IR Presentation July, 2017

Transcription

1 IR Presentation July, 2017

2 1 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 Report on Form 20-F and other filings and submissions with the United States Securities and Exchange Commission. * 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.

3 Towards the Next Stage 2.0 (Formulated in May 2015, Revised Financial Targets in May 2016)

4 Basic Concept of 2.0 Accelerate Self-Transformation towards a Value Partner and Embark on a Profit Growth Track Accelerate Profit Generation of Global Cloud Services Enhance Profitability of Network Services Develop new markets by further promoting B2B2X model Re-establish EPS Growth Goal (at least 400 yen*) and update other financial targets * Revised from at least 350 yen in May

5 Progress toward Financial Targets (FY2018/03) EPS Growth Streamlining Capital Investment (Domestic Network Business*) [compared to FY2015/03] Cost Reductions** (in fixed-line/mobile access networks) [compared to FY2015/03] Overseas Sales/Operating Income*** Results (FY2017/03) billion billion $16.9B/$0.8B Medium Term Targets (FY2018/03) At least 400 Original target at the announcement of 2.0 (May 2015): At least 350 ( 1.4 trillion in consolidated profits) At least 200 billion At least 800 billion Original target at the announcement of 2.0 (May 2015): At least 600 billion $22B/$1.5B * Excludes NTT Com s data centers and certain other assets. ** Does not reflect the impact of the change in depreciation method. *** Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets 4

6 EPS Growth 183 yen 237 yen 391 yen Reach Target (Forecast) 414 yen Profit Growth At least 400 yen Revised Original target at the announcement of 2.0 (May 2015) At least 350 yen Share Buybacks FY 2012/03 FY 2015/03 FY 2017/03 FY 2018/03 FY 2018/03 (Forecast) (Target) * EPS is adjusted according to the two-for-one stock split effective on July 1,

7 Overseas Sales/Operating Income Sales Sales $19.6B Sales $22.0B Sales $15.0B Sales $15.6B $16.9B Operating Income* $0.67B Operating Income* $0.69B Operating Income* $0.8B Operating Income* $1.2B Operating Income* $1.5B FY2015/03 FY2016/03 FY2017/03 FY 2018/03 (Forecast) Target 6 * Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets.

8 Strengthening NTT s Global Business FY Initiatives Go-To-Market Achieved record TCV* of cross-selling Organized Go-to-Market account support team across NTT Group Established sales collaboration platform Services / Operations Established and launched NTT Security Offered packaged services and improved service collaboration across NTT Group companies Procurement *Total Contract Value Reduced costs by refining common specifications and leveraging volume to obtain better discounts FY Initiatives Integrate management of the cloud IaaS platforms of NTT Com and Dimension Data to strengthen cloud offerings (Wholesale from NTT Com to Dimension Data) <Purpose> Secure, compliant enterprise-grade clouds Combination of public and private clouds for clients mission-critical IT systems Open cloud platform to support clients digital business with the latest innovation Hybrid IT managed services across full-stack IT Strengthen coordination of delivery processes across NTT Group companies Accelerate global account activities to win large-scale deals 7

9 Optimize Domestic Network Businesses Streamlining Capital Investment Improve efficiency of facility use Reduce procurement costs Improve and optimize IT systems 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 8 At least 200 billion yen (Domestic network business, compared to FY 2015/03) 1,400 billion yen Capital Investment (Domestic network Businesses* ) * Excludes NTT Com s data centers and certain other assets 1,300 billion yen 1,260 billion yen 1,193 billion yen FY2015/03FY2016/03 FY2017/03 At least 800 billion yen* Reduction of at least 200 billion yen Reach Target (Forecast) FY2018/03 (Forecast) Reach Target (Forecast) 1,200 billion yen FY2018/03 (Target) (in fixed-line/mobile networks, compared to FY 2015/03) FY2016/03 FY2017/03 FY2018/03 FY2018/03 (Forecast) (Target) Cost Reductions* 414 billion yen 654 billion yen 830 billion yen Original target at the announcement of 2.0 (May 2015) At least 600 billion yen Revised At least 800 billion yen

