Nippon Telegraph & Telephone (NTT)

We will now start the briefing session of NTT financial results for the six months ended September 30th, 2021. Thank you very much for participating today despite your busy schedules. I am from the IR office and I will be today's facilitator. It is nice to speak to you today. I would like to introduce today's attending members. Mr. Sawada, representative member of the board, president. Mr. Shimada, representative member of the board, senior executive vice president. Mr. Nakayama, executive officer, senior vice president, head of finance and accounting. Mr. Taniyama, executive officer, senior vice president, head of corporate strategy planning. Today's sessions Voice audio will be streamed live on the internet. This will also be distributed on demand basis on a later date, so we kindly seek your understanding. After this session, NTT Docomo will hold its briefing session regarding their results, so please attend this session also. Today's presentation materials are posted on our website under the title Presentation Materials. On the first page of the presentation materials, points to be considered are stated, so we kindly ask you to please read through them. After this, Mr. Sawada, our president, will explain the outline of the results and others, followed by opening the floor for your questions. Mr. Sawada, the floor is yours.

Thank you very much for joining us today. My name is Samada, the President and CEO. I will give you the highlights of the consolidated results for the first half of the year. Please turn to page four of the material. This shows you the consolidated results status. We saw year-on-year both operating revenue and operating income increase in profits at the new record high level. That is the situation as for operating revenue. due to increased identity data, operating revenue increased by 176.3 billion yen. Operating income, there was decline due to impact of review of the accounting system in the previous year at Docomo, but due to increased revenue at various up-goals, such as entity data, as well as their cost reduction efforts, operating income increased by 700 million yen, up to 1 trillion 9.3 billion yen. And for profit, this increased by 134.3 billion yen, and so an increase year-on-year. So both operating revenue and operating profits exceeded our expectation as for overseas sales increased year-on-year due to increased system integration. So we saw both increase in operating income and operating profit and operating revenue. Now page five talks about the Percentage of change in revenues and profit on a quarterly basis of the last couple of years. The blue shows 2018. We maintain increase in both increase in revenue and income. Green on the bottom, this shows increase in revenue by profit decline. This is for 2019. This is due to the reduction in billing plan at Okomo. 2020 shows the impact of COVID-19. We're able to make recovery from that. and we were able to refer to increase in both revenue and income during the year. As for 2010-21, this is indicated in red. In the second quarter, we saw an increase in profit. So we're now back on track toward increase in both operating income and operating plan. So we are very much in line with their initial expectation. So therefore, as for the recent situation is concerned, as far as the first half is concerned, we actually exceeded our initial business plan. Turning now to page six, this shows you the contributing factors by segment. Top shows operating revenue, bottom shows operating profit, or income rather. So as far as the downward trend is concerned, this is in Docomo, but as for other segments, the correction is not Docomo and long distance and international communication, but other sectors shows with increase in operating revenue and operating income as for mobile, As for sales, revenues are increasing. So we now see upward trend in operating revenue in the mobile communications segment. As far as the property is concerned, there was 27 billion yen impact from the review of the point plan. So there was also increase in factory-related investment and also increase in R&D. So as a result, on a year-on-year basis, This went down. However, there was $35 billion in decline in the first quarter. It's only $5 billion in the second quarter, so things are improving. As far as regional communication segment is concerned, focused on fiber, we see increasing service revenues. So, again, increasing revenue and income due to cost reduction. As for long-distance international segment, at NTT Limited, there was increase in structural transformation costs. So, there is a semiconductor shortage impact. This has had impact on declining chances on equipment sales as well as maintenance service revenue. So that is why they are experiencing declining both operating revenue and operating income. As for data, I think they have already announced their plans last year, just yesterday. Five topics. I'll be very brief in highlighting the topics. First relates to establishment of a sensibility charter. For the first time, we are setting a sensibility charter on a global basis. We have created, so this is a broad concept that includes SDGs, ESGs, and CSVs. This is a certain norm. And we have set our principle as self as we. As we have already announced, we have already announced the environment energy vision as well as new management style transformation policy. On top of these policies, we've also announced our human rights policy as well in conjunction with the aforementioned vision. Let's skip page nine. And go on to page 10. Here we talk about our thinking behind the policy of self-as-we. There are three topics. Ensuring the coexistence of nature and humanity, improving prosperity for all people and cultures, and maximizing well-being for all. Please turn to page 11.

We have set 30 activities for them, especially three, if I would like to point it out. Carbon neutral, and in the center where it says our culture is promoting the B2B2F and under the human right. promoting recruitment training and education for diverse human resources and women's investment in the workplace. And these indicators will be reflected in the executive's compensation. Page 12 is explaining about the basic way of thinking regarding the human rights policy. Page 13, the second topic, the Japan rugby is going to be changed to Japan Rebellion as their title partnership. We will be supporting them as the sponsors. And on page 14, this is the third topic, is showing the initiatives to create a remote world. There are three points, NTT East, same telework system, NTT West, the El Gana business chat, NTT Business Solutions, El Gana business chat, and Minor Pocket Service, which have a combined identification verification and my number card from NTT data. And on page 15, we're showing the progress regarding the medium-term management strategy initiative. It's in detail, so if you can look at the red letters, The ION, the Avatar robot, has been implemented, and to have the remote control, it's moving under 20 megabytes. So it's 1 20th of the regular delay is what we were able to realize through this. And using that method, we wanted to apply it to the eSports, which is a networking, and we are working on it. A MINISEC order, we wanted to control the latency, and we have developed that technology, and was of the case for ION. There's a possibility that we'll be able to come out with this technology to be applied, and globally, NPDT E-mail. Including the Latin America, we have established a new company, and we would like to promote migration. And as for strengthening of our new businesses, together with MUFG Bank and Osaka Gas Companies, and others, a total of eight companies, we created a renewable energy fund in September. At the very bottom, enhancement of our corporate value, we have issued NTT group green bonds. And today, it was resolved, and the board of directors are meeting at Tokyo Stock Exchange New Market Classification. We will be selecting a prime market and also comply and commit both the items in the revised Corporate Governance Code. And lastly, it's about the cancellation of the Treasury stock. It is going to be 7.15% of the outstanding shares prior to cancellation. And we will cancel 200 and 79 million shares. That is all from me. Thank you so much. Now I would like to take questions.