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IR Presentation
March, 2016
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.
‐1‐
Towards the Next Stage 2.0
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Basic Concept of “2.0”
‐3‐
Accelerate Self-Transformation towards a “Value Partner” and Embark on a Profit Growth Track
Develop new markets by further promoting B2B2X model
Re-establish EPS Growth Goal (at least 350 yen* (by FY 2018/3)) and update other financial targets
Accelerate Profit Generation of “Global Cloud Services”
Enhance Profitability of “Network Services”
* EPS is adjusted according to the two-for-one stock split effective on July 1, 2015.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
New Financial Targets (FY 2018/3)
‐4‐
Streamlining Capital Investment
EPS Growth*
Cost Reductions
Overseas Sales/Operating Income*
(compared to FY 2015/3) (Domestic Network Business**) At least 200 billion yen
At least 600 billion yen
$22 billion/$1.5 billion
At least 350 yen
(compared to FY 2015/3) (in fixed-line/mobile access networks)
[Aiming for 1.4 trillion yen in consolidated profits]
* EPS is adjusted according to the two-for-one stock split effective on July 1, 2015. ** Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible
fixed assets. *** Excludes NTT Com’s data centers and certain other assets.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
EPS Growth
‐5‐
FY 2012/3
183 yen
Share Buybacks
311 yen
At least
Reach Target (Forecast)
FY 2016/3 (Forecast) FY 2018/3(Target) FY 2015/3
+69.6%
237 yen Profit Growth
350 yen
* EPS is adjusted according to the two-for-one stock split effective on July 1, 2015.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Overseas Sales/Operating Income
‐6‐
FY 2018/3(Target)
Sales $22B
FY 2015/3
Operating Income*
$1.5B
Sales $15B
Operating Income*
$0.7B
* Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets.
+$0.5B
+$0.3B
+$7B Organic Growth, M&A
Efficient Operation / Services and
Optimized Procurement
Profit thru revenue growth
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Towards Creating Profit from Global Business Operations
‐7‐
Accelerate Efforts through Group-wide Projects
Deliver Steady Growth of Sales Thorough Cost Optimization Strengthen Products/Services
Expand our global accounts Strengthen Sales/Marketing Efforts
Optimize NTT Group efficiency (cloud, security and IT outsourcing services) Avoid duplication in new service investments
Optimize Services and Operations
Reduce Procurement Costs
Facilitate transparency of information re: Group management
Standardize and Improve IT Infrastructure Set common accounting standards Bolster cash management Enhance collaboration within NTT Group’s global subsidiaries
Strengthen Financial/Operations Systems Strengthen Group Governance and Risk Management
Strengthen consulting/industry-specific solutions Create solutions that integrate services provided by a variety of companies
Collaborate within NTT Group re: procurement
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Streamlining Capital Investment
‐8‐
Reduction of at least 200 billion yen
FY 2016/3(Forecast) FY 2013/3 FY 2018/3(Target) FY 2015/3
(Consolidated Financials *)
18.1% 14.6%
1,200 billion yen
1,910 billion yen 1,700
billion yen 1,630 billion yen
Improve Capex to Sales Optimize Domestic Network Businesses
Reach Target (Forecast)
1,400 billion yen
(Domestic netw
ork Businesses* *)
* * Excludes NTT Com’s data centers and certain other assets. * Excludes Real Estate assets.
Capital Investment
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Optimize Domestic Network Businesses
‐9‐
Improve efficiency of facility use
Reduce procurement costs
Streamlining Capital Investment At least 200 billion yen (Domestic network business, compared to FY 2015/3)
Cost Reductions At least 600 billion yen (in fixed-line/mobile networks, compared to FY 2015/3)
Improve and optimize IT systems
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
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
For Sustainable Growth
‐10‐
Develop closer partnerships with local governments in order to create regional services utilizing ICT E.g., “Comprehensive Partnership Agreement” with Fukuoka City
Make good use of ”2020” and the Government’s “Vitalization of Local Economies” initiative as opportunities to accelerate the migration to B2B2X
Create services that will become the standards of the next generation
Promote partnerships with a wide range of business entities (transportation, tourism, energy, agriculture, etc.) through NTT Group’s cross-company projects
Create high value-added services and establish new business models through collaboration with partners (by taking on the role of “catalyst”)
Strengthen Collaboration Platform (security, loT, network virtualization, etc.)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Mid-Term Agendas to be Addressed
‐11‐
Consider Application of IFRS (International Financial Reporting Standards)
Reconsider “Universal Services” and “General outlook on PSTN migration”
(November 2, 2010)
(From Q1 of FY 2019/3)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
(Reference) Re: “Towards the Next Stage 1.0” (1)
‐12‐
Move into a new competitive stage through collaboration
Launch new efforts to create high value-added services and business models, taking advantage of “2020” and “Vitalization of Local Economies” initiative
Initial steps: “New DOCOMO fees” and “Hikari Collaboration Model”
Establish the cornerstone of NTT’s global business operations as a pillar of growth
Expand into the global market as a new “challenger”
Begin new initiatives to work towards establishing a multifaceted competitive model based on “innovation and collaboration” as a “partner” that customers will continue to select
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
(Reference) Re: “Towards the Next Stage 1.0” (2)
