Declining profits from fixed-line services — once the mainstay of the telecom sector — bit into the pretax profits of the Nippon Telegraph and Telephone group in fiscal 2000.
The telecommunications giant on Thursday reported pretax profits of 726 billion yen for fiscal 2000, down 12 percent, on group sales of 1.14 trillion yen, up 9.5 percent compared with the previous year.
NTT Corp. President Junichiro Miyazu, head of NTT’s holding company, held a conference call to announce the results, during which he indicated that the group will drastically restructure NTT East and NTT West, the two regional firms that are reliant on fixed-line services for their income.
While Miyazu said the restructuring will involve tens of thousands of employee reductions and transfers, he declined to give further details.
Talks with labor unions over the shifts have yet to begin, NTT officials added.
As for the financial report, the company said group net profits stood at 464 billion yen — an increase of 531.8 billion yen from the fiscal 1999 loss of 67.8 billion yen — mainly thanks to the completion of pension liability write-offs incurred when new accounting rules took effect.
While fixed-line sales are on the wane, business is picking up in regards to cellular service and Internet-related services.
Sales from the cellular business, operated by the NTT DoCoMo Inc. group., surged 600 billion yen, a 16.8 percent increase from fiscal 1999.
Sales from the Internet and data transmission businesses jumped 750 billion yen, a 35.8 percent hike.
Sales from fixed analog lines, however, fell 360 billion yen, representing a 7.6 percent decrease.
In fiscal 2000, the cellular businesses accounted for 37.8 percent of total group sales, the Internet/data business 29.1 percent and analog fixed-line business 33.1 percent.
NTT West Corp., which has less customers in its region than NTT East, suffered a severe profit fall, mainly due to cuts in connection fees charged to other telecom companies and to repeated consumer price cuts brought on by intensifying competition with rival operators.
NTT West posted 105.7 billion yen in pretax losses on sales of 2.64 trillion yen; net income stood at a negative 44.6 billion yen.
In stark contrast, DoCoMo generated pretax profits of 708.4 billion yen, up 40.2 percent from fiscal 1999, with net profits of 412.7 billion yen.
According to the group holding company, the number of subscribers to fixed phone lines dropped 6.1 percent to 52.01 million during fiscal 2000, cellphone subscribers surged 22.7 percent to 36 million, 21.7 million of whom use DoCoMo’s pay-as-you-surf i-mode Internet service.
For fiscal 2001, which ends March 31, the NTT group predicts sales of 12.1 trillion yen, with pretax profits of 765 billion yen and net profits of 128 billion yen.
NTT East told to stop
The Telecom Ministry said Thursday it has ordered NTT East Corp. to cease its unfair marketing techniques to win subscribers for the Myline service, introduced this month.
Competition has been intense since the start of the year among the 12 carriers covered by Myline, under which subscribers connect to a preferred carrier without dialing its four-digit access code.
Carriers have been sharply discounting phone charges to attract subscribers and keep them in the fold.
Among NTT East’s acts deemed unfair by the Public Management, Home Affairs, Posts and Telecommunications Ministry is delivering to households application forms that already name NTT Communications as the carrier of choice.
NTT Communications is the long-distance and international arm formed from the 1999 break up of Nippon Telegraph and Telephone Corp., which became a holding company that includes two local operators — NTT East Corp. and NTT West Corp.
NTT East has also been criticized for distributing brochures informing subscribers of discounts and services offered by its long-distance counterpart.
In late April, rival carriers asked the ministry to order the three NTT group firms to cease these tactics.
The three carriers have closely collaborated in waging a marketing campaign to attract subscribers into the NTT fold, thereby putting other carriers at a sharp disadvantage, the ministry said.
The two regional NTT firms — which took over the nationwide telecom infrastructure of the former state-run monopoly, partially privatized more than a decade ago — almost completely dominate the local call market.
Myline got under way May 1, attracting subscribers faster than the carriers had expected. Of the 30 million who have signed up for the service, 8 million were unable to use the service from its start date due to the delay in making the necessary technical adjustments.
Competition over Myline is still fierce as only about half of Japan’s fixed-line phone subscribers have signed up and subscribers can still defect to another carrier without charge after making their initial selection.
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