IR Presentation. May 2018

Transcription

1 IR Presentation May 2018

2 This document is a translation of the Japanese original. The Japanese original is authoritative. The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to herein are based on a series of assumptions, projections, estimates, judgments and beliefs of the management of NTT in light of information currently available to it regarding NTT and its subsidiaries and affiliates, the economy and telecommunications industry in Japan and overseas, and other factors. These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the state of the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, the performance of new products, services and new businesses, changes to laws and regulations affecting the telecommunications industry in Japan and elsewhere, other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to herein, as well as other risks included in NTT s most recent Annual Securities Report and in any other materials publicly disclosed by NTT on its website. * E in this material represents that the figure is a plan or projection for operation. ** FY in this material indicates the fiscal year ending March 31 of the succeeding year. 1

3 Financial Results for the Fiscal Year Ended March 31, 2018

4 FY2017 Highlights Both Operating Revenues and Operating Income increased Record levels for Operating Revenues, Operating Income and Net Income Status of Consolidated Financial Results Operating Revenues : 11,799.6 billion (increase of billion [ 3.6%] year-on-year) Operating Income : 1,642.8 billion (increase of billion [ 6.7%] year-on-year) * 1 Net Income : billion (increase of billion [ 13.7%] year-on-year) billion (increase of 59.6 billion [ 7.4%] year-on-year) EPS : (increase of [16.6%] year-on-year) (increase of [10.2%] year-on-year) Overseas Sales : $19.51 billion (increase of $2.62 billion [ 15.5%] year-on-year) * 3 Overseas Operating Income : $1.01 billion (increase of $0.22 billion [ 28.2%] year-on-year) * 2 * 2 *1 Net income represents net income attributable to NTT, excluding noncontrolling interests. *2 Excludes the effects of the arbitration award received from Tata Sons Limited. *3 Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets. 3

5 FY2017 Contributing Factors by Segment Operating Revenues (Year-on-year: ) (Billions of yen) 11,391.0 Regional communications business 75.3 Long distance and international communications business 89.6 Mobile communications business Data communications business Other business * 11,799.6 FY2017 3, , , ,043.1 FY2016 [US-GAAP] FY2017 [US-GAAP] Operating Income (Year-on-year: ) 1,539.8 Regional communications business 5.2 FY2017 Long distance and international communications business Mobile communications business 19.9 Data communications business Other business * 1, 期 E FY2016 [US-GAAP] *Includes adjustments such as elimination 4 FY2017 [US-GAAP]

6 FY2017 Topics Increased Profitability of Network Services Expansion of NTT s User Base Mobile Subscriptions: million mobile subscriptions (net increase of 1.49 million) (Included in the above) Kake-hodai & Pake-aeru: million subscriptions (net increase of 4.90 million) FTTH Subscriptions: million subscribers (net increase of 0.48 million) (Included in the above) Hikari Collaboration: million (net increase of 2.37 million) Growing number of Wi-Fi area owners * : 744 (net increase of 187) * Total number of large-scale corporate or local government customers. Excludes small-scale restaurants, etc. 5

7 FY2017 Topics Promotion of the B2B2X Model Supported digital transformations in an effort towards creating new value and solving social issues and challenges Created innovative models by expanding collaboration with corporations and local governments in various fields, such as sports, transportation and manufacturing Expansion of Global Cloud Services Cross-Selling Order Volume : $0.83 billion Completed transfer of cloud IaaS business from Dimension Data to NTT communications Completed 100% acquisition of Secure-24, a provider of managed services in the U.S. Progress of Tokyo 2020 Medal Project: Towards an Innovative Future for All Number of used mobile phones and other devices collected(as of the end of March 2018): approximately 3.30 million devices 6

8 Summary of Medium-Term Financial Targets EPS Growth Streamlining Capital Investment (Domestic Network Business *2 ) [compared to FY2014] Cost Reductions *3 (in fixed-line/mobile access networks) [compared to FY2014] Overseas Sales/Operating Income *4 Results * billion billion $19.5B/$1.0B Medium-Term Targets At least 400 At least 200 billion At least 800 billion $22B/$1.5B *1 Excludes the effects of the arbitration award received from Tata Sons Limited. *2 Excludes NTT Com s data centers and certain other assets. *3 Does not reflect the impact of the change in depreciation method. *4 Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets. 7