‐13‐
Financial Targets (announced in November 2012)
Overseas Sales
Percentage of Corporate Sales Represented by Overseas Sales
Cost Reductions
(by FY 2017/3)
At least 50%
At least 600 billion yen
Capex to Sales 15%
EPS Growth At least 60%
$20 billion
(by FY 2017/3)
(by FY 2016/3)
(by FY 2016/3)
(in fixed-line/mobile access networks) (compared to FY 2012/3)
(vs. FY 2012/3)
Achieved (reduced by 650 billion yen)
(by FY 2015/3)
Financial Results for FY 2016/3 3Q and Financial Forecasts for FY 2016/3
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐15‐
FY 2016/3 3Q Highlights
OperatingRevenues 8,495.4 +312.8 +3.8% 8,182.5 11,400.0 74.5%
OperatingExpenses 7,368.8 +97.2 +1.3% 7,271.6 10,150.0 72.6%
OperatingIncome 1,126.6 +215.6 +23.7% 910.9 1,250.0 90.1%
Net Income 604.1 +154.1 +34.3% 449.9 655.0 92.2%
[%]
% progresscompared to
FY2015Forecasts
FY2015Forecasts
Changeyear-on-year
FY2015/3QFY2014/3Q
*
Net income represents net income attributable to NTT, excluding noncontrolling interests. *
(Billions of yen)
Operating Revenues reached record levels, increasing for the sixth consecutive year Operating Income increased due to cost control measures in the Regional communications and Mobile communications segments
Net Income increased due to an increase in Operating Income as well as the effects of Japanese tax reform
FY 2016/3 3Q FY 2016/3
FY 2016/3 Forecasts
FY2015/3 3Q
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐16‐
FY 2016/3 3Q Contributing Factors by Segment
: Operating Income reached record levels due to reduced marketing costs, among other factors, despite the continuation of the trend of decreasing Operating Revenues.
: Operating Revenues increased while Operating Income decreased due to the growth in overseas businesses and anticipatory investments in growing segments.
: In addition to the Mobile communications services revenues, both Operating Revenues and Operating Income increased due to growth in revenues from the Smart Life area and DOCOMO Hikari, and a decrease in depreciation costs from efficient investment strategies and initiatives to improve cost efficiency.
: Both Operating Revenues and Operating Income increased as a result of sales growth.
1,126.6
131.5232.2
88.082.2
584.9
683.0
56.7
74.0
40.3
46.2
+100.7
(5.7)
+98.2
+17.3 +5.9
+215.6
910.9
8,495.4
2,579.2 2,520.2
1,447.3 1,675.5
3,326.8 3,383.5
1,066.4 1,147.8894.1 872.7
+228.1
+312.8
(21.3)
+81.3
+56.7
(58.9)
8,182.5
*
*
FY2015/3 4-12 FY2016/3 4-12
* * Operating Income Operating Revenues
Regional communications business
Mobile Communications business Long distance and international communications business
Data communications business
Other business
(Billions of yen)
*Includes adjustments such as elimination
FY2015/3 4-12 FY2016/3 4-12
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
NTT (Holding Company) Forecasts for FY 2016/3
‐17‐
(Billions of yen)
OperatingRevenues 529.0 +100.0 429.0
OperatingExpenses 138.0 - 138.0
OperatingIncome 391.0 +100.0 291.0
Net Income 681.0 +393.0 288.0
FY2015 Forecasts (Reference)Previous Forecasts
(announced on Nov. 6, 2015)Change
RevisedForecast
NTT Corporation’s financial forecasts have been revised due to the sale of NTT DOCOMO shares and the distribution of surplus from NTT East.
FY 2016/3 Forecasts
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
FY 2016/3 Forecast Summary by Segment
‐18‐
: The forecast for Operating Income has been revised upward due to the progress in Hikari Collaboration and cost control efforts. The forecast for Operating Revenues remains unchanged.
: The forecast for Operating Revenues has been revised upward based on growth in overseas businesses. The forecast for Operating Income remains unchanged partly due to the impact of anticipatory investments.
: The forecast for Operating Income has been revised upward due to accelerated growth in the Smart Life area and further progress in cost efficiency strategies. The forecast for Operating Revenues has been revised downward due to the re-evaluation of NTT’s device sales plan.
:The forecasts for both Operating Revenues and Operating Income remain unchanged.
1,250.0
168.9 250.0113.6
100.0
635.8705.0
86.4
110.067.5
50.0
+81.1
(13.6)
+69.2
+23.6 (17.5)
+165.4 1,084.6
11,400.0
3,505.5 3,400.0
1,998.6 2,280.0
4,383.4 4,490.0
1,511.0 1,540.01,272.2 1,270.0
+281.4
+304.7 (2.2)
+29.0
+106.6
(105.5)
11,095.3
*
*
FY2015/3 FY2016/3E
* * Operating Income Operating Revenues
Regional communications business
Mobile Communications business Long distance and international communications business
Data communications business
Other business
(Billions of yen)
*Includes adjustments such as elimination
FY2015/3 FY2016/3E
The Current State of Fixed-Line Telephone Services and Going Forward
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
The Current State of Fixed-Line Telephone Services and Going Forward Migration to IP Networks
‐20‐
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)
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 2025
Maintain basic monthly charges at current levels to the extent possible (continue using existing copper lines)
Enable customers to continue using their existing phones and other devices without need for additional on-premises installation
Provide more reasonable call rates by taking advantage of non-distance sensitive rates of the IP network
Continue offering basic voice services (In addition to basic calls, will offer ISDN call mode, call waiting, caller ID display, public telephones, etc.)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
The Current State of Fixed-Line Telephone Services and Going Forward Considerations to maintain fixed-line telephone services
‐21‐
(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
In addition to the above, we will revise the method of providing fixed-line telephone services to allow for efficiency to the extent possible.