10 For Sustainable Growth Make good use of 2020 and the Government s Vitalization of Local Economies initiative as opportunities to accelerate the migration to B2B2X Strengthen Collaboration Platform (security, lot, network virtualization, etc.) Promote partnerships with a wide range of business entities (transportation, tourism, energy, agriculture, etc.) through NTT Group s cross-company projects Develop closer partnerships with local governments in order to create regional services utilizing ICT E.g., Comprehensive Partnership Agreement with Fukuoka City Create services that will become the standards of the next generation Create high value-added services and establish new business models through collaboration with partners (by taking on the role of catalyst ) 9

11 Direction of Initiatives for the B2B2X Model Support business model transformation for service providers to create new value, which leads to lifestyle transformations of service users NTT Group Provide New Tools with Partners Service Providers (Cross-Industry Collaboration) Enrich User Experiences Resolve Social Issues Individual consumers Members Viewers Visitors Partners AI, IoT Main Players Create New Services through Cross-Industry Collaboration Companies Manufacturers Shops 10

12 Major B2B2X Initiatives in FY2017/03 Entertainment April Providing amazing experiences through the integration of Kabuki and cutting-edge ICT Sports May Providing advanced sportsviewing experiences using ICT Agriculture June ICT solutions for agriculture and water infrastructure, combining AI and IoT Tourism July Smart city project through Sapporo City s ICT-utilizing platform Transport Sept Safe driving control solutions integrating biometric information Sports Smart stadium project and providing advanced game-viewing experiences Manufacturing July July Optimization of manufacturing/production processes with IoT Transport Jan Offline-to-online linked ads, and navigation at metro stations Healthcare Feb Improvement of rehabilitation efficiency through the use of wearable biosensors Infrastructure Nov Innovative cybersecurity solutions for secure operation of critical infrastructure Auto March Technological development and verification in the connected car field 11

13 Major R&D Initiatives in FY2017/03 Dialogue Technology Catching the World s Attention Showcased Natural Conversation among Multiple Persons and Robots and other technology at SXSW2017 (3/10-19 in Austin, U.S.A.) Android (Osaka University) x Discussion Dialogue (NTT) Front-page news in USA TODAY and local newspapers Virtual Reality Baseball Coaching System The World s Best Sound-Processing Technology Provided Hitachi Zosen with Anomaly Noise Detection Technology that objectively visualizes and analyzes the characteristics of both normal operating sounds and anomaly noises of manufacturing machines Frequency (Hz) Recorded Operating Sounds Reduction of Environmental Sounds and Noise Time (S) Diversity Navigation Time (S) Anomaly Noise World-Leading Security Technology Developed Secure Computation Technology, which enables the accurate analysis of encrypted genome information, the most sensitive personal information, between multiple institutes together, without decrypting the data Medical Institutes Research Labs Realized Fisher s exact test by secure computation technology First in the World Example of Genome Analysis Encrypted Calculation Engine Encrypted Data Unrecoverable Unauthorized Access Non-Conventional Computer Medical Institutes Research Labs Developed a coaching system for professional baseball players using athlete first-person vision synthesis technology, which enables players to experience simulations of pitches with immersive reality, and carried out practice testing with Tohoku Rakuten Golden Eagles (commercial launch in 2017) Developed MaPiece technology, which easily collects accessibility information, as well as 2.5D map representation technology, which realizes easy-to-understand 3D map displays Developed Quantum Neural Network, a new computer based on quantum optical technology. The use of quantum properties of optical signals enables us to find solutions to combinatorial optimization problems, which are extremely difficult for conventional computers to solve Information processing (neuron) Pump Pulse Phase Sensitive Amplification Coupler Optical Ring Resonator Optical parametric oscillator (Quantum analog device) Degenerate Optical Parametric Oscillator (DOPO) Coupler Approx. 50 times faster compared to current digital computers Support convenient and safe mobility of different types of people (seniors, people with baby strollers, foreign visitors, and others) 12 Optical modulator Digital Signal (Feedback Information) Communication (Synaptic connection) FPGA Posted in online version Measurement of the American scientific magazine, Science Digital Signal (OPO Pulse Information) FPGA Measurement Feedback Circuit (Legacy digital device)