9 EPS Growth 456yen 431 * yen At least 400 yen Revised 391 yen Original target at the announcement of 2.0 (May 2015) 183 yen 237 yen Profit Growth At least 350 Yen Share Buybacks FY2011 FY2014 * Exclude the effects of the arbitration award received from Tata Sons Limited. ** EPS is adjusted according to the two-for-one stock split effective on July 1, FY2016 FY2017 (Result) FY2017 (Target) 8

10 Optimize Domestic Network Businesses Streamlining Capital Investment At least 200 billion yen (Domestic network business, compared to FY2014) 1,400 Improve efficiency of facility use 1,300 billion yen billion yen 1,260 billion yen Capital Investment Reduce procurement costs 1,200 billion yen billion yen 205 billion yen (Domestic network Businesses* ) Excludes NTT Com s data centers and certain other assets Cost Reductions 1,193 Reached Target Improve and optimize IT systems Reduction of at least 200 billion yen FY2014 FY2015 FY2016 FY20117 (Result) FY2017 (Target) At least 800 billion yen* (in fixed-line/mobile networks, compared to FY2014) FY2015 Review and reduce costs in order to improve user services 414 billion yen Reached Target 856 billion yen 9 At least 600 billion yen 654 billion yen * Does not reflect the impact of the change in depreciation method FY2017 (Target) FY2017 (Result) Original target at the announcement of 2.0 (May 2015) Cost Reductions* Establish simple, highly efficient business operations in line with changes in our business model and environments FY2016 Revised At least 800 billion yen

11 Overseas Sales/Operating Income Sales $15.0B Sales $15.6B Sales $16.9B Sales $19.5B Sales $22.0B Operating Income* $0.67B FY2014 Operating Income* $0.69B FY2015 Operating Income* $0.8B FY2016 Operating Income* $1.0B FY2017 (Result) Operating Income* $1.5B FY2017 (Target) * Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets. 10

12 Direction of Initiatives for the B2B2X Model For the acceleration of new value creation, NTT Group drives collaboration with various service providers Contribute to service providers digital transformation for lifestyle change and social issue resolution as a valuable supporting player NTT Group Valuable Supporting Player Service Providers (Main Players) Needs New needs ICT tools AI, Edge computing etc. New services New Value Creation パートナー Partners Digital Transformation Lifestyle Change Social Issue Resolution 11

13 (Reference) Major B2B2X Initiatives since FY2017 Sports 2017 July Deepen digital marketing, including through new viewing experiences at 7 月 stadiums Auto Aug. Initiated consortium formation for the network and computing infrastructure of automotive Big Data Manufacturing Oct. Commercially launched the FIELD System, which incorporates edge computing and other technologies Agriculture Entertainment Cities Oct. Nov Jan. Started testing to utilize corevo for labor reduction in the field of agriculture/water environment Used Kirari! to provide new kabuki effects, such as the joint transmission of simultaneous real and virtual performances (hosted the Miyako Musubi Yume no Renjishi performance in Pontocho and Miyagawa) Released the DATA-SMART CITY SAPPORO ICT utilization platform in Sapporo Transport Feb. Successfully conducted joint testing of the application of edge computing and other technologies to IoT on ships Infrastructure Apr. Began sales of cybersecurity technology providing safe operation of critical infrastructure control systems 12

14 Financial Forecasts for the Fiscal Year Ending March 31, 2019

15 FY2018 Forecast Summary Both Operating Revenues and Operating Income are expected to increase, and Net Income (excluding a non-recurring event *3 ) is expected to increase Plan for Consolidated Revenues and Income FY2017 Result FY2018 Forecast Year-on-Year Operating Revenues Operating Income Net Income *2 US-GAAP IFRS *1 IFRS IFRS 11,799.6 billion 11,778.2 billion 11,830.0 billion billion [+0.4%] 1,642.8 billion 1,641.8 billion 1,690.0 billion billion [+2.9%] billion billion * billion billion * billion (18.7 billion) [(2.1%)] billion [+3.7%] *1 Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit. *2 Net income represents net income attributable to NTT, excluding noncontrolling interests. *3 Excludes the effects of the arbitration award received from Tata Sons Limited. 14

