ＩＲ Ｐｒｅｓｅｎｔａｔｉｏｎ September, 2014

Transcription

1 IR Presentation September, 2014

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.

3 Medium-term Financial Targets

4 Medium-term Financial Targets (Announced on November 8, 2012) The Path to Profit Recovery and Growth Global Cloud Services as the cornerstone of NTT s business operations Comprehensively strengthen network service competitiveness Further Improvement of Facility Efficiency Establishment of Simple and Highly Efficient Business Operations Tailored to Future Market Changes Cash Control and its Effective Utilization Streamlining capital investment Increasing M&A with a focus on Cloud-related businesses Enhancing shareholder returns in the medium term By the fiscal year ending March 31, 2017: Overseas sales: $20 billion Proportion of corporate sales represented by overseas sales: 50% or more By the fiscal year ending March 31, 2015: At least 400 billion yen in cost reductions in fixed-line/mobile access networks (compared with the fiscal year ended March 31, 2012) Revised to 600 billion yen in cost reductions By the fiscal year ending March 31, 2016: Capex to Sales: 15% EPS growth of 60% or more by the fiscal year ending March 31, 2016 (compared with the fiscal year ended March 31, 2012) 3

5 Progress of the Medium-term Financial Targets 12.0 Billion USD 31.8% Overseas Sales 12.2 Billion USD 36.6% Percentage of sales to overseas corporations 15.0 Billion USD 43.1% (Fiscal year ended/ing March 31) Cost reductions in fixed-line/mobile access networks 2013/3 2014/3 2015/3 E 120* 410* (Billions of yen) (Fiscal year ended/ing March 31) 2013/3 2014/3 2015/3 E * Compared to fiscal year ended 2012/3 600* Capital Investment(Capex to Sales) 18.4% * 17.3% * 16.5% * 18.1% 1,970.0 * 16.7% (Billions of yen) 15.9% 431 EPS % * % * (Yen/Share) (Fiscal year ended/ing March 31) 1, /3 2014/3 1,892.8 * 1,850.0 * 1, , /3 E * Amounts include sales and investments related to real estate and solar power generation operations (Fiscal year ended/ing March 31) 2013/3 2014/3 2015/3 E * Compared to fiscal year ended 2012/3 (Note) Fiscal year ended 2014/3 EPS is 477 yen(30% increase) when excluding the effect of non-operating income relating to the Otemachi 2-chome area redevelopment project % *

6 Shareholder Returns Dividend Dividends per share (Fiscal year ended/ing March 31) (yen) /3 Increased by More Than 3 Times /3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3E Share Buy Backs (Billions of yen) 6, ,000 4, , , , (Fiscal year ended/ing 0 March 31) From Market/ Gov t / /3 More Than 2 Trillion Yen in Buy Backs From Gov t /3 2007/3 1:Market 61 billion yen, Gov t 39 billion yen From Market /3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 5 From Gov t From Market From Market/ Gov t (max) 2015/3E 2:Market billion yen, Gov t billion yen

7 Global Cloud Services

8 Direction of NTT Group Global Cloud Cloud Services Corporate Customers Advisory Services Migration Services Operation Services Management Services Applications Solutions Managed ICT Data Centers Networks R&D 7

9 Our Strengths in Global Cloud Services Leader Position Gartner s Magic Quadrant (dimension data) Communications Outsourcing and Professional Services * World-class in Data Center (NTT Group) (Server room floor space: million square meters (as of the end of March 2014)) World-class in Global IP Backbone (Traffic volume (Source: Renesys Corporation)) (NTT Communications) 80% of Fortune Global 100 choose NTT Group Salesforce.com s Platinum Cloud Alliance Partner (NTT Centerstance, NTT Data) * Source: Gartner, " Magic Quadrant for Communications Outsourcing and Professional Services " Eric Goodness, et al. 21 October 2013 The Gartner Report(s) described herein, (the Gartner Report(s) ) represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ( Gartner ), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this enterprise report) and the opinions expressed in the Gartner Report(s) are subject to change without notice. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 8

