Message from the CEO

I would like to express our heartfelt thoughts and prayers to everyone who has fallen victim to COVID-19 or who has been otherwise impacted by the pandemic.

Regarding the recent occurrence in which members of management dined with ministry officials, I sincerely apologize for causing great inconvenience and concern to our shareholders, customers and all related parties.

Results for the FY2020 and Forecasts for FY2021

For the fiscal year ended March 31, 2021, NTT achieved year-on-year increases in both operating revenue and income, with operating revenue and profit reaching record highs. Specifically, operating revenues increased ¥44.6 billion [+0.4%] from the previous year to ¥11,944.0 billion due to an increase in Smart Life business revenue and domestic system integration revenue, despite a decrease in NTT DOCOMO’s handset sales and overseas system integration revenue due to the impact of COVID-19. Operating income increased ¥109.2 billion [+7.0%] from the previous year to ¥1,671.4 billion, as the impact of COVID-19 was offset by increased revenue, as well as cost reduction among group companies. As a result, profit increased ¥60.9 billion [+7.1%] from the previous year to ¥916.2 billion.

For the fiscal year ending March 31, 2022, we are projecting an increase in both operating revenue and income compared to the previous year, mainly due to an increase in system integration revenue by capturing strong demand for digitalization, expansion of the Smart Life business, and the effects of structural reforms in our overseas business, despite an expected decrease in revenue from the launch of “ahamo” and an expanded impact of the customer return program from “Gigaho Premier.” Operating revenue is expected to be ¥12,000.0 billion, operating income to be ¥1,730.0 billion, and profit to be ¥1,085.0 billion with all increase across the board, and they are all expected to reach record highs. Profit is expected to exceed ¥1,000 billion for the first time.

EPS is expected be ¥300 in FY2021, one year ahead of the medium-term financial target of ¥320 in FY2023 and cost reduction* is targeted at ¥840.0 billion in FY2021, two years ahead of the medium-term financial target of at least ¥800.0 billion in FY2023.

^*In fixed-line/mobile access systems; cumulative reduction from FY2017.

Primary Initiatives for FY2021

Regarding the promotion of the B2B2X model, we achieved the FY2021 target a year ahead of schedule with 104 projects for the FY2020 and will continue to work to expand of the number of projects. We will promote digital transformation (DX) in the food distribution sector through collaboration with Mitsubishi Corporation, DX in the construction industry through collaboration with Komatsu and other companies, and regional revitalization through the realization of smart cities.

With regard to the roll-out of 5G services, we will strengthen our customer base by offering rate plans such as "ahamo" that match the lifestyles of our customers. At the same time, we will support the transformation of customers' lifestyles by promoting personalization through online medical services and digital financial services.

In our global business, we will enhance competitiveness and accelerate our growth by expanding our high value-added services and creating effects from structural reforms.

To enhance and globalize R&D, the "IOWN Integrated Innovation Center" will be newly established in July 2021 to strengthen the collaboration between NTT's fundamental R&D and development capabilities of global vendors. In addition, we intend to expand our R&D into new areas, including service development and investment in growth fields.

We will also continue to promote new businesses such as real estate utilization and green power supply, as well as contribute to the revitalization of local communities and economies.

Enhancement of Governance

Through ESG (Environmental, Social, and Governance) management, we strive to continuously enhance our corporate value. In particular, in order to strengthen our governance, we will work on fostering a corporate culture that prevents occurrence of misconducts and operate our business based on high ethical standard.

In line with the performance-related stock compensation approved at the 36th General Meeting of Shareholders, we have expanded the scope of performance-linked compensation for members for the board from 30% to 50%, so that the new compensation system will make them more aware of the enhancement of corporate value over the medium- and long-term. In addition, we introduced the executive officer system to our major subsidiaries and appoint outside member of the board who are equivalent to independent directors, in order to invigorate discussions at the Board of Directors meetings and strengthen governance.

With regard to the recent dining event-related occurrence, we have announced that, based upon the report of our Special Investigations Committee, we are implementing initiatives to prevent any reoccurrences, such as formulating rules related to dining events and similar events. We will also strengthen internal controls by developing an appropriate management system for our operational status. Furthermore, we have imposed penalties for involved members of the board and officers, including reductions in compensation. In the future, we will reform our existing business style and work to transform into a new management style that is based on remote working, which is appropriate for the new age. As for specific initiatives, we will consider and promote the following measures: introduction of cloud-based systems/zero-trust systems, ) promotion of DX, automation/standardization of operations and generally ending paper usage, promotion of work-in-life (health management) through proximity of workplaces and residences, distribution of organizations (including headquarters and back-office divisions) across regions, promotion of the success of women, foreign nationals and external personnel, contribution to dispersed development of land by promoting the development of information infrastructure.

Lastly, as for shareholder returns, our basic policy is to pursue ongoing increases in dividend policies, and flexible share buybacks are conducted to improve capital efficiency. The planned annual dividend for FY2021 is expected to increase ¥110 per share, an increase of ¥5 per share from the previous fiscal year, making for the 11^th consecutive year of dividend increases.

We hope to receive your continued understanding and support.

2021 June

President and Chief Executive Officer,
Representative Member of the Board
Jun Sawada