NTT West Corp. is considering integrating and consolidating its 30 branch offices to between 10 and 15 in a bid to streamline operations, cut costs and weather intensifying competition, company sources said Saturday.
NTT West, one of the two local phone operators of Nippon Telegraph and Telephone Corp., is likely to begin negotiations with its labor union soon to work out details, the sources told Kyodo News.
The development comes after NTT West suffered a pretax loss of 105.7 billion yen in the business year that ended March 31, and recognized the need for additional cost-cutting measures, they said.
As the restructuring could close all NTT West offices in some prefectures, protests against the plan are expected across western Japan.
NTT East Corp., which serves eastern Japan, is planning to maintain all its 17 branch offices, although it will continue to push for lower costs, company sources said.
NTT East, which is also trying to restructure its operations, managed to secure a pretax profit of 14.1 billion yen in the last business year.
In April, NTT announced a new three-year management program featuring a transfer of tens of thousands of workers from NTT East and West to new regional firms as part of steps to accelerate restructuring.
The program envisions restricting the basic functions of NTT East and West to strategic planning, facility construction and management, development of new services and marketing.
It will also outsource other operations, such as order processing and maintenance, to new companies to be set up as subsidiaries of the NTT group’s “management resource utilization companies.”
As of the end of March, the two regional telecom units had a combined workforce of about 112,000. Through the rationalization plan, NTT wants to transfer up to about 60,000 staff to planned regional firms.
Both NTT East and West reduced the number of their smaller offices under the supervision of branch offices to 380 by last December from 643 as of the end of March 1999.
However, NTT West believes the further integration and consolidation of branch offices to be unavoidable as its business is worsening due to cuts to interconnection fees and user charges in light of competition with its rivals, the company sources said.
Compared with NTT East, NTT West is at a disadvantage in terms of pressing ahead with restructuring because the latter has 4,450 more employees.
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