16 FY2018 Forecast Summary by Segment Operating Revenues (Year-on-year: +51.8) (Billions of yen) 11,778.2 Regional communications business 91.5 Long distance and international communications business 67.8 Mobile communications business 31.5 Data communications business 55.2 Other business * ,830.0 FY2018 E 3, , , ,100.0 FY2017 [IFRS] FY2018 E [IFRS] Operating Income (Year-on-year: +48.2) 1,641.8 Regional communications business 8.6 FY2018 E Long distance and international communications business 39.0 Mobile communications business 3.1 Data communications business 18.6 Other business * 3.8 1, 期 E FY2017 [IFRS] FY2018 E [IFRS] 15

17 Towards a New Medium-Term Management Strategy Continue and further strengthen NTT s self-transformation into a Value Partner Increase global business profits Strengthen profitability of domestic network services (increase cost reductions and improve investment and asset efficiency) Promote the B2B2X model and take on the challenge of new market development Formulate a New Medium-Term Management Strategy in Conjunction with Second Quarter Results Based on future milestones, such as the introduction of 5G and PSTN migration, determine targets and initiatives for multiple timespans, such as three, five and seven years For financial targets, maintain the current policy of EPS growth as the main indicator, and set new targets for business structure reform, cost reduction, and improved investment and asset efficiency 16

18 Appendix

19 Changes in Dividend (Yen) % Dividends per share % 38.0% 31.4% 30.7% 32.9% 37.7% 65% 45% Payout Ratio % 37.2% 31.2% 32.3% 27.5% 23.0% 19.5% 17.1% 12.3% 13.0% 0 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018E (Fiscal Year) [IFRS] 25% 5% * Dividend is adjusted according to the two-for-one stock split effective on July 1,

20 Record of Share Buybacks Over 3 Trillion Yen in Buybacks From Market/ Gov t From Gov t From Market/ Gov t From Gov t From Market From Gov t From Market From Market / Gov t From Market From Market/ Gov t From Market (Billions of yen) * * * * * TBD Repurchase MAX 46.4 *6 from May to June. 0 (Fiscal Year) *1:Market 48.0 billion yen, Gov t 72.0 billion yen *2:Market 61.0 billion yen, Gov t 39.0 billion yen *3:Market billion yen, Gov t billion yen *4:Market billion yen, Gov t billion yen *5:Market billion yen, Gov t billion yen *6:On February 21, 2018, NTT authorized repurchases of shares up to 150 billion yen from market. (Period of repurchases is from February 22, 2018 through June 30, 2018.) As of April 2018, we have repurchased billion yen. (42.0billion yen in March 2018, 61.6 billion yen in April 2018) 19

21 Global Cloud Business Promotion System Provides full stack, full life-cycle service (Covers Infrastructure to Applications, Advisory to Management) Cloud Services Advisory Services Migration Services Operation Services Management Services Corporate Customers Application Managed Services IT Infrastructure Data Centers Networks Service Layers R&D 20

22 Growth Strategy of Global Business NTT Group to deliver enhanced IT capabilities and contribute to the success of clients digital transformation Advisory Application Managed Services IT Infrastructure NTT cloud Closed NW Advisory Business Applications Business Process Data Defined Business Model Cloud DC Managed Service Cloud DC SD-Exchange SD-WAN SD-LAN Security 3 rd party clouds Internet R&D In-house IP Ecosystem 21

23 Strengthen NTT s Global Business (Bringing together cloud IaaS capabilities) Completed the transfer of the wholesale company of cloud IaaS from Dimension Data to NTT Communications on March 29 th, Strengthen competitiveness by bringing together cloud IaaS capabilities and development capabilities of NTT Communications and Dimension Data. NTT Communications to handle development and operation of cloud IaaS and leverage Go-to-Market capabilities of NTT Communications, Dimension Data and other NTT Group companies. NTT Holding Company Clients Go-to-Market Go-to- Market Wholesale company Dimension Data Cloud Wholesale Services, Inc. Service development and operation Cloud assets Wholesale Service Development and Operation 22

