Summary of Results for Fiscal Year Ended March 31, 2004
During the fiscal year ended March 31, 2004, the recovery of the Japanese economy continued to gain momentum, supported overall by increased capital investment and exports as recovery in the world economy continued to bring about improvement in exports, production, and corporate profits.
The telecommunications market is experiencing the advent of a true "broadband age," as evidenced by the fact that the number of optical fiber, ADSL, CATV, and other broadband users has passed the 14 million mark. This has coupled with steadily intensifying service and price competition among telecommunications companies as they rush to diversify access lines, increase transmission speeds, and lower prices.
Meanwhile, the fixed-line telephone market, the core business of Nippon Telegraph and Telephone West Corporation (NTT West), has continued to contract as users shift from fixed-line to mobile telephony, broadband services expand, and more people use the Internet rather than the telephone, together with the proliferation of Internet telephone services based on VoIP (Voice over Internet Protocol) technology.
Faced with this extremely competitive market environment, NTT West designated fiscal 2003 as a critical year for transformation into a revenue-producing structure and establishment of continuous stable surpluses, undertaking the following measures to actively expand optical fiber and other broadband services, promote a solutions business that provides service integration for electronic government and other applications, and expand the operations of the entire NTT West Group, in a bid to achieve a resonant communications environment rapidly.
1. Broadband Business Development
|| Expanded Broadband Access Services
For its B-FLET'S service, NTT West worked to improve customer service by expanding the service area for optical fiber services while establishing a rapid response service structure to shorten the time from application to start of service. Further, in response to demand from customers residing in buildings and condominiums where such facility-related restrictions as on-premise conduits and common-use space preclude installation of B-FLET'S, NTT West is working to expand the broadband Internet access environment via optical fiber, such as by providing wireless schemes that combine subscriber optical fiber service with a 26GHz FWA (Fixed Wireless Access) system.
NTT West has further met the needs of customers for faster communications by adding the FLET'S ADSL MORE 24 service and FLET'S ADSL MORE 40 service, with a downstream speed of up to 24Mbps and 40Mbps respectively, to its existing MORE 12M, 8M, and 1.5M plans.
NTT West also began a 'FLAT ETHER' Ethernet VPN service, designed to provide economical private Ethernet networks among different facilities within a single prefecture.
NTT West also continued the time-limited discount plans begun during the preceding fiscal year and launched new student and senior discounts, to increase the number of customers using B-FLET'S and FLET'S ADSL.
NTT West also began offering a support menu to provide 24-hour support for B-FLET'S (excluding Family 100) and FLET'S ADSL to meet demand from enterprises and other users for support outside regular business hours.
Expanded Broadband Application Services
NTT West has further expanded the FLET'S service areas (inter-prefectural communications) throughout the NTT West service region. Customer convenience was increased by providing various services, such as FLET'S OFFICE WIDE, FLET'S COMMUNICATION, FLET'S SQUARE, FLET'S GROUP, information distribution agency service (wide-area menus), and server connection service, in the entire NTT West area.
To draw more customers to FLET'S SPOT, the backbone of NTT West's ubiquitous service, the service area was enlarged to cover all 73 major cities in Western Japan and the terms were expanded to attract individual and enterprise customers who had not yet subscribed to a FLET'S access service, such as B-FLET'S, FLET'S ADSL, or FLET'S ISDN.
FLET'S SQUARE provides attractive broadband content to FLET'S customers in cooperation with dominant content holders, including "DisneyBB on FLET'S" distributed by Walt Disney Japan and D Wonderland, "Takarazuka on FLET'S" by Hankyu Corporation and Takarazuka Review Company, GIZA's "THURSDAY LIVE at Hills Bread Factory," and Asahi Broadcasting's high-quality live classical concerts at The Symphony Hall.
The recent rapid proliferation of broadband access services has increased demand for both audio and video content, leading NTT West to cooperate with Itochu Corporation and Sky Perfect Communications in launching test distribution of quality-controlled content via IPv6 technology in Osaka in February 2004.
