Details of Capital Investment
Billions of yen
Capital Investment
1,700.0 1,700.0 1,687.2 Other
NTT DATA (Consolidated) NTT Communications NTT West
1,139.9 NTT East
1,092.3 NTT DOCOMO (Consolidated)
1,039.4
199.7 175.3 153.1
88.1 105.6 143.9
83.6 91.5 61.0 164.8 161.6 189.9 155.7 170.1 162.2
362.5 399.4 403.6
FY2015 4-12 FY2016 4-12 FY2017 4-12 FY2015 FY2016 FY2017 E
Financial Results for the Nine Months Ended December 31, 2017 16o Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


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Shareholder Returns
Share Buybacks (Billions of yen)
539.4
406.5
366.5 381.7 374.1 338.1 200.0 193.2 120.0 150.0
86.2 100.0 94.4 93.6
FY1999 FY2002 FY2003 FY2004 FY2005 FY2007 FY2008 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E
Dividends per (Yen)
Share • Pay-out ratio
150
Note: Dividends have been adjusted to reflect the two-for-one stock split carried out on July 1, 2015    
120 110
85 90 80 70
55 60 60
40 45 38.2% 38.0%
37.2% 34.1%
25 30 30 32.3% 31.2% 33.4% 31.4% 30.7%
23.0% 27.5%
12.3% 13.0% 19.5%
17.1%
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E
Financial Results for the Nine Months Ended December 31, 2017 17 Copyright (c) 2018 Nippon Telegraph and Telephone Corporation


February 9, 2018

FOR IMMEDIATE RELEASE

Financial Statements for the Nine Months Ended December 31, 2017

The financial results of Nippon Telegraph and Telephone East Corporation (NTT East) for the nine months ended December 31, 2017 are presented in the following attachments.

(Attachments)

 

1. Non-Consolidated Comparative Balance Sheets

 

2. Non-Consolidated Comparative Statements of Income

 

3. Business Results (Non-Consolidated Operating Revenues)

 

4. Revised Forecasts for the Fiscal Year Ending March 31, 2018

For inquiries, please contact:

Mr. Kenkichi Nakata or Mr. Ryou Yamamoto

Accounting Section, Finance Division

Nippon Telegraph and Telephone East Corporation

Tel: +81-3-5359-3331

E-mail: kessan_info-ml@east.ntt.co.jp


1. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     March 31, 2017     December 31, 2017     Increase
(Decrease)
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     339,631       334,501       (5,129

Antenna facilities

     3,604       3,503       (100

Terminal equipment

     22,947       21,033       (1,913

Local line facilities

     866,722       817,264       (49,457

Long-distance line facilities

     2,843       2,758       (84

Engineering facilities

     588,683       579,727       (8,956

Submarine line facilities

     732       621       (110

Buildings

     409,835       403,395       (6,439

Construction in progress

     19,988       18,536       (1,452

Other

     266,121       262,811       (3,309

Total property, plant and equipment

     2,521,110       2,444,156       (76,953

Intangible fixed assets

     84,120       82,537       (1,582

Total fixed assets - telecommunications businesses

     2,605,230       2,526,693       (78,536

Investments and other assets

      

Other investments and assets

     199,112       215,999       16,887  

Allowance for doubtful accounts

     (773     (760     13  

Total investments and other assets

                198,338                  215,239                    16,900  

Total fixed assets

     2,803,569       2,741,933       (61,635

Current assets:

      

Cash and bank deposits

     5,605       6,965       1,360  

Notes receivable

     —         39       39  

Accounts receivable, trade

     230,736       238,696       7,959  

Supplies

     26,005       23,017       (2,987

Other current assets

     435,502       294,391       (141,111

Allowance for doubtful accounts

     (327     (305     22  

Total current assets

     697,521       562,803       (134,718
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

         3,501,091           3,304,737       (196,353
  

 

 

   

 

 

   

 

 

 

 

– 1 –


     (Millions of yen)  
     March 31, 2017      December 31, 2017      Increase
(Decrease)
 

LIABILITIES

        

Long-term liabilities:

        

Long-term borrowings from parent company

     225,220        225,220        —    

Liability for employees’ retirement benefits

     247,366        257,571                     10,204  

Reserve for point services

     4,145        4,435        290  

Reserve for unused telephone cards

     8,460        8,211        (248

Allowance for environmental measures

     3,637        3,637        —    

Asset retirement obligations

     902        904        1  

Other long-term liabilities

     36,166        43,263        7,097  

Total long-term liabilities

     525,898        543,244        17,345  

Current liabilities:

        

Current portion of long-term borrowings from parent company

     140,615                     50,400        (90,215

Accounts payable, trade

                  89,029        40,565        (48,464

Accrued taxes on income

     14,186        6,455        (7,731

Allowance for environmental measures

     2,285        269        (2,016

Asset retirement obligations

     1        —          (1

Other current liabilities

     442,617        411,573        (31,044

Total current liabilities

     688,735        509,262        (179,472
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

     1,214,633        1,052,507        (162,126
  

 

 

    

 

 

    

 

 

 

NET ASSETS

        

Shareholders’ equity:

        

Common stock

     335,000        335,000        —    

Capital surplus

     1,499,726        1,499,726        —    

Earned surplus

     447,459        412,703        (34,755

Total shareholders’ equity

     2,282,186        2,247,430        (34,755

Unrealized gains (losses), translation adjustments, and others:

        

Net unrealized gains (losses) on securities

     4,271        4,799        528  

Total unrealized gains (losses), translation adjustments, and others

     4,271        4,799        528  
  

 

 

    

 

 

    

 

 

 

TOTAL NET ASSETS

     2,286,457        2,252,230        (34,227
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND NET ASSETS

         3,501,091            3,304,737        (196,353
  

 

 

    

 

 

    

 

 

 

 

Note: *NTT East participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 2 –


2. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Year ended
March 31, 2017
 

Telecommunications businesses:

          

Operating revenues

     1,149,281        1,133,897        (15,383     1,534,745  

Operating expenses

     989,295        936,138        (53,156     1,367,603  

Operating income from telecommunications businesses

     159,985        197,759        37,773       167,142  

Supplementary businesses:

          

Operating revenues

     87,407        86,705        (701     137,497  

Operating expenses

     73,617        72,228        (1,389     115,534  

Operating income from supplementary businesses

     13,790        14,477        687       21,962  

Operating income

     173,775        212,236        38,460       189,104  

Non-operating revenues:

          

Interest income

     20        10        (10     26  

Dividends received

     3,222        6,954        3,731       3,226  

Gains on sales of fixed assets

     14,403        3,002        (11,401     14,363  

Miscellaneous income

     1,816        1,941        124       2,647  

Total non-operating revenues

     19,464        11,908        (7,555     20,263  

Non-operating expenses:

          

Interest expenses

     3,547        2,682        (864     4,669  

Miscellaneous expenses

     199        78        (121     260  

Total non-operating expenses

     3,747        2,761        (986     4,930  

Recurring profit

     189,492        221,384        31,891       204,438  

Special losses

     —          60,909        60,909       —    

Income before income taxes

     189,492        160,474        (29,018     204,438  

Income taxes

     52,947        45,571        (7,375     54,774  

Net income

     136,545        114,902        (21,643     149,663  

 

Note: * NTT East participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


3. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2017
 

Voice transmission services revenues
(excluding IP services revenues)

     300,683        279,328        (21,355     (7.1     396,519  

Monthly charge revenues*

     226,876        211,616        (15,259     (6.7     299,992  

Call rates revenues*

     20,181        17,535        (2,646     (13.1     26,272  

Interconnection call revenues*

     34,911        32,561        (2,350     (6.7     45,606  

IP services revenues

     637,542        641,058        3,515       0.6       850,388  

Leased circuit services revenues
(excluding IP services revenues)

     70,680        69,547        (1,132     (1.6     93,307  

Telegram services revenues

     8,411        7,892        (518     (6.2     11,422  

Other telecommunications services
revenues

     131,962        136,069        4,107       3.1       183,107  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Telecommunications total revenues

     1,149,281        1,133,897        (15,383     (1.3     1,534,745  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplementary business total revenues

     87,407        86,705        (701     (0.8     137,497  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,236,688        1,220,603        (16,085     (1.3     1,672,243  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

* Partial listing only

 

– 4 –


4. Revised Forecasts for the Fiscal Year Ending March 31, 2018

Based on its recent business performance, NTT East has revised its financial results forecasts that were announced in the financial results release filed on November 10, 2017 for the fiscal year ending March 31, 2018, as follows.

 

     (Billions of yen)  
     Year Ending March 31,
2018
(Forecasts Previously
Announced on November 10,
2017)
     Year Ending March 31,
2018
(Revised Forecasts)
    Change  

Operating Revenues

     1,640.0        1,640.0       —    

Operating Income

     190.0        251.0       61.0  

Recurring Profit

     195.0        256.0       61.0  

Special Profits (Losses)

     —          (61.0     (61.0

Net Income

     135.0        135.0       —    

 

Note: The financial results forecasts and projected figures concerning the future performance of NTT East contained herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT East and its parent NTT in light of information currently available to them regarding NTT, NTT East and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT, NTT East and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

– 5 –


February 9, 2018

FOR IMMEDIATE RELEASE

Financial Results for the Nine Months Ended December 31, 2017

The financial results of Nippon Telegraph and Telephone West Corporation (NTT West) for the nine months ended December 31, 2017 are presented in the following attachments.