24 NTT s Capability in Global Business NTT Telecom (A) Cloud (A) IT Vendor (A) Data Center (incl. colocation) - - Network Integration Network Apps (ERP) Cloud Implementation - - AMO - - Public Hosted Private Leader Attacker Legend: Global capability Top Tier 2 nd Tier Specific capability Not competitive/local - Out of scope Security - - SIer (I) 23

25 Our Strengths in Global Cloud Services Network Scale: Provides service in 190 countries/regions World-class in Global IP backbone traffic (Source: Dyn Research) Quality: Lowest network latency between Japan / US / major countries in Asia Data Center Scale: World-class (Source: October,2017 issue of Colocation Database by TeleGeography) As of March 2018, total floor space: approx.1.4 million m², total sites: approx. 250 Quality: High-quality lineup(tierⅣ sites) 24

26 Expansion of Cross-Selling (Aggregate Contract Value) Aggregate contract value of Cross-Selling reached approx. 3.4 billion USD Expansion of Global Account Management Total IT solution triggered by Cloud Service Public Manufacturing (Motor vehicle) 3,400 million USD North America Worldwide including emerging countries Cross-selling of existing services, mainly IT infrastructure Insurance 990 million USD Finance 1,190 million USD Healthcare 1,630 million USD 2,560 million USD 60 million USD ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar million USD 290 million USD 25 ~ Mar ~ Mar Numbers are rounded.

27 Revenue by Region USD (FY2016) Not-including the number of Japan Application IT Infrastructure Total AMERICAS EMEA APAC *1 35% 45% 40% 10% 65% 55% 60% 90% ICT Market 1,650B 810B (50%) 480B (30%) 360B (20%) 52% 48% USD (FY2016) 55% 45% * Source: Created by NTT based on McKinsey s data (excluding Telephone market, including new tech such as IoT,etc) *1 Japanese domestic market is not included in APAC figures. 48% 52% 34% 66% 26

28 Sports & ICT Smart Stadium powered by Digital Marketing Fan/ Supporter Spectators Local Community (such as local shopping districts) Sponsors Event Organizers Game Day/Outside of the Game (Children s Lessons, Local Events, etc.) Information Services Fan Services Video Services e-commerce EC Services Virtual Reality VR Children s Lessons, Mileage Points, etc. 3D 3D, multi-angle, playerfollowing, etc. Customer referrals with local shopping districts, etc. Nack5 STADIUM OMIYA (Omiya Ardija Home Stadium) Information Infrastructure Customer Relationship Management CRM Infrastructure Points, coupons, payments, etc. High-density Wi-Fi, Wi-Fi Multicast, etc. 27

29 Sports & ICT B2B2X Model Collaboration with a Sports League Contribution to the Development of the Sports Field into a Growth Industry with J.League Club Teams Diagram of Collaboration Initiatives ~Expansion of Customer Base through Digital Marketing~ Fully leverage NTT Group s assets to support the marketing activities of the J.League Contribute to higher earnings for the J.League and its club teams and create new services and business models for NTT Group 28

30 Sports & ICT The Smartification of World Sports The Open (U.K.) Tour de France (France) Indy 500 (U.S.) Overseas Japan Ball flight distance and trajectory; Tweet map (worldwide) Alpine Ski World Cup (Naeba) Official tournament app (athlete information, results, maps, etc.); video broadcasting Racer position, speed, and time behind; combination of data and video At Six Day London (a popular European track cycling event), monitoring of wheel speed and heart rate as well World Triathlon Series (Yokohama) Official triathlon app; Live video IP delivery (paratriathlon) Driving status and racers vital signs Position #1 Japan Walk (Tokyo) Universal design information (Web app) provision Images provided by:j SPORTS 29

31 Tourism Trade & ICT B2B2X Model Collaboration with Local Governments and Companies Contribution to ICT Community Development Utilized Publicly Available Data and Real-World Data through Collaboration with Sapporo City and Local Distribution Companies We have collected and analyzed real-world data related to travel, preference, and purchasing trends among domestic and overseas tourists. This information was used to deploy measures for stimulating consumption, including mutual customer referrals by hotels, tourist spots, and shopping facilities, and to help communicate the appeal of Sapporo City. <Overall Framework for Data-Based Marketing (Travel and Consumption)> 30

