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| NTT's Business Plan Projects Profit Surge in Data Services
March 5, 1999 (TOKYO) -- Nippon Telegraph and Telephone Corp. (NTT) expects
its profit to decline in fiscal 1998, although it projects an increase
in profit from data communications services.
|The expected profit decline is mainly due to decreasing telephone-related
business revenues, the company said in its fiscal 1999 business plan.
The plan was submitted recently to the Minister of Posts and Telecommunications
NTT's business plan was made on the assumption that the current organization
would continue largely as it is. The NTT breakup is scheduled for July
Based on the assumption, fiscal 1999 revenue is estimated at 6,116 billion
yen (122 yen = US$1) and recurring profit at 216 billion yen. This
means that the revenue and profit will decrease substantially compared
with the projections for fiscal 1998.
The decline in the revenue from telephone-related businesses is the primary
cause for the falls in revenue and profit, the company said.
NTT is faced with a shrinking market share due to changes in interconnections
with other telecom carriers, shifting demand from conventional telephones
to mobile phones, the impact of economic sluggishness and other reasons.
Due to such factors, revenue associated with the analog telephone business
is forecast to fall by 370 billion yen to 3,364 billion yen in fiscal
1999, said Takashi Sakamoto, senior manager at NTT's Department I (NTT-Holding
On the other hand, NTT expects to see gains in operating revenue to 1,120
billion yen, or an increase of 200 billion yen, in data communications
services in fiscal 1999. Such services include integrated services digital
network (ISDN), open computer network (OCN), high-speed digital leased
lines, frame relay, cell relay services and others.
NTT's profit structure is now at a turning point from telephone to data
services, a company official said. Rising profit in information infrastructure
services is shifting NTT's focus toward those sectors.
As of the end of March 2000, the number of subscriber telephones will
likely decrease by 2.3 million to 56.23 million.
NTT expects that the INS-Net 64 (64kbps ISDN service) will increase by
1.72 million lines to 5.54 million lines, and INS-Net 1500 (1.5Mbps
ISDN service) by 13,000 lines to 59,000 lines, as of the end of March
For OCN, NTT expects the leased-line connection service to reach 46,000
lines, an increase of 22,000 lines, and the dial-up connection service
to reach 794,000 lines, for an increase of 395,000 lines. Also, NTT
projects the high-speed digital transmission service to reach 273,000
lines, for an increase of 52,000 lines.
By late May, NTT will apply for authorization to revise the current business
plan taking into consideration its scheduled breakup.
The NTT East and NTT West regional companies and the long-distance telephone
services company will devise their own business plans immediately after
they are established.
NTT's current business plan is provisional.
"However, despite the reorganization, the basic framework of the current
plan will not change substantially," Sakamoto said.
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