(Attachments)

 

1. Non-Consolidated Comparative Balance Sheets

 

2. Non-Consolidated Comparative Statements of Income

 

3. Business Results (Non-Consolidated Operating Revenues)

 

4. Revised Forecasts for the Fiscal Year Ending March 31, 2018

For inquiries, please contact:

Junichiro Maekawa or Kenichi Matsuno

Accounting Section, Finance Division

Nippon Telegraph and Telephone West Corporation

Tel: +81-6-4793-3141

E-mail: kessan-info@west.ntt.co.jp


1. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
        March 31, 2017        December 31, 2017     Increase
(Decrease)
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     297,757       291,301       (6,455

Antenna facilities

     5,895       5,897       1  

Terminal equipment

     11,318       11,388       69  

Local line facilities

     1,051,300       1,016,371       (34,929

Long-distance line facilities

     1,693       1,741       47  

Engineering facilities

     517,724       505,218       (12,506

Submarine line facilities

     3,131       3,473       341  

Buildings

     312,924       312,175       (748

Construction in progress

     31,294       18,411       (12,882

Other

     219,918       218,987       (931

Total property, plant and equipment

     2,452,960       2,384,966       (67,993

Intangible fixed assets

     64,444       60,605       (3,839

Total fixed assets - telecommunications businesses

     2,517,404       2,445,572       (71,832

Investments and other assets

      

Other investments and assets

     187,606       205,330       17,723  

Allowance for doubtful accounts

     (681     (606     75  

Total investments and other assets

                186,924                  204,723                    17,799  

Total fixed assets

     2,704,329       2,650,296       (54,033

Current assets:

      

Cash and bank deposits

     18,251       5,338       (12,913

Notes receivable

     —         1       1  

Accounts receivable, trade

     199,820       197,935       (1,885

Supplies

     29,950       27,045       (2,904

Other current assets

     151,715       110,512       (41,203

Allowance for doubtful accounts

     (339     (273     66  

Total current assets

     399,398       340,559       (58,839
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     3,103,728       2,990,856       (112,872
  

 

 

   

 

 

   

 

 

 

 

– 1 –


     (Millions of yen)  
        March 31, 2017         December 31, 2017      Increase
(Decrease)
 

LIABILITIES

        

Long-term liabilities:

        

Long-term borrowings from parent company

     591,000        601,000        10,000  

Liability for employees’ retirement benefits

     242,251        250,951                8,699  

Reserve for point services

     3,792        3,006        (786

Reserve for unused telephone cards

     8,000        7,765        (234

Allowance for environmental measures

     9,074        8,424        (650

Asset retirement obligations

     228        89        (139

Other long-term liabilities

     4,749        99,290        94,540  

Total long-term liabilities

     859,097        970,526        111,429  

Current liabilities:

        

Current portion of long-term borrowings from parent company

     110,707        40,400        (70,307

Accounts payable, trade

                  71,635                     34,223        (37,411

Short-term borrowings

     105,259        126,884                     21,624  

Accrued taxes on income

     8,731      * 4,450        (4,281

Allowance for loss on disaster

     4,096        3,845        (251

Allowance for environmental measures

     2,361        1,039        (1,321

Asset retirement obligations

     133        287        154  

Other current liabilities

     362,351        210,352        (151,998

Total current liabilities

     665,277        421,483        (243,794
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

     1,524,374        1,392,010        (132,364
  

 

 

    

 

 

    

 

 

 

NET ASSETS

        

Shareholders’ equity:

        

Common stock

         312,000            312,000        —    

Capital surplus

     1,170,054        1,170,054        —    

Earned surplus

     96,911        116,238        19,327  

Total shareholders’ equity

     1,578,965        1,598,292        19,327  

Unrealized gains (losses), translation adjustments, and others:

        

Net unrealized gains (losses) on securities

     388        553        164  

Total unrealized gains (losses), translation adjustments, and others

     388        553        164  
  

 

 

    

 

 

    

 

 

 

TOTAL NET ASSETS

     1,579,353        1,598,845        19,492  
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND NET ASSETS

     3,103,728        2,990,856        (112,872
  

 

 

    

 

 

    

 

 

 

 

Note: *NTT West participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 2 –


2. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Year ended
March 31, 2017
 

Telecommunications businesses:

          

Operating revenues

     993,893        958,461        (35,431     1,325,585  

Operating expenses

     904,627        832,434        (72,193     1,242,485  

Operating income from telecommunications businesses

     89,265        126,027        36,761       83,099  

Supplementary businesses:

          

Operating revenues

     99,331        99,761        429       153,430  

Operating expenses

     91,339        89,147        (2,191     141,343  

Operating income from supplementary businesses

     7,992        10,613        2,621       12,086  

Operating income

     97,257        136,640        39,383       95,186  

Non-operating revenues:

          

Interest income

     9        9        (0     12  

Dividends received

     613        839        225       615  

Miscellaneous income

     1,628        1,322        (306     2,330  

Total non-operating revenues

     2,252        2,171        (80     2,957  

Non-operating expenses:

          

Interest expenses

     5,477        4,499        (978     7,114  

Miscellaneous expenses

     132        333        201       2,875  

Total non-operating expenses

     5,609        4,832        (776     9,989  

Recurring profit

     93,900        133,979        40,079       88,154  

Special losses

     6,055        63,890              57,835       6,915  

Income before income taxes

     87,844        70,088        (17,755     81,239  

Income taxes

   * 24,201      * 19,561        (4,640     21,469  

Net income

           63,643              50,527        (13,115           59,770  

 

Note: * NTT West participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


3. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2017
 

Voice transmission services revenues (excluding IP services revenues)

     300,613        277,515        (23,097     (7.7     396,272  

Monthly charge revenues*

     225,645        209,958        (15,686     (7.0     298,340  

Call rates revenues*

     18,877        16,434        (2,442     (12.9     24,590  

Interconnection call revenues*

     38,044        34,681        (3,362     (8.8     49,676  

IP services revenues

     523,275        517,220        (6,055     (1.2     697,252  

Leased circuit services revenues
(excluding IP services revenues)

     65,194        65,363        169       0.3       86,362  

Telegram services revenues

     9,362        8,569        (792     (8.5     12,625  

Other telecommunications services revenues

     95,447        89,791        (5,655     (5.9     133,071  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Telecommunications total revenues

     993,893        958,461        (35,431     (3.6     1,325,585  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplementary business total revenues

     99,331        99,761        429       0.4       153,430  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,093,224        1,058,223        (35,001     (3.2     1,479,015  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

* Partial listing only

 

– 4 –


4. Revised Forecasts for the Fiscal Year Ending March 31, 2018

Based on its recent business performance, NTT West has revised its financial results forecasts that were announced in the financial results release filed on November 10, 2017 for the fiscal year ending March 31, 2018, as follows.

 

     (Billions of yen)  
     Year Ending March 31,
2018
(Forecasts Previously
Announced on November 10,
2017)
     Year Ending March 31,
2018
(Revised Forecasts)
    Change  

Operating Revenues

     1,436        1,436       —    

Operating Income

     100        164       64  

Recurring Profit

     95        159       64  

Special Profits (Losses)

     —          (64     (64

Net Income

     70        70       —    

 

Note: The financial results forecasts and projected figures concerning the future performance of NTT West contained herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT West and its parent NTT in light of information currently available to them regarding NTT, NTT West and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT, NTT West and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

– 5 –


February 9, 2018

FOR IMMEDIATE RELEASE

NTT Com Announces Financial Results for the Nine Months Ended December 31, 2017

TOKYO, JAPAN — NTT Communications Corporation (NTT Com) announced today its financial results for the nine months ended December 31, 2017. Please see the following attachments for further details:

 

I. Financial Results of NTT Communications Group

 

II. Non-Consolidated Comparative Balance Sheets

 

III. Non-Consolidated Comparative Statements of Income

 

IV. Business Results (Non-Consolidated Operating Revenues)

 

V. Revised Forecasts for the Fiscal Year Ending March 31, 2018

#    #    #

About NTT Communications Corporation

NTT Communications provides consultancy, architecture, security and cloud services to optimize the information and communications technology (ICT) environments of enterprises. These offerings are backed by the company’s worldwide infrastructure, including a leading global tier-1 IP network, the Arcstar Universal One™ VPN network, reaching over 190 countries/regions, and over 140 secure data centers worldwide. NTT Communications’ solutions leverage the global resources of NTT Group companies, including Dimension Data, NTT DOCOMO and NTT DATA.

www.ntt.com | Twitter@NTT Communications | Facebook@NTT Communications | LinkedIn@NTT

For more information

(Mr.) Akira Ito or (Mr.) Shinichi Shimizu

Accounting and Taxation, Finance, NTT Communications

Tel: +81 3 6700 4311

Email: info-af@ntt.com


I. Financial Results of NTT Communications Group

 

     (Millions of yen)  
     Nine months ended
Dec 31, 2016
     Nine months ended
Dec 31, 2017
     Increase
(Decrease)
    Percent
Increase
(Decrease)
 

Operating revenues

     937,331        968,629        31,298       3.3  

Operating expenses

     831,468        882,366        50,898       6.1  

Operating income

     105,863        86,263        (19,600     (18.5

 

– 1 –


II. Non-Consolidated Comparative Balance Sheets

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
        March 31, 2017        December 31, 2017     Increase
        (Decrease)        
 

ASSETS

      

Fixed assets:

      

Fixed assets - telecommunications businesses

      

Property, plant and equipment

      

Machinery and equipment

     151,531       129,614       (21,916

Antenna facilities

     1,674       1,348       (325

Terminal equipment

     1,963       2,132       169  

Local line facilities

     1,103       1,085       (18

Long-distance line facilities

     5,122       5,112       (9

Engineering facilities

     49,878       48,664       (1,214

Submarine line facilities

     16,701       15,360       (1,341

Buildings

     205,475       201,256       (4,218

Construction in progress

     13,323       16,013       2,690  

Other

     105,983       119,357       13,374  

Total property, plant and equipment

     552,757       539,945       (12,812

Intangible fixed assets

     98,820       100,955       2,134  

Total fixed assets - telecommunications businesses

     651,578       640,900       (10,677

Investments and other assets

      

Investment securities

     108,152       115,989       7,837  

Investments in subsidiaries and affiliated companies

     387,905       417,772                    29,866  

Other investments and assets

     65,778       66,713       935  

Allowance for doubtful accounts

     (160     (133     26  

Total investments and other assets

     561,675       600,342       38,666  

Total fixed assets

     1,213,254       1,241,242       27,988  

Current assets:

