Suffering from huge appraisal losses incurred through failed overseas investments, Nippon Telegraph and Telephone Corp. reported special losses Thursday totaling 2.1 trillion yen for the 2001 business year on a consolidated basis.
As a result, the giant telecom group is projected to post net losses of 865 billion yen, a record for any Japanese company and beating even Nissan Motor Co’s fiscal 1999 684.3 billion yen loss into the No. 2 position.
NTT earlier projected net losses of 331 billion yen for the year ending in March.
NTT’s group special losses included NTT DoCoMo’s impairment losses of 8.13 trillion yen as well as losses of 6.92 trillion yen incurred from retirement promotion programs that are part of NTT East Corp. and NTT West’s restructuring efforts, the company said.
Earlier in the day, NTT DoCoMo disclosed a new appraisal losses total of 550 billion yen, in addition to 263 billion yen in losses in shares of the Netherlands’ KPN Mobile N.V., which had already been disclosed.
As a result, DoCoMo revised its earlier net income projection from profits of 255 billion yen to losses of 36 billion yen, the first net losses for DoCoMo since the cellular company was listed on the Tokyo Stock Exchange in October 1998.
By company, DoCoMo suffered 506 billion yen in impairment losses in AT&T Wireless Services Inc. of the United States, 30 billion yen in KG Telecommunications Co. of Taiwan and 14 billion yen in Hutchison 3G UK Holdings Ltd.
DoCoMo, to keep its promise with stockholders, will however continue to pay dividend payments for the fiscal year, said President Keiji Tachikawa, though the amounts have yet to be decided.
The mobile operator has invested about 1.8 trillion yen in overseas telecom carriers in total in a bid to spread its i-mode business and the third-generation cellular phone technology more widely.
At Thursday’s press conference, Tachikawa insisted that the investments were necessary at the time to form alliances with foreign telecom carriers, and that nobody was able to predict the burst of the telecom stock price bubble.
“Only God could have predicted (the falls in stocks) two years ago. And we had a chance (to invest) only at that time,” Tachikawa said.
Tachikawa added that the true value of the overseas investments really depends on whether i-modelike services and third-generation mobile phones succeed in those countries, and he is convinced his strategy will prove right.
But to accept responsibility for the sharp drop in recent performance, no bonus will be paid to board members, and salaries will be cut by 20 percent for the president, 15 percent for executive vice presidents and 10 percent for other board members, he said.
Under Japanese accounting rules, a company is obliged to post appraisal losses when a stock price owned by a firm has fallen more than 50 percent and there is no rational reason to expect a recovery in the near future.
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