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, indicated in the following pages.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
The Current State of Fixed-Line Telephone Services and Going Forward [Appendix] Migration of PSTN-Specific Functions to IP Networks
‐22‐
Inter-connectivity functions
Functions introduced when fixed-line telephone was the primary telecommunications service
Other PSTN-specific functions
Carrier preselection function (MYLINE)/ relay carrier selection function
Bidirectional number portability between operators similar to mobile number portability
Hub function (Interconnection through NTT East/NTT West PSTN)
Direct interconnection between major carriers
Complex inter-carrier access charge settlement (Time usage-based access charge settlement among multiple carriers)
Simple inter-carrier access charge settlement
Not provided
One-way number portability from NTT East/NTT West to other carriers
Uniform rates for all carriers
“Hold-the-line feature” of emergency calls such as 110 and 119
Simple “call back,” the same as making calls from a mobile or IP phone
Rates for calls from public telephones to mobile phones set by each carrier
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
The Current State of Fixed-Line Telephone Services and Going Forward [Appendix] Reference: Migration from PSTN to IP Networks
‐23‐
Optical fiber
Copper lines
Copper lines
Hikari Denwa
Optical fiber
Fixed-line telephone (Analog telephone service, INS-Net)
Hikari Denwa Fixed-line telephone (basic voice service)
IP network PSTN
SIP server *
Current system Post-migration
* A server that manages and controls telephone services using an IP network (SIP: Session Initiation Protocol)
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 network
Edge router Edge router Local switch
Conversion device
Interconnection switch
Gateway router
Copper line terminal
Conversion device
◎ ◎
Signal transfer switch
SIP server *
Tandem switch
Core router Core router
Other carriers
Other carriers
PSTN interconnection IP interconnection
Appendix
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Changes in Dividend
‐25‐
Increased by 4.4 Times
Dividend
Dividends per share
(yen)
(Fiscal year ended/ing March 31)
Dividend payout ratio
110
25
* Dividend is adjusted according to the two-for-one stock split effective on July 1, 2015.
12.3% 13.0% 17.1% 23.0%
19.5% 27.5%
32.3% 31.2% 38.2% 37.2% 33.4% 38.0% 35.4%
0
20
40
60
80
100
120
0%
20%
40%
60%
80%
100%
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Record of Share Buybacks
‐26‐
0
1,000
2,000
3,000
4,000
5,000
6,000
94.4
200.0
381.7
150.0
406.5*2 400
200
539.4
366.5
600
About 2.8 Trillion Yen in Buybacks
2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2007/3 2006/3 2005/3 2004/3
100.0*1
338.1*3
2015/3
Share Buybacks
(Billions of yen)
From Market
From Gov’t
From Market From Gov’t From Market/ Gov’t From
Market/ Gov’t
(Fiscal year ended/ing March 31, except 2015/10)
*1:Market 61.0 billion yen, Gov’t 39.0 billion yen *2:Market 250.0 billion yen, Gov’t 156.5 billion yen *3:Market 101.2 billion yen, Gov’t 236.9 billion yen
From Market
2016/3E
93.6 86.2
2003/3
From Gov’t
Graph1
2003/3
2004/3
2005/3
2006/3
2007/3
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3E
862
1000
3665
5394
944
2000
3817
1500
4065
3315
936
Sheet1
2003/32004/32005/32006/32007/32008/32009/32010/32011/32012/32013/32014/32015/32016/3E
自己株式取得86210003665539494420003817150040653315936
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
NTT East and West’s business operation plans for 2017/3 (submitted for approval on March 1, 2016)
Item FY2016/3 forecast FY2017/3
Plan Change from
previous FY
Operating revenues 1,721.0 1,650.0 (71.0)
Operating expenses 1,566.0 1,495.0 (71.0)
Operating income 155.0 155.0 ±0
Other income (expenses) 7.0 0.0 (7.0)
Recurring profit 162.0 155.0 (7.0)
NTT East
Item FY2016/3 forecast FY2017/3
Plan Change from
previous FY
Net Increase of FLET’S Hikari (thousands subs) 250 300 +50
Capital investment (Billions of yen) 300.0 270.0 (30.0)
FY2016/3 forecast
FY2017/3 Plan
Change from
previous FY
1,527.0 1,472.0 (55.0)
1,463.0 1,408.0 (55.0)
64.0 64.0 ±0
(7.0) (5.0) +2.0
57.0 59.0 +2.0
FY2016/3 forecast
FY2017/3 Plan
Change from
previous FY
250 300 +50
290.0 275.0 (15.0)
(Billions of yen)
NTT West
‐27‐
Ref.
