Nippon Telegraph & Telephone (NTT)

We will now start the briefing on NTD's financial results for fiscal year 2020 third quarter. Please go ahead. Thank you very much for participating today despite your busy schedules. I am Fujiki from the IR office and will be the facilitator today. I would like to introduce today's attending members. First from NTD, Mr. Shimada, representative member of the board, senior executive vice president. Mr. Nakayama, executive officer, senior vice president, head of finance and accounting. Mr. Tanayama, executive officer, senior vice president, head of corporate strategy planning from NTT Tokomo. Mr. Fujiwara, executive vice president, member of the board of directors, general manager of corporate strategy and planning department. Mr. Kobayashi, Senior Vice President, General Manager of Accounts and Finance Department. Today's briefing session voice is streamed live. This will also be streamed on our company's website on a later date, so we kindly seek your understanding. Today's presentation materials are posted on our company's IR website under Presentation Materials. On the first page of the presentation material, points to be considered are stated, so we kindly ask you to read through them. After this, Mr. Shimada will explain the outline of the results and others, followed by opening the floor for questions from all of you. Mr. Shimada, please.

Thank you very much. Shimada is my name. Thank you for joining us at this web-based meeting despite your busy schedule. So allow me to explain the financial results for the nine-month ended December 31st, 2020. I'll be very brief in my presentation. So pages four, five, and shareholder return, page 14. For this, I will be focusing on these three pages. So let's start with page four. As for third quarter, we saw a decline in operating revenue but increase in operating income. Net profit was achieved record high as of third quarter. At this moment, both operating revenue and operating income is proceeding better than our annual plan as for operating revenue as a result of declining Docomo's handset sales as well as overseas system integration business revenue as well as due to change in accounting method for part of the revenue. whereby net amount instead of total amount will be recorded. Operating revenue decreased by 124.7 billion yen year-on-year and to reach 8,703,800,000 yen. As for operating income, while there is decline from impact of COVID-19, as a result of increase in profit in Dokomo's smart left business as well as improved profitability in our overseas business, operating income increased 51.9 billion yen and reached 1,502,300,000 yen. As for net profit, There was an increase due to increased operating income. Also, there was contribution from absorption of minority interest income related to turning Docomo into a whole new subsidiary firm. So, profit increased 34.3 billion yen and reached 831.2 billion yen. As for overseas sales, there has been decline due to change in accounting method as well as impact from COVID-19. But on the other hand, operating margin improved due to streamlining exercise at NTT Limited. Right now, we're making very strong progress. We need to continuously monitor the possible restriction on economic activities around the world due to COVID-19. We will not be revising the annual plan at this juncture, but we'll make an effort to exceed the plan. Now, as far as the impact of COVID-19 during the third quarter results are concerned, the impact on operating revenue is $160 billion and $30 billion on operating profit. Please turn to page five, contributing factors per segment for the third quarter. As for mobile communications segment, decrease in operating revenue but increase in operating income, declining mobile communications service Revenue due to decline in housing sales and global revenue and expanded impact of the new rate plan was offset by increased profit and smaller business. So revenue declined year-on-year, but operating income increased year-on-year. As for regional communication segment, while revenue increased due to strong fiber sales at both NTT East and West, there is disposable property related to expanded capacity at NTT West. So increase in revenue but decline... So, increase in revenue, but decline in operating income. But for the second quarter, third quarter, they showed both increase in operating revenue and operating income. So, very strong. That's a long distance in the national communication segment. Change in accounting for part of the revenue at entity limited did take place. And so, there was impact on COVID-19. So, there was decline in operating revenue. On the other hand, improved profit, there was improved profit from structural reform in overseas business. So, revenue declined, but income increased as a result in this segment. As for data communication segment, this was already announced for entity data just yesterday. They recorded increase in both operating revenue and operating income year-on-year. Let's turn to page 14. This is regarding the shareholder returns.

In the midterm management strategy, we have announced our basic way of thinking of continuous dividend increase. Therefore, this is reflecting the daily progress of this fiscal year performance against annual performance forecasts profit increase from wholly owning entity Tokomo and improvement of cash flow. And given this, as for dividend, fiscal year 2020 year-end dividend will be 55 yen, a 5 yen increase from the dividend forecast at the beginning of fiscal year, and the annual dividend of 105 yen per share, and it is a 10 yen increase compared to the previous year.