Portals offering search engines and video content expanded worldwide, as did personal-information communication, including social networking services and blogs, demonstrating that information and communication technology (ICT) is continuing to reshape lifestyles and business models.

Companies came under greater pressure to address information-related risks through measures such as compliance with the Personal Information Protection Law and Japanese SOX Law. At the same time, the importance of corporate social responsibility grew, particularly in terms of shareholders and customers.

The competitive landscape of the global information and communication market was reshaped by mergers and acquisitions among telecommunications and Internet companies in the United States and cross-border alliances among carriers in Europe.


BUSINESS STRATEGIES
NTT Com designated 2006 as the year of its "second foundation." By providing total ICT solutions on a global, one-stop basis, NTT Com is working to create new lifestyles and business models, and to empower corporate customers to meet their internal operational needs, as well as the needs of their customers.


In November 2006 the NTT Com Group introduced its Business Vision 2010, a plan for achieving new growth by providing customers with new value and thereby earning their greater satisfaction and trust. By helping customers to bridge present and future potential, NTT Com aims not only to earn the trust of customers worldwide, but also to contribute to an affluent society in which people can live rewarding lives with peace of mind.

To better fulfill this mission, the NTT Com Group added portal and engine services as its sixth business domain for new growth, along with solution, network-management, security, global and ubiquitous services.

Deploying business under the six business domain, as an "ICT Solution Partner," the NTT Com Group provided corporations with consulting-based solutions to help them address their ICT needs. For the Internet services, under the slogan "CreativE-Life for Everyone," the NTT Com Group positioned NTT Resonant's "goo" portal as a core Internet-related offering, in addition to OCN and "plala" Internet access, IP telephone and video content.

While placing top priority on customer and market needs in terms of operations and services, the NTT Com Group undertook new measures to improve corporate marketing, product delivery and maintenance capabilities. The system for personnel evaluation was strengthened and other operational and structural reforms were adopted with the goal of increasing revenues and profits in strategic growth areas. Strong emphasis was placed on frontline empowerment, employee character quality and overall corporate strength.

OPERATION RESULTS

1. Voice Services
Operating revenues from voice transmission services (excluding IP services) decreased 2.1%, or 9.8 billion yen, to 462.9 billion yen. Although revenues declined in the shrinking fixed-line segment, revenues from other non-IP voice transmission services, including the PL@TINUM LINE discount calling plan and diversified toll-free calling services were either sustained or increased. Efforts to raise market share in international voice services included more aggressive sales and offering the SEKAIWARI plan to PL@TINUM LINE customers.

2. IP Services
Operating revenues from IP services rose 5.2%, or 15.9 billion yen, to 319.7 billion yen. Revenue growth was achieved with wide-area LAN services and OCN Internet-access services, the latter accounting for 6.09 million subscribers as of March 2007.

3. Data Communications Services (excluding IP)
Operating revenues from non-IP data communications services declined 9.0%, or 15.9 billion yen, to 160.9 billion yen. The decline reflected the costs of merging or eliminating selected networks and customer migration to IP services. Efforts to sustain revenues included the offering of simple yet highly reliable services.

4. Solutions Services
Operating revenues from solutions services rose 19.2%, or 26.7 billion yen, to 165.8 billion yen. System-integration service revenues increased due to a restructuring of the Enterprise Business Division designed to strengthen delivery of corporate services. In addition, fixed-fee maintenance and data-center service revenues grew steadily.

5. Others
Other operating revenues, mainly from the leasing of facilities and resale of products, rose 2.2%, or 700 million yen, to 36.0 billion yen.


MEASURES FOR FISCAL 2007

In fiscal 2007, the first full year of NTT Com's Business Vision 2010, further revenue growth is projected in the strategic areas of IP services and solutions. NTT Com will implement new strategies to facilitate this growth, as well as bolster its overall business platform.

For corporate business operations, in April 2007, NTT Com's Enterprise Business Division was further reorganized by industry into five separate units, and NTT Com group companies providing other system engineering services were reorganized under a unified structure. The changes enable NTT Com to provide ICT solutions more efficiently in a one-stop, integrated manner . By providing consulting carefully tailored to each industry or business, and by delivering highly added-value solutions, the group expects to serve as a truly reliable partner that customers can depend on for their ICT needs. At the same time, aggressive efforts will be made to acquire new customers and expand business domains.

In global operations, NTT Com opened representative offices in Dubai, UAE last December and Warsaw, Poland in April 2007, expanding its overseas network to 21 countries. The continuing acceleration of overseas operations was exemplified by an agreement in March to construct an undersea cable connecting Japan and Russia by the end of 2007. Highly valued-added services combining strengthened data-communications services and ICT management will be delivered on a one-stop basis to customers worldwide.

In Internet business service, a strengthened service-delivery platform has been realized by consolidating Internet-related group companies under NTT Com. With more than six million OCN subscribers, as well as plala and NTT Resonant Inc.'s goo subscribers, NTT Com expects not only to realize greater operational efficiency, but also to develop advanced services and delivery methods that will facilitate new lifestyles, and thereby expand demand to help the NTT Group achieve its goal of 30 million fiber-optic lines by 2010.

The company remains committed to its ongoing group-wide review of value chains that support overall business, as well as raise the quality of both operations and maintenance services.

In summary, NTT Com intends to enhance corporate efficiencies and strengths by continuously reviewing its businesses, products and operations in terms of customer needs and market trends.

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