Change in Hikari Collaboration Model (thousands subs)
2,750 2,050 (700)
(incl.)Switchover lines (thousands subs) 2,300 1,500 (800)
1,500 1,500 ±0
1,200 1,000 (200)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐28‐
Global Cloud Business Promotion System
R&D
Corporate C
ustomers
Advisory Services
Migration Services
Operation Services
Management Services
Cloud Services
Managed ICT
Data Centers Networks
Applications Solutions
Provides full stack, full life-cycle service (Covers Infrastructure to Applications, Advisory to Management)
Servic
e L
aye
rs
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐29‐
NTT’s Capability in Global Business
NTT Telecom (A) Cloud
(A) IT Vendor
(A) SIer
(I)
Data Center - -
Network Integration
-
Network - - -
Apps (ERP)
Imple-mentation
- -
AMO - -
Cloud Public -
Hosted Private
- -
Security - -
Leader Attacker
Global capability Legend: Top Tier Specific capability Not competitive/Local 2nd Tier - Out of scope
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐30‐
Scale: ・ World-class in total floor space (Approx. 1 million ㎡) (Source: TeleGeography)
Quality: ・ High-quality lineup(TierⅣ sites)
Data Center
Scale:
・ Provides service in 196 countries/areas ・ World-class in Global IP backbone traffic (Source: Renesys Corporation)
Quality:
・ Lowest network latency between Japan / US / major countries in Asia
Network
Our Strengths in Global Cloud Services
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐31‐
Expansion of Cross-Selling (Aggregate Contract Value)
Total IT solution triggered by Cloud Service
North America
Worldwide including emerging countries
~2011/3 ~2012/3 ~2013/3
Cross-selling of existing services, mainly IT infrastructure
Aggregate contract value of Cross-Selling reached approx. 1.2 billion USD
Expansion of Global Account Management
~2014/3 ~2015/3
Insurance Finance
Public
Healthcare
Manufacturing (Motor vehicle)
1,200 million USD
990 million USD
290 million USD
147 million USD
62 million USD
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Cross Selling Track Record
‐32‐
US
2014/3.1Q
Texas Department of Transportation
ÿ Cloud solution, Application, Maintenance ÿ ITO, Total security service
2014/3.4Q
Healthcare Manufacturer ÿ Transition of ERP to Cloud service ÿ ITO
2014/3.4Q
Heavy Industry ÿ Business platform construction ÿ ITO
UK
2014/3.3Q
Consumer Products Manufacturer ÿ Global LAN/WAN construction ÿ ITO
Japan
2014/3.3Q
ANA ÿ Implementation and operation of
UCaaS(Could communication service)
Singapore
2014/3.2Q
May Bank
2015/3.2Q
Financial Institution ÿ Dater Center service ÿ DC equipment procurement, implementation
2015/3.1Q
HM Treasury ÿ Cloud, Business platform construction ÿ Network infrastructure construction
Improved brand awareness leads to more deals with global enterprises
ÿ Dater Center service ÿ DC equipment procurement, implementation
2015/3. 4Q
Dairy Industry ÿ Cloud Solution ÿ Data Center service
2015/3. 2Q
Nonferrous Metal ÿ Global network service ÿ Network management service
Belgium
2016/3. 1Q
Medical Devices Manufacturer ÿ Transition of Application to Cloud service ÿ Data Center service
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Revenue by Region
‐33‐
Total (USD)
ÿ ICT Market
1,610B
(FY2015/3) ÿ NTT Global Business
(EBITA/Rev 4.5%)
AMERICAS EMEA APAC
47% 53% 67% 33% 54% 46%
0.4B
3.6B
1.8B
2.5B 4.3B
2.4B
940B (60%) 490B (30%) 180B (10%)
10%
90%
42%
58%
36%
64%
4.6B
10.3B 69%
31%
*Source: Created by NTT based on McKinsey’s data (excluding Telephone market)
Legend
IT Infrastructure Application
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Global ICT services market (enterprise customers)
‐34‐
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2013 2014 2015 2016 2017
$1,770B
$1,460B
5 % Growth per annum
BPO
Traditional apps
ITO/AMO
IT infrastructure
Network service
SI for traditional apps
Cloud SaaS Cloud SI IaaS/PaaS CAGR 23%
10% of market size
(USD B)
New Business
Source: NTT’s calculation based on inputs from McKinsey, etc.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Toward Efficient and Sustainable Operations
‐35‐
Streamlining Capital Investment At least 200 billion yen by FY2017 (Domestic network business, compared to FY2014)
Cost reductions At least 600 billion yen by FY2017 (in fixed-line/mobile networks, compared to FY2014)
Effective Usage of Assets/facilities
Optimization of Specifications for Hardware and Software
BPR
Cross-utilization of services and functions
Train engineers to handle various technologies onsite Optimize service quality level
Improve efficiency of procurement and development through simplified specification
Improve efficiency of installation and operation
Improvement of ROA through streamlining and reallocating facilities
・Commoditization and integration of hardware
・Remote control
Optimize Domestic Network Businesses Improve effective usage of network
infrastructure
* SDN:Software Defined Networking, a network in which functions and configurations can be defined and controlled using software. NFV:Network Functions Virtualization, the virtualization of network functions using software.