Also in February 2004, NTT West began testing "Grid" technology in cooperation with the National Institute of Genetics, linking multiple computers over a network to create a virtual supercomputer for performing massive calculations.
In March 2004, NTT West joined two other companies, Sharp Corporation and NTT SOLMARE CORPORATION, to launch the download movie content distribution service "Cinema Foobio" provided by NTT SOLMARE, connecting Sharp's personal server "Galileo" with B-FLET'S and other services. This allows broadband to be used to bring movies and other content to a home TV in a manner similar to rental videos.
To meet the diverse needs of our corporate customers, in October 2003, NTT West inaugurated IP telephone service for major corporate customers that allows them to make low-rate telephone calls within and outside IP telephone networks and receive calls via their previous subscriber line telephone numbers.
Restructuring to Promote Broadband Business
To reinvent itself as a broadband provider for swift, efficient promotion of its broadband interests while also striving to more efficiently manage its existing businesses, in July 2003 NTT West reorganized its headquarters, establishing a Broadband Services Promotion Headquarters to integrate and make self-sufficient all broadband-related operations from initial service to facilities construction and sales promotion, along with a Fundamental Services Promotion Headquarters to maximize income from existing telephone services by integrating and increasing the efficiency of such basic services as subscriber lines, public telephones, and telegrams.
In cooperation with NTT MARKETING ACT Group, in May 2003 NTT West also established the FLET'S Customer Relations Center (FRC), a central reception facility for the entire NTT West area, to boost customer service for the wide range of orders and questions resulting from the rapid proliferation of the Internet and corresponding rapid increase in Web use, and to establish continuous positive relationships with NTT West's customers by providing service and support optimized to their lifestyles.
2. Expanded Solutions Business
NTT West has been offering the "prosol Series" to provide system solutions to a wide range of customers, from government agencies to businesses. As the initial scheme for "N. prosol," a total network solution individually optimized for small to medium-sized businesses and local governments according to application, in May 2003 NTT West began providing "VPNext," an all-in-one package that includes everything from broadband lines like B-FLET'S and VPN equipment to installation, maintenance, and operation. Then, in August 2003, NTT West began offering its "Broadband VPN Solution," an easy-to-order product that opens the various broadband VPN services, such as Wide LAN Plus, Mega Data Netz, and FLET'S GROUP, to quick, economical use in order to meet the growing needs of enterprises and government agencies for low-cost wide-area VPNs that enhance operations and productivity by transmitting video content and integrating data and audio over a network.
Further, in July 2003, as a new lineup for "C. prosol," a total IT solution for optimizing commerce (commercial transaction cycles) that can be implemented quickly and economically, regardless of type of business, NTT West began offering "function integrated call center solutions" to integrate the independent contact channels of telephone, fax, Web, e-mail, etc., used to receive orders and handle questions from customers at a central reception point, resulting in increased efficiency and effectiveness of CRM (Customer Relationship Management) in in-bound operations.
In the area of "G. prosol" solutions for local governments, NTT West teamed with NTT NEOMEIT in April 2003 to provide solutions to accompany the full-scale launch of the Basic Resident Register Network, which employs IC cards designed for the Basic Resident Register Network to facilitate the transaction of a variety of government services through the network.
In August 2003 NTT West added three new offerings for "D. prosol," reliable solutions to satisfy customer demand for better defense against security threats like computer viruses and unauthorized access in cooperation with Luck and Sumitomo Corporation: Total Security Monitoring Service, Security Information Service, and Security Hole Check Service Light, providing total solutions, from consulting on implementation to complete design, construction, and operating support for security systems.
To reinforce support for these activities, in November 2003, NTT West, the NTT MARKETING ACT Group, and the NTT NEOMEIT Group joined together to establish a Security Services Promotion Office with a group total of 1,000 employees. The office is charged with providing community-based high-quality total security solutions that reflect the NTT West Group motto of "Secure," "Safe," and "Reliable."