      

Cash and bank deposits

     3,406       6,081       2,674  

Notes receivable

     8       0       (8

Accounts receivable, trade

     178,248       190,520       12,272  

Supplies

     9,643       9,018       (625

Other current assets

     90,655       55,439       (35,215

Allowance for doubtful accounts

     (1,367     (1,410     (43

Total current assets

                 280,595                   259,649       (20,946
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     1,493,849       1,500,892       7,042  
  

 

 

   

 

 

   

 

 

 

 

– 2 –


     (Millions of yen)  
        March 31, 2017         December 31, 2017      Increase
        (Decrease)        
 

LIABILITIES

        

Long-term liabilities:

        

Long-term borrowings from parent company and subsidiary

     222,333        247,986        25,652  

Liability for employees’ retirement benefits

     89,994        94,170        4,176  

Reserve for point services

     407        437        29  

Reserve for unused telephone cards

     3,540        3,436        (103

Asset retirement obligations

     4,126        4,547        421  

Other long-term liabilities

     19,416        22,362        2,946  

Total long-term liabilities

     339,818        372,940        33,122  

Current liabilities:

        

Accounts payable, trade

     29,548        20,209        (9,339

Short-term borrowings

     —          13,445        13,445  

Accrued taxes on income

     3,749        *4,856                        1,106  

Allowance for losses on construction

     627        587        (39

Asset retirement obligations

     56        13        (42

Other current liabilities

     169,379        150,203        (19,175

Total current liabilities

     203,360        189,316        (14,044
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES

     543,179        562,256        19,077  
  

 

 

    

 

 

    

 

 

 

NET ASSETS

        

Shareholders’ equity:

        

Common stock

     211,763        211,763        —    

Capital surplus

     131,615        131,615        —    

Earned surplus

     563,997        554,432        (9,564

Total shareholders’ equity

     907,376        897,811        (9,564

Unrealized gains (losses), translation adjustments, and others:

        

Net unrealized gains (losses) on securities

     43,080        40,786        (2,293

Deferred gains or losses on hedges

     213        36        (176

Total unrealized gains (losses), translation adjustments, and others

     43,293        40,823        (2,470
  

 

 

    

 

 

    

 

 

 

TOTAL NET ASSETS

                 950,670            938,635        (12,034
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND NET ASSETS

     1,493,849        1,500,892        7,042  
  

 

 

    

 

 

    

 

 

 

 

Note: *NTT Com participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 3 –


III. Non-Consolidated Comparative Statements of Income

(Based on accounting principles generally accepted in Japan )

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Year ended
March 31, 2017
 

Telecommunications businesses:

          

Operating revenues

     522,293        523,642        1,348       697,333  

Operating expenses

     462,077        450,641        (11,436     620,370  

Operating income from telecommunications businesses

     60,216        73,000        12,784       76,963  

Supplementary businesses:

          

Operating revenues

     151,884        170,122        18,237       226,522  

Operating expenses

     139,001        159,698        20,696       210,936  

Operating income from supplementary businesses

     12,883        10,424        (2,459     15,585  

Operating income

     73,099        83,424        10,324       92,549  

Non-operating revenues:

          

Interest income

     52        25        (27     62  

Dividends received

     8,160        7,148        (1,012     8,258  

Lease and rental income

     8,456        8,032        (423     11,204  

Miscellaneous income

     491        1,657        1,165       1,222  

Total non-operating revenues

     17,162        16,863        (298     20,748  

Non-operating expenses:

          

Interest expenses

     814        566        (247     1,050  

Lease and rental expenses

     4,111        2,902        (1,208     5,712  

Miscellaneous expenses

     401        110        (290     1,072  

Total non-operating expenses

     5,326        3,580        (1,745     7,836  

Recurring profit

     84,935        96,708        11,772       105,461  

Special profits

     —          2,433        2,433       —    

Income before income taxes

         84,935             99,141                14,205           105,461  

Income taxes

   * 23,555      * 29,144        5,588       20,458  

Net income

     61,380        69,996        8,616       85,003  

 

Note: *NTT Com participates in a consolidated tax return system, which has been adopted by NTT (Holding Company) and its wholly-owned subsidiaries in Japan. However, except for a portion of the calculation of taxes, income taxes have not been calculated on a consolidated basis in the quarterly financial statements.

 

– 4 –


IV. Business Results (Non-Consolidated Operating Revenues)

(Based on accounting principles generally accepted in Japan)

 

     (Millions of yen)  
     Nine months ended
December 31, 2016
     Nine months ended
December 31, 2017
     Increase
(Decrease)
    Percent
Increase
(Decrease)
    Year ended
March 31, 2017
 

Cloud Computing Platforms

     52,435        60,242        7,806       14.9       72,034  

Data Networks

     286,327        294,738        8,411       2.9       384,804  

Voice Communications

     190,144        183,054        (7,089     (3.7     250,794  

Applications & Content

     28,037        26,891        (1,146     (4.1     37,732  

Solution Services

     105,907        114,922        9,015       8.5       163,496  

Others

     11,326        13,914        2,588       22.8       14,993  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     674,178        693,764        19,585       2.9       923,855  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

– 5 –


V. Revised Forecasts for the Fiscal Year Ending March 31, 2018

Based on the financial results for the nine months ended December 31, 2017, NTT Com revised its forecasts for the fiscal year ending March 31, 2018 which was previously announced on May 15, 2017.

 

     [Billions of yen]  
     Year Ending March 31,
2018

[Forecasts]
    Year Ending March 31,
2018
[Revised Forecasts]
    Change  

Operating Revenues

    

1,330

[940

 

   

1,330

[940

 

   
—  
 

Operating Income

    

135

[93

 

   

135

[110

 

   

—  

[+17

 

Recurring Profit

    

—  

[103

 

   

—  

[120

 

   

—  

[+17

 

Net Income

    

—  

[73

 

   

—  

[85

 

   

—  

[+12

 

 

* The figures in the upper rows are for NTT Communications Group. The figures in square brackets are for NTT Communications only.
* Forward-looking statements and projected figures concerning the future performance of NTT Com, NTT and their respective subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT Com in light of information currently available to it regarding NTT Com, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT Com, NTT and their respective subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

– 6 –


February 9, 2018

Nippon Telegraph and Telephone Corporation

Supplementary Data for

the Nine Months Ended December 31, 2017

Contents

 

1.    Financial Results Summary (Consolidated)

     pages 1-2  

2.    Financial Results (Business Segments)

     page 3  

3.    Financial Results (Holding Company and Subsidiaries)

     pages 4-6  

4.    Operating Data

     pages 7-9  

Disclaimers

The projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained herein, as well as other risks included in NTT’s most recent Annual Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission.

 

* “E” in this material represents that the figure is a plan or projection for operation.
** “FY” in this material indicates the fiscal year ending March 31 of the succeeding year.


1. Financial Results Summary (NTT Consolidated Financial Results, EBITDA and EBITDA Margin and Interest-Bearing Liabilities)

NTT Consolidated Financial Results

 

     (Billions of yen)  
     FY 2016     FY 2017      FY 2017 (E)  
     Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended
March 31
     Year
Ending
March 31

(Forecast) (2)
 

Consolidated (US GAAP)

                            

Operating Revenues

       2,716.7         2,807.6         2,836.2         8,360.5         3,030.5       11,391.0         2,809.8         2,855.0         3,057.2         8,722.0       —          —          11,750.0  

Fixed Voice Related Services

     311.8       307.5       299.8       919.2       314.7       1,233.9       290.2       280.8       287.8       858.9       —          —          —    

Mobile Voice Related Services

     213.0       216.6       221.8       651.4       213.9       865.3       228.7       238.9       238.7       706.4       —          —          —    

IP/Packet Communications Services

     948.0       953.3       941.0       2,842.4       966.6       3,809.0       949.2       959.7       952.1       2,861.0       —          —          —    

Sales of Telecommunications Equipment

     186.7       236.4       227.0       650.1       156.4       806.5       173.4       175.1       293.5       642.0       —          —          —    

System Integration

     688.3       708.8       726.7       2,123.7       917.9       3,041.6       782.5       817.3       880.0       2,479.9       —          —          —    

Other

     368.9       385.0       419.9       1,173.7       461.0       1,634.8       385.8       383.1       405.0       1,173.9       —          —          —    

Operating Expenses

     2,229.3       2,368.5       2,444.1       7,041.9       2,809.3       9,851.2       2,318.2       2,371.4       2,712.9       7,402.5       —          —          10,160.0  

Cost of Services (excluding items shown separately below)

     547.3       606.1       598.0       1,751.4       736.2       2,487.6       554.9       565.6       580.4       1,700.9       —          —          —    

Cost of Equipment Sold (excluding items shown separately below)

     175.3       231.2       248.3       654.8       225.0       879.7       184.5       195.4       295.5       675.4       —          —          —    

Cost of System Integration (excluding items shown separately below)

     501.7       484.5       510.3       1,496.6       664.4       2,161.0       561.1       580.0       633.7       1,774.8       —          —          —    

Depreciation and Amortization

     359.2       357.3       366.4       1,082.9       379.3       1,462.2       332.3       327.7       335.6       995.6       —          —          1,359.0  

Impairment Losses

     0.4       14.3       51.3       66.0       7.9       73.9       —         0.6       143.9       144.4       —          —          —    

Goodwill

     —         4.5       48.8       53.3       —         53.3       —         —         18.9       18.9       —          —          —    

Metal cables

     —         —         —         —         —         —         —         —         124.8       124.8       —          —          —    

Other

     0.4       9.8       2.5       12.7       7.9       20.6       —         0.6       0.2       0.7       —          —          —    

Selling, General and Administrative Expenses

     645.5       675.1       669.7       1,990.3       796.5       2,786.8       685.4       702.2       723.8       2,111.4       —          —          —    

