FY2020.2Q Financial Results-Key Points

In FY2020 2Q, as a result of decreases in overseas SI revenues and in revenues from device sales and overseas roaming charges at NTT DOCOMO, among other factors, there was a negative impact of approximately 130.0 billion yen on operating revenues and approximately 20.0 billion yen on operating income. For the fiscal year, our initial forecasts of a decrease in operating revenues of350.0 billion yen and a decrease in operating income of 70.0 billion yen remain unchanged, based on the anticipated significant negative impact of COVID-19 on overseas SI projects in the second half of the fiscal year and the occurrence of second waves of COVID-19, especially in Europe and the United States. We will work to mitigate the negative impact by rapidly seizing upon changes in the market environment and changing them into business chances, such as by increasing sales under our new service brand, "Remote World," which provides customers with appropriate services for both during and after the COVID-19 pandemic.

We will continue the structural reforms focused on NTT Ltd. and NTT Data, accelerate the pace of profit improvement, and continue to work towards achieving our medium-term financial target. NTT Ltd. is already realizing the effects of the structural reforms implemented in the last fiscal year, is already advancing its shift to high value-added services and will continue to accelerate this shift in the future.

In addition to the structural reforms in Europe that NTT Data has been implementing since the last fiscal year, it will conduct structural reforms in North America as well and continue to strengthen its digital project support capabilities. Looking ahead to times after COVID-19, we will work to increase our profits by acquiring digital projects, which are increasing worldwide.

In order to enhance shareholder returns, our board of directors has just resolved to buy back shares in an amount up to 250.0 billion yen. With respect to shareholder returns, our basic policy of increasing dividends on a continuous basis and buying back shares flexibly will remain unchanged.

Although our level of indebtedness will temporarily increase as a result of the transaction to make NTT DOCOMO a wholly owned subsidiary, we will reduce our indebtedness through the spin-off of our leasing business and through securitizations of receivables. As before, we will use free cashflows in order to continue to enhance shareholder returns and make investments for further growth, and also plan to repay debt (0.9 trillion) in the next several years down to our targeted debt level of 6.0 trillion yen (a level of approximately 2x EBITDA).