IR Presentation. August 2018

Transcription

1 IR Presentation August 2018

2 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 1 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. **** E 1Q in this in this material represents that the figure three-month is a plan period or projection beginning for operation. on April 1 and ending on June ** 30, FY 2Q in this represents material indicates the six-month the fiscal period year ending beginning March on 31 April of the 1 and succeeding ending year. on September 30, 3Q represents the nine-month period beginning on April 1 and ending on December 31, and 4Q represents the twelve-month period beginning on April 1 and ending on March 31.

3 2 Overview of Consolidated Results

4 Status of Consolidated Results for FY2018.1Q Both Operating Revenues and Operating Income increased Smooth start for the annual plan Status of Consolidated Financial Results Operating Revenues: 2,852.7B (+ 44.0B [ +1.6%] year-on-year) Operating Income: 537.2B (+ 12.6B [ +2.4%] year-on-year) Profit 1 : 289.7B ( + 0.5B [ +0.2%] year-on-year) Overseas Sales: $4.97B (+$0.33B [ +7.2%] year-on-year) Cross-Selling Order Volume : $0.21B Overseas Operating Income 2 : $0.27B (+$0.03B [+11.4%] year-on-year) 1 Profit presented above represents the profit attributable to NTT, excluding non-controlling interests. 2 Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 3

5 Contributing Factors by Segment for FY2018.1Q Operating Revenues 2,808.7 FY2017.1Q Regional communications business 17.8 FY2018.1Q (Year-on-year:+44.0) Long distance and international communications business 7.8 Mobile communications business 43.1 Data communications business , Other business 22.2 (Billions of yen) 2,852.7 FY2018.1Q Operating Income FY2017.1Q Regional communications business 9.3 FY2018.1Q (Year-on-year:+12.6) Long distance and international communications business 9.0 Mobile communications business 27.8 Data communications business 期 E FY2018.1Q Includes adjustments such as elimination of inter-segment transactions. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION Other business 0.2

6 5 Towards New Mid-Term Management Strategies

7 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 6 Outline of New Mid-Term Management Strategies Support our customers Digital Transformation Promote B2B2X model for new value creation Rollout 5 th -Generation Wireless System Provide personal services to support individuals lifestyle changes Accelerate our own Digital Transformation Enhance competitiveness in global business Drive digital self-transformation in domestic business Leverage talent, technologies, and assets Reinforce and globalize R&D Create new lines of business (Real estate, Electric power) Promote ESG management, and enhance the returns to shareholders to improve corporate value

8 Enhance Competitiveness in Global Business 1 Establish a New Holding Company Focused on Global Business New steps to make NTT more competitive and profitable in the global market We will establish a new global holding company under NTT and transfer NTT Communications, Dimension Data, NTT DATA, NTT Security and NTT Innovation Institute by FY2018.3Q We will consider integrating these businesses (except NTT DATA) into two new businesses by FY2019.2Q; one will look after our global business, and the other will cater to our domestic business in Japan Current Status NTT NTT Communications Dimension Data NTT DATA NTT Security NTT Innovation Institute Status in FY2018.3Q NTT Global Holding Company NTT Communications Dimension Data NTT DATA NTT Security NTT Innovation Institute Global Innovation Fund Name: NTT, Inc. Headquarters: Tokyo, Japan CEO: Jun Sawada (President and CEO of NTT) (New) (New) NTT DATA will continue to collaborate with other companies in the Group while retaining its present management structure, status as a listed company, and brand Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 7

9 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 8 Enhance Competitiveness in Global Business 2 Establish a Global Innovation Fund With this new fund, we will activate investment in high-growth areas such as digital technology We will intensify our R&D activities in global markets by using a global network of experts from advanced academic research institutions and venture-capital communities around the world Fund Name: NTT Venture Capital, L.P. Location: The United States of America Fund Size: Up to U.S.$500 million

10 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 9 Other Initiatives Promote B2B2X Model Signed the Agreement for Comprehensive Collaboration for Realizing a Super-Smart Society by Utilizing Public and Private Data with Yokohama and Yokohama City University (July 31, 2018) Drive Digital Self-Transformation in Domestic Business Appointed Chief Digital Officers within NTT Group (August 1, 2018) Will work to further enhance the efficiency of business processes and to provide new value-added services Establish IT Strategy Office at the NTT Head Office (scheduled for September 1, 2018) Will further enhance IT strategy and IT governance for NTT Group, boosting Digital Transformation within NTT Group