10 Cross-Selling Contract Value Along with our business expansion, NTT Group has raised its brand awareness in the Global market, leading to an increase of new deals with Global enterprises. 700M USD 62M USD 85M USD 143M USD 2011/3 2012/3 2013/3 2014/3 9

11 Cases of Cross-Selling Contract 1 Yum!Brands, Inc Customer One of the world s largest restaurant operating company including KFC and Pizza Hut Contract Summary Migration of common information systems to Cloud Provision of outsourcing service - Business Process Outsourcing (BPO) (eg. Accounting, General Affairs, Personnel Affairs) - Information Technology Outsourcing (ITO) 2 Texas Department of Transportation Customer Government agency responsible for maintaining aviation/rail/public transportation infrastructure Contract Summary Provision of core system for public transportation management on highly secure Could platform Advisory Service Assessment of cloud migration by originally developed tools Application Application development/ maintenance/quality assurance Application/ Managed ICT Customization and implementation of Oracle ERP application Private Cloud Service Managed ICT Provision of Private Cloud Service IT Support for CAD, GIS, GPS, etc Implementation and operation of unified communication platform* Data Center Data Center 10 Security Full-line security service 10 *Unified platform of telephone and video conference, etc., provided via network

12 Acquisition of everis Acquired 100% shares in everis, a full-line IT service provider in Spain Strengthening our presence in Spain and major Latin American countries Improving our price competitiveness and service quality by utilizing development bases in Spain and Latin America Near-shoring in European area Mexico Mexico UK Belgium Guatemala El Salvador Near-shoring in Latin American area Belize Honduras Costa Rica Nicaragua Ecuador Peru Panama Guyana Venezuela Suriname French Guyana Colombia Peru Chile Chile Colombia Bolivia Paraguay Brazil Argentina Uruguay Brazil Portugal Spain Off-shoring for Latin American area Italy Argentina Presence of everis (by country) Development bases of everis 11

13 Acquisition of RagingWire Acquired 80% shares in RagingWire, a Data Center operator in US, for approx. $350M Significantly strengthening our ability to provide high-quality and large-scale data centers, to respond to high demands for data center/cloud services in North America California Data Center Campus (Sacramento) Virginia Data Center Campus (Ashburn) NTT Com s Data Centers RagingWire s Data Centers The size of circles are proportional to server room areas 12

14 Acquisition of Virtela Acquired 100% shares in Virtela, a Virtual Network Operator in US, for approx. $525M Aiming to become a leader in the global market through unified delivery of global network service 1 Unified Operation Improvement of business efficiency by integrating operation with Virtela 2 Unified Service Upgrade of services by utilizing Virtela s network function virtualization* * Technology which enables to virtualize customers' network equipment (such as firewalls and WAN accelerators), instead of placing dedicated equipment on customers premises 3 Unified Network Expansion of service coverage from 160 to 196 countries/regions Effective usage of IP backbone 13

15 Establishment of NTT I 3 in Silicon Valley Establishment of NTT I 3 in Silicon Valley as the base for developing cloud and security technology Advancing market-driven development of services originated in North America Large enterprises Developed market Deploy developed IP (1) Cloud (2)Security Deploy standardised service Mid/small enterprises Emerging market 14

16 Enhancement of Security Platform One of the world s largest security integrators Providing service in over 50 countries Cutting-edge R&D, world-class communications carrier CSIRT(Computer Security Incident Response Team) Established a permanent position as a frontrunner in security technology Building a global security platform Adapting to the legal systems and personal information protection systems of each country (local platforms) Promoting M&A and strategic alliances Region A Region B Region C Local Platform Security Analysis Engine Global Security Platform Security Intelligence Information regarding threats and vulnerability, etc. 15 Global Operation (NOC / SOC) Intelligent encryption Secure dispersion/ computation technology Cloud forensics Anti-malware, etc.

