Nippon Telegraph & Telephone (NTT)

Thank you very much for attending today despite your busy schedules. We would like to start the briefing session on NTT's fiscal year 2020 for first quarter financial results. I'm Hanaki from the IR office and will be facilitating today's session. First, I would like to introduce today's attending members. Hiroi, represented member of the board, senior executive vice president. Nakamura, executive officer, head of finance and accounting. Hattori, executive officer, head of corporate strategy and planning. The audio of today's briefing is streamed live. We are planning to have on-demand streaming on our website at a later date, so we seek your understanding on this matter. As for today's materials, please refer to presentation materials on our IR website. On the first page of the material, points to be noted are listed, so we kindly ask you to please go through them. Today, Senior Executive Vice President Hiroi will explain the overview of our financial results, followed by Q&A. Mr. Hiroi, please go ahead.

Thank you very much. Hiroi is my name. Thank you for joining us. Despite your busy schedule, we appreciate your attendance at the presentation of financial results. So allow me to present to you the financial results for the first quarter of fiscal year 2024. As far as the financial results are concerned, Operating revenue increased but operating profit decreased. For operating revenue, this increased 129 billion yen and reached up to 3 trillion yen, 240 billion yen, due to gains in operating revenue in the integrated ICT business and the global solution business. There was positive foreign exchange impact of roughly 80 billion yen. As for operating profit, there was drop in telecommunication service revenue for fixed and mobile. Also, there was cost to reinforce customer base and for removal of unnecessary assets in order to reduce maintenance costs at NTT East and West. There was also cost pertaining to disaster recovery, so operating profit decreased by 38.8 billion yen and went down to 435.8 billion yen. Although operating profit declined, I believe the performance is very much in line with the guidance we have given at the outset. We will continue to reinforce customer base through sales reinforcement and network quality improvement, and also on top of steadfast cost reduction and expansion of enterprise business as we work to achieve consolidated profit plan. Profit decreased by 101.6 billion yen and went down to 274.1 billion yen due to the drop in operating profit and rebound proceeds from the sales of shares last year. EBITDA decreased 23.1 billion yen year-on-year and went down to 115.3 billion yen due to the drop in operating profit. Please turn to the following page. Please turn to page five. I'd like to talk about contributing factors by segment. Let me start with the integrated ICT business segment. Even though mobile communication service revenue continues, growth in finance payment, especially in the smart life business sector, helped to drive increase in operating revenue. Although operating profit increased in smart life business, Overall operating profit decreased year on year due to increasing cost to reinforce customer base. We will work to reduce cost and reinforce customer base in order to deliver the annual plan. As for regional communication segment, operating revenue and upper profit decreased year on year due to drop in network revenue as well as from removal of unnecessary assets to reduce maintenance cost and also replace aging facilities. We also saw cost increase due to disaster recovery cost. So therefore, both operating revenue and upper profit declined for the regional communication segment. Both revenue and profit are in line with the plan, and we will work to pursue selection and focus of business and actively tackle fundamental cost reduction as well as operational efficiency improvement. Let me now turn to global solution business segment. NTData provided details when they made their financial presentations yesterday. But on top of increased revenue in public sector, finance, and enterprise sector here in Japan, foreign exchange impact led to increase in both operating revenue while operating profit was flat. As for the other segment, we recorded increase in operating revenue and operating profit driven by expansion of sales of housing at NTT Urban Solutions. So that is the outline of the financial results. Please turn to page 6. I would now like to talk about shareholder return. We will carry out share buyback of up to 200 billion yen in order to improve capital efficiency. And the period will be roughly from August 8th of fiscal year 2024 up until March 31st of 2025. This is done to improve capital efficiency and to enhance shareholder return, especially you see the market volatility in the last few days. Literally speaking, Japanese stocks are struggling, but it's important that we provide strong shareholder return. We will continue to support, continue to work hard so that we'll be able to support the overall share price in the marketplace. Next. Let me talk about some of the topics starting from page eight and onwards.

Page nine, first, is established NTTGIX to promote linked AI is what I would like to explain. To realize The shift from conventional individual AI that optimizes each business and industry to a linked AI that links in a cross-business, cross-industry way, NTT AI6, will be established in August this year. By utilizing cross-business, cross-industry data and realizing the optimization of the entire supply chain, we aim to solve social issues such as labor shortages. Next, page 10, please. Promoting the further development of Tsuzumi. NTT, this version, LLM, Tsuzumi's situation. Since the commercialization in March 2024, customers from variety of fields showed interest, and we are now making over 400 proposals for implementation. We have received orders from companies such as Yamato Transport Company and Fukui Prefecture and others. In addition, we have started the Tsuzumi Partner Program, and Transcosmos is participating in it, and we will start providing Tsuzumi on Microsoft Azure. Going forward, we will collaborate with our partners to accelerate the expansion of Tsuzumi both domestically and overseas. And page 11. This is NWM1. We call it Noom1. You see this graphics here and photograph. We will be selling the device and headphone. Conventionally, In the name of Noom, we've already sold a product, but in addition to the existing line-up, utilizing NTT's proprietary technologies, PSSET and Magic Focus Voice, we have made this in a double-equipped for the first time and launched the Noom One, which is an open-air flagship model, and this is sold on Amazon, so I would like you to make the purchase of it. I myself is actually using this, and it is a very, it's providing a very good sound quality is what I feel. If you download the app, you are able to adjust various levels of the sounds. And even though you're doing a remote working, you can listen to the content of the meeting itself. And because it's open ear, you'll be able to hear outside sounds as well. So I think it's a good product for remote working. The price is 39,600 yen. So I'd like you to make a purchase of this. And next, page 12, it is the current status and future of renewable energy business. We, in 2023, we have acquired Green Power Investment, a leading domestic renewable energy company, and added wind power generation to solar power generation capabilities, and anticipates achieving a renewable energy acquisition forecast of 8 billion kilowatt per hour per year by 2030. NTT will strengthen to support for customers' green transformation by leveraging the group's renewable energy-related assets, technologies, and solutions. And next, page 13 is showing the status of the number of shareholders. The number of shareholders has shrunk since becoming listed. After the stock split announcement, the number of shareholders continues to increase, and as of the end of June of this year, compared to before the stock split announcement, the number of shareholders increased by 2.5 times to 2.26 million, and this is setting a new record high. As shown on the right-hand pie chart, the age composition of shareholders has become quite diverse, and various age groups shareholders own our shares and for us. This shareholder's composition, we take it as a positive Lastly, page 14, here we're showing the progress under the medium-term management strategy. For this part, we are showing the progress since this May, and it is as shown here, so I'd like you to read through them. This concludes my explanation.