NTT Communications Corporation (NTT Com) announced today that its non-consolidated financial results for the fiscal year ended March 31, 2010 include a decrease in net income of 31.9% year-on-year to 60.6 billion yen, a decrease in operating revenues of 4.3% to 1,079.2 billion yen and a decrease in operating income of 3.3% to 97.5 billion yen. Operating expenses, however, shrank 4.3% to 981.7 billion yen.

All results are based on accounting principles generally accepted in Japan.

BACKGROUND

While the effects of the global financial crisis that began in fall 2008 started to ease in the United States and various Asian countries as a result of stimulus measures, the outlook remained unclear for the European and Japanese economies, the latter due to ongoing deflation, the yen’s persistent strength, credit uncertainty and other factors. In the Japanese information and communication market, providers rapidly introduced new services and business models based on cloud computing as companies increasingly turned to ICT to raise their business efficiency.

BUSINESS STRATEGIES

NTT Com also strengthened its services based on two core concepts in NTT Communications group’s Business Vision 2010 growth strategy: "ICT Solution Partner" for business customers and "’CreativE-life’ for Everyone" for individual customers. Emphasis was placed primarily on meeting customers’ demands for "total, global and one-stop solutions", and for services that "support social prosperity and safe and convenient lifestyles."

NTT Com further augmented its consulting-type sales and services. These enhancements are intended to develop services to help NTT Com’s business customers meet special needs through ICT solutions, assist global businesses to implement the strategy of "bridging the world with Japanese quality" in various fields, and enhance points of contact with customers through the utilization of NTT Com’s extensive customer base. In addition, NTT Com endeavored to actively expand its Internet-based businesses with new services and business models.

To better realize the company’s primary mission encapsulated in the slogan of "bridge" and "continue to bridge", enhancements were carried out in seven core business domains - Solutions, Network Management, Security, Global, Ubiquitous, Portal/engine and Managed-quality Operations - and growth strategies were focused on maximizing synergies throughout the NTT Communications group. Under the above-referenced mission statement, NTT Com promoted the transformation of its business structure by focusing corporate resources on the company’s seven core business domains discussed above. NTT Com also directed its efforts toward the training and development of professionals with expert knowledge or skills to support these businesses, reforming its delivery process, improving the quality of its operations and creating new services.

Services for business customers were strengthened with more seamless global offerings, including high value-added solutions and increased consulting-type sales and solutions in which the company helped customers solve problems as their "ICT Solution Partner." Secure, high-quality cloud-based services were expanded under the BizCITY™ concept of providing companies with ICT environments for secure access to enterprise services from any place at anytime. Customers used these service to rationalize business assets, lower investment risks and outsource systems.

In global businesses, in response to the needs of Japanese and multinational companies for high-quality services that provide seamless functionality both domestically and abroad, NTT Com also provided total, highly value-added ICT solutions that combine network integration services with data center, security and server-management services. To support the expansion and strengthening of its global services, NTT Com opened new data centers and offices, as well as acquiring Pacific Crossing Limited, the operator of the PC-1 trans-Pacific submarine cable, and Integralis AG, a leading provider of IT security services.

In Internet-based businesses, NTT Com expanded the customer base for its OCN- and Plala-brands through proactive marketing centered on fiber optic services and by providing a diverse range of services. NTT Com leveraged the comprehensive strengths of the NTT Communications group, including NTT Resonant and NTT Plala, to develop integrated Internet-related services for ISPs, 050-prefix IP telephone, video distribution and consumer-generated media. NTT Plala’s Hikari TV service expanded its subscriber base to more than one million users as of March 31, 2010 by expanding the service area for IP re-broadcasts of digital terrestrial television and offering more high-definition content.

In summary, NTT Com further stabilized its revenue structure by meeting increasingly diverse and sophisticated market demands, enhancing on-site customer-support capabilities and the interpersonal skills of frontline personnel, and focusing steadily on the needs of its customers.

OPERATING RESULTS

IP service revenues increased 10.7 billion yen, or 3%, to 364.8 billion yen as a result of expanded OCN and VPN revenues. Voice transmission and data communication service revenues continued to fall, decreasing by 34.8 billion yen, or 8.4%, to 378.9 billion yen and 13 billion yen, or 9.8%, to 120.1 billion yen, respectively. Although the global economy has begun to show positive signs of recovery, solution services revenues, which had risen in previous years, declined 10.5 billion yen, or 5.3%, to 186.5 billion yen as economic prospects for the foreseeable future remained unclear. Total operating revenues decreased 47.9 billion yen, or 4.3%, to 1,079.2 billion yen.

Tighter cost controls through further process enhancement resulted in purchases of goods and services expenses declining by 30.1 billion yen, or 5.9%, to 479.9 billion yen. Communication network charges decreased 11.1 billion yen, or 4%, to 268.8 billion yen due to lower voice transmission service revenues. Total operating expenses declined by 44.5 billion yen, or 4.3%, to 981.7 billion yen.

Operating income declined by 3.3 billion yen, or 3.3%, to 97.5 billion yen. Net income decreased 28.3 billion yen, or 31.9%, to 60.6 billion yen, reflecting the absence of the one-time gain in the previous year for special profits due to sales of real estate and stocks.