NTT West also expanded the lineup of the @recolte Agricultural Information Processing System Series for agriculture-related groups and organizations, and in May 2003 launched the Meat Traceability System to digitally register and manage the variety of information generated in the beef production process, such as producer name and location raised, in an electronic database which can be used to provide information to consumers to promote the safety of meat.
3. Expanded NTT West Group Operations
NTT NEOMEIT continues to expand the operations surrounding its customer network and system construction and maintenance integration (MI) business, and has been using the telecommunications technical capability, know-how, and front-line service network developed in this field through these operations to further expand business. NTT NEOMEIT has provided customers with total IT solution services, enhancing its brand products and services, including AQStage, which provides high-quality, high-security IT services to enterprises and government agencies, Neo'z, which provides personal computer support services to SOHO and general consumers, EXPLANET and GEOSPACE (digital map), which provide specialized map information products using network technology, and OZFA, which supplies information equipment. Further, while promoting business based on an operating alliance formed in fiscal 2002, NTT NEOMEIT has been collaborating with Voice Network Group Companies in the comprehensive sale of home appliances in a bid to seek out new business opportunities.
NTT MARKETING ACT has expanded operations by actively promoting "ACTOS," a unified brand for its new IT-related services, in addition to its traditional telemarketing business. Specifically, NTT MARKETING ACT has promoted "total marketing solutions" that provide total problem resolution support to ensure the customer satisfaction demanded by enterprises, by combining existing operations, such as telemarketing and temporary staff services, with the know-how gained from those businesses, and has initiated the member program "ACTOS Member" to offer the products handled by MARKETING ACT Group at special member prices and provide useful information to customers, as a part of CRM activities for general users. NTT MARKETING ACT also launched "ACTOS Mobile C," an ASP service that utilizes 2-dimensional matrix codes to make possible economical sales promotions and customer management through joint utilization of customer management and 2D-code distribution systems by multiple users over the Internet.
In light of the corporate scandals that have been all too frequent in other companies of late, the entire NTT West Group has engaged in a series of projects to reinforce its corporate ethics. In order to instill sound ethics in all employees and nurture corporate culture and awareness against illegal and unethical acts, NTT West held corporate ethics workshops for all employees, including top management, and designated January as Corporate Ethics Month, during which various awareness tools were distributed and an awareness survey was implemented.
In addition to these activities, NTT West is also working to protect the environment, by promoting environmentally-friendly policies to conserve paper resources, combat global warming, and reduce waste, all very important for reducing environmental impact from our business operations. Specific measures taken include conserving paper resources by reducing the amount of virgin pulp used in telephone directories and other publications, countering global warming by reducing the power consumed for communications, and reducing industrial waste by establishing medium- and long-term group action plan targets alongside individual fiscal year targets, and forming and implementing environmental protection action management programs to achieve them. Based on the NTT WEST Group Global Environmental Charter and together with the NTT MARKETING ACT Group and NTT NEOMEIT Group, the NTT WEST Group has strived as one to promote action for the protection of the environment, as by reducing the burden on the environment from the Groups' activities and complying with environmental laws and regulations.
The NTT WEST Group has also been working on certification for ISO14001, the international standard for environmental management systems, to continually improve its environmental measures and reduce risk to the environment. The growing number of branches are all striving to enlarge the certified area at each branch. Following on the certification last fiscal year of the Kanazawa Branch, the Ehime and Shizuoka branches expanded their certified areas to include all branch activities. The Group has set as a goal the certification of all branches as well as group companies by the end of fiscal 2005.
In continuation of the overall environmental protection measures of the NTT WEST Group from last fiscal year, the NTT WEST Group has actively made the status of its environmental protection activities public through such vehicles as the NTT WEST Group Environmental Report (which includes the NTT MARKETING ART Group and NTT NEOMEIT Group) issued in September 2003, in an effort to assume responsibility as a corporation for the protection of the environment.
As a result of the above, operating revenues for the period under review were 2,166.8 billion yen (down 2.2% from the previous year) and recurring profit was 90.5 billion yen (up 101.6% from the previous year). Net profit totaled 61.5 billion yen (up 217.4% from the previous year), posting the second straight year of corporate profitability.