Operating Income

     487.4       439.1       392.1       1,318.6       221.2       1,539.8       491.6       483.6       344.4       1,319.6       —          —          1,590.0  

Income Before Income Taxes

     446.1       450.8       410.3       1,307.2       220.6       1,527.8       496.2       485.8       459.3       1,441.3       —          —          1,695.0  

Net Income Attributable to NTT

     243.6       232.5       192.6       668.7       131.4       800.1       271.5       256.0       209.1       736.6       —          —          880.0  

(Ref.) Details of “Cost of Services,” “Cost of Equipment Sold,” “Cost of System Integration” and “Selling, General and Administrative Expenses”

 

     

Personnel

     557.7       569.7       547.5       1,674.9       601.9       2,276.8       593.1       594.7       612.8       1,800.5       —          —          —    

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

     1,227.9       1,335.4       1,384.4       3,947.8       1,664.2       5,612.0       1,308.2       1,358.2       1,530.7       4,197.1       —          —          —    

Loss on Disposal of Property, Plant and Equipment

     24.2       36.3       39.8       100.2       96.8       197.0       27.3       35.4       34.8       97.4       —          —          —    

Other Expenses

     60.0       55.6       54.7       170.3       59.1       229.4       57.3       55.0       55.2       167.5       —          —          —    

Total

     1,869.8       1,996.9       2,026.4       5,893.1       2,422.1       8,315.1       1,985.9       2,043.2       2,233.4       6,262.5       —          —          —    

EBITDA and EBITDA Margin with Reconciliation

                            

EBITDA [a+b+c+d] (1)

     860.0       830.7       829.8       2,520.5       662.9       3,183.3       837.4       827.7       839.3       2,504.4       —          —          3,190.0  

a Operating Income

     487.4       439.1       392.1       1,318.6       221.2       1,539.8       491.6       483.6       344.4       1,319.6       —          —          1,590.0  

b Depreciation and Amortization

     359.2       357.3       366.4       1,082.9       379.3       1,462.2       332.3       327.7       335.6       995.6       —          —          1,359.0  

c Loss on Sales and Disposal of Property, Plant and Equipment

     13.0       20.0       20.0       53.0       54.4       107.4       13.5       15.9       15.5       44.9       —          —          241.0  

d Impairment Losses

     0.4       14.3       51.3       66.0       7.9       73.9       —         0.6       143.9       144.4       —          —          —    

EBITDA Margin [(e/f)*100] (1)

     31.7     29.6     29.3     30.1     21.9     27.9     29.8     29.0     27.5     28.7     —          —          27.1

e EBITDA [a+b+c+d]

     860.0       830.7       829.8       2,520.5       662.9       3,183.3       837.4       827.7       839.3       2,504.4       —          —          3,190.0  

f Operating Revenues

     2,716.7       2,807.6       2,836.2       8,360.5       3,030.5       11,391.0       2,809.8       2,855.0       3,057.2       8,722.0       —          —          11,750.0  

Interest-Bearing Liabilities

                            
     FY 2016                 FY 2017                   FY 2017 (E)  
     As of
June 30
    As of
September 30
    As of
December 31
    As of
March 31
                As of
June 30
    As of
September 30
    As of
December 31
    As of
March 31
                  As of
March 31
(Forecast)
 

Interest-Bearing Liabilities

     4,353.6       4,091.8       4,497.1       4,088.2           4,419.3       4,172.2       4,127.7       —               3,900.0  

 

Notes :    (1)    Beginning with the three months ended March 31, 2017, the method for calculating EBITDA has been revised to add Loss on Sales of Property, Plant and Equipment and Impairment Losses. EBITDA and EBITDA Margin, as calculated using the previous method including only Operating Income and Depreciation and Amortization, and Loss on Disposal of Property, Plant and Equipment, would have been 695.3 billion yen and 22.7%, respectively, for the three months ended December 31, 2017 and 2,359.3 billion yen and 27.0%, respectively, for the nine months ended December 31, 2017. EBITDA and EBITDA Margin figures presented in the table above have been retroactively recalculated using the new calculation method.
   (2)    Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 1 –


1. Financial Results Summary (Capital Investment)

Capital Investment

 

 

     (Billions of yen)  
     FY 2016     FY 2017      FY
2017 (E)
 
     Three
Months
Ended
June 30
    Three
Months
Ended

September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended

March 31
    Year
Ended

March 31
    Three
Months
Ended
June 30
    Three
Months
Ended

September 30
    Three
Months
Ended

December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended

March 31
     Year
Ending
March 31

(Forecast) (3)
 

Capital Investment (1)

       284.4              381.5              426.5           1,092.3              607.8           1,700.0              356.0              402.3              381.6           1,139.9           —          —          1,700.0      

Regional communications business

     96.3       118.7       130.6       345.6       237.7       583.4       106.4       126.2       123.6       356.3       —          —          555.0  

Long distance and international communications business

     44.8       56.6       67.0       168.3       76.5       244.9       52.1       57.9       47.8       157.8       —          —          249.0  

Mobile communications business

     97.1       148.9       153.3       399.4       197.7       597.1       120.9       146.7       135.9       403.6       —          —          570.0  

Data communications business

     28.5       39.1       37.9       105.6       52.5       158.1       44.4       53.5       41.3       139.3       —          —          192.0  

Other business

     17.6       18.1       37.6       73.3       43.3       116.6       32.1       17.9       32.9       82.9       —          —          134.0  

(Ref.) Core Group Companies

 

                     

NTT (Holding Company)

     1.0       2.6       3.8       7.6       8.1       15.7       1.9       2.1       2.8       6.9       —          —          18.0  

R&D Facilities

     —         —         —         —         —         12.9       —         —         —         —         —          —          15.0  

Joint Facilities

     —         —         —         —         —         2.8       —         —         —         —         —          —          3.0  

NTT East (2)

     42.1       52.4       61.0       155.7       118.0       273.8       58.5       56.8       54.7       170.1       —          —          250.0  

Service Expansion and Improvement

     —         —         —         —         —         249.6       —         —         —         —         —          —          231.0  

Voice Transmission

     —         —         —         —         —         142.6       —         —         —         —         —          —          133.0  

Data Transmission

     —         —         —         —         —         17.8       —         —         —         —         —          —          14.0  

Leased Circuit

     —         —         —         —         —         88.2       —         —         —         —         —          —          83.0  

Telegraph

     —         —         —         —         —         0.9       —         —         —         —         —          —          1.0  

R&D Facilities

     —         —         —         —         —         2.7       —         —         —         —         —          —          2.0  

Joint Facilities

     —         —         —         —         —         21.3       —         —         —         —         —          —          17.0  

NTT West (2)

     46.2       56.8       61.7       164.8       109.3       274.1       42.1       60.9       58.5       161.6       —          —          260.0  

Service Expansion and Improvement

     —         —         —         —         —         256.0       —         —         —         —         —          —          239.0  

Voice Transmission

     —         —         —         —         —         157.7       —         —         —         —         —          —          144.0  

Data Transmission

     —         —         —         —         —         22.9       —         —         —         —         —          —          17.0  

Leased Circuit

     —         —         —         —         —         74.9       —         —         —         —         —          —          77.0  

Telegraph

     —         —         —         —         —         0.3       —         —         —         —         —          —          1.0  

R&D Facilities

     —         —         —         —         —         1.9       —         —         —         —         —          —          2.0  

Joint Facilities

     —         —         —         —         —         16.0       —         —         —         —         —          —          19.0  

NTT Communications

     25.1       32.2       34.1       91.5       43.6       135.1       18.1       22.3       20.5       61.0       —          —          111.0  

Cloud Computing Platforms

     —         —         —         —         —         39.6       —         —         —         —         —          —          23.0  

Data Networks

     —         —         —         —         —         26.3       —         —         —         —         —          —          22.1  

Voice Communications

     —         —         —         —         —         10.2       —         —         —         —         —          —          8.2  

Applications & Content

     —         —         —         —         —         1.9       —         —         —         —         —          —          4.1  

Solution Services

     —         —         —         —         —         6.3       —         —         —         —         —          —          5.3  

Infrastructure and Joint Facilities, etc.

     —         —         —         —         —         50.5       —         —         —         —         —          —          48.0  

NTT DOCOMO (Consolidated)

     97.1       148.9       153.3       399.4       197.7       597.1       120.9       146.7       135.9       403.6       —          —          570.0  

NTT DATA (Consolidated)

     28.5       39.1       37.9       105.6       52.5       158.1       49.0       53.5       41.3       143.9       —          —          192.0  

(Ref.) Optical Access Network Investment

 

     

NTT East

     —         —         —         —         —         85.0       —         —         —         —         —          —          80.0  

NTT West

     —         —         —         —         —         71.0       —         —         —         —         —          —          73.0  

 

Notes :    (1)    Capital Investment figures for domestic access network businesses for the nine months ended December 31, 2016, the nine months ended December 31, 2017 and the year ending March 31, 2018 (Forecast) are 800.8 billion yen, 795.8 billion yen and 1,193.0 billion yen, respectively.
   (2)    Figures for NTT East and NTT West include figures for Optical Access Network Investment.
   (3)    Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 2 –


2. Financial Results (Business Segments)

     (Billions of yen)  
     FY 2016     FY 2017      FY 2017 (E)  
   Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended
March 31
     Year
Ending
March 31

(Forecast) (2)
 

Business segments (1)

                            

Regional communications business

                            

Operating Revenues

        802.9              817.5              814.4           2,434.8              873.4           3,308.2              787.8              792.8              798.7           2,379.3           —          —          3,230.0      

Operating Expenses

     675.1       713.1       716.2       2,104.4       844.3       2,948.7       654.2       673.3       796.1       2,123.6       —          —          2,900.0  

Operating Income

     127.8       104.5       98.2       330.5       29.0       359.5       133.6       119.5       2.5       255.7       —          —          330.0  

Long distance and international communications business

 

     