14 Financial Results for the FY 2017/03 and Financial Forecasts for the FY 2018/03

15 FY2017/03 Summary of Consolidated Financial Results Operating Income increased by billion [14.2%] Net Income reached new record levels EPS increased by 41 to 391 Status of Consolidated Financial Results Operating Revenues: 11,391.0 billion (decrease of billion [(1.3)%] year-on-year) Operating Income : 1,539.8 billion (increase of billion [14.2%] year-on-year) Net Income* : billion (increase of 62.4 billion [8.5%] year-on-year) EPS : (increase of [11.6%] year-on-year) * Net income represents net income attributable to NTT, excluding noncontrolling interests. 14

16 FY2017/03 Topics Increased Profitability of Network Services Expansion of NTT s User Base Mobile Subscriptions: million mobile subscriptions (net increase of 3.92 million) (Included in the above) Kake-hodai & Pake-aeru: million subscriptions (net increase of 7.36 million) FTTH Subscriptions: million subscribers (net increase of 0.79 million) (Included in the above) Hikari Collaboration: 8.74 million (4.74 million opened connections (1.93 million new subscribers and 2.82 million subscribers who switched subscriptions from FLET S Hikari) Growing number of Wi-Fi area owners * : 557 (increase of 164 year-on-year) Expansion of Global Cloud Services Cross-Selling Order Volume: US$940 million Promotion of the B2B2X Model Expanded the scope of collaboration with other companies and local governments through the use of NTT Group s latest cutting-edge technology in the fields of sports, traditional entertainment, manufacturing industry, connected cars, etc. * Total number of large-scale corporate or local government customers. Excludes small-scale restaurants, etc. 15

17 FY2017/03 Contributing Factors by Segment Significant increase in Operating Income in the Regional communications business and Mobile communications business Operating Revenues (Year-on-year: (150.0)) (Billions of yen) 11,541.0 Regional communications business 99.6 Long distance and international communications business FY2017/03 3, ,129.3 Mobile communications business 57.4 Data communications business , ,718.7 Other business 88.0 * 11,391.0 FY2016/03 FY2017/03 Operating Income 1,348.1 Regional communications business 94.5 FY2017/ (Year-on-year : ) Long distance and international communications business Mobile communications business Data communications business Other business 5.5 * 1,539.8 FY2016/03 FY2017/03 *Includes adjustments such as elimination 16

18 FY2017/03 Details of Consolidated Cash Flows Billions of yen Cash flows from operating activities (A) Cash flows from investing activities (B) FCF (A) + (B) Cash flows from financing activities Interest-bearing debt 3,000 2, , ,500 2,000 1,000 (329.5) Acquisitions/Sales of property, plant, equipment and intangibles [(122.9)] Acquisitions of subsidiaries [(208.4)] (124.0) ,000 4, , (1,000) Decrease in accounts receivable [+136.4] (273.9) (707.6) (981.5) 3,500 (2,000) (1,759.8) (2,089.3) Increase/Decrease in debt [+175.9] Acquisition/Sales of treasury stock [(280.5)] Acquisition of shares of subsidiaries [(140.2)] 3,000 FY2016/03 FY2017/03 (3,000) FY2016/03 FY2017/03 Increase/Decrease from the same period of the previous fiscal year 17

19 FY2018/03 Forecast Summary Operating Income expected to increase by 50.2 billion [3.3%] to 1,590.0 billion Operating Revenues, Operating Income and Net Income expected to reach record levels EPS expected to reach medium-term financial target (at least 400) Plan for Consolidated Revenues and Income Operating Revenues: 11,750.0 billion (increase of billion [3.2%] year-on-year) Operating Income : 1,590.0 billion (increase of 50.2 billion [3.3%] year-on-year) Net Income* : billion (increase of 29.9 billion [3.7%] year-on-year) EPS : (increase of [5.9%] year-on-year) * Net income represents net income attributable to NTT, excluding noncontrolling interests. 18