11 ESG Management Contribute to SDGs with low environmental load Energy efficiency Goals in 2025 Double the energy efficiency of telecom business Reduce 10% of power consumption of telecom business Convert power facilities into Direct-current Saving energy in telecom facilities Plan to participate in Goals in 2025 Transition to EV *** Convert 50% of general domestic corporate vehicles to EV 15% cost reduction of vehicles Plan to participate in EP 100* EV 100** *, ** Global Initiative driven by The Climate Group, British NPO farm EP100:Aiming to double the energy productivity EV100:Accelerating the transition to electric vehicles and making electric transport the new normal *** Target in % Electric Vehicle Integration, -30% reduction of cost related company owned fleet. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 10

12 11 Financial Forecasts for the Fiscal Year Ending March 31, 2019

13 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 US-GAAP IFRS *1 IFRS IFRS Operating Revenues Operating Income 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%] Net Income * 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 12

14 FY2017 Contributing Factors by Segment Operating Revenues (Year-on-year: +51.8) (Billions of yen) Regional communications business 91.5 Long distance and international communications business 11, Mobile communications business 31.5 Data communications business 55.2 Other * business ,830.0 FY2017 [IFRS] FY2018 E 3, , , ,100.0 FY2018E [IFRS] Operating Income (Year-on-year: +48.2) 1,641.8 Regional communications business 8.6 Long distance and international communications business 39.0 Mobile communications business 3.1 Data communications business 18.6 Other * business 3.8 1,690.0 FY2018 E FY2017 [IFRS] *Includes adjustments such as elimination Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION FY2018E [IFRS] 13

15 Appendix 14

16 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 15

17 EPS Growth 456yen 391 yen 431 * yen Reached Target 183 yen 237 yen Share Buybacks Profit Growth 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) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 16

18 Optimize Domestic Network Businesses Streamlining Capital Investment Improve efficiency of facility use Reduce procurement costs Improve and optimize IT systems At least 200 billion yen (Domestic network business, compared to FY2014) 1,400 billion yen Capital Investment (Domestic network Businesses* ) 1,300 billion yen 1,260 billion yen 1,193 billion yen Reached Target 205 billion yen * Excludes NTT Com s data centers and certain other assets Cost Reductions Review and reduce costs in order to improve user services Establish simple, highly efficient business operations in line with changes in our business model and environments * Does not reflect the impact of the change in depreciation method FY2014 FY2015 FY2016 FY20117 (Result) At least 800 billion yen* (Domestic network business, compared to FY2014) FY2015 FY2016 FY2017 (Result) Cost Reductions* 414 billion yen 654 billion yen Reached Target 856 billion yen Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 17

19 Overseas Sales/Operating Income Sales $15.0B Sales $15.6B Sales $16.9B Sales $19.5B Operating Income* $0.67B FY2014 Operating Income* $0.69B FY2015 Operating Income* $0.8B FY2016 Operating Income* $1.0B FY2017 (Result) * Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 18

20 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 19 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 ICT tools AI, Edge computing etc. Service Providers (Main Players) New services Needs New needs New Value Creation パートナー Partners Digital Transformation Lifestyle Change Social Issue Resolution

21 (Reference) Major B2B2X Model Initiatives (FY2018) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 20 Sports Infrastructure Auto 2017 July 2018 April Aug. Deepen digital marketing, including 7 月 through new viewing experiences at stadiums Began sales of cybersecurity technology providing safe operation of critical infrastructure control systems Initiated consortium formation for the network and computing infrastructure of automotive Big Data Cities Manufacturing Agriculture Oct. May Oct. Commercially launched the FIELD System, which incorporates edge computing and other technologies Scheduled to begin joint field testing of public safety solutions in Las Vegas, United States Started testing to utilize corevo for labor reduction in the field of agriculture/water environment Entertainment Entertainment Cities Nov. May 2018 Jan. Used Kirari! to provide new kabuki effects, such as the joint transmission of simultaneous Jointly staged real and commercial virtual performances kabuki (hosted performances the Miyako Musubi Yume no Renjishi performance in Pontocho and Miyagawa) using the latest technology, including Kirari!, primarily at the Minami-za theater in Kyoto Released the DATA-SMART CITY SAPPORO ICT utilization platform in scheduled to re-open in autumn 2018 Sapporo Transport Cities Infrastructure Yokohama City University Feb. July Apr. Successfully conducted joint testing of the application of edge computing and other technologies to IoT on ships Signed the Agreement for Comprehensive Collaboration for Realizing a Super-Smart Society by Utilizing Public and Private Data Began sales of cybersecurity technology providing safe operation of critical infrastructure control systems