17 Secret Sharing Technology Secure Computation Technology NTT s Secure Computation Technology ranks among the highest level in the world,* which is highly competitive in expanding our Global Cloud Service. NTT has succeeded in putting it to practical use for medical statistical analysis for the first time in the world. Secret Sharing Technology Enables to encrypting data (dividing into some meaningless data sets) and stores them in separate servers among the cloud. Secure Computation Technology Enables computation of secretly shared data without decryption. Secret sharing (data saved in separate servers) save?? Enables statistical analyses without decryption computing request Original (Data File) draw Restoration of original file? Cloud output result Use of Data (Statistic Computing, etc) * World s No.1 sorting and multiplication capability 16

18 IT Spending 1 Forecast Developing Countries $1,450 billion (17%) $290 billion (29%) (71%) $1,740 billion (19%) Developed Countries 1, (83%) 1, (81%) 2011 Growth 2016 (E) Source: Gartner, "Forecast: Enterprise IT Spending by Vertical Industry Market, Worldwide, , 4Q13 Update" 30 January 2014, Calculations performed by NTT. 1 IT Spending : Software, IT Services, Devices (Excluding Internal Services, Telecom Services, and Datacenter.) Developing Countries : Latin America, Emerging Asia/Pacific, Greater China, Eastern Europe, Eurasia, MEA Developed Countries : North America, Western Europe, Mature APAC 17

19 Broadband Services

20 Broadband Access Services in Japan Mobile Fixed 150M Approx. Mobile 144.0M subs EMOBILE SoftBank Mobile 30M FTTH 25.4M subs Approx. 100M 20M au NTTEAST and 50M NTT DOCOMO Approx. 63.1M subs 10M NTT WEST Approx. 18.1M subs DSL 4.5M subs Approx. Approx. CATV 6.0M subs NTT EAST and NTT WEST NTT market share Approx. 44% NTT market share Approx. 71% Approx.1.5M subs NTT market share Approx. 33% Access speed ~150Mbps Access speed ~1Gbps ~50Mbps ~160Mbps (Note) Access speeds shown are numbers used for commercial purposes, and are the maximum output speeds achievable within the framework of the respective best effort services. (Source)MIC data (As of the end of March 2014) 19

21 Mobile Broadband Business (Million subs) DOCOMO Smartphone Users 60% % of LTE-enabled smartphone users スマホ利用数 % (Million subs) Xi LTE Subscriptions Increased by Approx.10 million From FY ended 2014/3 1Q /3 2015/3 2014/3 2015/3 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 20

22 Aggregate ARPU of Mobile Broadband Business : Smart ARPU : Packet ARPU : Voice ARPU : Monthly Support Impact (Yen) 4,930 4,870 4,850 4, , , , , , , ,700 2,750 2,830 2,860 2,890 2,910 2,930 2,950 2,930 3,010 2,040 2,020 1,990 1,860 1,840 1,840 1,820 1,690 1,680 1,700 ー 180 ー 290 ー 390 ー 510 ー 580 ー 650 ー 740 ー 820 ー 820 ー /3 2014/3 2015/3 2015/3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q full-year Smart ARPU : A part of other operating revenues (revenues from content services, proxy bill collection commissions, forecast mobile phone insurance service, advertising and others) / No. of active subscriptions (*) (*) Sum of No. of active subscriptions for each month : ((No. of subscriptions at the end of previous month + No. of subscriptions at the end of current month) / 2) during the relevant period Fiscal year ended 2013/3 Aggregate ARPU 4,840 ( Voice ARPU 1,970, Packet ARPU 2,790, Smart ARPU 420, Monthly Support Impact -340 ) Fiscal year ended 2014/3 Aggregate ARPU 4,500 ( Voice ARPU 1,790, Packet ARPU 2,920, Smart ARPU 490, Monthly Support Impact -700 ) 21

23 Fixed Broadband Business FTTH Subscriptions FTTH Subscriptions (Sum of NTT East and NTT West) FTTH Churn Rate (Sum of NTT EAST and NTT WEST) (thousands subs) 1.31% 1.34% 1.37% Compared to the same period in the previous year 0.12p 1.24% 1.17% 13,251 11,134 15,059 13,251 16,564 16,564 17,300 17,300 18,050 15,059 18,000 18, % 1.07% 1.03% 1.21% 1.19% 1.05% 1.02% 1.12% 2010/3 2011/3 2012/3 2013/3 2014/3 (Fiscal year ended/ing March 31) 2015/3E 2012/3 2013/3 2014/3 2015/3 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 22