Operating Revenues

     519.0       519.8       531.8       1,570.6       558.6       2,129.3       529.7       535.1       567.1       1,631.9       —          —          2,230.0  

Operating Expenses

     492.0       504.7       555.3       1,551.9       536.5       2,088.4       494.9       499.5       560.9       1,555.3       —          —          2,110.0  

Operating Income

     27.0       15.2       (23.5     18.7       22.1       40.8       34.8       35.6       6.3       76.6       —          —          120.0  

Mobile communications business

                            

Operating Revenues

     1,108.7       1,179.4       1,181.2       3,469.2       1,115.3       4,584.6       1,136.7       1,163.4       1,295.5       3,595.7       —          —          4,750.0  

Operating Expenses

     810.4       893.9       925.6       2,629.9       1,003.0       3,632.9       859.1       893.7       1,009.2       2,762.1       —          —          3,795.0  

Operating Income

     298.3       285.4       255.6       839.3       112.3       951.6       277.6       269.7       286.3       833.6       —          —          955.0  

Data communications business

                            

Operating Revenues

     373.5       388.6       402.6       1,164.6       554.1       1,718.7       462.3       482.1       516.3       1,460.8       —          —          1,970.0  

Operating Expenses

     351.6       374.6       371.4       1,097.6       513.3       1,610.8       437.0       448.4       486.2       1,371.6       —          —          1,840.0  

Operating Income

     21.9       14.0       31.2       67.1       40.8       107.9       25.3       33.7       30.1       89.1       —          —          130.0  

Other business

 

     

Operating Revenues

     272.1       295.5       322.3       889.9       392.4       1,282.3       281.4       283.0       297.2       861.5       —          —          1,260.0  

Operating Expenses

     259.8       278.1       292.7       830.6       374.4       1,205.0       262.3       262.7       279.2       804.1       —          —          1,185.0  

Operating Income

     12.3       17.4       29.6       59.3       18.0       77.3       19.0       20.4       18.0       57.4       —          —          75.0  

 

Notes :

   (1)    Figures for each segment include inter-segment transactions.
   (2)    Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 3 –


3. Financial Results (Holding Company and Subsidiaries)

 

     (Billions of yen)  
     FY 2016     FY 2017      FY 2017
(E)
    [Ref.]
FY 2017 (E)
 
     Three
Months
Ended

June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended
March 31
     Year
Ending
March  31
(Revised
Forecast) (2)
    Year
Ending
March 31
(Forecast when
previous 2Q
results were
announced)
 

NTT (Holding Company) (JPN GAAP)

                              

Operating Revenues

     269.1           32.7           138.6           440.6           33.7           474.3           436.7           30.9           162.3           630.1           —          —          662.0           662.0      

Operating Expenses

     29.4       30.7       31.1       91.3       43.3       134.6       30.0       29.4       30.8       90.2       —          —          130.0       130.0  

Operating Income

     239.6       2.0       107.5       349.2       (9.5     339.6       406.6       1.5       131.5       539.8       —          —          532.0       532.0  

Non-Operating Revenues

     6.0       6.2       5.7       18.1       6.0       24.1       5.1       6.2       5.1       16.5       —          —          22.0       22.0  

Non-Operating Expenses

     7.7       6.8       6.7       21.3       7.6       28.9       6.1       6.3       6.7       19.2       —          —          25.0       25.0  

Recurring Profit

     237.9       1.4       106.5       345.9       (11.0     334.9       405.6       1.4       130.0       537.1       —          —          529.0       529.0  

Net Income

     237.5       (19.7     79.2       297.0       (8.9     288.1       405.3       (0.6     130.3       535.1       —          —          727.0       530.0  

NTT East (JPN GAAP)

                              

Operating Revenues

     410.1       413.3       413.1       1,236.6       435.5       1,672.2       405.5       407.1       407.8       1,220.6       —          —          1,640.0       1,640.0  

Voice Transmission Services (excluding
IP) (1)

     101.4       99.9       99.2       300.6       95.8       396.5       94.2       92.7       92.2       279.3       —          —          370.0       370.0  

IP Services

     213.3       211.7       212.4       637.5       212.8       850.3       213.4       213.7       213.8       641.0       —          —          850.0       850.0  

Leased Circuit (excluding IP)

     24.0       23.6       23.0       70.6       22.6       93.3       23.2       23.1       23.0       69.5       —          —          93.0       93.0  

Other

     46.1       46.0       48.1       140.3       54.1       194.5       47.6       46.8       49.4       143.9       —          —          193.0       193.0  

Supplementary Business

     25.0       31.9       30.3       87.4       50.0       137.4       26.8       30.6       29.1       86.7       —          —          134.0       134.0  

Operating Expenses

     346.0       353.6       363.1       1,062.9       420.2       1,483.1       329.9       341.0       337.4       1,008.3       —          —          1,389.0       1,450.0  

Personnel

     23.6       23.6       23.2       70.5       24.0       94.6       21.4       20.8       20.6       63.0       —          —          85.0       85.0  

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

     224.3       230.9       236.1       691.4       270.7       962.1       222.9       232.6       231.3       686.9       —          —          947.0       947.0  

Depreciation and Amortization

     72.2       72.5       76.0       220.8       74.2       295.0       58.7       59.1       59.5       177.3       —          —          234.0       234.0  

Loss on Disposal of Property, Plant and Equipment

     6.1       8.4       9.7       24.3       31.5       55.9       7.6       10.4       8.1       26.1       —          —          49.0       110.0  

Taxes and Public Dues

     19.5       18.1       17.9       55.6       19.6       75.3       19.1       18.0       17.6       54.8       —          —          74.0       74.0  

Operating Income

     64.1       59.6       49.9       173.7       15.3       189.1       75.6       66.1       70.4       212.2       —          —          251.0       190.0  

Non-Operating Revenues

     17.3       0.5       1.5       19.4       0.7       20.2       8.1       0.8       2.9       11.9       —          —          9.0       9.0  

Non-Operating Expenses

     1.2       1.2       1.2       3.7       1.1       4.9       0.9       0.9       0.9       2.7       —          —          4.0       4.0  

Recurring Profit

     80.2       58.9       50.2       189.4       14.9       204.4       82.8       66.0       72.4       221.3       —          —          256.0       195.0  

Net Income

     57.8       42.1       36.5       136.5       13.1       149.6       60.0       46.3       8.5       114.9       —          —          135.0       135.0  

NTT West (JPN GAAP)

 

                       

Operating Revenues

     362.0       368.4       362.7       1,093.2       385.7       1,479.0       351.0       354.1       353.0       1,058.2       —          —          1,436.0       1,436.0  

Voice Transmission Services (excluding IP) (1)

     101.6       99.9       99.0       300.6       95.6       396.2       93.7       92.2       91.4       277.5       —          —          370.0       370.0  

IP Services

     175.5       173.6       174.0       523.2       173.9       697.2       173.5       171.8       171.8       517.2       —          —          689.0       689.0  

Leased Circuit (excluding IP)

     22.0       21.7       21.3       65.1       21.1       86.3       22.0       21.7       21.6       65.3       —          —          87.0       87.0  

Other

     33.8       35.0       35.9       104.8       40.8       145.6       32.5       31.8       34.0       98.3       —          —          138.0       138.0  

Supplementary Business

     29.0       38.0       32.2       99.3       54.0       153.4       29.1       36.4       34.1       99.7       —          —          152.0       152.0  

Operating Expenses

     323.3       335.9       336.6       995.9       387.8       1,383.8       301.4       310.6       309.5       921.5       —          —          1,272.0       1,336.0  

Personnel

     20.3       20.0       19.9       60.3       20.2       80.5       18.9       17.6       17.8       54.4       —          —          74.0       74.0  

Cost of Services and Equipment Sold, and Selling, General and Administrative Expenses

     206.3       219.1       215.4       640.9       254.4       895.4       206.0       215.4       212.6       634.2       —          —          863.0       863.0  

Depreciation and Amortization

     70.4       70.8       74.1       215.4       72.1       287.6       52.2       52.7       53.8       158.9       —          —          213.0       213.0  

Loss on Disposal of Property, Plant and Equipment

     8.6       9.4       10.9       29.1       24.1       53.2       6.6       8.4       9.2       24.4       —          —          55.0       119.0  

Taxes and Public Dues

     17.5       16.3       16.2       50.0       16.8       66.9       17.4       16.1       15.8       49.4       —          —          67.0       67.0  

Operating Income

     38.7       32.5       26.0       97.2       (2.0     95.1       49.5       43.5       43.5       136.6       —          —          164.0       100.0  

Non-Operating Revenues

     1.2       0.4       0.5       2.2       0.7       2.9       1.3       0.4       0.3       2.1       —          —          4.0       4.0  

Non-Operating Expenses

     2.0       1.7       1.7       5.6       4.3       9.9       1.5       1.7       1.5       4.8       —          —          9.0       9.0  

Recurring Profit

     37.8       31.1       24.8       93.9       (5.7     88.1       49.3       42.1       42.4       133.9       —          —          159.0       95.0  
                              

Net Income

     23.3       22.2       18.0       63.6       (3.8     59.7       35.0       29.8       (14.3     50.5       —          —          70.0       70.0  

 

Note:    (1)    Operating Revenues from Voice Transmission Services (excluding IP) of NTT East and NTT West for the nine months ended December 31, 2017 include monthly charges, call charges and interconnection charges of 211.6 billion yen, 17.5 billion yen and 32.5 billion yen for NTT East, and 209.9 billion yen, 16.4 billion yen and 34.6 billion yen for NTT West, respectively.
  

(2)   

   NTT (Holding Company) Forecasts for the year ending March 31, 2018 have not been changed from those announced on December 11, 2017.

