NTT Corp. posted the nation's largest operating profit for the fiscal first half of 2003.

The telecom giant's group operating profit in the April-September period grew 1.6 percent from a year earlier to 836.6 billion yen, mainly due to cost-cutting efforts by its regional fixed-line units, according to results released Tuesday.

Its nearest rival was Toyota Motor Corp., whose operating profit in the same period came to 767.8 billion yen.

NTT's net profit exploded more than 11-fold to a record 383.57 billion yen after a hefty one-time charge ate into profit the previous year.

In the same period last year, NTT posted a 33.16 billion yen net profit due to a 309.87 billion yen loss stemming from overseas investments.

The former state monopoly, still 46 percent owned by the government, said its group revenue for the period edged up 0.8 percent to 5.41 trillion yen, reversing the decline of the previous year.

The sales growth was due to gains by NTT DoCoMo Inc., which saw revenue expand 6.4 percent during the six-month period.

Revenue from its regional units, NTT East and NTT West Corp., declined as their fixed-line telephone businesses continued to suffer.

"We cannot yet declare that we are back on an upward revenue trend," NTT President Norio Wada told a news conference. "The situation is still severe. The revenue from the fixed-line business will continue to drop."

The company expects revenue from its traditional fixed-line telephone business will fall by 1 trillion yen over three years, as more people turn to mobile phones, Internet Protocol telephony and e-mail for their communication needs.

The number of subscribers to NTT's fixed-line business slipped 1.3 percent during the period to 60.54 million. The combined voice communication revenue of the two regional units slid 5 percent to 1.5 trillion yen.

However, cost-cutting efforts helped the fixed-line units expand their profit in the period, more than offsetting DoCoMo's increased expenses for mobile handset subsidies.

NTT East and West trimmed a combined 70 billion yen in personnel expenses alone, for example.

Company officials admitted there was little room left for continued cost-cutting efforts, making it unlikely that NTT will be able to maintain profit growth amid its shrinking revenue.

The company is betting its future on the IP phone business, offered mainly through the FLET'S broadband service.

NTT said the same day it will establish in December a new company, NTT Resonant Inc., to boost its IP-related business. Resonant will be dedicated to developing broadband services such as high-quality interactive video communications, it said.