Swiss . . NTT annual profit rises 13%
Mobile phone and internet services drive sales at Japanese phone titan
May 26, 2000: 6:51 a.m. ET
cnnfn.com
LONDON (CNNfn) - Japan's Nippon Telegraph and Telephone said Friday its annual operating profit rose a bigger-than-expected 12.6 percent on increasing use of mobile phones and rising demand for Internet services.
The world's largest telecommunications firm by revenue said operating profit rose to ¾980.3 billion ($9.2 billion) for the year to Mar. 31 from ¾870.3 billion a year ago. Analysts surveyed by Reuters expected, on average, operating profit of ¾907 billion.
"The revenue structure is shifting out of income from analog to income from mobile and Internet-related service, and this is clearly showing in the results," NTT president Junichiro Miyazu told a news conference.
NTT DoCoMo, the world's second-largest mobile phone service provider, contributed over 60 percent of NTT's overall profit. NTT owns 67 percent of the mobile phone unit. DoCoMo on Wednesday said its group net profit surged 23 percent, propelled by explosive sales of its Web-surfing "i-mode" phones.
Deregulation in Japan's ¾13 trillion telecommunication market has forced NTT to reorganize its business. Domestic and long-distance call charges are falling as customers switch to rival phone operators and make greater use of mobile phones.
But analysts expect NTT's fixed-line business to grow with the introduction of faster and larger data transmission services later this year, driven by increased Internet usage by both consumers and businesses.
"What we see for 1999 is a preview of what we are going to see on a much larger scale in 2000," said Kate Lye, an analyst at USB Warburg.
NTT's bottom line fell to a net loss of ¾67.8 billion from a profit of ¾602.7 billion the previous year, however, reflecting the impact of accounting charges relating to employee pensions and corporate restructuring.
On Thursday, unlisted NTT Communications, NTT's long-distance and international unit established last year, posted a profit of ¾72.8 billion on operating revenue of ¾1.075 trillion, reflecting healthy growth of its Internet access service.
NTT reported its earnings after the stock market closed in Tokyo Friday. Earlier in the day the company's shares rose 1.6 percent to ¾1.29 million. That is down about 35 percent from a peak of ¾1.87 million last November, reflecting a recent slide in global high-tech and telecom shares.
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