OT, though of interest in a general way:
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November 20, 2000
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Internet, Data, Mobile Services Drive NTT Grp Profits
By RON HARUI
Of DOW JONES NEWSWIRES
TOKYO -- The NTT Group reported earnings Monday that sharply highlighted its increasing reliance on revenue and profits from its Internet and data communications businesses, as well as from its mobile communications operations.
The NTT Group, headed by Nippon Telegraph & Telephone Corp. (NTT or 9432), reported a group net profit of Y175.37 billion for the first half ended Sept. 30, down 27.1% from the same period a year ago.
An extraordinary loss of Y208.86 billion - to make up for shortfalls at the company's pension reserves - squeezed NTT's group net profit in the first half although it posted healthy improvements on all other earnings figures.
Except for the extraordinary loss, NTT reported a group operating profit of Y610.29 billion, up 8.2% from the year-earlier period, and a group pretax profit of Y551.01 billion, up 11.9%, while its group revenue rose 9.5% to Y5.486 trillion.
Underscoring the importance of its Internet and data communications operations, NTT said that revenue from these services jumped 40.6% to around Y1.2 trillion in the first half, accounting for a 22.3% share of total group revenue in the first half, up from a 17.3% share last year.
Revenue from mobile communications services leaped 16.5% to about Y2.0 trillion, representing a 37.4% share of total group revenue, up from a 35.2% share a year ago.
In contrast, revenue from analog fixed-line services fell 7.0% on year to Y2.2 trillion in the first half, resulting to a 40.3% share of total group revenue, down from a 47.5% share in the previous year.
"Our earnings reflect the ongoing shift in the nation's information communications market from telephone to Internet and from local competition to global competition," said Satoru Miyamura, NTT senior vice president, at a press conference in Tokyo.
NTT's shift towards Internet, data and mobile communications services away from fixed-line telephones was reinforced by a 23.7% rise to 34.26 million subscribers to its mobile communications operations in the first half and a 64.3% increase to 9.37 million subscribers to its Integrated Services Digital Network (ISDN) service. Subscribers to its fixed-line telephones fell 6.2% to 53.71 million.
The ISDN service enables users to upload and download information and images much faster via high-speed lines, compared with those available through conventional telephone lines.
Kirk Boodry, senior telecoms analyst at Dresdner Kleinwort Benson in Tokyo, said that NTT's group earnings were positive overall, mainly led by robust revenue from the group's cellular phone and Internet operations.
"I think there's upside for NTT's revenue and profits, given that its data communications and Internet services haven't been used much," Boodry said. "Even though NTT's fundamentals may be slightly pressured by the downturn in the global telecom industry and the fall of the Nasdaq stock market in the U.S., my six-month outlook on NTT is good."
Currently, Boodry has a "buy" rating on NTT's stock, and forecasts that the share price should rise to Y2 million by the end of this fiscal year next March.
NTT's earnings were released after the close of trading on the Tokyo Stock Exchange Monday. NTT's share price ended up Y19,000, or 2.09%, at Y926,000.
For the whole fiscal year, NTT forecasts a group net profit of Y186 billion and a pretax profit of Y747 billion on operating revenue of Y11.323 trillion.
The earnings and forecasts reported by the NTT Group included the parent company NTT, mobile phone operator NTT DoCoMo Inc. (J.NTX or 9437), long-distance and international phone arm NTT Communications Corp., data communications unit NTT Data Corp. (J.NDC or 9613), and regional telecommunications carriers NTT East Corp. and NTT West Corp.
-By Ron Harui, Dow Jones Newswires; 813-5255-2929; ron.harui@dowjones.com
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