20 FY2018/03 Forecast Summary by Segment Increase in both Operating Revenues and Operating Income in the Long distance and international communications business, Data communications business and Mobile communications business Operating Revenues 11,391.0 Regional communications business 78.2 FY2018/03E 3,230.0 (Year-on-year: ) Long distance and international communications business Mobile communications business Data communications business , , , ,970.0 Other business * (Billions of yen) FY2017/03 FY2018/03E Operating Income (Year-on-year : +50.2) 1,539.8 Regional communications business 29.5 FY2018/03E E FY2017/03 Long distance and international communications business 79.2 Mobile communications business 3.4 Data communications business Other business 25.0 * 1, E FY2018/03E *Includes adjustments such as elimination 19

21 Changes in Anticipation of the Adoption of IFRS NTT executed the following changes in anticipation of the planned adoption of IFRS (beginning from the fiscal year ending March 31, 2019) u Change in Depreciation Method In light of the globalization of its business operations and its consideration of adopting IFRS, NTT changed its method for calculating depreciation of property, plant, and equipment (*) from the declining-balance method to the straight-line method of depreciation *Excluding assets that already employ the straight-line method of depreciation. Effect of accounting change for the FY2017/03: Approx billion yen u Implement measures to remove facilities and to minimize future costs Effect of accounting change for the FY2017/03: Approx billion yen The voluntary delisting from the New York Stock Exchange became effective in April NTT is considering deregistering from SEC when IFRS is expected to be adopted. (around April 2018) u Even after delisting from the NYSE, NTT anticipates that its ADRs will be traded on the U.S. over-the-counter market. 20

22 Appendix

23 Changes in Dividend (Yen) Increased by 6 Times Dividends per share Fiscal year ended/ing March 31 * Dividend is adjusted according to the two-for-one stock split effective on July 1,

24 Record of Share Buybacks Over 3 Trillion Yen in Buybacks (Billions of yen) 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 * * * * * TBD ~2017/04 repurchased 43.2 Fiscal year ended/ing March 31 *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, 23

25 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 Service Layers R&D 24

26 NTT s Capability in Global Business NTT Telecom (A) Cloud (A) IT Vendor (A) Data Center (incl. colocation) - - SIer (I) 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 25

27 Our Strengths in Global Cloud Services Scale World-class in Global IP backbone traffic Provides service in 196 countries/areas (Source: Dyn Corporation) Quality Network Lowest network latency between Japan / US / major countries in Asia Data Center Scale World-class in total floor space (Approx. 1.3 million ) (Source: TeleGeography) Quality High-quality lineup(tier sites) 26

28 Expansion of Cross-Selling (Aggregate Contract Value) Aggregate contract value of Cross-Selling reached approx. 2.6 billion USD Expansion of Global Account Management North America Total IT solution triggered by Cloud Service Worldwide including emerging countries Cross-selling of existing services, mainly IT infrastructure 990 million USD Insurance Public 1,190 million USD Finance Manufacturing (Motor vehicle) Healthcare 1,625 million USD 2,564 million USD 62 million USD 147 million USD 290 million USD 2011/ / / / / / /03 27

29 Cross Selling Track Record Improved brand awareness leads to more deals with global enterprises AMERICAS 2014/3.1Q Texas Department of Transportation Cloud solution, Application, Maintenance ITO, Total security service 2014/3.4Q 2015/3.1Q HM Treasury Cloud, Business platform construction Network infrastructure construction 2016/3.1Q EMEA Japan 2014/3.3Q ANA Implementation and operation of UCaaS Could communication service 2015/3.2Q Healthcare Manufacturer Transition of ERP to Cloud service ITO 2014/3.4Q Heavy Industry Business platform construction ITO 2015/3. 4Q Dairy Industry Cloud Solution Data Center service 2016/3. 1Q Medical Institution ITO NW equipment procurement, implementation Data Center service 2016/3.4Q Manufacturer Cloud & DC management service Transition of Application to Cloud service 2016/3.4Q HEIDELBERGER DRUCKMASCHINEN AG (Manufacturer) Communication Service ITO 2017/3.1Q Financial Institution Dater Center service DC equipment procurement, implementation 2014/3.2Q May Bank APAC Dater Center service DC equipment procurement, implementation 2016/3.4Q Financial Institution Application Management Outsourcing Business Process Outsourcing 2017/3.1Q Medical Devices Manufacturer Transition of Application to Cloud service Data Center service ReAssure Data Center service ITO, Total security service Public Transport Victoria, Australia Development and Operation of Smartcard ticketing system 28