22 Changes in Dividend (Yen) % 65% % 38.0% 31.4% 30.7% 32.9% 37.7% 45% Payout Ratio % 13.0% 17.1% 23.0% 19.5% 27.5% 32.3% 31.2% 38.2% 37.2% FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018E [IFRS] 25% 5% * Dividend is adjusted according to the two-for-one stock split effective on July 1, Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 21

23 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 ~2018/05 repurchased (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 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 22

24 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 23 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

25 NTT s Capability in Global Business NTT Telecom (A) Cloud (A) IT Vendor (A) SIer (I) Data Center (incl. colocation) Network Integration - - Network Apps (ERP) Cloud Implementation AMO - - Public Hosted Private Leader Attacker Security - - Legend: Global capability Top Tier 2 nd Tier Specific capability Not competitive/local - Out of scope Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 24

26 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 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 データセンター 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)

27 Strengthen Provision of Global Cloud Services Expansion of highquality data center service to the Netherlands, the seventh country in Europe where services are offered Expansion of supply capacity of Frankfurt data centers by 1.5x Launch of Germany Munich 2 Data center Primary Data Centers Data Centers Under Construction Underwater Cables Mergers and Acquisitions Agreement to acquire 100% of the stock of Secure-24, a large-scale U.S. IT managed servies operator Launch of the Germany Rhein-Ruhr 1 Data Center Launch of construction of JUPITER, new high-colume, low-latency underwater fiber optic cables that will connect Japan, the U.S. and the Phillippines Launch of Virginia Ashburn 3 (VA3) Data Center and launch of construction of VA4 Data Center Launch of data center services in South Africa Launch of Texas Dallas 1 (TX1) Data Center, one of the largest in the world Expansion of data center services in Mumbai and Bangalore Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 26

28 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 27 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

29 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION Numbers are rounded. 28 Expansion of Cross-Selling (Aggregate Contract Value) Aggregate contract value of Cross-Selling reached approx. 3.6 billion USD Expansion of Global Account Management North America Total IT solution triggered by Cloud Service Worldwide including emerging countries Insurance Public Finance Manufacturing (Motor vehicle) 2,560 Healthcare million USD 3,400 million USD 3,610 million USD Cross-selling of existing services, mainly IT infrastructure 990 million USD 1,190 million USD 1,630 million USD 60 million USD 150 million USD 290 million USD ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar ~ Mar ~ Jun. 2018

30 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 29 Cross Selling Track Record Improved brand awareness leads to more deals with global enterprises AMERICAS FY2013.1Q Texas Department of Transportation Cloud solution, Application, Maintenance ITO, Total security service FY2013.4Q Healthcare Manufacturer Transition of ERP to Cloud service ITO FY2013.4Q Heavy Industry Business platform construction ITO FY Q Dairy Industry Cloud Solution Data Center service FY Q Medical Devices Manufacturer Transition of Application to Cloud service Data Center service FY2015.1Q EMEA Medical Institution ITO NW equipment procurement, implementation Data Center service FY2015.4Q Manufacturer Cloud & DC management service Transition of Application to Cloud service FY2015.4Q HEIDELBERGER DRUCKMASCHINEN AG (Manufacturer) Communication Service ITO FY2016.1Q ReAssure Data Center service ITO, Total security service FY2017.3Q Energy Industry SaaS(Cloud Application service) Japan FY2013.3Q ANA Implementation and operation of UCaaS(Could communication service) FY2014.2Q Financial Institution Dater Center service DC equipment procurement, implementation FY2013.2Q May Bank APAC Dater Center service DC equipment procurement, implementation FY2015.4Q Financial Institution Application Management Outsourcing Business Process Outsourcing FY2016.1Q Public Transport Victoria, Australia Development and Operation of Smartcard ticketing system

31 Revenue and Employee by Region(excl. Japan) (USD) (FY2017) Total AMERICAS EMEA APAC* Revenue Employees $19.5B $7.7B $7.5B $4.3B 116,000 32,000 43,000 41,000 * Exclude Japan (FY2017) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 30

32 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 31 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

