Nippon Telegraph & Telephone (NTT)

Thank you very much for attending today, despite your busy schedules. From here, we would like to start the briefing session of NTT's FY2023 first quarter financial results. I will be facilitating today's meeting. My name is Hanaki from the IR office. First, I would like to introduce the attending members on stage. Representative, member of the board, Senior Executive VP Hiroyi. Executive Officer, Head of Finance and Accounting, Nakamura. Executive Officer, Head of Corporate Strategy Planning, Hattori. Today's briefing is streamlined on audio. We are planning to stream- streamline it on our website at a later date, so we seek your understanding beforehand. As for today's explanation materials, please refer to presentation materials posted on our IR website. There is a point to be noted on the first page, so please read through it as well. Today, Senior Executive VP Hiroi will explain the outline of the financial results first and open the floor for your questions afterwards. Mr. Hiroi, please go ahead.

Thank you very much. My name is Hiroi from NTT. Thank you for joining us despite your busy schedule. We appreciate your attendance. I would now like to present The financial results for the three months ended June 2023. Please turn to slide number four. This talks about the status of consolidated results for the first quarter. Operating revenue increased, operating profit decreased, and profit increased. That is the financial presentation. Operating revenue and profit reached new record high levels as the first quarter. Operating revenue increased 42.2 billion yen year on year and reached 3,111.1 billion yen due to increase in revenue in integrated ICT business segment as well as global business solution segment. Now, of this increase, currency or foreign exchange accounted for roughly 40 billion yen of this increase. As for operating profit, This decreased by 28.7 billion yen year-on-year, down to 474.7 billion yen due to increased upfront costs related to operational efficiency and replacement of facilities, as well as reinforced security in regional communication business segment, as well as increasing electricity costs. Although we do not ordinarily disclose the first quarter plans per se, both revenue and profit are progressing in line with our expectations and our forecast. And we're working to achieve the consolidated guidance aiming at increased profit on a full year basis. As for profit, profit increased 7.2 billion year-on-year and reached 375.8 billion as decline in operating profit and increased interest expenses was covered by proceeds from sales of shares. EBITDA decreased 18.9 billion year-on-year, reaching 838.5 billion due to decline in operating profit. Let me now turn to slide number five. where we talk about the contributing factors by segment. Let me start with the integrated ICT business segment. In this segment, revenue increased year on year due to enterprise and smart life business increase. Well, operating profit declined in part due to accelerated growth investment in smart life business. Operating profit in enterprise business grew from increased revenue as well as improved cost efficiency in the consumer communication business segment. As for regional communication business segment, both first quarter operating revenue and operating profit declined due to drop in fixed line voice service revenue as well as demand for working from home having run its course There was also impact from increase in upfront costs for operational efficiency improvement and reinforced security, as well as increased electricity costs. Having said that, both operating revenue and operating profit are progressing in line with our plans, and we are going to work toward achieving our full-year plan. Let me now turn to global solution business segment. Revenue grew year on year, from growth in domestic business, such as public and enterprise segment, as well as impact of currency. This applies primarily to the overseas business. While increased revenue led to increased profit, operating profit declined year on year due to increase in integration-related costs in our global business, as well as increase in investment for growth. Well, increase in integrated related costs will continue beyond the second quarter. We will work to achieve the annual plan through cost reduction based on structural transformation, and we believe that we are in line with our plan. As for the other segment, operating revenue and operating profit declined year on year due to dropping revenue from electricity business at Enid. Let me now turn to three major topics in relation to the first quarter. Please turn to slide number seven. This relates to establishment of new companies for the creation of new value. I have identified three companies that have been established and new. First is we established NTT Innovative Devices Corporation, which will develop, manufacture, and sell photonics, electronics, convergence devices. We also established the second company called NTT Green and Food Incorporated, which will produce and sell seafood farmed by land-based agriculture systems. Also, thirdly, we have integrated NTT Business Associates and NTT Learning Systems to operate as a strategic company in the human capital field. And they have integrated NTT XC partner. Through this business, we will deliver creation of new value

Next is slide eight. This is regarding shareholder return and regarding share buybacks. Continuously, in order to improve capital efficiency and enhance shareholder returns is the objective, and we have resolved in today's Board of Directors meeting to buy back shares in an aggregated amount up to 200 billion yen. As conventionally communicating to you, enhancing the shareholder returns is something that we would like to continuously conduct, and within the new medium-term management strategy regarding the EPS, we have clearly stated that we are steadily going to increase that repeatedly. Therefore, in order to realize such things, we would like to surely implement the shareholder return that we are sharing with you today. Page 9 is regarding the record of share buybacks up to now, so please refer it for your reference purpose. Conducting the share buyback and by increasing operating profit, we will be increasing the EPS surely, which is leading to the increase of the share price is how we think about this. And on page 10, this is a situation regarding number of shareholders. So I would like you to refer this as your reference as well. FY 2023, end of June, number of shareholders are shown comparison with the end of March. We have announced the stock split, and due to that, We are seeing an 18% of increase of shareholders who show the interest to our shares after the announcement of the stock split. And after the stock split has become effective, what was the status of that? We will not know about it until September. And once we know the status, we would like to share that thoroughly with you. Page 11 is showing the progress under the medium-term management strategy. We have compiled the initiative, so we would like to refer to this later. That is all from my side. Thank you.