24 Fixed Broadband Business ARPU ARPU Basic Rate Additional Services (Yen) 5,740 5,880 5,920 5,860 5,660 5,500 <Hikari Denwa> Percentage of FTTH users 84% 88% 90% 91% 1,450 1,570 1,640 1,720 1,770 1,800 Million channels NTT EAST 4,290 4,310 4,280 4,140 3,890 3, yen/month~ 12/3 13/3 14/3 15/3E <FLET S TV> Million subscriptions ,780 5,890 5,940 5,880 5,830 5, NTT WEST 1,460 1,580 4,320 4,310 1,650 4,290 1,730 4,150 1,800 4,030 1,840 3, yen/month 12/3 13/3 14/3 15/3E <Remote Support> Million subscriptions (Fiscal year ended/ing March 31) 2010/3 2011/3 2012/3 2013/ /3 2015/3E 500 yen/month~ 12/3 13/3 14/3 15/3E

25 Penetration of Video Services Million subscriptions Hikari TV+FLET S TV 3.46 Multi-Device Tuner (STB) TV TV with Built-in tuner New STB for Smart TV Hikari TV Smartphones, tablet PCs Car Navigation PC/NotePC 1.01 Multi-Service Hikari TV FLET S TV :IPTV service which distributes VOD, terrestrial digital broadcasting, BS digital broadcasting, and multi-channel broadcasting :Service which distributes terrestrial digital broadcasting, BS digital broadcasting, and multi-channel broadcasting(optional), by Radio Frequency system video karaoke game TV music book application shopping 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3E (End of Year/month) 24

26 Expansion of Wi-Fi Solution Business Enterprises and local government provide information service through Wi-Fi, together with free Internet access NTT Group (NTT-BP) builds the Wi-Fi network and provides the platform for Information service Users Area Owners NTT Airports Railway Stations server AP Internet access (free of charge) + Information service (charged) Office buildings Tourist spots, Art galleries, City halls, etc. Information service platform (including cloud) + Wi-Fi network Started provision of Japan Connected-free Wi-Fi, which inter-connects the Wi-Fi services provided by enterprises and local governments 25

27 NTT Group Overview

28 NTT Group Overview Operating revenues (consolidated) :10,925.2 billion yen Operating income (consolidated) : 1,213.7 billion yen No. of employees : 239,750 No. of subsidiary companies : 946 * Percentage figures show the percentage of voting rights (March 31, 2014) 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: 3,572.3 billion yen Operating Income: billion yen 1,809.9 billion yen billion yen 4,461.2 billion yen billion yen 1,343.9 billion yen 67.9 billion yen No. of Employees: No. of Subsidiaries: 75, , , , (Note) Fiscal year ended March Operating revenue and operating income of each segment include inter-segment transactions. 1,328.5 billion yen 56.1 billion yen 25,

29 Trend in Consolidated Financial Results Operating Revenues (Trillion yen) Operating Income (Trillion yen) Net Income (Trillion yen) Operating FCF (Trillion yen) EPS (yen) Fiscal year ended/ing March 31 * 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3E *Includes influence of 60 billion yen of non-operating revenues by The Otemachi 2-Chome Area Redevelopment Project. (Note) Operating FCF=EBITDA-Capex 28

30 Changes in Consolidated Operating Revenues Consolidated Operating Revenues (billion yen) :Regional communications business :Long distance and international communications business :Mobile communications business :Data communications business :Other business 10, , , , , , ,000 3, , , , , , , , , , ,000 4, , , , , , , , , , (Fiscal year ended/ing March 31) 1, , , , , /3 2011/3 2012/3 2013/3 2014/3 2015/3E (Note) Business segment operating revenues include inter-segment transactions 29