30 Revenue by Region Total AMERICAS EMEA APAC (USD) (FY2017/03) (EBITA/Rev 4.7%) ICT Market 1,610B Legend Application IT Infrastructure (FY2016/03) 940B (60%) 490B (30%) 180B (10%) 67% 33% 54% 46% 47% 53% *Source: Created by NTT based on McKinsey s data (excluding Telephone market) 29

31 Global ICT services market (enterprise customers) (USD B) 1,800 5 % Growth per annum $1,770B New Business 1,600 1,400 $1,460B BPO Traditional apps 1,200 1, SI for traditional apps Cloud SaaS 10% of market size Cloud SI IaaS/PaaS CAGR 23% 600 IT infrastructure 400 Network service 200 ITO/AMO Source: NTT s calculation based on inputs from McKinsey, etc

32 Smart Stadium powered by Digital Marketing Fan/ Supporter Spectators Local Community (such as local shopping districts) Sponsors Event Organizers Nack5 STADIUM OMIYA (Omiya Ardija Home Stadium) Game Day/Outside of the Game (Children s Lessons, Local Events, etc.) Information Services Information Infrastructure Fan Services Video Services e-commerce EC Services Customer Relationship Management CRM Infrastructure Virtual Reality VR Children s Lessons, Mileage Points, etc. 3D 3D, multi-angle, playerfollowing, etc. Customer referrals with local shopping districts, etc. Points, coupons, payments, etc. High-density Wi-Fi, Wi-Fi Multicast, etc. 31

33 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 byj SPORTS 32

34 Tourism Transportation TradeICT Digital Marketing Multilingual Support, Tourist Information, Navigation, Digital Coupons, Wi-Fi One Certification, Etc. Increase Tourists Satisfaction Vitalization of Local Communities and Economies CASEFukuoka City to Whole Kyushu Area Proposed Excursion Route Based on Behavior Analysis Ability to see Wi-Fi Hotspots 100 yen tourism bus route Current suggested route Excursion route Heatmap of Places to Visit Tenjin Central Park () Historic Fukuoka City Guest House (Café Annex)() Scenic Riverside Walkway National Highway OpenStreetMap contributors Canal City Photos: Fukuoka City OpenStreetMap contributors OpenStreetMap contributors 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 Organizations Big Data Local Governments Digital Trust Open DataPromote Secondary and Tertiary Uses Industrial Development, Disaster Prevention and Mitigation, Smartification of Public Tourism Smartification of Infrastructure Infrastructure, and Others Energy and Traffic and Transport Environment Education and Childcare Support Culture and Sports Healthcare Disaster Prevention and Mitigation Agriculture, Forestry and Fisheries 34

36 NTT DOCOMO s Billing Plan Kake-hodai & Pake-aeru Basic Concept Shifting competition focus from switching users to customer retention Billing Plan Kake-hodai & Pake-aeru from June, 2014 Flat rate for declining voice usage, measured rate for increasing data usage Primary feature Subscriptions Packet Sharing Beneficial for families and 2 or more devices Flat rate for calls Flat rate for domestic calls Discount for longterm users Beneficial billing plans for long-term users FY 2016/03 FY 2017/03 35

37 NTT DOCOMO: Increased Customer Returns (FY ) Expanded to billion (Over a 12-month period) 36

38 NTT DOCOMO: Increased Customer Returns (FY ) Planned additional customer returns : Step 1: 30 billion yen Step 2 & beyond: Tens of billions of yen Enrich basic plans Start accepting applications from May 24, 2017 New Simple Plan dedicated for data sharing packages Declaration 1 Market leader offering visible benefits and convenience Enrich Share Pack Enrich d POINT Start accepting applications from May 24, 2017 New Ultra Share Pack 30 for data On May 10, 2017 Transfer docomo Points to d POINTs with broadened use applications and extended point expiration Step 2 & beyond Additional customer return measures planned 37

