NTT operating profit up 18%, but forecasts a drop this year

14 May 2008

Japan’s biggest telecoms company by revenues and subscribers Nippon Telegraph and Telephone Corp (NTT) posted an 18% rise in full-year operating profit for the year ending 31 March 2008, bolstered by pensions savings, but warned that it expects profits to dip 11% in the current financial year. The government-backed telco reported operating profit of JPY1.3 trillion (USD12.5 billion) in the year to March, compared with JPY1.1 trillion in FY2006/07. However, for the year to 31 March 2009 it is predicting operating profit of JPY1.16 trillion, below a consensus forecast of JPY1.21 trillion in a poll conducted by Reuters Estimates.

NTT said group revenues in FY2007/08 dipped 0.7% year-on-year from JPY10.76 trillion to JPY10.68 trillion, and net profit leapt 32% from JPY481.37 billion in the year to March 2007 to JPY635.16 billion, on the back of strong demand for long-distance and international communications services. NTT said operating profit for the group’s solution services and IP-based phone services through computer networks, rose 61% from a year ago. The operator expects to book net profit of JPY500 billion in its current fiscal year.

Separately, NTT has announced plans to buy back up to 450,000 shares, equivalent to 3.3% of its own shares outstanding, for as much as JPY200 billion ($1.93 billion) to improve capital efficiency and flexibility. The telco is pinning its hopes on the future of its next generation network (NGN) services which allow for a smooth migration to data-rich services such as VoD and IPTV. NTT started the commercial service in March on a limited basis.