 

 

-4-


3. Financial Results (Holding Company and Subsidiaries)

 

     (Billions of yen)  
     FY 2016     FY 2017      FY 2017 (E)     [Ref.]
FY 2017 (E)
 
     Three
Months
Ended

June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended

June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended
March 31
     Year
Ending
March 31

(Revised
Forecast)
    Year Ending
March 31

(Forecast when
previous 2Q
results were
announced)
 

NTT Communications (JPN GAAP)

                              

Operating Revenues (1)

     220.2           226.9           227.0           674.1           249.6           923.8           230.3           231.9           231.3           693.7           —          —          940.0           940.0      

Cloud Computing Platforms

     17.1       17.6       17.6       52.4       19.5       72.0       20.2       19.3       20.6       60.2       —          —          87.0       87.0  

Data Networks

     94.8       95.1       96.3       286.3       98.4       384.8       97.2       98.6       98.8       294.7       —          —          393.0       393.0  

Voice Communications

     63.0       63.3       63.7       190.1       60.6       250.7       60.0       60.7       62.2       183.0       —          —          244.0       244.0  

Applications & Content

     9.4       9.2       9.3       28.0       9.6       37.7       8.7       9.3       8.7       26.8       —          —          37.0       37.0  

Solution Services

     31.9       37.7       36.1       105.9       57.5       163.4       37.3       40.3       37.2       114.9       —          —          159.0       159.0  

Others

     3.7       3.7       3.8       11.3       3.6       14.9       6.8       3.4       3.6       13.9       —          —          20.0       20.0  

Operating Expenses

     194.3       202.5       204.1       601.0       230.2       831.3       198.9       204.8       206.4       610.3       —          —          830.0       847.0  

Personnel

     19.2       18.9       19.0       57.2       19.7       77.0       19.1       18.9       18.9       57.1       —          —          77.0       77.0  

Cost of Services, Cost of Equipment Sold, and Selling, General and Administrative Expenses

     90.8       98.8       95.1       284.8       121.6       406.4       94.8       99.5       97.0       291.4       —          —          639.0       639.0  

Communication Network Charges

     54.7       54.6       59.2       168.6       54.4       223.1       57.6       58.8       62.0       178.4       —          —         

Depreciation and Amortization

     25.4       25.6       26.2       77.4       27.0       104.4       22.7       23.3       23.7       69.8       —          —          96.0       96.0  

Loss on Disposal of Property, Plant and Equipment

     0.5       1.0       0.9       2.5       4.1       6.7       0.8       0.6       1.2       2.8       —          —          5.0       22.0  

Taxes and Public Dues

     3.5       3.2       3.4       10.2       3.2       13.4       3.6       3.4       3.4       10.5       —          —          13.0       13.0  

Operating Income

     25.8       24.3       22.9       73.0       19.4       92.5       31.4       27.1       24.9       83.4       —          —          110.0       93.0  

Non-Operating Revenues

     7.4       5.6       4.0       17.1       3.5       20.7       6.7       6.4       3.5       16.8      
—  
 
     —          18.0       18.0  

Non-Operating Expenses

     2.3       1.6       1.3       5.3       2.5       7.8       1.4       0.9       1.1       3.5       —          —          8.0       8.0  

Recurring Profit

     30.9       28.3       25.6       84.9       20.5       105.4       36.7       32.6       27.3       96.7       —          —          120.0       103.0  

Net Income

     22.3       20.4       18.5       61.3       23.6       85.0       27.6       23.1       19.2       69.9       —          —          85.0       73.0  

Dimension Data (IFRS) (2)(3)

                              

Operating Revenues

     206.6       198.6       196.4       601.7       207.4       809.0       207.0       208.5       233.1       648.6       —          —          890.0       890.0  

Operating Expenses

     207.9       205.7       197.9       611.5       207.4       818.9       207.2       205.2       229.8       642.1       —          —          881.0       881.0  

Operating Income (4)

     (1.3     (7.0     (1.5     (9.9     (0     (9.9     (0.2     3.3       3.3       6.5       —          —          9.0       9.0  

Net Income Attributable to Dimension Data

     (2.4     (9.6     (14.6     (26.5     (1.4     (27.9     (1.8     0.2       2.3       0.7       —          —          —         —    

 

Notes:    (1)   The following are the main services included in each line item:
     - Cloud Computing Platforms: “Data center services” and “Private Cloud (Enterprise Cloud, etc.)”
     - Data Networks: “Closed network services (Arcstar Universal One, etc.)” and “Open network service (OCN, etc.)”
     - Voice Communications: “Telephone services” and “VoIP services (050 plus, etc.)”
     - Applications & Content: “Application services (Mail services, etc.)”
     - Solution Services: “System integration services”
   (2)   Because Dimension Data’s statements of income from January 1 to September 30, 2017 are consolidated into NTT’s consolidated statements of income from April 1 to December 31, 2017, Dimension Data’s financial results for the nine months ended September 30, 2017 are included under the nine months ended December 31, 2017 and Dimension Data’s forecast for the twelve months ending December 31, 2017 is included under Year Ending March 31, 2018 (Forecast).
   (3)   The conversion rate used for Dimension Data figures for the nine months ended December 31, 2017 is USD1.00 = JPY111.89.
   (4)   Operating Income for the nine months ended December 31, 2017 under US GAAP was (0.5) billion yen.

 

 

– 5 –


3. Financial Results (Holding Company and Subsidiaries)

 

     (Billions of yen)  
     FY 2016     FY 2017      FY 2017 (E)  
     Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine
Months
Ended
December 31
    Three
Months
Ended
March 31
     Year
Ended
March 31
     Year
Ending
March 31

(Forecast) (2)
 

NTT DOCOMO Consolidated (US GAAP)

                            

Operating Revenues

     1,108.7           1,179.7           1,181.3           3,469.6           1,115.0           4,584.6           1,136.7           1,163.4           1,295.6           3,595.7           —          —          4,750.0      

Telecommunications Services

     729.7       744.8       750.7       2,225.2       759.9       2,985.1       774.9       793.9       793.4       2,362.2       —          —          3,114.0  

Mobile Communications Services

     704.2       712.8       712.1       2,129.1       714.8       2,844.0       723.1       736.5       732.0       2,191.6       —          —          2,878.0  

Voice Revenues

     215.9       219.6       224.8       660.2       215.0       875.2       231.2       241.4       241.3       713.9       —          —          932.0  

Packet Communications Revenues

     488.3       493.3       487.4       1,468.9       499.8       1,968.8       491.9       495.1       490.6       1,477.6       —          —          1,946.0  

Optical-fiber Broadband Services and Other Telecommunications Services

     25.5       31.9       38.6       96.1       45.1       141.1       51.8       57.4       61.4       170.6       —          —          236.0  

Equipment Sales

     165.8       214.4       206.2       586.3       132.9       719.2       150.6       152.9       274.1       577.6       —          —          759.0  

Other Operating Revenues

     213.2       220.5       224.4       658.1       222.2       880.3       211.2       216.7       228.0       655.9       —          —          877.0  

Operating Expenses

     809.4       893.4       924.5       2,627.3       1,012.6       3,639.8       858.4       893.0       1,009.0       2,760.3       —          —          3,790.0  

Personnel

     72.3       72.8       72.2       217.3       74.5       291.8       72.9       71.6       72.5       216.9       —          —          290.0  

Cost of Services, Cost of Equipment Sold, and Selling, General and Administrative Expenses

     531.5       600.6       622.8       1,754.8       677.3       2,432.1       553.3       577.5       688.2       1,819.0       —          —          2,506.0  

Depreciation and Amortization

     109.7       110.8       113.9       334.4       117.9       452.3       119.0       121.0       121.5       361.5       —          —          489.0  

Impairment Loss

     —         —         —         —         12.2       12.2       —         —         —         —         —          —          —    

Loss on Disposal of Property, Plant and Equipment

     7.9       16.8       16.5       41.3       38.3       79.6       12.4       16.0       15.4       43.9       —          —          69.0  

Communication Network Charges

     76.7       82.1       88.8       247.6       81.8       329.4       90.9       96.6       100.8       288.3       —          —          395.0  

Taxes and Public Dues

     11.2       10.3       10.3       31.8       10.5       42.4       9.9       10.2       10.6       30.7       —          —          41.0  

Operating Income

     299.3       286.3       256.7       842.3       102.4       944.7       278.3       270.5       286.6       835.3       —          —          960.0  

Non-Operating Income (Loss)

     (4.0     (0.4     8.3       3.8       1.0       4.8       3.5       2.2       116.9       122.6       —          —          121.0  

Income Before Income Taxes

     295.3       285.9       265.0       846.2       103.4       949.6       281.8       272.7       403.5       958.0       —          —          1,081.0  

Net Income Attributable to NTT DOCOMO

     206.9       198.6       184.0       589.4       63.1       652.5       189.9       184.0       280.4       654.3       —          —          740.0  

NTT DATA Consolidated (JPN GAAP)

                            

Net sales

     392.2       387.4       401.2       1,180.8       551.5       1,732.4       540.4       480.5       515.2       1,536.2       —          —          2,060.0  

Public & Social Infrastructure

     89.1       97.6       109.5       296.3       159.1       455.4       85.9       —         103.6       286.7       —          —          447.0  

Financial

     118.6       127.7       124.3       370.7       147.2       518.0       127.5       —         140.8       400.0       —          —          539.0  

Enterprise & Solutions

     97.7       103.1       103.0       304.0       121.6       425.6       105.2       —         120.7       339.7       —          —          442.0  

New

                            

North America (1)

     —         —         —         —         —         —         —         —         107.2       370.4       —          —          513.0  

EMEA & LATAM (1)

     —         —         —         —         —         —         —         —         104.5       317.3       —          —          362.0  

Elimination or
Corporate (1)

     —         —         —         —         —         —         —         —         (61.8     (178.1     —          —          (243.0

Old

                            

Global

     145.2       122.8       128.7       396.7       206.5       603.3       284.7       —         —         —         —          —          —    

Elimination or Corporate

     (58.5     (63.9     (64.5     (186.9     (83.0     (269.9     (63.0     —         —         —         —          —          —    

Cost of Sales

     294.5       286.7       293.7       874.9       418.6       1,293.6       413.5       354.4       388.0       1,156.0       —          —          1,548.0  

