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Thank you very much for attending despite your busy schedule today. We now like to start briefing session for NTT Inc's first quarter financial results of FY2025. I am Akaishi from IR office serving as the moderator today. Thank you very much for your cooperation. First, I'd like to introduce today's attendees. Representative member of the board, Senior Executive Vice President Hiroi, Senior Vice President, Head of Finance and Accounting, Nakamura. Senior Vice President, Head of Corporate Strategy Planning, Hattori. These are the attendees from our side. Today's briefing is audio streamed live. It will be available on demand on the website at a later date. Your understanding is very much appreciated. I would invite you to refer to the presentation material posted on our IR site for this briefing. Also, may we ask you to kindly read disclaimer on the first page of the material. First, we'll see Executive Vice President Hiroi. We'll explain the overview of the financial results, and then we will take your questions. Well, Mr. Hiroi, please.

This is Hiroi speaking. Thank you very much for attending our briefing session despite your busy schedules. So I would like to explain FY2025 first quarter financial results overview. As for the results, overall operating revenues increased and operating profit declined year on year. Operating revenues for the first quarter reached new record high levels. As for the revenues, though there was an approximately 50 billion yen decline from the FX rate impact, Due to the revenue increase from the enterprise business expansion at each group company, the operating revenue was 3,262,000,000,000 yen, up by 22,000,000,000 yen year on year. As for the operating profit, though entity east and west increased, at Yokomo, in addition to the decline in the mobile communication service revenues, Due to the rollout of initiatives such as strengthening customer base and improvement of mobile network quality, EBDA was 801.4 billion yen, down by 13.9 billion yen year-on-year. Offering profit was 405.2 billion yen, down by 30.6 billion yen year-on-year. profit was 259.7 billion yen down by 14.4 billion yen year-on-year due to decline in operating profit. The overall of the valuation of the first quarter, the foreign exchange rate was a bit more yen appreciated than what we have expected, but both revenue and profit, this is progressing as expected by continuing to surely reduce the cost and expanding the enterprise business and others. We will work towards achieving the annual consolidated plan. Next will be the overview by segment. As for the integrated ICT business segment, though the mobile communication service revenue decreased, Revenue increased year-on-year due to the growth of a smart life business led by finance business and the organic growth of the enterprise business. As for the profit, there was an increase in the enterprise business and implementing various measures to improve the income and expenditure profit declined year-on-year due to implementing measures to strengthen customer base and improve network quality. As a result of initiatives to strengthen our customer base, MMP was positive in the first quarter cumulatively. Towards achieving the annual plan, we will strengthen our competitiveness through continuing to strengthen our customer base and improve our network quality, as well as surely conducting cost reduction and expanding our growth business, such as smart light business and enterprise businesses. Next is regarding the global solutions business segment. Although there was an increase in revenue due to capturing the DX demand in Japan, there was a negative foreign exchange impact of approximately 50 billion yen in the area, therefore both revenue and profit are at the same level as the previous year. Next is regarding the regional communications business segment. resulted in increase in both revenue and profit year-on-year due to the increase of revenue of both enterprise and optic fibers business, though the legacy business revenue is declining. Furthermore, the net additions in the fiber optic services have increased year-on-year due to 10 gear bike plants and staffing sales are providing service to the entire apartment building. And as for other segments, Due to the growth of data center engineering at Urban Solutions, both revenue and profit increased year-on-year.

