NTT blames profit fall on rising costs and sluggish wireline performance

11 May 2007

Japanese communications group NTT has posted a net income of JPY476.9 billion (USD4 billion) in the fiscal year ended 31 March 2007, down 4.4% from JPY498.7 billion in the previous year. Mobile unit NTT DoCoMo stepped up efforts to encourage subscribers to shift to its 3G FOMA service, amid stiffer competition from KDDI and Softbank, which pushed up its operating costs. Japan’s largest telco also blamed sluggish performance at its fixed line units, which are trying to entice customers to use high speed, fibre-to-the-home services, for the drop in profits. The group’s consolidated operating revenues were JPY10.76 trillion, up only 0.2%. Operating expenses were up 1.1% to JPY9.65 trillion as a result of increased expenses associated with higher system integration revenues, increased mobile phone handset costs and other sales related expenses. NTT’s operating income, however, fell 7% to JPY1.11 trillion, from JPY 1.19 trillion last year, whilst consolidated income before taxes was JPY1.14 trillion, a decrease of 12.9% from JPY1.31 trillion a year earlier.

The group ended March with 6.08 million customers of its B FLET’S fibre-optic broadband service, up 2.66 million over last year, and NTT expects to win a further 2.7 million new fibre users in the 2007/08 financial year. Its ADSL customer base at the end of the financial year numbered 5.32 million, but the company expects this number to fall to 4.42 million by end-March 2008 due to fibre substitution. NTT’s IP telephony service had 3.17 million subscribers at 31 March and it expects that total to reach 6.27 million this fiscal year. Correspondingly it predicts fixed line telephone customers will decline from 43.34 million to 38.98 million in the twelve-month period due to the shift to IP-based services.