32 For Resolution of Social and Economic Issues Promote coordination of administrative services and social infrastructure with local governments as the hubs, and contribute to the resolution of social and economic issues of local regions (including local economic regions) Businesses Citizens Big Data Local Governments Digital Trust Organizations Open Data Promote Secondary and Tertiary Uses Industrial Development, Disaster Prevention and Mitigation, Smartification of Public Infrastructure, and Others Tourism Smartification of Infrastructure Education and Childcare Support Traffic and Transport Culture and Sports Energy and Environment Healthcare Disaster Prevention and Mitigation Agriculture, Forestry and Fisheries 31

33 Improving energy efficiency of telecommunication buildings Promote energy saving and space saving by utilizing HVDC* system/lithium-ion battery. HVDC : High Voltage Direct Current Building A Utility Power AC 100V DC 48V UPS/Rectifier Standby generator Lead-acid battery Utility Power DC 380V Rectifier (HVDC) Lithium-ion battery Standby generator Create Free Space Connect in Grid Building B AC & DC mixed Lead-acid battery 32 Replace to HVDC Lithium-ion battery Construct power grid

34 NTT DOCOMO: Toward Sustainable Growth Execution of Declaration beyond and business growth driven primarily by members Strengthen customer base centered on members ~ Further evolve billing plans, point program and service offerings to address the needs of each customer ~ Step up growth investments ~ Infrastructure investment to create new businesses for the 5G era and further promotion of +d activities ~ Drastic cost efficiency improvement ~ Further improvement of network cost efficiency and operational reform leveraging AI and other new technologies ~ 33

35 NTT DOCOMO: Increased Customer Returns Active Rollout of Customer Returns Measures Zutto DOCOMO Discount Plus Packet Pack Kaigai Option Started Mar. 15, 2018 NEW Started May 1, 2018 For customers who travel overseas Increased the amount of For customers docomo Hikari Set Dicounts with high bundled with Ultra Pack usage at home Started Feb. 1, 2018 For high-usage customers Application of Simple Plan to Ultra Data Packs Basic Share Pack Basic Pack Simple Plan applicable to any Packet Pack To start May 25, 2018 For long-term & high-usage customers For highusage customers For customers with limited usage Ultra30 Share Pack 30 For customers with limited voice usage For customers who use one handset for a log period of time Simple Plan docomo with For customers purchasing Lowered Mobile Device Protection fees For students handset and their family docomo Student Discount 34

36 ~ ~ NTT DOCOMO: Basic Share Pack/Basic Pack Share pack 5 2,013 1,980 Share pack 10 2,947 2,780 Share pack 15 3,880 3,713 NEW 4,713 Basic Share Pack Simple Plan docomo with 128kbps 5GB 10GB 15GB 30GB Data M pack 4,700 5, kbps Data S pack 3,400(2GB) 2,480 3,180 3,980 NEW Basic Pack Simple Plan docomo with 1GB 3GB 5GB 20GB Basic Share Pack The monthly charges represent the rates after applying the charges of Simple Plan, sp mode, the discounts of Zutto DOCOMO Discount Plus (Platinum Stage) and docomo with. The monthly charge per user is calculated by dividing the sum of the family s monthly fees by three users (digits after the decimal point are rounded up). Basic Pack The monthly charges for Data S/M Packs represent the rates after applying the charges of Kake-hodai Light Plan, sp mode, the discounts of Zutto DOCOMO Discount Plus (Platinum Stage) and docomo with. The monthly charges of Basic Pack represent the rates after applying the charges of Simple Plan, sp mode, the discount of Zutto DOCOMO Discount Plus (Platinum Stage) and docomo with. 35

37 NTT DOCOMO: d POINT d POINT CLUB members (Million subs) Topped 65 million d POINT partners No. of participating stores: Approximately 34, d POINT CARD registrants: fold fold d POINT CARD registrants indicate the number of users who can earn and use d POINTs at participating stores by registering their personal information. d POINT partners represent the total number of brands/sites where users can earn or use d POINTs. d POINT partners and no. of participating stores are inclusive of planned launches. 36