39 Hikari Collaboration Model Supporting a variety of market players to create new value EAST WEST Flet s Hikari (FTTH) Wholesale of FTTH Service Provider* Mobile, MVNO, ISP, Players in other industries etc. Partner s own service FTTH service Providing service by single package Creation of Value Customers Improve customer s convenience Retail * Approx. 520 service providers are providing service (As of April 30, 2017) 38

40 Subscriptions and Billing Table of docomo Hikari Basic Monthly Charges Plan and +1GB bonus packet will be added) Monthly *1 *2 Fee Kake-hodai Plan (Smartphone/Tablet) 2,700 Kake- Kake-hodai Plan (Feature Phone) 2,200 hodai Kake-hodai Light Plan /Simple Plan (Smartphone/Tablet) *3 1,700 (Voice) Kake-hodai Light Plan (Feature Phone) *3 1,200 Data Plan Billing plan for kids Packet Pack Monthly Charges Simple Plan (Smartphone) *4 980 Data Plan (Smartphone/Tablet) 1,700 Data Plan (Router) 1,200 Kids Keitai Plus Plan Data Quota *5 500 Monthly Fee Keitai Pack *3 *6 2GB 300-4,200 Data S Pack 2GB 3,500 For single Data M Pack Subscriptions 5GB 5,000 Ultra Data L Pack 20GB 6,000 For Families Others Ultra Data LL Pack 30GB 8,000 Share Pack 5 5GB 6,500 Share Pack 10 10GB 9,500 Share Pack 15 15GB 12,500 Ultra Share Pack 30 30GB 13,500 Ultra Share Pack 50 50GB 16,000 Ultra Share Pack GB 25,000 Share Option *Per subscription Zutto Docomo Discount *7 (Discount rate determined by usage period) U25 Ouen Discount *8 (Discount for subscribers to age ( 100-2,500) ( 500) docomo Hikari (FTTH) Monthly Fee ( 5,200) for FTTH apply to detached house subscribers Listed prices for FTTH use ISP of Type A additional charge is needed to use ISP of Type B.( 200) for Standalone Package (An additional contract with an ISP is required for access to the Internet) *1 Basic Monthly Charges are provided under the condition of fixed period subscription for two years. *2 DOCOMO also provides Free Course with no discount and no cancellation fee. *3 Apply only for Xi (LTE) subscription. *4 Apply only for Packet Pack (Share Pack) Subscribers. *5 Kake-hodai / Simple Plan or Data Plan subscription is needed *6 Apply only for Kake-hodai (Feature Phone) or Kake-hodai Light Plan (Feature Phone). *7 The subscription can be cancelled without a cancellation charge after the first two-year subscription expires. *8 Apply only for Kake-hodai Plan. (For Kake-hodai Light Plan, only 1 GB of bonus packets is added to the data volume available with Packet Pack, which is also applied for Kake-hodai Plan.) 39 docomo Hikari Subscriptions docomo Hikari Pack Monthly Charges Monthly Fee / /03 Mobile FTTH Discounts Limited-time Discount 5,500-9, ,200 5,200 0 ( 500) 8,700 3,500 5,200 0 ( 500) 9,400 5,000 5,200 ( 800) 10,300 6,000 5,200 ( 900) 12,100 8,000 5,200 ( 1,100) 10,900 6,500 5,200 ( 800) 13,500 9,500 5,200 ( 1,200) 15,900 12,500 5,200 ( 1,800) 16,700 13,500 5,200 ( 2,000) 18,700 16,000 5,200 ( 2,500) 27,000 25,000 5,200 ( 3,200) (Million Subs) Discount period: up to 1 year after commencement of docomo Hikari

41 The World Envisaged by 5G 40

42 Operating Income of Docomo s Smart Life Business & Other Businesses * Operating income result is inclusive of impairment loss (- 8.1 billion). 41