New Technologies (SDN/NFV*, AI, etc.)
Shift to integrated platform and streamlining of IT systems
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐36‐
Discount for long-term users
Flat rate for calls
Packet Sharing
Beneficial billing plans for long-term users
Flat rate for domestic calls
Beneficial for families and for one person
Beneficial for 2 or more devices
Basic Concept
NTT DOCOMO’s New Billing Plan
Shifting competition focus from “switching users” to “customer retention”
“Flat rate” for declining voice usage, “measured rate” for increasing data usage
Subscriptions Total new billing plan subs topped 27 million on January 13, 2016
1GB data top-up purchase rate 1GB data top-up purchase rate grew to approx. 30%
Up-sell % of users choosing “M Pack” or larger data buckets
grew to approx. 90%
◆ % of users choosing “M Pack” or larger data buckets represents the proportion of users choosing “Data M Pack,” “Data L Pack” and “Share Pack” among the total number of users opting to subscribe to the data packs and share packs of the new billing plan. The number represents the actual performance for FY2016/3 3Q. ◆ 1GB data top-up purchase rate: Purchase frequency of 1GB data top-up ÷ Total number of packet packs. The number represents the actual performance for FY2016/3 3Q.
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Hikari Collaboration Model
Flet’s Hikari
(FTTH)
Wholesale of FTTH
Partner’s
own service
Providing service
by single package
Improve
customer’s
convenience “Creation of Value”
Retail
FTTH service
Service Provider Mobile, MVNO, ISP,
Players in other industries etc.
Customers
Supporting a variety of market players to create new value
‐37‐
EAST
WEST
http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=m2daA7bz-oyMGM&tbnid=Mz-sCg5C99hnrM:&ved=0CAcQjRw&url=http://www.7980en.com/1618.html&ei=Fs80VJD3Mo_s8AXLgIGICQ&bvm=bv.76943099,d.dGc&psig=AFQjCNHsaHNk_s0D_GAHCjTXNHJY92xX7g&ust=1412833344985175http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=m2daA7bz-oyMGM&tbnid=Mz-sCg5C99hnrM:&ved=0CAcQjRw&url=http://www.rakuten.ne.jp/gold/hachihachimobile/flets/flets.html&ei=9s80VPb4Ocvx8gXuhoGgCQ&bvm=bv.76943099,d.dGc&psig=AFQjCNH19BqrRsX6ehnHoNE6nGNcawWcrA&ust=1412833625531688
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Goal of Hikari Collaboration Model
Current Status
Received many inquiries from players in various business types
Concluded NDA and negotiating with approx. 1,100 service providers
Reduce marketing cost
Stir new demands by shifting business model from B2C to B2B2C
‐38‐
(As of January 31, 2016)
Current status and goal of Collaboration Model
(70% of service providers are non-telecom carriers)
approx. 270 service providers are providing service
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
“docomo Hikari”: Updates
‐39‐
Service launched: Mar. 1, 2015
Cumulative subscription applications
topped 1.25 million
Up-sell
New subscription acquisition
Promotion of family use
◆The up-sell rate, new subscription acquisition rate, and Share Pack selection rate represent the actual data for FY2016/3 3Q. The cumulative number of subscription applications represents the cumulative data from the launch of service through December 31, 2015.
Over 50% of “docomo Hikari” subs are new subscribers to our mobile service
Over 50% of “docomo Hikari” subs have opted to join “Share Pack”
Over 20% of “docomo Hikari” subs have switched to larger data bucket plans
Subscriptions: 1,090,000 (As of Dec. 31, 2015)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Billing Table of docomo Hikari Pack
‐40‐
+
+
(Prices do not include tax )
・Monthly Fee (¥5,200) for FTTH apply to detached house subscribers ・Listed prices for FTTH use ISP of Type A. ¥+200 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)
*3 Limited-time Discount: Application acceptance period is through May 31,2016 Discount period is up to 1 year after commencement of “docomo Hikari” service
docomo Hikari (FTTH)
Monthly Fee Basic Monthly C
harges
Kake-hodai Plan (Voice)
Kake-hodai Plan (Smartphone/Tablet) ¥2,700
Kake-hodai Plan (Feature Phone) ¥2,200
Kake-hodai Light Plan ¥1,700
Data Plan Data Plan (Smartphone/Tablet) ¥1,700
Data Plan(Router) ¥1,200
Data Quota
Monthly Fee
Packet Pack Monthly C
harges
For single Subscriptions
Data S pack 2GB ¥3,500
Data M pack 5GB ¥5,000
Data L pack 8GB ¥6,700
For Families
Share pack 5 5GB ¥6,500
Share pack 10 10GB ¥9,500
Share pack 15 15GB ¥12,500
Share pack 20 20GB ¥16,000
Share pack 30 30GB ¥22,500
Monthly Fee Mobile FTTH Discounts
docomo H
ikari Pack Monthly C
harges
Hikari Data S pack ¥8,700 ¥3,500 ¥5,200 ¥0
Hikari Data M pack ¥9,400 ¥5,000 ¥5,200 (¥800)
Hikari Data L pack ¥10,900 ¥6,700 ¥5,200 (¥1,000)
Hikari Share pack 5 ¥10,900 ¥6,500 ¥5,200 (¥800)
Hikari Share pack 10 ¥13,500 ¥9,500 ¥5,200 (¥1,200)
Hikari Share pack 15 ¥15,900 ¥12,500 ¥5,200 (¥1,800)
Hikari Share pack 20 ¥18,700 ¥16,000 ¥5,200 (¥2,500)
Hikari Share pack 30 ¥24,500 ¥22,500 ¥5,200 (¥3,200)
Limited-time Discount*3
(¥500)
Others
Share Option *Per subscription ¥500
Zutto Docomo Discount (Discount rate determined by usage period)
(¥300~ ¥2,000)
U25 Ouen Discount (Discount for subscribers to age 25 and +1GB bonus packet will be added)
(¥500)
*1 Basic Monthly Charges are provided under the condition of fixed period subscription for two years.