Gross Profit

     97.6       100.6       107.5       305.8       132.9       438.8       126.9       126.0       127.2       380.2       —          —          512.0  

Selling, General and Administrative Expenses

     80.3       72.7       78.3       231.3       90.4       321.7       104.7       96.2       97.2       298.2       —          —          392.0  

Operating Income

     17.3       27.9       29.1       74.5       42.5       117.1       22.1       29.8       29.9       82.0       —          —          120.0  

Non-Operating Income (Loss)

     (0     (0.1     (1.1     (1.3     (2.7     (4.1     0.2       (2.0     (0.2     (2.0     —          —          (4.0

Ordinary income

     17.3       27.7       28.0       73.1       39.8       112.9       22.4       27.8       29.7       80.0       —          —          116.0  

Net Income Attributable to Owners of Parent

     10.0       18.9       16.0       45.0       20.6       65.6       8.1       13.7       14.1       36.0       —          —          59.0  

 

Note:    (1)    Due to the revision of NTT DATA’s global management structure on July 1, 2017, NTT DATA changed the method of classification and disclosure of segment information starting from the six months ended September 30, 2017. Under the new segments, the results for the nine months ended December 31, 2016 were 130.2 billion for North America, 249.4 billion yen for EMEA & LATAM, and (169.9) billion yen for Elimination or Corporate, and the results for the year ended March 31, 2017 were 246.3 billion for North America, 330.8 billion yen for EMEA & LATAM, and (243.9) billion yen for Elimination or Corporate. The new Elimination or Corporate segment includes certain figures that would have been included in former segment areas such as China/APAC.
   (2)    Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 6 –


4. Operating Data

Number of Subscribers

 

     (in thousands except for Public Telephones)  
     FY 2016      FY 2017      FY 2017 (E)  
     As of
June 30
     As of
September 30
     As of
December 31
     As of
March 31
     As of
June 30
     As of
September 30
     As of
December 31
     As of
March 31
     As of
March 31
(Forecast) (9)
 

Telephone Subscriber Lines (1)

     19,671        19,413        19,117        18,797        18,482        18,168        17,860        —          17,785  

NTT East

     9,740        9,617        9,471        9,315        9,166        9,014        8,864        —          8,865  

NTT West

     9,931        9,796        9,647        9,482        9,316        9,154        8,996        —          8,920  

INS-Net (2)

     2,719        2,661        2,602        2,539        2,488        2,440        2,386        —          2,326  

NTT East

     1,384        1,356        1,325        1,293        1,269        1,244        1,217        —          1,193  

NTT West

     1,334        1,305        1,276        1,246        1,219        1,196        1,170        —          1,133  

Telephone Subscriber Lines + INS-Net

     22,390        22,074        21,719        21,336        20,970        20,609        20,246        —          20,111  

NTT East

     11,125        10,973        10,796        10,609        10,434        10,258        10,081        —          10,059  

NTT West

     11,265        11,102        10,923        10,727        10,535        10,350        10,166        —          10,052  

Public Telephones

     168,673        166,120        163,921        161,375        160,396        159,485        158,693        —          157,972  

NTT East

     76,511        74,846        73,357        71,434        71,037        70,763        70,617        —          70,434  

NTT West

     92,162        91,274        90,564        89,941        89,359        88,722        88,076        —          87,538  

FLET’S ISDN

     83        81        79        77        75        73        72        —          70  

NTT East

     36        35        34        33        33        32        31        —          30  

NTT West

     47        46        45        44        43        42        41        —          39  

FLET’S ADSL

     1,019        987        955        919        881        849        819        —          791  

NTT East

     459        444        428        411        394        379        365        —          351  

NTT West

     560        543        527        508        487        470        454        —          440  

FLET’S Hikari (including Hikari
Collaboration Model) (3)(4)(5)

     19,520        19,704        19,903        20,053        20,294        20,386        20,457        —          20,853  

NTT East

     10,839        10,958        11,078        11,173        11,318        11,381        11,439        —          11,673  

NTT West

     8,681        8,746        8,825        8,880        8,976        9,005        9,018        —          9,180  

(incl.) Hikari
Collaboration Model

     5,912        6,917        7,854        8,744        9,574        10,145        10,655        —          11,894  

NTT East

     3,781        4,337        4,846        5,328        5,770        6,077        6,351        —          7,028  

NTT West

     2,131        2,580        3,008        3,416        3,804        4,069        4,304        —          4,866  

Hikari Denwa (6)

     17,451        17,545        17,655        17,759        17,862        17,924        17,984        —          18,039  

NTT East

     9,180        9,242        9,311        9,369        9,433        9,478        9,520        —          9,569  

NTT West

     8,271        8,302        8,344        8,390        8,430        8,447        8,464        —          8,470  

Conventional Leased Circuit Services

     231        229        227        225        224        222        220        —          218  

NTT East

     112        111        110        109        109        108        106        —          105  

NTT West

     118        118        117        116        115        115        114        —          113  

High Speed Digital Services

     114        112        110        108        106        105        103        —          100  

NTT East

     58        57        56        55        54        53        52        —          52  

NTT West

     56        55        54        53        52        52        51        —          48  

NTT Group Major ISPs (7)

     11,360        11,328        11,303        11,231        11,189        11,157        11,110        —          11,015  

(incl.) OCN

     7,969        7,905        7,847        7,739        7,678        7,637        7,595        —          7,496  

(incl.) Plala

     3,024        3,047        3,075        3,106        3,124        3,135        3,129        —          3,130  

Hikari TV

     3,047        3,041        3,032        3,023        3,021        3,018        3,015        —          3,030  

FLET’S TV Transmission
Services (6)

     1,445        1,464        1,489        1,521        1,551        1,570        1,592        —          1,602  

NTT East

     917        926        939        951        963        972        983        —          981  

NTT West

     528        538        551        570        587        597        609        —          621  

Mobile Telecommunications Services (8)

     71,614        72,943        73,588        74,880        75,114        75,361        75,678        —          76,200  

(incl.) “Kake-hodai & Pake-aeru” billing plan

     31,586        33,416        35,198        37,066        38,342        39,617        40,598        —          —    

Telecommunications Services (LTE (Xi))

     39,893        41,281        42,671        44,544        45,659        46,908        48,200        —          50,000  

Telecommunications Services
(FOMA (3G))

     31,721        31,662        30,917        30,336        29,455        28,453        27,478        —          26,200  

sp-mode

     33,082        33,809        34,749        35,921        36,671        37,418        37,979        —          39,300  

i-mode

     18,136        17,416        16,503        15,493        14,662        13,809        13,030        —          11,900  

 

Notes :    (1)   Number of Telephone Subscriber Lines is the total of individual lines and central station lines (Subscriber Telephone Light Plan is included).
   (2)   “INS-Net” includes “INS-Net 64” and “INS-Net 1500.” In terms of number of channels, transmission rate, and line use rate (base rate), “INS-Net 1500” is in all cases roughly ten times greater than “INS-Net 64.” For this reason, one “INS-Net 1500” subscription is calculated as ten “INS-Net 64” subscriptions (including subscriptions to the “INS-Net 64 Lite Plan”).
   (3)   Number of “FLET’S Hikari (including Hikari Collaboration Model)” subscribers includes subscribers to “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light,” “FLET’S Hikari Lightplus” and “FLET’S Hikari WiFi Access” provided by NTT East, subscribers to “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Mytown Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West and subscribers to the “Hikari Collaboration Model,” the wholesale provision of services to service providers by NTT East and NTT West.
   (4)   The comparative results for the nine months ended December 31, 2017 compared to the year ended March 31, 2017 for “FLET’S Hikari (including Hikari Collaboration Model)” are as follows: the numbers of new subscribers for NTT East and NTT West were 1,184 thousand lines and 919 thousand lines, respectively, for a total of 2,103 thousand lines; the numbers of new subscribers (excluding switchover lines) for the “Hikari Collaboration Model” for NTT East and NTT West were 840 thousand lines and 602 thousand lines, respectively, for a total of 1,441 thousand lines; and the numbers of switchover lines for NTT East and NTT West were 712 thousand lines and 635 thousand lines, respectively, for a total of 1,348 thousand lines.
   (5)   The comparative forecast for the year ending March 31, 2018 (Forecast) compared to the results for the year ended March 31, 2017 for “FLET’S Hikari (including Hikari Collaboration Model)” are as follows: the numbers of new subscribers for NTT East and NTT West are expected to be 1,700 thousand lines and 1,200 thousand lines, respectively, for a total of 2,900 thousand lines; the numbers of new subscribers (excluding switchover lines) for the “Hikari Collaboration Model” for NTT East and NTT West are expected to be 1,250 thousand lines and 850 thousand lines, respectively, for a total of 2,100 thousand lines; and the numbers of switchover lines for NTT East and NTT West are expected to be 1,100 thousand lines and 1,000 thousand lines, respectively, for a total of 2,100 thousand lines.
   (6)   Numbers of subscribers for “Hikari Denwa” and “FLET’S TV Transmission Services” include wholesale services provided to service providers by NTT East and NTT West.
   (7)   “NTT Group Major ISPs” includes “WAKWAK” and “InfoSphere,” in addition to “OCN” and “Plala.”
   (8)   Number of Mobile Telecommunications Services (including “Telecommunications Services (LTE (Xi))” and “Telecommunications Services (FOMA (3G))”) includes Communication Module Services.
   (9)   Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 7 –


4. Operating Data

Average Monthly Revenue per Unit (ARPU)

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues attributable to each designated service on a per user basis. In the case of NTT Group’s fixed-line business, ARPU is calculated by dividing revenue items included in the operating revenues of NTT Group’s regional communications business segment, that is, fixed-line (telephone subscriber lines and INS-NET) and FLET’S Hikari, by the number of active subscribers to the relevant services.