31 Changes in Consolidated Operating Income Consolidated Operating Income (billion yen) :Regional communications business :Long distance and international communications business :Mobile communications business :Data communications business :Other business 1, , , , , ,000 1, (Fiscal year ended/ing March 31) /3 2011/3 2012/3 2013/3 2014/3 2015/3E (Note) Business segment operating income include inter-segment transactions 30

32 Changes in CAPEX (Billions of yen) 3, % CAPEX / Sales 20.0% 2, % 18.4% 18.1% 16.7% 15.9% 2,000 1,500 1,947.4 (1,987.1) 1,829.6 (1,870.1) (454.6) Others (422.0) 1,906.5 (1,946.6) (435.6) 1,907.5 (1,970.0) 1,795.7 (1,892.8) (461.3) (499.0) 1,750.0 (1,850.0) (520.0) 15.0% 10.0% 1, NTT DOCOMO NTT EAST + NTT WEST % 0 (Fiscal year ended/ing March 31) 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3E (Note) Amounts shown in parentheses include sales and investments related to real estate and solar power generation operations. CAPEX to Sales including sales and investments related to real estate and solar power generation operations are as follows; 2010/3:19.5%, 2011/3:18.1%, 2012/3:18.5%, 2013/3:18.4%,2014/3:17.3%, 2015/3(E):16.5% %

33 Changes in Interest-bearing Debt Interest-bearing Debt (billion yen) Debt ratio* 6,000 5, % 36.2% 35.2% 32.9% 33.0% 33.2% 40.0% 4, % 3,000 2,000 1,000 4, , , , , , % 10.0% 0 (Fiscal year ended/ing March 31) 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3E * Debt ratio = Interest-bearing debt / (Interest-bearing debt + Shareholders equity) x % 32

34 Changes in Number of Employees Consolidated No. of employees 222,150 :Regional communications business :Long distance and international communications business :Mobile communications business 226, ,150 :Data communications business :Other business 239, , , ,900 75,850 71,100 94,350 88,300 81, ,600 38,050 40, ,000 14,200 22,300 34,550 29,350 22,950 50,000 31,150 33,450 23,300 23,900 58,650 61,350 24,850 26,100 75,000 77,550 0 (End of Year/month) 25,250 25,500 25,250 27,150 25,950 25, /3 2011/3 2012/3 2013/3 2014/3 2015/3E 33

35 Age Distribution of Employees at NTT East, NTT West and Outsourcing Companies (As of March 31, 2014) 8,000 Number of Employees 6,000 4,000 2, Age (Note) Figures for East Outsourcing Companies include the consolidated prefectural outsourcing companies (NTT EAST-TOKYO and others), NTT-ME and NTT EAST SOLUTIONS. 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. 34

36 Share Buy Backs and Cancellation Buy back from market Buy back from market Cancellation Buy back from Gov t <>:share holding ratio Treasury Stocks <10.4%> Treasury Stocks <14.1%> Treasury Stocks <0.0%> 99mil. shares Gov t Owned Shares 431mil. shares <33%> 99mil. shares 38mil. shares Gov t Owned Shares 431mil. shares <33%> 138mil. shares 49mil. shares Gov t Owned Shares 431mil. shares <33%> Excess Holdings 62mil. shares Cancellation -187 mil. shares Gov t Owned Shares 431mil. shares <39%> Excess Holdings 36mil. shares Treasury Stocks <2.3%> 26mil. shares Gov t Owned Shares 405mil. shares <37%> 793mil. shares 755mil. shares 705mil. shares 705mil. shares Market floating shares 705mil. shares Mar. 31, 2012 Mar. 31, 2013 Oct. 31, 2013 Nov., 2013 Total number of shares issued (million shares) 1,323 1,137 Mar., 2014 Mandatory (minimum) number of shares to be held by the Government under the NTT Law = (total number of shares issued-30 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 Law, supplementary provision 13) 35

37 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 Copyright 2014 Copyright 2014 Nippon Nippon Telegraph Telegraph and and Telephone Telephone Corporation Corporation