| Attachment 1 |
SUMMARY OF RESULTS |
During the six months ended September 30, 2001, conditions in the Japanese economy remained harsh, with personal consumption coming in almost flat and the "IT slump" occurring throughout the world, coupled with a decline in exports, production and capital investment. Against this backdrop, telecommunications markets have rapidly turned global and borderless. The growing number of alliance and merger and acquisition deals among telecommunications carriers have brought with them the advent of megacompetition. At the same time, the markets have witnessed further progress in the shift "from voice transmission to data transmission," propelled by the rapid development of telecommunications technology and the national campaign to expedite the introduction of IT in accord with the "e-Japan Priority Policy Program" and other basic policies laid out by the national government. This has resulted in fierce competition to attract customers beyond national borders and business sectors. A diverse range of protocols for "broadband" communications - including ADSL (asymmetric digital subscriber line), CATV (community antenna television), FWA (fixed wireless access) and FTTH (fiber to the home) - have entered the picture amid growing demand for high-speed, high-volume Internet access services, igniting tougher price competition. Meanwhile, the increasing popularity of VoIP (voice over Internet protocol) technology has started to exert a negative impact on the voice transmission business. Under this climate, the Nippon Telegraph and Telephone West Corporation (NTT West) devoted all its energies to its "Mid-Term Restructuring Plan" and "the NTT Group Three-Year Business Plan (FY2001-2003)", in order to achieve two management goals: the "transition to a profit-making structure" and "transformation into an information sharing company." At the same time, NTT West strove to consolidate its management foundation by increasing management efficiency and bolstering price competitiveness, providing information-sharing products in an attempt to stimulate IP demand. Faster-than-expected changes in market structures, however, forced NTT West to focus on ensuring its development as a key player in the industry. It saw itself obliged to aggressively contribute to the IT revolution through accurate responses to those changes and the building of long-lasting financial resilience. In concrete terms, the company endeavored energetically to bolster its earnings from IP business so as to ensure continued growth and development of the NTT West Group, and strove to pave the way for implementing a structural reform of NTT West whereby no area is off-limits to a review of cost structures. NTT West remains committed to improving management efficiency. The company has been dedicating itself to increasing profitability and improving cost structure by advancing some of the initiatives launched in the previous year. These include the effort to build information sharing marketing positions that cater to the IP era, reallocate personnel to areas with high market potential, and encourage voluntary retirement. Together with these initiatives, NTT West is considering a drastic review of operations in order to forge ahead with the structural reform of the company. In one proposed scheme, NTT West will specialize in the basic operations necessary to fulfill its responsibility to serve its customers, in addition to planning, strategy formulation and service development. It will outsource other operations - including day-to-day customer services, facilities operations, SOHO and mass marketing, and common operations - to group companies. Aware of the need to reduce costs by making the most of existing facilities and equipment, while maintaining reliable, quality services, NTT West made timely and efficient capital investment that has focused on securing profitability, thus carrying out cost reduction. In an attempt to retain and enhance price competitiveness, NTT West has put everything it has into acquiring a greater share of the market by increasing its competitive edge and offering greater convenience to customers through strategically reduced charges and expansion of discount services in anticipation of the introduction of the presubscription system. Specifically, on May 1, 2001 the company reduced the price of local calls, day or night, to 8.5 yen per three minutes, and offered a variety of discount services, steeper discounted rates and a reduction in monthly fixed fees to subscribers of its My Line Plus services. NTT West has drawn upon its collective strength, aided by these reduced charges and discount services, for an aggressive marketing push to increase the number of its presubscribed fixed lines. For the information sharing market, NTT West offered a full line-up of and lowered the rates for its Internet-access services, in order to meet the growing customer demand for "quicker, more powerful Internet access services" through broadband technology. Its goal is to offer inexpensive but quality Internet connection services that are world-class. Specifically, the company has expanded service areas and reduced the rates for "FLET'S  ADSL" and "FLET'SISDN" (integrated services digital network), an IP connection service featuring complete flat-rate Internet access, while it has pushed forward the introduction of broadband access services by way of the full launch of and expanded options for "B-FLET'S", a high-speed, flat-rate Internet access service via fiber-optic subscriber lines.In an attempt to solve the problem of the "digital divide," NTT West inaugurated "L-mode", an additional Internet access service that allows customers to send and receive e-mail and retrieve information from a fixed-line telephone. The company has endeavored to expand the base of Internet users through these easy-to-use new services. In the hope of opening new businesses, the company has made aggressive efforts to develop and offer services that allow customers to use a greater variety of advanced content and applications, through tie-ups with companies in and outside of the NTT West Group. Some of these efforts include participation in the establishment of TFM Interactive, Inc., a content distribution business via broadband networks, and experiments with distributing motion pictures via optical access lines in a joint effort with Toho Co., Ltd. The company has also been proactive in the solutions business, successfully landing a comprehensive order to build, maintain and operate networks for the Mazda Group. As a result of these efforts, the principal marketing results of the company for the interim period under review were as follows. The total number of subscriber telephone lines installed stood at 25.86 million as of the end of September. In the area of INS-Net services, the number of INS-Net 64 lines installed totaled 4.90 million as of the end of September. In the area of leased circuit services, the number of high-speed digital transmission lines came to 250 thousand as of the end of September. NTT West's first-half results for the fiscal year ending March 31, 2002 were as follows: operating revenues amounted to 1,206.9 billion yen; the company registered an ordinary loss of 75.5 billion yen, and a net loss of 51.1 billion yen. |