In the case of NTT Group’s mobile communications business, ARPU is calculated by dividing revenue items included in operating revenues from its mobile communications business segment, such as revenues from LTE (Xi) mobile phone services, FOMA (3G) mobile phone services and “docomo Hikari” services, that are incurred consistently each month, by the number of active users to the relevant services. The calculation of these figures excludes revenues that are not representative of monthly average usage, such as telecommunications equipment sales, activation fees and universal service charges.

NTT believes that its ARPU figures calculated in this way provide useful information regarding the monthly average usage of its subscribers. The revenue items included in the numerators of NTT Group’s ARPU figures are based on its financial results comprising its U.S. GAAP results of operations.

 

    (Yen)  
    FY 2016     FY 2017     FY 2017 (E)  
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Three
Months
Ended
June 30
    Three
Months
Ended
September 30
    Three
Months
Ended
December 31
    Nine Months
Ended
December 31
    Three
Months
Ended
March 31
    Year
Ended
March 31
    Year
Ending
March 31

(Forecast) (10)
 

NTT East (1)(2)(3)(4)(5)

                         

Aggregate Fixed Line ARPU (Telephone Subscriber
Lines + INS-NET Subscriber Lines)

    2,620       2,620       2,620       2,620       2,590       2,610       2,580       2,580       2,590       2,580       —         —         2,570  

FLET’S Hikari ARPU (6)

    5,340       5,280       5,230       5,280       5,170       5,250       5,120       5,090       5,080       5,100       —         —         5,050  

Basic Monthly Charge

    3,750       3,720       3,690       3,710       3,670       3,700       3,640       3,640       3,620       3,640       —         —         3,600  

Optional Services

    1,590       1,560       1,540       1,570       1,500       1,550       1,480       1,450       1,460       1,460       —         —         1,450  

NTT West (1)(2)(3)(4)(5)

                         

Aggregate Fixed Line ARPU (Telephone Subscriber
Lines + INS-NET Subscriber Lines)

    2,580       2,580       2,580       2,580       2,560       2,580       2,540       2,550       2,550       2,550       —         —         2,550  

FLET’S Hikari ARPU (6)

    5,350       5,300       5,260       5,310       5,210       5,280       5,160       5,110       5,100       5,120       —         —         5,080  

Basic Monthly Charge

    3,640       3,620       3,590       3,620       3,570       3,610       3,550       3,510       3,490       3,510       —         —         3,490  

Optional Services

    1,710       1,680       1,670       1,690       1,640       1,670       1,610       1,600       1,610       1,610       —         —         1,590  

NTT DOCOMO (7)(8)(9)

                         

Aggregate ARPU

    4,330       4,420       4,450       4,400       4,550       4,430       4,600       4,710       4,720       4,680       —         —         4,670  

Voice ARPU (LTE (Xi) + FOMA (3G))

    1,240       1,250       1,280       1,250       1,220       1,250       1,330       1,390       1,390       1,360       —         —         1,360  

Data ARPU

    3,090       3,170       3,170       3,150       3,330       3,180       3,270       3,320       3,330       3,320       —         —         3,310  

Packet ARPU (LTE (Xi) + FOMA (3G))

    2,960       2,990       2,960       2,970       3,080       2,990       2,970       2,990       2,970       2,990       —         —         2,970  

“docomo Hikari” ARPU

    130       180       210       180       250       190       300       330       360       330       —         —         340  

 

Notes :

   (1)   We compute the following two categories of ARPU for business conducted by each of NTT East and NTT West.
    

a.  Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines): Calculated based on revenues from monthly charges and call charges for Telephone Subscriber Lines and INS-NET Subscriber Lines, which are included in operating revenues from Voice Transmission Services (excluding IP Services), and revenues from “FLET’S ADSL” and “FLET’S ISDN,” which are included in operating revenues from IP Services.

    

b. FLET’S Hikari ARPU: Calculated based on revenues from “FLET’S Hikari” (including “FLET’S Hikari” optional services), which are included in operating revenues from IP Services, revenues from monthly charges, call charges and connection device charges for “Hikari Denwa,” and revenues from “FLET’S Hikari” optional services, which are included in Supplementary Business revenues.

    

-  “FLET’S Hikari” includes “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light,” “FLET’S Hikari Lightplus” and “FLET’S Hikari WiFi Access” provided by NTT East, and “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Mytown Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West. In addition, “FLET’S Hikari” also includes the “Hikari Collaboration Model,” the wholesale provision of services to service providers by NTT East and NTT West.

    

-  “FLET’S Hikari” Optional Services includes wholesale services provided to service providers by NTT East and NTT West.

   (2)   Revenues from interconnection charges are excluded from the calculation of Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines) and FLET’S Hikari ARPU.
   (3)   Numbers of active subscribers used in the ARPU calculation of NTT East and NTT West are as below.
    

-  Quarterly Results: Sum of number of active subscribers* for each month in the relevant quarter

    

-  Nine-month Results (from April to December): Sum of number of active subscribers* for each month from April to December

    

-  FY Results: Sum of number of active subscribers* for each month from April to March

    

-  FY Forecast : Sum of number of active subscribers* for each month from April to September and sum of the average expected active number of subscribers* from October to March ((number of subscribers at September 30, 2017 + number of expected subscribers at March 31, 2018)/2)x6

    

*active subscribers =  (number of subscribers at end of previous month + number of subscribers at end of the current month)/2

   (4)   For purposes of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), the number of subscribers is determined based on the number of subscriptions for fixed-line services (Telephone Subscriber Lines + INS-NET Subscriber Lines).
   (5)   In terms of number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases roughly ten times greater than INS-Net 64. For this reason, for the purpose of calculating Aggregate Fixed Line ARPU (Telephone Subscriber Lines + INS-NET Subscriber Lines), one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions.
   (6)   For purposes of calculating FLET’S Hikari ARPU, the number of subscribers is determined based on the number of FLET’S Hikari subscribers, which includes subscribers to “B FLET’S,” “FLET’S Hikari Next,” “FLET’S Hikari Light,” “FLET’S Hikari Lightplus” and “FLET’S Hikari WiFi Access” provided by NTT East, subscribers to “B FLET’S,” “FLET’S Hikari Premium,” “FLET’S Hikari Mytown,” “FLET’S Hikari Next,” “FLET’S Hikari Mytown Next,” “FLET’S Hikari Light” and “FLET’S Hikari WiFi Access” provided by NTT West, and the “Hikari Collaboration Model,” the wholesale provision of services to service providers by NTT East and NTT West.
   (7)  

The following is the formula we use to compute ARPU for NTT DOCOMO.

a.  Aggregate ARPU = Voice ARPU + Packet ARPU + “docomo Hikari” ARPU

b. Data ARPU = Packet ARPU + “docomo Hikari” ARPU

    

-  Voice ARPU: Voice ARPU Related Revenues (basic monthly charges, voice communication charges) / No. of active users

    

-  Packet ARPU: Packet ARPU Related Revenues (basic monthly charges, packet communication charges) / No. of active users

    

-  “docomo Hikari” ARPU: “docomo Hikari” ARPU Related Revenues (basic monthly charges, voice communication charges) / No. of active users

   (8)   Numbers of active users used in the ARPU calculation of NTT DOCOMO are as below.
    

-  Quarterly Results: Sum of number of active users* for each month in the relevant quarter

    

-  Nine-month Results (from April to December): Sum of number of active users* for each month from April to December

    

-  FY Results/FY Forecast : Sum of number of active users*/expected number of active users* for each month from April to March

    

*active users = (number of users at end of previous month + number of users at end of current month)/2

   (9)   The number of “users” used to calculate ARPU is the total number of subscriptions, excluding the subscriptions listed below:
    

a.  Subscriptions of communication modules services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver” and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to Mobile Virtual Network Operators (MVNOs); and

    

b. Data Plan subscriptions in the case where the customer contracting for such subscription in his/her name also has a subscription for “Xi” or “FOMA” services in his/her name.

     Note that revenues from communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver” and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to Mobile Virtual Network Operators (MVNOs) are not included in ARPU calculations.
   (10)   Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 8 –


4. Operating Data

Number of Employees

 

    (Persons)  
    FY 2016     FY 2017     FY 2017 (E)  
    As of
June 30
    As of
September 30
    As of
December 31
    As of
March 31
    As of
June 30
    As of
September 30
    As of
December 31
    As of
March 31
    As of
March 31
(Forecast) (2)
 

NTT Consolidated (1)

    248,650       248,650       280,600       274,850       280,850       283,400       286,350       —         281,750  

Regional communications business

    67,400       67,300       73,700       68,250       70,000       70,300       71,450       —         68,250  

Long distance and international communications business

    45,150       44,450       44,050       43,850       43,850       44,200       44,650       —         44,500  

Mobile communications business

    27,500       27,450       27,400       26,750       28,150       28,050       27,950       —         27,750  

Data communications business

    83,200       84,000       109,950       111,650       113,950       115,900       117,350       —         117,000  

Other business

    25,400       25,450       25,500       24,350       24,900       24,950       24,950       —         24,250  

Core Group Companies (1)

                 

NTT (Holding Company)

    2,800       2,800       2,750       2,700       2,750       2,700       2,700       —         2,650  

NTT East

    5,200       4,950       4,950       4,850       5,200       4,800       4,750       —         4,650  

NTT West

    4,600       4,450       4,450       4,400       4,550       4,000       4,000       —         3,900  

NTT Communications

    6,550       6,450       6,450       6,350       6,400       6,400       6,350       —         6,300  

NTT DOCOMO (Consolidated)

    27,500       27,450       27,400       26,750       28,150       28,050       27,950       —         27,750  

NTT DATA (Consolidated)

    83,200       84,000       109,950       111,650       113,950       115,900       117,350       —         117,000  

 

Notes :    (1)   Starting from the nine-month period ended December 31, 2016, “Number of Employees” includes employees whose contracts were changed from fixed-term contracts to open-ended contracts.
   (2)   Forecasts for the year ending March 31, 2018 have not been changed from those announced in the financial results for the six months ended September 30, 2017.

 

– 9 –

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