*1
*2 Not acceptable for combination with “Data S pack.”
*2
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐41‐
Fixed
~337.5Mbps ~320Mbps ~1Gbps ~50Mbps
FTTH 27M subs
DSL 3.4M subs
CATV 6.7M subs
Mobile 152.9M subs
NTT DOCOMO
68.5M subs
NTTEAST and NTT WEST
19M subs
NTT EAST and NTT WEST Approx.1.1M subs
Mobile
150M
100M
50M
30M
20M
10M
SoftBank
Mobile
KDDI
Broadband Access Services in Japan
(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 September 2015)
NTT market share Approx. 70%
NTT market share Approx. 45%
Access speed
Access speed
Approx.
Approx.
Approx. Approx.
Approx.
Approx.
KDDI market share Approx. 29%
SoftBank market share Approx. 26%
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐42‐
Mobile Broadband Business
25.29
83%
(Million subs) % of LTE-enabled smartphones 96%
31.63
DOCOMO Smartphone Users
2Q
2Q
3Q
4Q
2016/3 1Q
2015/3 1Q
3Q
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Aggregate ARPU of Mobile Broadband Business (Newly defined ARPU)
・2014/3 Full-year Aggregate ARPU (Newly defined ARPU) 4,370 Yen ( Voice ARPU 1,950 Yen, Packet ARPU 3,180 Yen, Impact of discount programs -760 Yen )
・2015/3 Full-year Aggregate ARPU (Newly defined ARPU) 4,100 Yen ( Voice ARPU 1,850 Yen, Packet ARPU 3,190 Yen, Impact of discount programs -940 Yen )
* Impact of discount programs: Impact of “Monthly Support” discount program and “docomo Hikari Pack” bundle discounts, etc.
‐43‐
:Voice ARPU :Packet ARPU :”docomo Hikari” ARPU (Yen)
:Impact of discount programs*
2016/3 Full-year Forecast
Data ARPU
New MOU (minutes)
2015/3
1Q 2Q 3Q 4Q
4,210 4,110 4,040 4,030 4,190
4,010
1Q 2016/3
2Q
4,160
111 121 128 126 129 136
3Q
134
4,230
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Aggregate ARPU of Mobile Broadband Business (Conventional ARPU)
・2014/3 Full-year Aggregate ARPU (Conventional ARPU) 4,610 Yen ( Voice ARPU 1,840 Yen, Packet ARPU 2,980 Yen, Smart ARPU 500 Yen, Impact of discount programs -710 Yen )
・2015/3 Full-year Aggregate ARPU (Conventional ARPU) 4,370 Yen ( Voice ARPU 1,710 Yen, Packet ARPU 2,940 Yen, Smart ARPU 590 Yen, Impact of discount programs -870 Yen )
* Impact of discount programs: Impact of “Monthly Support” discount program and “docomo Hikari Pack” bundle discounts, etc.
‐44‐
(Yen)
Differences between Conventional ARPU and Newly defined ARPU - Denominator : “No. of subscriptions” of Conventional ARPU = “No. of users” of Newly defined ARPU + Data Plan subscriptions (Excluding Standalone data plan subscriptions) - Molecule : Conventional ARPU doesn’t include “docomo Hikari” revenues. Conventional ARPU includes “Revenues accounted for in Smart ARPU” (Excluded in Newly defined ARPU due to start of segment result disclosure, etc.)
