NTT reports fall in first-half net profit on weak DOCOMO results

10 Nov 2014

Nippon Telegraph and Telephone Corp (NTT Corp) has published its financial results for the six months ended 30 September 2014, noting that despite a 2.0% year-on-year increase in operating revenues to JPY5.374 trillion (USD46.9 billion), operating income slipped 9.5% to JPY590.9 billion and net income declined 10.3% to JPY290.3 billion, due to weak sales at the operator’s mobile business NTT DOCOMO.

NTT Corp confirmed that whilst its first-half operating revenues increased for the fifth consecutive year due to growth at its overseas businesses, NTT DOCOMO was adversely impacted by lower revenues from – in particular – voice communication services, amid intense sector competition from rivals Softbank Corp and KDDI (au). As previously reported by CommsUpdate, the wireless carrier’s operating revenue for H1 FY2015 fell 2.1% y-o-y to JPY2.172 trillion from JPY2.198 trillion in the corresponding period of 2013, while net income slipped 13.6% to JPY259.522 billion. Operating income declined by 15.5% year-on-year to JPY399.586 billion which DOCOMO said was affected by cuts to the prices of handsets, including Apple iPhones – which it only added to its product portfolio last year, a full five years after Softbank began selling them. In the wake of the disappointing results, the carrier lowered its forecast full year operating profit to JPY630 billion, which it attributes to tough competition in the local market.

In the fixed line communications field, NTT Group continued to work to increase the number of new subscribers and improve long-term customer retention for its ‘FLET’S Hikari’ services. The group’s NTT East and NTT West units had a combined 18.455 million FLET’S fibre broadband subscribers at end-September, up from 18,050 million at end-March 2014. However, NTT Corp noted that operating revenues in the regional communications business segment for the six-month period fell 2.4% from the same period of the previous fiscal year to JPY1.707 trillion due to, among other things, a decrease in fixed voice-related revenues resulting from the decline in fixed line telephone subscriptions, which was partially offset by an increase in IP/packet communications revenues. On the other hand, operating expenses fell by 2.7% from the same period of the previous fiscal year to JPY1.629 trillion in part due to a decrease in personnel expenses and efforts to streamline operating expenses. As a result, segment operating income for the six-month period ended 30 September 2014 increased 3.0% from the same period of the previous fiscal year to JPY77.9 billion.

For the full year to 31 March 2015, NTT Corp has cut its group net profit outlook to JPY529 billion from JPY586 billion and lowered its revenue forecast to JPY11.01 trillion from JPY11.20 trillion previously.

Japan, NTT (NTT East & NTT West), NTT DOCOMO