Nippon Telegraph & Telephone (NTT)

Thank you very much for attending today despite your busy schedules. From now, we would like to start the briefing on NTT fiscal year 2023 second quarter financial results. I am Hanaki from the IR office, and I will be facilitating this session. I would like to first introduce the attending members on stage. Representing member of the board, President and CEO Shimada. Representing Member of the Board, Senior Executive Vice President Hiroi. Executive Officer, Head of Finance Accounting, Nakamura. Executive Officer, Head of Corporate Strategy Planning, Hattori. Today's briefing is streamed live. We are planning to stream it on our website at a later date. so we seek your understanding beforehand. Please refer to presentation materials posted on our IR website. On the first page, points to be noted is written, so we kindly ask you to please go through them as well. Without further ado, from Presidency Oh Shimada, we'll be explaining the outline of the financial results, followed by Q&A from the floor. Mr. Shimada, please go ahead.

Thank you for joining us despite your busy schedule. I would also like to thank those of you who are connected to us on a remote basis. Allow me to share with you the second quarter results for the fiscal year 2023. Please turn to page four. Operating revenue increased and operating profit declined year on year. Operating revenue reached new record high levels as the second quarter. Operating revenue increased 78.4 billion yen year-on-year, up to 6 trillion 364.6 billion yen, thanks to increased revenue from integrated ICT business and global solution business. Now, after this increase, there is positive impact of roughly 80 billion from the foreign exchange. As for operating profit, this went down by 45.6 billion down to 950.9 billion due to upfront costs related to large-scale system renewal to improve operational efficiency at the regional communication business, as well as increased costs for removal of unnecessary assets in order to reduce the size of the asset. We do not disclose quarterly plans, but both operating revenue and operating profit are in line with our expectations. During the second half, we intend to generate cash and profit by expanding growth investment and slim down non-core assets, as well as carry out cost reduction, and we will work to achieve the annual target of increase in the consolidated operating profit throughout such efforts. As for profit, this declined 25.8 billion yen to 670.8 billion yen due to the drop in operating profit and increase in interest payment. EBITDA declined 34.5 billion yen to 1,673.1 billion yen due to decline in operating profit. Please turn to page five. This is the contributing factors by segment. Starting with the integrated ICT business segment, there was increase year on year due to increase in enterprise business and smart life business. The decline in operating profit relating to upfront investment toward future growth of enterprise business was more than offset by cost efficiency improvement at the consumer communication business. As for regional communication business segment, on top of the decline in fixed-voice revenue, there was also upfront cost in the first half, which I have already alluded to. So both operating revenue and operating profit went down year on year. Both revenue and profit is in line with our expectation, and we will work toward achieving increase in both revenue and profit for the full year basis. As for global solution business, Operating revenue increased year-on-year due to increase in Japanese domestic public sector business and enterprise business and also positive impact on foreign exchange. Operating income increased year-on-year despite the increase in overseas business integration cost due to structural transformation and increase in revenue. As for other business, inclusive real estate and energy, both operating revenue and operating profit declined due to drop in revenue from electricity business and anode energy. Please turn to page six. This shows you the projection for the full year, as we announced back in May of this year. Although as of the second quarter, both operating profit and profit has declined year on year, this is in line with our plan, and through increase in operating profit during the second half, we intend to achieve the annual target, as well as the APS target, which is welcoming its final year in fiscal year 2023. Please turn to page 7. I would like to cover several topics. Please turn to page 8.

First, I would like to explain our initiatives related to autonomous driving. In anticipation of the full-scale deployment of autonomous driving services in Japan, NTD has invested in May Mobility, a company with strength in autonomous driving technology and has obtained exclusive domestic sales rights for May Mobility's automated driving solutions in Japan. by leveraging May Mobility's autonomous driving systems and NTT's high-speed, high-reliable network and IC technologies. NTT will work on various partners to provide autonomous driving services that solve social issues. Please go to page nine. Next, as for the initiatives to expand ION's global business, I will explain establishing of ION Global Promotion Office. With the aim to generate business cases utilizing ION, NTT Data Group established the ION Global Promotion Office in North America and EMEAO. We are aiming for social implementation of ION by training 600 ION technology experts globally by the end of fiscal year 2025. Please go to slide 10. Next, I will explain creating ion data centers through APN. In order to realize decentralized data center, we will conduct tests of APN connections between data centers in the U.S., U.K., and Japan by the end of fiscal year 2023. Decentralized data centers allow for low latency, high capacity and high quality data transmission through multiple facilities as if only one data center was being used for data processing. Moving forward, similar tests will be conducted in countries other than the US and the UK. Page 11 is showing the progress of under the medium-term management strategy is as shown. Please look at page 12. Finally, I would like to explain the number of shareholders. I will report the number of shareholders as of the end of September after the stock split. The right side of the graph shows the number of shareholders at the end of September. The number of shareholders which had previously tended to increase slightly has increased significantly more than 1.5 times. We believe that the stock split has triggered interest in investing in NTT stock, especially among individual shareholders. The age structure of NTT shareholders has also become more diverse, with the percentage of shareholders in their 40s or younger increasing approximately fourfold. This is the explanation regarding the financial results.