:Voice ARPU :Packet ARPU :Smart ARPU :Impact of discount programs*
2015/3 1Q 2Q
2016/3 Full-year Forecast
3Q 4Q
4,450 4,370 4,340 4,340 4,400 4,290
1Q 2016/3
2Q
4,450
3Q
4,490
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
1.34% 1.21% 1.19%
1.37%
1.24%
1.05% 1.02%
1.17% 1.12%
0.99% 0.94%
1.11% 1.02%
0.83% 0.80%
2013/3
1Q 2Q 3Q 4Q
2014/3
1Q 2Q 3Q 4Q
2015/3
1Q 2Q 3Q 4Q
2016/3
1Q 2Q 3Q
2016/3E
Total FTTH Service: Change from preceding Fiscal Year +50
FLET’S Hikari
(1) Number of opened connections +160
(2) Number of cancellations ▲185
(3) Number of switchover lines ▲350
Net Increase((1)+(2)+(3)) ▲375
Hikari Collabo- ration Model
(1) Number of opened connections +90
(2) Number of cancellations ▲15
(3) Number of switchover lines +350
Net Increase((1)+(2)+(3)) +425
‐45‐
Fixed Broadband Business FTTH Subscriptions
FTTH Subscriptions (Sum of NTT East and NTT West)
FTTH Churn Rate (Sum of NTT EAST and NTT WEST) Compared to the same period in the previous
year: ▲0.14p
* “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
*
(ten thousands subs)
(Fiscal year ended/ing March 31)
(ten thousands)
2011/3 2012/3 2014/3
1,506 1,656
1,730
2013/3 2015/3
1,805
2016/3E
1,872 1,922
1,845
27 Hikari
Collaboration Model 452
FLET’S Hikari 1,470
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
2012/3 2013/3 2014/3 2015/3 2016/3E 2011/3
Multi-Device
‐46‐
Penetration of Video Services
Hikari TV
Million subscriptions
(End of Year/month)
PC/NotePC
New STB for Smart TV
Tuner (STB)
TV TV with Built-in tuner
Smartphones, tablet PCs
Car Navigation
video TV
music
book
karaoke
game
application shopping
Multi-Service
Hikari TV :IPTV service which distributes VOD, terrestrial digital broadcasting, BS digital broadcasting, and multi-channel broadcasting
FLET’S TV :Service which distributes terrestrial digital broadcasting, BS digital broadcasting, and multi-channel broadcasting(optional), by Radio Frequency system
1.41
2.00
2.45
2.82 2.01
2.87
3.46
3.98
3.01
Hikari TV+FLET’S TV
4.36 4.52
3.15
http://netafull.net/images2008/Eee_PC_900-X_Black_leftstand.jpg
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
Other
group companies
100%*
54.2%*
66.6%*
‐47‐
100%*
NTT Group Overview
• Operating revenues (consolidated) :11,095.3 billion yen • Operating income (consolidated) : 1,084.6 billion yen • No. of employees : 241,600 • No. of subsidiary companies : 917
* Percentage figures show the percentage of voting rights (March 31, 2015)
Long distance and international
communications business
Data communications
business
Regional communications
business
Mobile communications
business
Other businesses real estate, finance,
construction and power business
Operating Revenue:
Operating Income:
No. of Employees:
No. of Subsidiaries:
3,505.5 billion yen
168.9 billion yen 71,200
54
1,998.6 billion yen
113.6 billion yen
42,250
350
1,511.0 billion yen
86.4 billion yen
76,650
253
1,272.2 billion yen
67.5 billion yen
25,800
86
4,383.4 billion yen
635.8 billion yen
25,700
174
* Fiscal year ended March 2015. Operating revenue and operating income of each segment include inter-segment transactions.
http://www.ntt.com/http://www.nttdocomo.co.jp/
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐48‐
Trend in Consolidated Financial Results
Fiscal year ended/ing March 31
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E **
■ Operating Revenues (Trillion yen)
■ Operating Income (Trillion yen)
■ Net Income (Trillion yen)
■ EPS* (yen)
* EPS is adjusted according to the two-for-one stock split effective on July 1, 2015. **Includes influence of 60 billion yen of non-operating revenues by The Otemachi 2-Chome Area Redevelopment Project .
1.21
0.51
1.22
0.47
10.3 10.5
193 183
1.20
10.7
0.52
215
1.21
10.9
0.59
255
1.08
11.1
0.52
237
11.4
1.25
0.66
311
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
1,120.3 1,089.0 1,251.9 1,328.5 1,272.2 1,270.0
1,163.2 1,251.8 1,303.5 1,343.9 1,511.0 1,540.0
4,224.3 4,240.0 4,470.1 4,461.2 4,383.4
4,490.0
1,332.7 1,678.7
1,657.9 1,809.9 1,998.6
2,280.0
4,027.2 3,764.8
3,659.8 3,572.3 3,505.5
3,400.0
0
5,000
10,000
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E
‐49‐
Changes in Consolidated Operating Revenues :Data communications business
10,700.7 10,305.0 10,507.4
10,925.2 11,095.3
Consolidated Operating Revenues
(billion yen)
:Regional communications business :Long distance and international communications business :Mobile communications business
:Other business
* Business segment operating revenues include inter-segment transactions
(Fiscal year ended/ing March 31)
11,400.0
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
44.9 56.9 53.3 56.1 67.5 50.0
77.0 71.5 85.8 67.9 86.4 110.0
839.1 876.4 836.4
817.2
635.8 705.0
97.1 116.7
121.3 127.5
113.6
100.0
127.3 86.9 93.0 127.2
168.9
250.0
0