33 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION *video: World Triathlon Series (2018/Yokohama) 32 Sports & ICT The Smartification of World Sports Overseas Japan The Open (U.K.) Ball flight distance and trajectory; Tweet map (worldwide) Tohoku Rakuten Golden Eagles (Pro Baseball) Virtual reality (VR) baseball coaching system Tour de France (France) 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) Athlete Tracking and Analysis (Technical verification) Indy 500 (U.S.) Driving status and racers vital signs Position #1 Japan Walk (Tokyo/Osaka/Sendai) Universal design information (Web app) provision

34 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)> Prior to visit Industry-wide/ area-wide marketing to inbound travelers Local sales Of SIM cards Distribution of Information via SNSs (by country) Travel (base stations, Wi-Fi,GPS) SNS (twitter facebook) Purchases (department stores, Drug store, etc.) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION During visit Smartphone applications (travel guides, Wi-Fi verification, AR images, smartphone payment) Signage (multi-language) Print media Commercial facilities Hotels (multiple) Commercial facilities Sapporo Snow Festival Tourist facilities Tourist facilities Sapporo city ICT utilization platform DATA-SMART CITY SAPPORO After return Ongoing marketing initiatives (Promotional campaigns, cross-border e-commerce, etc.) ー Establishment of an environment that makes it easy to utilize public and private data collected by Sapporo city and companies ー Launched website on 2018/01/31 33

35 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 Disaster Prevention Tourism Energy and Traffic and Transport and Environment Mitigation Smartification of Infrastructure Education and Childcare Support Culture and Sports Healthcare Agriculture, Forestry and Fisheries Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 34

36 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 Replace to HVDC Lithium-ion battery Construct power grid Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 35

37 Tsuchinikaeru Battery Returns to the soil without any negative effect on the soil or organisms Sensors everywhere Aiming World Naturally friendly even remaining in the environment Tsuchinikaeru Battery No negative effect on the growth of plant life (Phytotoxicity test) Tsuchinikaeru Battery Commercial Batteries biological material Leafy vegetables komatsuna Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 36

38 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 37 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 ~

39 NTT DOCOMO: d POINT CLUB Members d POINT CLUB members d POINT CARD registrants (Million members) Up 7% fold FY17 1Q FY18 1Q FY17 1Q FY18 1Q d POINT CARD registrants indicate the number of users who can earn and use dpoints at participating stores by registering their personal information Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 38

40 NTT DOCOMO: d POINT d POINTs used d POINT partners (Billion points) 41.3 No. of participating stores: Approximately 38, fold 7.5 Points used at partners stores, etc.: fold fold FY17 1Q FY18 1Q FY17 1Q FY18 1Q 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 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 39

41 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 Data S pack 3,400(2GB) 2,480 5GB 3,180 10GB Data M pack 4,700 3,980 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 40 15GB NEW ~ 5,980 Basic Pack Simple Plan docomo with 30GB 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). ~ 128kbps

42 NTT DOCOMO: Smart Life Business & Other Businesses (Billions of yen) Principal services Smart Life business Content/Commerce Finance/Payment Lifestyle 37.0 Up 17% 43.3 Other businesses Enterprise solutions Support services for customers peace of mind, etc. FY17 1Q FY18 1Q 18 FY18 年度 full ( 予想 year ) (target) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 41

43 NTT DOCOMO: The World Envisaged by 5G High speed/ Large capacity Peak rate: 20Gbps* AR/VR 4K/8K video steaming Stadium solution Autonomous driving 5G Smart city, smart home Low latency Remote medical services Transmission latency in Radio Access Network(RAN): 1ms or less* Agricultural ICT Connection with numerous devices No. of simultaneously connected: 10 6 devices / km 2 * * Requirements discussed under Standardization (Recommendation ITU-R M ) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 42

44 5G standardization and NTT DOCOMO s commercialization schedule NTT DOCOMO will launch standard compliant 5G in New use cases will be created through 5G trials. FY2016 FY2017 FY2018 FY2019 FY2020 Event Pyeongchang Olympic (February) Tokyo Olympic (July) Requirements Proposals Specifications Basic studies specifications (Release15) NTT DOCOMO 5G commercial system development 5G trials 5G commercial launch Domestic regulatory clearance Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION MIC Information and Communications Council etc. Frequency allocation * Based on the "New-generation mobile communication system Committee (6th) Report Overview, Information and Communications Council, Ministry of Internal Affairs and Communications" held in September

45 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 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 44

46 The Current and Future State of Fixed-Line Telephone Services Image of Migration to IP Networks PSTN Signal transfer switch Current system Other carriers Interconne ction switch Tandem switch PSTN interconnection Conversion device IP network SIP server * Core router 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 Post-migration IP interconnection IP network Conversion device SIP server * Other carriers Gateway router 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) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 45

