Attachment 1


While the Japanese economy generally remained under severe conditions and no tangible recovery in personal consumption was observed during the six-month period under review, there were some signs of mild improvement as plant and equipment investment in such growth areas as information and telecommunications traced a positive trend.

The telecommunications markets are undergoing dramatic and rapid changes with the explosive growth of Internet and mobile telephone usage. Similarly, the process of globalization and the development of seamless services are creating a borderless global market characterized by intense competition. There is every indication that the intensity of competition will increase further as a result of such trends as the introduction of a wide variety of services tailored to specific needs, the continued reduction in telecommunications charges, and the entry of numerous new enterprises in regional telecommunications markets.

Against this background, the Nippon Telegraph and Telephone West Corporation (NTT West) has endeavored to contribute to the IT revolution in Japan through such measures as the lowering of telecommunications charges, and the development and marketing of a wide range of convenient and attractive services. At the same time, NTT West has focused on developing new sources of revenue and improving managerial efficiency to be able to respond more effectively to the increasingly severe business environment marked by the introduction of price caps, long-run incremental cost method, and dialing parity system. Specific management goals in this area consist of the achievement of a "transition to a profit-making structure," and "transformation into a information sharing company."

In a document released in April 2000 entitled "NTT West Program for the Information Sharing Market," the company has identified the following strategies for developing new revenue sources: transition of the core business domain to the IP business field; development and marketing of new services; continued reduction of charges; and the development of new businesses.

With regard to the development and marketing of new services, in November 1999, NTT West launched a trial marketing of IP Connection Service featuring complete flat-rate Internet access. In May 2000, the monthly flat-rate access fee was lowered, and in July, the service was renamed "FLET'S ISDN" and was formally launched as a full-scale service. The geographic coverage of this service has been steadily expanded to cover the principal cities of the region. Various other new products and services have been launched for improved Internet access, such as "FLET'S Office," a low-priced service for creating corporate private networks based on local IP networks in prefectures where "FLET'S ISDN " is already available. The "Wide LAN Service" is designed to be used by companies and local government organizations for creating faster and cheaper optical LAN environments connecting multiple locations. The "Internet Mansion KIT" is a tool for easy installation of an environment for standing access to the Internet in existing condominium buildings. Finally, the "PetitWeb" terminal provides easy access to the Internet based on simple settings.

Regarding the reduction of telecommunications charges, NTT West has taken various actions in response to the introduction of a price cap system on October 1 and in order to further improve customer convenience. Specifically, the following highly diverse range of changes and discount programs have been launched on October 1: significant reductions in charges for intra-prefectural calls for distances exceeding 20 km; reduction in charges and expansion of discount services for high-super digital leased circuit services and ATM leased services; "Kenta-kun," a discount service for intra-prefectural calls whereby discounts are given when the total monthly charges for calls made to the three intra-prefectural telephone numbers (including telephone numbers within the same city) which incur the highest monthly charges, exceed a certain amount; and, "Wari-max" and "Wari-big" whereby companies can receive discounts on local and intra-prefectural calls in accordance with their total monthly charges for intra-prefectural calls from multiple places of business (headquarters, branch offices, sales offices, etc.) and single places of business, respectively.

In pursuit of new business opportunities in the Internet age, NTT SmartConnect Corporation, established in March 2000, has been marketing an ASP service named "SmartWare." Through this initiative, the NTT West Group is involving itself in the ASP business.

NTT West is endeavoring to create new sources of revenue with a special focus on the IP business field. Parallel to these efforts, NTT West has been restructuring its operations in the direction of creating new organizational structures for information sharing operations centered on IP businesses. To promote this initiative, NTT West has decided to undertake a thorough review of the organization of its head office and branches. The review is scheduled to be completed in November 2000.

NTT West remains strongly committed to the goal of improving management efficiency. In accordance with the Mid-term Restructuring Plan (2000-2002) announced in November 1999, NTT West has been pursuing various initiatives for this purpose. These include the reassignment of personnel within the NTT Group and to information sharing divisions, cutbacks in plant and equipment investment, and cost-cutting over a broad range of expenses. NTT West has also decided to carry out a voluntary retirement program during fiscal 2000 and 2001. This program will be instituted to achieve a more resilient management foundation in view of the continued lowering of charges, the growing intensity of competition and the increasingly severe outlook for the business environment. The program also aims to better prepare the company for making a positive contribution to the promotion of the IT revolution.

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 27.11 million as of the end of September. In the area of INS-Net services, the number of INS-Net 64 lines installed totaled 3.92 million as of the end of September. In the area of leased circuit services, the number of high-speed digital transmission lines came to 217 thousand as of the end of September.

NTT West's first-half results for the fiscal year ending March 31, 2001 were as follows. Operating revenues amounted to 1,315.2 billion yen. The company registered ordinary loss of 41.6 billion yen, and net loss of 31.0 billion yen.