To: Gary Korn who wrote (23895 ) 11/18/1997 9:26:00 AM From: Glenn D. Rudolph Respond to
NTT's group profit seen rising 60-70% in 1997/98
Reuters Story - November 18, 1997 07:04
%CORA %JP %TEL %RESF 9432.T 9433.T V%REUTER P%RTR
By Yuko Inoue
TOKYO, Nov 18 (Reuters) - Japanese telecoms giant NTT will
ring up sharply higher group profits in the year to March 1998,
with mobile phone unit NTT DoCoMo serving as the key source of
profits, analysts said on Tuesday.
Nippon Telegraph and Telephone Corp's group net
profit is expected to surge 60 to 70 percent this year as strong
profits at DoCoMo more than offset negative factors, such as a
wider-than-expected loss in the PHS handyphone business, they
said.
DoCoMo, with its massive spending power, has been able to beat
back local competition through aggressive pricing, taking large
market share away from DDI Corp and other smaller
competitors.
DoCoMo, which holds more than half of Japan's expanding
mobile phone market, is likely to report a 60 percent rise in
profits this year, analysts said.
"NTT will shortly boost its profit target for the group due
to DoCoMo's bull run," said Eric Gan, an analyst at Goldman
Sachs (Japan).
NTT will unveil its latest full-year earnings forecast and
its first-half results, on Friday. It will also release
group-based half-year earnings for the first time.
NTT became free to pursue business internationally in
January, something that has encouraged it to undertake
restructuring and turn its eyes more to group-orientated
business, analysts say.
NTT's parent company, the group's biggest cash-flow
generator, will be restructured into three companies under a
single holding firm in mid-1999.
The parent firm could report modestly higher profits this
year, in the midst of an aggressive push towards transforming
itself into a provider of high-growth multimedia services from
that of a mere operator of telephone services.
NTT's revenues from its traditional fixed-line telephone
business are falling at a faster-than-expected pace due a mobile
phone boom and rate cuts in its long-distance business, analysts
said.
However, the firm is benefiting from growing investments by
Japanese businesses and Internet users in digital information.
Revenues from its ISDN digital service, which sends and
receives data about three times faster than ordinary phone
lines, will rise by more than 110 billion yen ($873 million)
during the year, they said, with the service expected to start
making profits in fiscal 1999/2000.
"Overall, NTT's telephone and information business is
steadily growing," said Hironori Tanaka, an analyst at Yamaichi
Research Institute of Securities and Economics.
Soaring demand for portable phone services and increasing
Web traffic also mean a boost in phone traffic in the local call
market, in which NTT has a monopoly.
As a result, the parent firm will receive nearly 700 billion
yen ($5.55 billion) in interconnection charges from mobile phone
and other telecom operators during the year, up 14 percent over
the previous year, said Nikko Research Centre analyst Hironobu
Sawake.
Analysts expect NTT's full-year parent current profit to
range from 385 to 420 billion yen ($3.08 to $3.33 billion),
against 366 billion yen ($2.90 billion) last year.
Current profit is pretax and includes gains or losses on
non-operating activities such as investments in stocks.
"NTT, with its solid earnings structure, is unlikely to be
affected by rate cuts in long-distance services any more,"
Yamaichi's Tanaka said.
NTT would also reap profits from its steadily growing NTT
Data unit, a leading information software firm, but a loss at
its PHS handyphone unit would trim some of the group profit,
analysts said. PHS is a cut-rate mobile phone designed for those
not needing a full cellular service.
The following are analysts's profit estimates, as well as
NTT's own forecasts, for the 1997/98 business year in billions
of yen. Actual 1996/97 results are in brackets.
parent current group net
Yamaichi 420 260
Nikko 400 250
Goldman Sachs 385 245
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NTT's own 387 (366) 222 (149.84)
($1=125 yen)
- Tokyo Equities Desk (813) 3432-8595
email: tokyo.equities.newsroomreuters.com