500
1,000
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E
‐50‐
Changes in Consolidated Operating Income :Data communications business
* Business segment operating income include inter-segment transactions
Consolidated Operating Income (billion yen)
:Regional communications business :Long distance and international communications business :Mobile communications business
:Other business
(Fiscal year ended/ing March 31)
1,214.9 1,223.0 1,202.0 1,213.7
1,084.6
1,250.0
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
779.6 784.2 755.0 690.7 626.7 590.0
668.5 726.8 753.7 703.1
661.8 600.0
381.5 (422.0)
3,95.5 (435.6)
398.8 (461.3) 401.9
(499.0) 414.4 (529.0) 440.0
(540.0)
18.0% 18.4% 18.1%
16.7% 15.6%
14.6%
0%
5%
10%
15%
20%
0
500
1,000
1,500
2,000
2,500
3,000
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E
‐51‐
Changes in CAPEX
(Billions of yen) CAPEX / Sales
NTT EAST +
NTT WEST
NTT DOCOMO
Others
1,829.6 (1,870.1)
1,906.5 (1,946.6)
1,907.5 (1,970.0) 1,795.7
(1,892.8) 1,702.9 (1,817.5)
* 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; 2011/3: 18.1%, 2012/3: 18.5%, 2013/3: 18.4%, 2014/3: 17.3%, 2015/3: 16.4%, 2016/3E: 15.2%
(Fiscal year ended/ing March 31)
1,630.0 (1,730.0)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016)
4,553.5 4,274.0
4,036.0 4,200.0 4,406.7
4,200.0
56.8%
54.2%
49.0% 49.3% 50.8%
46.4%
0%
10%
20%
30%
40%
50%
60%
0
1,000
2,000
3,000
4,000
5,000
6,000
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E
‐52‐
Changes in Interest-bearing Debt
Debt/Equity ratio*
* Debt Equity ratio = Interest-bearing debt / Shareholders’ equity x 100
Interest-bearing Debt
(billion yen)
(Fiscal year ended/ing March 31)
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐53‐
Changes in Number of Employees
Consolidated No. of employees
:Data communications business :Regional communications business :Long distance and international communications business :Mobile communications business
:Other business
(End of Year/month)
219,350 224,250 227,150
239,750 241,600 245,650
25,500 25,250 27,150 26,000 25,800 24,800
50,000 58,650 61,350
75,000 76,650 81,600
22,950 23,300
23,900
24,850 25,700 26,400
29,350 31,150
33,450
38,050 42,250
46,350
91,550 85,900
81,300
75,850 71,200
66,500
0
100,000
200,000
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3E
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐54‐
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.
Age Distribution of Employees at NTT East, NTT West and “Outsourcing Companies” (As of March 31, 2015)
Num
ber of Em
ployees
20 30 40 50 60 65
Copyright©2016 Nippon Telegraph and Telephone Corporation IR Presentation (March, 2016) ‐55‐
Share Buybacks and Cancellation
2,646
Gov’t Owned Shares
862mil. shares
199mil. shares
Treasury Stocks <14.1%>
Buyback from market
2,273
Cancellation Buyback from
Gov’t and Market
Excess Holdings
124mil. shares
2,096
Cancellation
Treasury Stocks <0.0%>
Treasury Stocks <7.8%>
Treasury Stocks <0.0%>
<>:share holding ratio
Gov’t Owned Shares
862mil. shares
276mil. shares
97mil. shares
1,585mil. shares 1,411mil.
shares
Mar. 31, 2012 Oct. 31, 2013 Nov., 2013 Oct. 31, 2015 Nov., 2015 Total number of shares issued (million shares)
1,411mil. shares
Cancellation 373 mil. shares
Gov’t Owned Shares
862mil. shares
1,358mil. shares
Market floating shares
1,358mil. shares
Gov’t Owned Shares
738mil. shares
Gov’t Owned Shares
738mil. shares
177mil. shares
Excess Holdings
59mil. shares
Cancellation 177 mil. shares
* Number of shares is adjusted according to the two-for-one stock split effective on July 1, 2015. * 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))
Next Value Partner Transformation
for
Trusted Solutions by
of Business models and Lifestyle
of Global, Secure, End-to-end, and Full-line ICT services
N T T
スライド番号 1スライド番号 2スライド番号 3スライド番号 4スライド番号 5スライド番号 6スライド番号 7スライド番号 8スライド番号 9スライド番号 10スライド番号 11スライド番号 12スライド番号 13スライド番号 14スライド番号 15FY 2016/3 3Q HighlightsFY 2016/3 3Q Contributing Factors by SegmentNTT (Holding Company) Forecasts for FY 2016/3FY 2016/3 Forecast Summary by Segment�スライド番号 20スライド番号 21スライド番号 22スライド番号 23スライド番号 24スライド番号 25スライド番号 26スライド番号 27NTT East and West’s business operation plans for 2017/3�(submitted for approval on March 1, 2016)Global Cloud Business Promotion System NTT’s Capability in Global BusinessOur Strengths in Global Cloud Servicesスライド番号 32Cross Selling Track RecordRevenue by RegionGlobal ICT services market (enterprise customers)スライド番号 36NTT DOCOMO’s New Billing PlanHikari Collaboration ModelCurrent status and goal of Collaboration Model“docomo Hikari”: UpdatesBilling Table of docomo Hikari Packスライド番号 42スライド番号 43スライド番号 44スライド番号 45スライド番号 46スライド番号 47スライド番号 48スライド番号 49スライド番号 50スライド番号 51スライド番号 52Changes in Interest-bearing Debtスライド番号 54スライド番号 55スライド番号 56スライド番号 57