Nippon Telegraph and Telephone Corporation (NTT)

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Nippon Telegraph and Telephone Corporation (NTT)

F4Q 2011 Earnings Conference Call

May 13, 2011 5:00 AM EST

Executives

Koji Ito – IR

Satoshi MiuraRepresentative Director, President and CEO

Analysts

Masuno – Nomura Securities

Takahashi – Mizuho Securities

Moriyuki – SMBC Nikko Securities

Tanaka – Morgan Stanley

Oshidari – JP Morgan

Takahashi – Merrill Lynch

Presentation

Koji Ito

[Interpreted]

Thank you very much for waiting, ladies and gentlemen. First of all I would like to thank you all for attending this meeting despite your very busy schedule. Now we would like to start the Analyst Meeting to release the Financial Results of the Fiscal Year ended March 2011 of NTT Corporation. My name is Ito from IR. I shall be serving as the moderator.

Let me introduce to you the participants of NTT. Representative Director, President and CEO, Mr. Miura; Mr. Unoura, Representative Director and Senior Executive Vice President; Mr. Watanabe, Director and Senior Vice President in-charge of Corporate Strategy and Planning; Director and Senior Vice President, Mr. Kobayashi, Director of Finance and Accounting Division.

Next I would like to ask you to confirm whether you’ve got all the handout materials in front of you. There are two materials. The first one is a copy of the slide materials as you see here. The title is the Financial Results for the Fiscal Year ended March 2011. Another one is a thick white booklet of data information of financial results of fiscal year 2010.

Now the regarding forward-looking statements and projected figures are contained in the materials are referred to during the presentation and QA session, please notice that there is a written disclaimer information at back of the cover page of the slide materials. Please take a look at it. Today’s meeting will be live broadcast and furthermore recorded video. So it will be distributed on-demand on the company’s IR website. So I would like to seek your understanding regarding this arrangement.

We are planning to spend about 90 minutes, one hour and a half for this meeting. In other words, we shall be closing this meeting at and around 7:30 P.M. Now I would like to ask Mr. Miura to present to you the outlines of the financial results. And after that we would like to entertain your questions.

Satoshi Miura

[Interpreted]

Good afternoon, ladies and gentlemen, thank you joining us despite your very busy and demanding schedule. We appreciate your attendance. In the interest of time, I would like to begin the presentation of the financial results, and also talk about the financial forecast for the year ending March 31, 2012. I would like to start from page two.

Let me begin with the financial results for the year ended March 31, 2011. We were able to realize increase in both operating revenue and operating income for the first time in seven years. In the previous year, we enjoyed increase in operating income but for in the previous period we saw increase in operating income, but for the last fiscal year 2010, we realized increase in both operating revenue and operating income.

Operating revenue increased 123.6 billion yen. This was primarily due to the contribution from the increase in system integration related revenue due to the mergers and acquisitions involving Dimension Data and acquisition of Keane by NTT Data. And also NTT Hikari – correction, FLET'S Hikari subscriber base increased as well as software and services revenue and DOCOMO’s packet ARPU increased leading to increase in IP related revenue, and also other revenues inclusive of mobile phone protection and delivery services provided by DOCOMO was increased.

Turning to operating income. This increased by 97.2 billion yen year-on-year. Temporary drivers such as decline in inventory, asset valuation loss and loss for doubtful accounts in NTT Urban Development and NTT Finance improved, but even if we were to exclude that factor, NTT East, NTT West and DOCOMO all were able to achieve increase in operating income in a steadfast fashion.

So overall, as far as the financial results are concerned, we were able to indicate very clear signal for improved profitability at fixed-line service and also we were able to hold downward trend in mobile service revenue. And also we have seen boost in global revenue due to mergers and acquisitions. So Group as a whole, we were able to realize very strong results for fiscal year 2010.

Please turn to page three. Here we talk about full-year – correction here, fiscal year 2010 results of our operating income versus fiscal year 2010 forecasts. Now the impact of the earthquake is anticipated to be 30 billion yen. However because we realized increased profit for NTT Group as a whole, we were able to exceed forecasts of operating income by 34.9 billion yen and reached 1,214.9 billion yen.

Please turn to page 26. The impact from the earthquake is indicated on page 26. The impact on the operating income for March 2011 is expected to be 20 billion yen for NTT East and 6 billion for NTT DOCOMO and NTT Communications. The line connecting between Japan and the United States and also the line connected to Sendai. These were affected. They were disrupted. And as for others, other subsidiary firms also were affected by the earthquake.

So on a consolidated basis, we are anticipating an impact of 30 billion yen on the operating income for March 2011. Now as far impact for – the impact for March 2012, 20 billion yen for NTT West, 20 billion yen for P&L, construction related impact is 20 billion yen and DOCOMO 10 billion yen and CapEx 10 billion yen impact. So altogether, 30 billion yen impact is expected for March 2012.

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