38 NTT DOCOMO: Smart Life Business & Other Businesses Smart life business and other businesses operating income exceeds target Up 26% Principal services Smart life business Content/Commerce Finance/Payment Lifestyle Other businesses Enterprise solutions Support services for customers peace of mind, etc. 37

39 The World Envisaged by 5G 38

40 The Current and Future State of Fixed-Line Telephone Services Migration to IP Networks Schedule for service changeovers and migration to IP networks Aim to complete migration to IP networks before tandem/signal transfer switches in the PSTN * networks approach their limits of useful life *PSTN (Public Switched Telephone Network): A network that provides analog telephone services and INS-Net (ISDN Information Network System) Outgoing calls from NTT s fixed-line telephone services will be switched over to IP networks from January 2024 (scheduled completion by January 2025) At the beginning of the migration of fixed-line telephone services, take over all of the contracts for analog telephone services and INS-Net services to the new fixed-line voice services with new rates Charges and conditions for the fixed-line telephone services after the migration to IP networks Continue offering basic voice services and enable customers to continue using their existing phones and other devices without need for additional on-premises installation Currently planned charges and conditions for the fixed-line telephone services after the migration to IP networks are as follows: Basic monthly charges: Unless the market environment changes significantly, current basic monthly charges for analog telephone services and INS-Net will remain the same Call rates: By taking advantage of non-distance sensitive flat rates of the IP network, nation-wide call rates to fixed-line telephones will be JPY 8.5 (excluding tax) per every 3 minutes NTT will provide international calls as well as Hikari Denwa services (with the option of selecting other service providers) Contracts: Provide all customers that use analog telephone services and INS-Net services with sufficient transition time through multiple notices before the migration, and take over their contracts to new fixed-line voice services after the migration MyLINE services: Guidance for handling MyLINE services (Dialing Parity / Pre-Selection Service) will be provided separately 39

41 The Current and Future State of Fixed-Line Telephone Services Image of Migration to IP Networks Current system Post-migration Other carriers Other carriers PSTN Signal transfer switch Interconnection switch PSTN interconnection IP network SIP server * Migrate tandem/signal transfer switches to IP Continue use of copper lines Use local switches as Copper line terminals Connect to other carriers through IP IP interconnection IP network SIP server * Gateway router Tandem switch Conversion device Core router Conversion device Core router Local switch Edge router Copper line terminal Edge router Copper lines Optical fiber Copper lines Optical fiber Fixed-line telephone (Analog telephone service, INS-Net) Hikari Denwa Fixed-line telephone (basic voice service) Hikari Denwa * A server that manages and controls telephone services using an IP network (SIP: Session Initiation Protocol) 40

42 Broadband Access Services in Japan Mobile Fixed 150M Approx. Mobile 167.3M subs SoftBank 30M Approx. FTTH 30.1M subs SoftBank market share Approx. 25% 100M KDDI KDDI market share Approx. 30% 20M NTT EAST and NTT WEST 50M NTT DOCOMO Approx. 75.7M subs 10M Approx. 20.5M subs Approx. DSL 2.2M subs Approx. CATV 6.9M subs NTT market share Approx. 45% NTT market share Approx. 68% NTT EAST and NTT WEST *2 Approx.0.82M subs Access Speed *1 ~788Mbps Access Speed *1 ~10Gbps ~50Mbps ~320Mbps *1 Figures for access speed are the speeds of typical commercial services, and are the maximum values of the best-effort traffic. *2 Stopped accepting applications from July 1,2016. (Source)MIC data (As of the end of December 2017) 41

43 Mobile Broadband Business DOCOMO Mobile telecommunications services Subscriptions (Millions Subs) Total smartphone/tablet uses (Millions subs) Churn Rate(%) Handset churn rate(%) % 0.53% 0.56% 0.66% 0.67% 0.60% 0.62% 0.69% 0.49% 0.42% 0.43% 0.53% 0.48% 0.47% 0.51% 0.57% FY2016 1Q 2Q 3Q 4Q FY2017 1Q 2Q 3Q 4Q * Churn rate is calculated excluding the subscriptions and cancellation of subscriptions of Mobile Virtual Network Operators (MVNOs). 42

