NTT Posts Net Profit
On Cost-Cutting Efforts
Associated Press
TOKYO -- Nippon Telegraph & Telephone Corp. returned to profitability in the fiscal year ended March 31 on the back of cost-cutting, which will include an additional 3,900 layoffs.
The nearly 2% job reduction comes on top of the 16,100 jobs trimmed during the last fiscal year, which brought the work force at NTT down by 7% to 207,400 people from 223,500 the previous year, the Tokyo-based group said Tuesday.
For the fiscal year just ended, NTT posted a net profit of ¥233 billion ($2 billion), a significant improvement from the ¥835 billion loss for the prior fiscal year. The profit figure was better than the company forecast of ¥205 billion but sales fell slightly below the prediction for ¥10.96 trillion.
NTT, Japan's biggest telecommunications group, said sales fell 0.9% to ¥10.923 trillion from ¥11.03 trillion.
NTT President Norio Wada said the group's troubled fixed-line businesses were back in the black only because of cost cuts and acknowledged that growth remains a major challenge. The challenge will be tough, he said, given the trend in Japan toward plunging revenue from fixed phones as demand switches to mobile phones and Internet phones.
Although NTT will continue to strengthen broadband and optical-fiber services to gain new sources of revenue, Mr. Wada said such businesses may not take off for several years.
"We must completely change the content of our business in three to five years," he told reporters. "The situation remains tough this fiscal year but we want to sustain our recovery."
NTT is forecasting a ¥453 billion profit for the fiscal year ending March 31, 2004, up 94%, on ¥10.9 trillion sales, unchanged from fiscal 2002.
The improvements are expected to come as fixed-line businesses, as well as its mobile unit, NTT DoCoMo Inc., produce higher profits.
NTT East, covering eastern Japan, and NTT West for western Japan had both been in the red the previous fiscal year, but they managed to return to profitability in fiscal 2002.
NTT, a former government monopoly, used to be able to count on hefty fees for its telephone services in Japan uncontested. As the market began to open up, it has faced stiff competition from newcomers both in fixed lines and broadband services.
The aggressive push from Internet company Softbank Corp., which is centering its strategy on broadband, has pushed down broadband fees here to among the lowest in the world.
NTT has been carrying out a three-year revival program that began in fiscal 2002 to cut costs and expand in broadband, Internet phones and optical fiber links.
Although mobile phone use is widespread in Japan, growth in that sector has slowed down in recent years. NTT DoCoMo recovered from the massive losses it was forced to book in fiscal 2001 for the plunging value of its stakes in overseas partners. DoCoMo's latest camera-equipped phones are selling well, and its superfast "third-generation," or 3G, service -- which includes videophone handsets -- is slowly starting to catch on in Japan after a shaky start.
Copyright (c) 2003 The Associated Press
Updated May 13, 2003 5:18 a.m. |
