NTT Communications Corporation (NTT Com) announced today that its non-consolidated financial results for the fiscal year ended March 31, 2013 (FY2012) saw net income increase 12.0% year on year to 65.3 billion yen, operating revenues decrease 3.7% to 944.8 billion yen and operating income increase 11.7% to 118.1 billion yen. Operating expenses shrank 5.6% to 826.6 billion yen. All results are based on Japanese accounting principles.

BACKGROUND

With the inauguration of Japan’s new administration, monetary and fiscal measures targeting protracted deflation, including emergency economic measures, were promptly implemented, resulting in a correction of the yen and a rise in stock prices. However, with Japan’s economic recovery still not on track and the global economic slowdown continuing, the future direction of the domestic economy remains uncertain.

In addition to the rapid popularization of smartphones and tablet devices, the expansion of cloud computing and improvements in high-speed technology in mobile access, such as LTE, the ICT industry is seeing growing interest in new applications of information and communications technologies, such as big data analysis and Bring Your Own Device (BYOD).

BUSINESS STRATEGIES

In accordance with the company’s Vision 2015 growth strategy and corporate slogan "Global ICT Partner," NTT Com aims to achieve consolidated revenues of 1.5 trillion yen in FY2015, including a more than twofold increase in global sales compared with FY2010.

In FY2012, NTT Com worked to develop new growth businesses while drastically streamlining existing businesses to achieve its Vision 2015 goals. For example, the company provided new services based on its Global Cloud Vision, carried out global seamless sales activities and implemented highly competitive operations.

In services, the company strived to provide global seamless services and enhance its service lineups.

Specific measures taken by type of service were as follows:

• Cloud Platforms
  Enterprise Cloud, the world’s first private cloud service to deploy network virtualization technology on networks inside and/or between data centers, was unveiled in Japan and Hong Kong and then expanded to nine locations in seven countries, as of the end of March 2013.
  
  In addition, the company’s network of domestic and international data centers was further strengthened with openings of the Singapore Serangoon Data Center and the Malaysia Cyberjaya 3 Data Center and the completion of construction of Tokyo’s largest data center, the Tokyo No.6 Data Center.
• Data Networks
  NTT Com’s highly reliable global network services were enhanced by connecting the Asia Submarine-cable Express, a submarine cable launched in August 2012, to Arcstar Universal One.
  
  To meet a variety of mobile needs, the company also enhanced its Arcstar Universal One Mobile service and OCN Mobile service through the introduction of LTE-compatible plans, which enable high-speed mobile data communication. Furthermore, in response to rapidly increasing communications volume, Super OCN 100 gigabit Ethernet Service was provided for the first time in Asia.
• Voice Communications
  Positioning line consolidation of voice and data communications and BYOD-compatible services as the company’s core services for enterprise customers, the company began offering Arcstar IP Voice and a W-mode option in 050 plus for Biz and enhanced the features of Arcstar UCaaS. Moreover, the lineup of web-conferencing services was strengthened with the launch of Arcstar Video Conferencing, a high-quality video conferencing service that can be used on smartphones and tablet devices.
• Applications and Content
  The company’s offerings of general services that can be used in any industry, including mail, storage, and virtual desktop, were expanded to meet the needs of enterprise customers. NTT Com Online Marketing Solution Corporation was established to further strengthen the online marketing business, which supports customers’ marketing activities. Group subsidiary NTT Plala augmented its Hikari TV service with the launch of an e-book service, Hikari TV book, and a music distribution service, Hikari TV music.
• Solution Services
  Cloud Migration Services was launched to provide one-stop support to customers shifting their on-premise systems to cloud services, including the migration of everything from servers to network infrastructure and applications. Moreover, the company launched its Managed Security Services and developed a new security platform that has enhanced functions to detect and analyze security risks, such as targeted attacks, in cooperation with Integralis, Secode and NTT Secure Platform Laboratories.

In sales, NTT Com targeted global seamless sales by utilizing its global account management system to further enhance its sales activities. Also, it established NTT Com Marketing Corporation and launched an online shopping site, NTT Com Store, to strengthen sales activities targeted at small and midsize enterprises. Furthermore, the company established the BYOD Promotion Department to reinforce its BYOD business.

Finally, in the area of operations, NTT Com greatly improved efficiency through a review of overlapped processes across services and a Group-wide restructuring of its value chains. In particular, the company directed Group-wide resources and know-how to the appropriate companies to improve the operational expertise of each company, thereby further streamlining operations. It also actively advanced efforts to divide functions at a global level and allocate them appropriately, including the promotion of offshoring. Furthermore, the company’s cost structure was drastically transformed through the standardization, automation and consolidation of operational processes.

Overseas, NTT Com was the first foreign telecommunications company to establish a sales branch in Yangon, Myanmar, a rapidly growing market. Also, striving to enhance its high-value-added ICT services to better meet the needs of multinational companies, NTT Com acquired India’s data center provider Netmagic Solutions Private Limited, UK’s data center provider Gyron Internet Limited, and Freedom Resources Holdings Corporation, a subsidiary of the DTSI group, which provides IP telephony and system integration services for operating systems mainly in the Philippines.

OPERATING RESULTS

Operating revenues declined again in FY2012 compared to FY2011. Voice transmission service revenues decreased 9.4% year on year to 293.9 billion yen, IP service revenues declined 0.7% to 371.8 billion yen and data communications service revenues were down 13.6% to 67.6 billion yen. Solution services revenues, which have been declining continuously in recent years, increased 2.4% to 183.9 billion yen. Total operating revenues decreased 3.7% to 944.8 billion yen.

On the positive side, tighter cost controls lowered expenses for purchases of goods and services by 6.7% to 400.6 billion yen. Access charges decreased 9.7% to 213.5 billion yen due to lower voice transmission service charges. Total operating expenses declined 5.6% to 826.6 billion yen.

As a result, operating income increased 11.7% to 118.1 billion yen and net income was up 12.0% to 65.3 billion yen, which included the booking of special profits of 24.0 billion yen on the settlement of interconnection charges and sales of real estate, as well as special losses of 31.8 billion yen on the write-off of investments made by affiliated companies.