47 Broadband Access Services in Japan Mobile Fixed 150M Approx. Mobile 170.1M subs SoftBank 30M Approx. FTTH 30.3M subs SoftBank market share Approx. 24% 100M 50M KDDI KDDI market share Approx. 31% NTT DOCOMO Approx. 75.7M subs 20M 10M NTT EAST and NTT WEST 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.0.78M 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 March 2018) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 46

48 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% 0.59% 0.49% 0.42% 0.43% 0.53% 0.48% 0.47% 0.51% 0.57% 0.49% FY2016 1Q 2Q 3Q 4Q FY2017 1Q 2Q 3Q 4Q FY2018 1Q * Churn rate is calculated excluding the subscriptions and cancellation of subscriptions of Mobile Virtual Network Operators (MVNOs). Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 47

49 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 4,720 4,800 4, ,340 5,370 5,350 5,380 5,300 5,360 5,320 5,260 5,300 5,270 (1,150) (1,130) (1,120) (1,080) (1,000) (970) (950) (950) (940) (970) FY2016 FY2017 FY2018 FY2018E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q MOU min) 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) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 48

50 Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 49 Fixed Broadband Business FTTH Subscriptions FTTH Subscriptions (Sum of NTT East and NTT West) (millions subs) 2,005 2,053 1, , FY2015 FY2016 FY2017 FY2018.1Q 2,113 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) 1.02% 0.83% 0.80% 0.98% 0.90% 0.79% 0.80% 1.00% 1.01% 0.88% 0.90% 1.03% 1.00% FY2015 FY2016 FY2017 FY2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q * 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

51 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: Operating Income: billion 93.6 billion billion billion 78.6 billion No. of Employees: No. of Subsidiaries: 3,232.9 billion 2,218.9 billion 4,769.4 billion 2,043.1 billion 1,236.6 billion 67,600 45,350 27, ,000 24, * Fiscal year ended March Operating revenue and operating income of each segment include inter-segment transactions. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 50

52 Trend in Consolidated Financial Results Operating Revenues (Trillion yen) Operating Income (Trillion yen) Net Income (Trillion yen) EPS* (yen) FY2011 FY2012 FY2013 ** FY2014 FY2015 FY2016 FY2017 *** FY2017 **** FY2018E [IFRS] [IFRS] * 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 51

53 Changes in Consolidated Operating Revenues (Billion yen) 10, ,000 3, , , , , , , , , , ,998.6 :Regional communications business :Long distance and international communications business :Mobile communications business 11, , , , , , ,129.3 :Data communications business :Other business 11, , , , , , , , ,000 4, , , , , , , , , , , , , , , , , , , , , , , , , , ,290.0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [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. FY2018E [IFRS] Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 52

54 Changes in Consolidated Operating Income (Billion yen) 1,500 1, , , , , :Regional communications business :Long distance and international communications business :Mobile communications business 1, , , :Data communications business :Other business 1, , FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] * Business segment operating income include inter-segment transactions 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 53

55 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, , , , , , 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 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 54

56 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 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 [IFRS] * Debt Equity ratio = Interest-bearing debt / Shareholders equity x 100 * 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. FY2018E [IFRS] Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 55 0%

57 Changes in Number of Employees 300, , , , ,150 85,900 81,300 31,150 33,450 23,300 23,900 58,650 61,350 38,050 42,250 :Regional communications business :Long distance and international communications business :Mobile communications business 239, , ,450 75,850 71,200 66,200 43,750 24,850 25,700 26,150 75,000 76,650 80, ,850 (268,450) 68,250 (62,250) 43,850 (43,850) 67,600 45,350 26,750 27,450 (26,750) :Data communications business :Other business 282, ,800 81,850 45,600 28, , , ,950 (111,300) (273,650) (59,800) (45,350) (27,450) (117,100) (279,400) (59,100) (45,400) (28,150) (122,500) 0 25,250 27,150 26,000 25,800 24,800 24,350 24,150 25,250 (24,300) (23,950) (24,250) 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. The figures in parentheses are the number of employees excluding employees whose contracts were changed from fixed-term contracts to open-ended contracts. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 56

58 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. Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 57

59 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 <7.0%> 146mil. shares Market floating shares 1,271mil. 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 May * 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)) Copyright 2018 NIPPON TELEGRAPH AND TELEPHONE CORPORATION 58

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