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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 for approval.

    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 1, 1999.

    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 Provisional Headquarters).

    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 2000.

    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.

    (Nikkei Communications)



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