NTT East Corp. and NTT West Corp. are contemplating deeper workforce “cuts” because the popularity of mobile phones and a future obligation to reduce the fees it charges other carriers are eating into their profitability, officials said Friday.
The two domestic arms of Nippon Telegraph and Telephone Corp. now intend to ask up to 6,500 employees to leave in fiscal 2000 and fiscal 2001 on a voluntary basis, expanding a plan they announced last November to cut as many as 21,000 workers over three years, the officials said.
The firms will consult their labor unions after hammering out the details of the plan, the officials said.
The companies have been hit by the growing number of customers with conventional fixed-line telephones who are defecting to mobile phones, which have recently surpassed them in number. In addition, a Japanese-U.S. agreement signed in July to cut the fees the two are allowed to charge other carriers for accessing their nationwide local phone network was factored into the decision, they said.
NTT East will ask 3,000 workers between the ages of 40 and 57 to leave on a voluntary basis, while NTT West will ask for resignations from 3,500 people, the companies said.
Severance pay equivalent to salaries for 12 months will be paid to those who leave in fiscal 2000, and 9 months for those leaving in fiscal 2001, the firms said.
Last November, in addition to the payroll cuts, the two decided to transfer 4,000 employees on their regular payrolls to fast-growing companies inside the NTT group, such as NTT DoCoMo Inc., the operator of the popular i-mode Internet-capable mobile phone services.
KDDI predicts profit
Telecom operator DDI Corp. said Friday that it projects net profits of 10 billion yen on sales of 2.3 trillion yen for fiscal 2000 — the first fiscal year after DDI’s merger with KDD Corp. and IDO Corp., scheduled to become KDDI on Oct. 1.
The projection combines DDI Corp.’s projected earnings for the fiscal year from April 2000 to March 2001, and those of IDO and KDD from October to March.
KDDI’s pretax profits for fiscal 2000 are projected at 40 billion yen.
Sales related to data services and cellular phones are expected to grow for the fiscal year, but the cellular business will still post net losses of 2 billion yen, the company said.
After the merger, DDI is to be renamed KDDI.
KDDI is set to become the nation’s No. 2 telecom group after the Nippon Telegraph and Telephone group.
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