43 The Current State of Fixed-Line Telephone Services and Going Forward Migration to IP Networks Continue providing currently used fixed-line telephone services* by gradually migrating from PSTN to IP networks *Analog telephone services and INS-Net (voice) provided via PSTN (Public Switched Telephone Network) Continue offering basic voice services (In addition to basic calls, will offer ISDN call mode, call waiting, caller ID display, public telephones, etc.) Enable customers to continue using their existing phones and other devices without need for additional on-premises installation Maintain basic monthly charges at current levels to the extent possible (continue using existing copper lines) Provide more reasonable call rates by taking advantage of non-distance sensitive rates of the IP network Announce the timing of migration to IP networks separately in the future, after discussions with other relevant business operators, in light of the fact that our tandem/signal transfer switches will approach their limits of useful life around

44 The Current State of Fixed-Line Telephone Services and Going Forward Considerations to maintain fixed-line telephone services In order to maintain fixed-line telephone services while minimizing the burden on customers, after migration IP networks in principle will not be equipped with the PSTN-specific functions historically provided. In addition to the above, we will revise the method of providing fixed-line telephone services to allow for efficiency to the extent possible. (Examples) Use of optical fiber and wireless in response to requests from local governments to lay utility cables underground, without having to reinstall copper lines Adjust the high level of call-quality standards (latency conditions, etc.) required of fixed-line telephones to the call-quality level of mobile phones 43

45 The Current State of Fixed-Line Telephone Services and Going Forward [Appendix] Reference: Migration from PSTN to IP Networks Current system Post-migration PSTN Signal transfer switch Other carriers PSTN interconnection Interconnection switch Tandem switch IP network Conversion device 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 IP interconnection Conversion device IP network 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 ) 44

46 Broadband Access Services in Japan Mobile Fixed 150M Mobile 162.7M subs Approx. SoftBank 30M FTTH 29.3M subs Approx. SoftBank market share Approx M KDDI KDDI market share Approx M NTTEAST and NTT WEST 50M NTT DOCOMO Approx. 74.9M subs 10M Approx. 20.1M subs DSL 2.5M subs Approx. CATV 6.9M subs Approx. NTT market share Approx. 46 NTT market share Approx. 68 NTT EAST and NTT WEST Approx.0.92M subs Access speed 682Mbps Access speed 2Gbps 50Mbps 320Mbps *Figures for access speed are the speeds of typical commercial services, and are the maximum values of the best-effort traffic. Source MIC data (As of the end of March 2017) 45

47 Mobile Broadband Business 46

48 Aggregate ARPU of Mobile Broadband Business Voice ARPU Packet ARPU docomo Hikari ARPU Impact of discount programs * Yen MOU (minutes) FY2016/03 1Q 2Q 3Q 4Q Fiscal year ended/ing March 31 FY2017/03 1Q 2Q 3Q 4Q FY2018/03 Full-year Forecast 2016/3 Full-year Aggregate ARPU 4,170 Yen Voice ARPU1,950 Yen, Packet ARPU3,250 Yen, docomo Hikari ARPU 60 Yen, Impact of discount programs 1,090 Yen 2017/3 Full-year Aggregate ARPU 4,430 Yen Voice ARPU2,010 Yen, Packet ARPU3,340 Yen, docomo Hikari ARPU 210 Yen, Impact of discount programs 1,130 Yen * Impact of discount programs: Impact of Monthly Support discount program and docomo Hikari Pack bundle discounts, etc. 47

49 Fixed Broadband BusinessFTTH Subscriptions FTTH Subscriptions (Sum of NTT East and NTT West (ten thousands subs) 1,872 1, ,730 1, / / /03 Fiscal year ended/ ing March 31 1, , /03 2, , /03 2,085 Hikari Collaboration Model 1,189 FLET S Hikari /03E <Reference: Breakdown of FTTH Subscriptions> Total FTTH Service: Change from preceding Fiscal Year Hikari Collaboration Model FLET S Hikari 2017/3E +80 (1) Number of opened connections +420 Number of switchover lines +210 (2) Number of cancellations 105 Net Increase((1)+(2)) +315 (1) Number of opened connections +80 (2) Number of cancellations 315 Number of switchover lines Net Increase((1)+(2)) (ten thousands) FTTH Churn Rate* (Sum of NTT EAST and NTT WEST * 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 48 Fiscal year ended March 31