44 Aggregate ARPU of Mobile Broadband Business :Mobile ARPU : docomo Hikari ARPU :Impact of discount (Yen) 4,340 4,430 4,460 4,570 4,620 4,740 4,750 4,780 4, ,340 5,370 5,350 5,380 5,300 5,360 5,320 5,260 5,270 (1,150) (1,130) (1,120) (1,080) (1,000) (970) (950) (950) (970) MOU min) FY2016 FY2017 FY2018E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2016 Full-year Aggregate ARPU 4,440 Yen (Mobile ARPU 5,350 Yen, docomo Hikari ARPU 210 Yen, Impact of discount programs 1,120 Yen) FY2017 Full-year Aggregate ARPU 4,710 Yen (Mobile ARPU 5,310 Yen, docomo Hikari ARPU 370 Yen, Impact of discount programs 970 Yen) 43

45 Fixed Broadband Business FTTH Subscriptions FTTH Subscriptions (Sum of NTT East and NTT West) (millions subs) , FY2014 FY2015 FY2016 FY Hikari Collaboration Model FLET S Hikari 8.02 FY2018E * Reference: FY2018 Breakdown of FTTH Subscriptions Total FTTH Service: Change from preceding Fiscal Year Hikari Collaboration Model FLET S Hikari (millions subs) FY2018E (1) Number of opened connections Number of switchover lines (2) Number of cancellations (1.45) Net Increase (1)+(2) (1) Number of opened connections (2) Number of cancellations (2.15) Number of switchover lines (1.25) Net Increase (1)+(2) (1.40) FTTH Churn Rate* (Sum of NTT EAST and NTT WEST) 1.12% 0.99% 0.94% 1.11% 1.02% 0.83% 0.80% 0.98% 0.90% 0.79% 0.80% 1.00% 1.01% 0.88% 0.90% 1.03% FY2014 FY2015 FY2016 FY2017 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q * Sum of number of churn for each month of each quarter / Sum of number of active subscribers** for each month of each quarter ** Active subscribers = (number of subscribers at end of previous month + number of subscribers at the end of the current month) / 2 44

46 NTT Group Overview Operating revenues (consolidated) Operating income (consolidated) : 11,799.6 billion : 1,642.8 billion No. of employees :282,550 No. of subsidiaries :922 * Percentage figures show the percentage of voting rights (March 31, 2018) 100% * 100% * 66.6% * 54.2% * Other group companies Regional communications business Long distance and international communications business Mobile communications business Data communications business Other businesses real estate, finance, construction and power business Operating Revenue: 3,232.9 billion Operating Income: billion 2,218.9 billion 93.6 billion 4,769.4 billion billion 2,043.1 billion billion 1,236.6 billion 78.6 billion No. of Employees: No. of Subsidiaries: 67, , , , , * Fiscal year ended March Operating revenue and operating income of each segment include inter-segment transactions. 45

47 Trend in Consolidated Financial Results Operating Revenues (Trillion yen) Operating Income (Trillion yen) Net Income (Trillion yen) EPS* (yen) (Fiscal Year) * EPS is adjusted according to the two-for-one stock split effective on July 1, ** Includes influence of 60 billion yen of non-operating revenues by The Otemachi 2-Chome Area Redevelopment Project *** Excluding the effects of the arbitration award received from Tata Sons Limited, net income is expected to be 860 billion yen, and EPS to be 431 yen. **** Excluding the effects of the arbitration award received from Tata Sons Limited, net income is expected to be 849 billion yen, and EPS to be 425 yen. Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit. FY2011 FY2012 FY2013 * * FY2014 FY2015 FY2016 FY2017 * * * 46 FY2017 * * * * [IFRS] FY2018E [IFRS]

48 Changes in Consolidated Operating Revenues :Regional communications business :Long distance and international communications business :Mobile communications business :Data communications business :Other business (Billion yen) 10,000 10, , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 4, , , , , , , , , (Fiscal Year) 1, , , , , , , , , , , , , , , , , ,290.0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] FY2018E [IFRS] * Business segment operating revenues include inter-segment transactions * Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit. 47

49 Changes in Consolidated Operating Income (Billion yen) 1,500 1,000 1, , , , :Regional communications business :Long distance and international communications business :Mobile communications business 1, , , :Data communications business :Other business 1, , (Fiscal Year) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] * Business segment operating income include inter-segment transactions 48 FY2018E [IFRS] * Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit.

