February 28, 2002


Application for Approval of the Business Operation Plan
for Fiscal Year Ending March 31, 2003


Nippon Telegraph and Telephone West Corporation (NTT West) today submitted its business operation plan for the fiscal year ending March 31, 2003 to the Minister of Public Management, Home Affairs, Posts and Telecommunications for approval.


In making Japan the world's most advanced IT nation which the "e-Japan strategy" targets, the telecommunications sector is expected to actively contribute to the creation of new industries as well as to the development and efficiency of social and economic activities. In response to the increasing sophistication of consumer needs and the processes of diversification and globalization, the telecommunications market itself is undergoing drastic transformations, as evidenced in the surge in demand for mobile and Internet communications. The competitive environment of regional communications markets is also becoming markedly tougher, due to such factors as the fierce price reductions in the Internet access market and the intensification of competition triggered by the introduction of "MYLINE" preferred carrier registration service.

Under this fierce competitive environment, coupled with Japan's economic slowdown, NTT West faces severe financial challenges. In light of this situation, NTT West shall restructure its operations immediately to bolster the business efficiency through drastic structural reforms. At the same time, the company will work harder for the development of information sharing by providing innovative new services through its digital infrastructure for a wide range of corporate and individual activities. NTT West will continue to provide both stable and high-quality universal services, while also pursuing the following objectives: it shall promote the deployment of the Optical Access Network in anticipation of greater demand for broadband services; it shall contribute to the advancement of telecommunications markets through fair competition; it shall enhance its research and development capabilities in applied fields; and it shall ensure that the telecommunications industry is reliable and open to the public.

As a reflection of these fundamental principles, in its business management during the fiscal year ending March 31, 2003, NTT West will promote drastic structural reforms, focusing on the outsourcing of operations to build a scheme that can deal with new markets, coupled with various management improvement measures. While undertaking a drastic improvement of its cost structure through such reforms, the company will also strive to establish sound foundations for profitability through an extensive rollout of broadband businesses, in addition to a full lineup of IP access services, including "Fiber-optic IP Connection Service" , to respond actively to the growing demand for Internet communications. NTT West will grasp the views and needs of customers accurately and speedily in order to make the necessary improvements in services. In other areas, NTT West will also implement measures for maintaining smooth interconnection and open networks. It will seek to promote its research and development position in applied fields, improve disaster prevention measures, promote human resources development, and actively pursue new business opportunities. Through this line of action, NTT West will endeavor to achieve a stable course of future development. NTT West stands ready to share the benefits of these programs with its customers, local communities and the shareholders in the holding company.

The above outlines the basic strategies of NTT West for the fiscal year ending March 31, 2003. While special emphasis will be assigned to the matters summarized below, NTT West will respond with due flexibility to any changes in the business environment.


1. VOICE TRANSMISSION SERVICES

(1) Subscriber Telephones:

NTT West stands ready to respond speedily to all demand for subscriber telephones, including the relocation of existing lines. The total number of subscribers is projected to reach approximately 26.10 million by the end of the fiscal year ending March 31, 2003.

Item: Planned Number
Additional Installations: 0.40 million subscribers
Relocations: 2.77 million subscribers


(2) Social-Welfare Telephones:

The progress of social welfare has generated various demands for telecommunication services. To respond to welfare-related needs, NTT West shall promote the installation of its "Silver Phones series" (Anshin [Relief], Meiryo [Clearness], Hibiki[Sound], Fureai[Communication]) and other welfare-oriented products.

Item: Planned Number
Silver Phones
Anshin (Relief): +500 units
Meiryo (Clearness): +100 units


(3) Public Telephones:

NTT West shall promote the installation of IC-card operated public telephones.
It shall continue to promote the installation of social-welfare public telephones, including those with voice adjustment function and public phone booths for wheel chair users, to achieve improved services and welfare-oriented functions.

Item: Planned Number
IC-Card Public Telephones: +6,000 units
Public Telephones with Volume Adjustment Function: +6,000 units


(4) INS-Net Digital Services:

INS-Net Digital Services are now available in all areas with potential demand. The total number of INS-Net 64 subscriber lines and INS-Net 1500 subscriber lines are projected to reach approximately 4,145,000 circuits and approximately 37,000 circuits lines, respectively, by the end of the fiscal year ending March 31, 2003.

Item: Planned Number
INS-Net 64 Subscriber Lines: (740,000) circuits
INS-Net 1500 Subscriber Lines: (4,000) circuits



2. DATA TRANSMISSION SERVICES

NTT West shall continue providing IP Connection Services featuring a full line of flat-rate Internet access plans for INS-Net, ADSL and fiber-optic services.


3. LEASED CIRCUIT SERVICES

Facilities for leased circuit services are scheduled to be installed to actively respond to demands, including those for high-speed digital transmission services, and voice and image transmission services.

Item: Planned Number
Conventional Leased Circuits: (35,000) circuits
High-Speed Digital Transmission Circuits: +16,000 circuits



4. TELEGRAPH SERVICES

NTT West shall promote such measures as the maintenance of telegraph operation systems to enhance services and raise efficiency.


5. IMPROVEMENTS AND ADVANCES IN TELECOMMUNICATIONS EQUIPMENT

(1) Optical Access Network:

NTT West shall actively promote the deployment of Optical Access Network in coordination with expanding demand for broadband services.

Item: Planned Number
Optical Subscriber Cables: +2.6 million fiber km
(Cover rate at the end of March 2003 will be 53 %.)


(2) Telecommunications Network:

NTT West shall enhance network services as well as improve network economy and efficiency while meeting demand for broadband services.

(3) Disaster-Prevention Measures:

NTT West shall promote necessary disaster-prevention measures for telecommunications equipment. To this end it shall establish emergency communication and crisis management measures, as well as procedures for restoring systems and distributing vital information in the event of a large-scale disaster.

(4) Installation of Underground Transmission Cables:

NTT West shall install underground transmission cables to aid transmission stability, secure safe and comfortable passage spaces and improve the appearance of urban areas, in cooperation with the local and national governments or other companies.

(5) Facility Maintenance:

NTT West shall implement facility maintenance, including the replacement of cables, to maintain customer services, ensure safety and harmony with social environments and stabilize communications systems.

NTT West shall pursue cost reduction by making exhaustive use of existing equipment and facilities in improving and upgrading communications facilities.


6. PROMOTION OF RESEARCH AND DEVELOPMENT ACTIVITIES

To further stabilize and strengthen the foundations of the business operations, and to meet public demand for information and telecommunications, NTT West shall promote research and development in the spheres of network systems and access systems which create more sophisticated telecommunications networks. In addition, NTT West shall also promote research and development in such areas as information distribution applications and communications terminals of various types which expand the range of choices available to customers in their selection of reliable and convenient services through sophisticated telecommunications networks.

The summary of the business plans for the above principal services and the plant and equipment investment plans are outlined in the attached tables.



- Table 1
Principal Services Plan for Fiscal Year Ending March 31, 2003
- Table 2
Plant and Equipment Investment Plan for Fiscal Year Ending March 31, 2003
- Attachment 1
Revenues and Expenses Plan for Fiscal Year Ending March 31, 2003
- Attachment 2
Plan of Sources and Applications of Funds for Fiscal Year Ending March 31, 2003


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