NTT Q1 operating profits dip 10.1%

3 Aug 2006

Japan’s dominant fixed line provider Nippon Telegraph and Telephone Corp. (NTT) said operating profit dipped by 10.1% in its fiscal first quarter to 30 June, as users migrated to high speed mobile services offered by the likes of its wireless arm NTT DoCoMo. NTT posted operating profit of JPY359.18 billion (USD3.13 billion) in the period under review, compared with JPY399.63 billion a year ago, on the back of a 0.9% rise in revenues to JPY2.62 trillion. Quarterly net profit fell 19% to JPY144.7 billion, down from JPY177.6 billion a year ago, due to increasing competition with smaller rivals and marketing costs associated with efforts to retain market share. Nevertheless, the company has kept its full-year outlook unchanged: it expects to book a net profit of JPY500 billion on full-year sales of JPY10.8 trillion.

NTT is facing an increasing challenge from the country’s second largest telecoms provider KDDI Corp, which recently reported a 44% rise in quarterly profit after gaining mobile market share due to its aggressive marketing and improved mobile multimedia services. NTT DoCoMo, which earns more than 65% of the parent company’s profits, saw its own quarterly profit slip 21% as a result of intense competition with KDDI and Softbank Corp. NTT is trying to stave off its rivals by signing up customers to its high speed broadband networks that offer faster downloads of music clips and video streaming. The former government monopoly is relying on fibre-optic services to make up for declining profit and revenue from mobile and conventional fixed line services. It aims to spend JPY5 trillion over four years to link 30 million digital subscribers.