50 Changes in CAPEX (Billion yen) 2,000 1, , , ,817.5 :Regional communications business :Long distance and international communications business :Mobile communications business :Data communications business :Other business 1, , , , , , (Fiscal Year) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] * CAPEX excluding sales and investments related to real estate and solar power generation operations are as follows; FY2011: 1,906.5 billion yen, FY2012: 1,907.5 billion yen, FY2013: 1,795.7 billion yen, FY2014: 1,702.9 billion yen, FY2015: 1,605.2 billion yen 49 FY2018E [IFRS] * Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit.

51 Changes in Interest-bearing Debt (Billion yen) Debt/Equity ratio* 6, % 49.0% 49.3% 50.8% 47.1% 45.2% 60% 4, % 40% 2,000 4, , , , , , , , , % 0 (Fiscal Year) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] * Debt Equity ratio = Interest-bearing debt / Shareholders equity x 100 FY2018E [IFRS] * Based on IFRS results which have not been audited, and are provided for reference only. These figures are subject to change, pending results of the independent financial audit. 0% 50

52 Changes in Number of Employees :Regional communications business :Long distance and international communications business :Mobile communications business :Data communications business :Other business 304, , , , , , , , ,450 68,250 67,600 81, ,000 85,900 81,300 75,850 71,200 66,200 43,850 45,350 45, ,000 31,150 33,450 23,300 23,900 58,650 61,350 38,050 42,250 43,750 24,850 25,700 26,150 75,000 76,650 80,550 26,750 27,450 28, , , ,950 0 (Fiscal Year) 25,250 27,150 26,000 25,800 24,800 24,350 24,150 25,250 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018E * Starting from FY2016, "No. of Employees" includes employees whose contracts were changed from fixed-term contracts to open-ended contracts. 51

53 Age Distribution of Employees at NTT East, NTT West and Outsourcing Companies (As of March 31, 2018) 4,000 Number of Employees 2, Age * Figures for East Outsourcing Companies include employees from the consolidated regional outsourcing companies (NTT EAST-MINAMIKANTO and others), NTT-ME and NTT EAST SERVICE, while figures for West Outsourcing Companies include NTT BUSINESS SOLUTIONS, NTT MARKETING ACT, NTT NEOMEIT, NTT FIELDTECHNO and NTT BUSINESS ASSOCIE WEST. Figures for those companies include the number of more than 60-year-old contracted employees. 52

54 Share Buybacks and Cancellation <>:share holding ratio 199mil. shares Gov t Owned Shares 862mil. shares <33%>* 1,585mil. shares Buyback from market Treasury Stocks <14.1%> 276mil. shares 97mil. shares Gov t Owned Shares 862mil. shares <33%>* 1,411mil. shares Cancellation Treasury Stocks <0.0%> Cancellation 373 mil. shares 1,411mil. shares Gov t Owned Shares 862mil. shares <39%>* Buyback from Gov t and Market Excess Holdings 124mil. shares Treasury Stocks <7.8%> 177mil. shares Gov t Owned Shares 738mil. shares <33%>* 1,358mil. shares Cancellation Treasury Stocks <0.0%> Cancellation 177 mil. shares 1,358mil. shares Gov t Owned Shares 738mil. shares <36%>* Buyback from Gov t and Market Excess Holdings 59mil. shares Treasury Stocks <6.5%> 136mil. shares Market floating shares 1,282mil. shares Gov t Owned Shares* 679mil. Shares <33%> Mar Oct Nov Oct Nov Total number of shares issued (million shares) 2,646 2,273 2,096 Apr * Number of shares is adjusted according to the two-for-one stock split effective on July 1, * Mandatory (minimum) number of shares to be held by the Government under the NTT Act = (total number of shares issued-60 million shares issued at the IPO in 2000) 1/3 (The number of shares issued after the initial listing are not to be included in the calculations. (NTT Act, supplementary provision 13)) 53

55 Next Value Partner for Transformation of Business models and Lifestyle Trusted Solutions by of Global, Secure, End-to-end, and Full-line ICT services