50 NTT Group Overview Operating revenues (consolidated):11,391.0 billion yen Operating income (consolidated) : 1,539.8 billion yen No. of employees : 274,850 No. of subsidiary companies : 944 * Percentage figures show the percentage of voting rights (March 31, 2017) Regional communications business Long distance and international communications business Mobile communications business Data communications business Other group companies Other businesses real estate, finance, construction and power business Operating Revenue: 3,308.2 billion yen Operating Income: billion yen 2,129.3 billion yen 40.8 billion yen 4,584.6 billion yen billion yen 1,718.7 billion yen billion yen 1,282.3 billion yen 77.3 billion yen No. of Employees: 68,250 43,850 26, ,650 24,350 No. of Subsidiaries: * Fiscal year ended March Operating revenue and operating income of each segment include inter-segment transactions. 49

51 Trend in Consolidated Financial Results Operating Revenues Trillion yen Operating Income Trillion yen Net Income Trillion yen EPS* yen Fiscal year ended/ing March / / / 03 * * 2015/ / / / 03E * 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. 50

52 Changes in Consolidated Operating Revenues Consolidated Operating Revenues billion yen 10, , , ,095.3 Regional communications business Long distance and international communications business Mobile communications business 11, ,391.0 Data communications business Other business 11,750.0 (Fiscal year ended/ing March 31) * Business segment operating revenues include inter-segment transactions 51

53 Changes in Consolidated Operating Income Consolidated Operating Income billion yen Regional communications business Long distance and international communications business Mobile communications business 1,539.8 Data communications business Other business 1, , , , , ,348.1 (Fiscal year ended/ing March 31) * Business segment operating income include inter-segment transactions 52

54 Changes in CAPEX Billions of yen 1, , ,892.8 Regional communications business Long distance and international communications business Mobile communications business 1, , ,700.0 Data communications business Other business 1,700.0 (Fiscal year ended/ing March 31) * CAPEX excluding sales and investments related to real estate and solar power generation operations are as follows; 2012/3: 1,906.5 billion yen, 2013/3: 1,907.5 billion yen, 2014/3: 1,795.7 billion yen, 2015/3: 1,702.9 billion yen, 2016/3: 1,605.2 billion yen 53

55 Changes in Interest-bearing Debt Interest-bearing Debt billion yen (Fiscal year ended/ing March 31) * Debt Equity ratio = Interest-bearing debt / Shareholders equity x

56 Changes in Number of Employees Consolidated No. of employees Regional communications business Long distance and international communications business Mobile communications business Data communications business Other business 274, , , , , , ,450 End of Year/month * Starting from FY2017/03, "No. of Employees" includes employees whose contracts were changed from fixed-term contracts to open-ended contracts. 55

57 Age Distribution of Employees at NTT East, NTT West and Outsourcing Companies (As of March 31, 2017 Number of Employees 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. 56

58 Share Buybacks and Cancellation Buyback Buyback from from market Gov t and Market share holding ratio Treasury Stocks Treasury Stocks 199mil. Cancellation shares 373 mil. shares Gov t Owned Shares 862mil. shares <33>* 1,585mil. shares 276mil. shares 97mil. shares Gov t Owned Shares 862mil. shares <33>* 1,411mil. shares 1,411mil. shares Gov t Owned Shares 862mil. shares Excess Holdings 124mil. shares Treasury Stocks Treasury Stocks Cancellation 177mil. shares Gov t Owned Shares 738mil. shares <39>* <33>* 1,358mil. shares Buyback from Gov t and Market 177 mil. shares 1,358mil. shares Excess Holdings 59mil. shares Gov t Owned Shares 738mil. shares <36>* Treasury Stocks 90mil. Gov t shares Owned Shares 679mil. shares <33> Market floating shares 1,327mil. shares Mar., 2012 Oct., 2013 Nov., 2013 Oct., 2015 Nov., 2015 Total number of shares issued (million shares) Apr., 2017 * 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 issued6 0 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)) 57

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