From now on, I'd like to share five topics. First of all, the very first one, I'd like to talk about Suzumi 2, Upgraded Pure Japanese-Made LRM. and WDE Tsuzumi is a purely Japanese model that NTT developed from scratch and we will be releasing the second generation Tsuzumi 2 in October of this year. We have significantly improved its ability to understand complex context and meanings which is necessary for interpreting internal business documents and manuals, a feature that was highly requested by our computers. For example, the accuracy of responses to inquiries about the accounting manual has improved four times compared to the previous model, and performance is comparable to that of other companies for models in benchmark comparisons. In addition, C3D maintains its cost or performance and effectiveness by running on a single GPU. It is also compatible with on-premise environments and as a purely domestically produced model, it can be used safely even with highly confidential information. We hope you look forward to this upgraded Tuzumi 2. Next, well, the NTT D3 listed on the Singapore Exchange. NTT D3 REIT. a real estate investment trust managed by NTTD's REIT manager. A consolidated subsidiary of the NTTD data group has been listed on the Singapore Exchange on July 14, 2025. And through the transfer of six data center assets, which is composing this, and then with this listing, the recovery cycle of data center investment could be accelerated and also we will be able to generate investment funds and maintain financial soundness while further growing our DC Center business and maximizing our corporate value. Next topic is the IO use cases at Expo 2025, Osaka, Kansai, Japan. May 24th and 25th on our entity pavilion days this year, entity held It's a Kabuki powered by ION, a real-time joint performance using ION APM, and two-way transmission between Japan and Taiwan, and Hanakura Senbonzakura Expo 2025 version, and words were given. At the NTT Pavilion, computers utilizing ION 2.0 consumes just one-eighth of that power of conventional computers. In FY2026, we aim to offer a commercial version with twice the communication capacity of the export version. And the next topic is the announcement of the policy for future fixed line telephone services. Given the deterioration of NTT East and West copper-based telecommunication facilities and the decline in cost efficiency in the future, NTT East and West plan to gradually transition to fiber optic and wireless-based fixed-line services by 2035, ensuring the continuity of fixed-line telephone services. To avoid causing inconveniences to existing customers, We will provide sufficient notice and transition periods before switching to alternative services, and NTT East and West plan to announce basic policies and related information around late September. The very final page is about the progress under the midterm management plan strategy. And so the progress since May is as shown, so I hope you will take a look at it at your leisure. Thank you.

Next, we would like to move on to the Q&A session. Regarding the questions, we would like to take those from those who are connected to the web conference system who have registered prior to this meeting. For those of you who have a question, please push the raise your hand button on the web conference system. If you want to cancel your question, please press the raise your hand button. When we appoint the person to ask a question, please identify your company and name and unmute. If and when we ask you to unmute, please unmute and ask your question. And please keep the unmute until we ask you to finish your question. Now we'd like to take a question from Nico. NBC Securities. Mr. Kikuchi, please go ahead. Please unmute. This is Kikuchi speaking. I have two questions. The first is what you have explained, the NTGDC REACH. It has listed and it seems that it has slightly declined. But the responsive or how are you looking at the responses that you're receiving right now? As Mr. Hiroi said just before, using this scheme, you want to accelerate investment cycle of data centers and you'll be able to circulate the funding in an effective way and I have high expectations towards that. However, is it really going to be something that's usable? I want your feeling on this. That's my first question. This is Hiroi speaking. As the total evaluation is, it has reached the pass score, passing score. From this spring, we went through various processes such as pre-marketing activities and others. And the market environment, there was the impact of the Trump tariffs, and the market was kind of soft. And also in the Singapore market, at the data center read, there were ones that were not performing so well. So there was a slight of a negative impact that we have received. However, data center read that entity sponsoring and the content of the asset has been evaluated to a certain level. So we believe that we have received a certain level of positive valuation from the investors. And the scale being a large and being able to hold for long term, I can not name them, but it seems that an anchor type investors are participating. And the pricing and in terms of launch pricing, I believe that there are various evaluation sources, but I think it is overall a satisfactory evaluation. Thank you very much. The communications with the investors. Increase the scale of it. It became something that you can absorb that, meaning that on a regular basis, you'll be able to sell and transfer your assets. And that was the passing grade. Well, if you're not able to do such a thing, there's no meaning to it. So on a regular basis, towards the market as of, a good quality asset that is in line with investors' expectation, we will transfer to the REIT and we want to grow the REIT itself. And I think we were able to make the start that will enable us to do that. Okay, thank you very much. My second question is related to performance of the first quarter. At Docomo, I have various questions, detailed questions, I'll ask them later. Over all the $405 billion of operating profit, I was forecasting about $430 billion. So I thought it may be close. But Docomo, as expected, still weak. And for entities east and west, as you said, yes, have increased their profit. And for the first quarter, as your company, how are you looking at it? Maybe it is not satisfactory, but still, it is as planned. Hiroi-san, from your perspective, how are you viewing the results of the first quarter? Well, this is Hiroi speaking. Just before, as I explained in the overview explanation, overall, the performance was in line with what we had expected. However, if we look... In detail, the content of it, there's the ups and downs, as you have pointed out, Mr. Kikuchi. But in a large way, what impacted the profit was the Docomo, the mobile business. Later, I believe there will be an explanation from them as well. They are strengthening their mobile business, and MNP turned positive. and continuing positive, and in terms of ARPU, it is proceeding in line with the plan, and I think that is good. However, in order to maintain that, to improve the strength of their marketing and sales capability, because the competitive environment is becoming severe, so at the point of selling the handsets, reinforcing the sales activities had a slightly negative impact in the results, and in order to strengthen it further, it will require cost. However, this part, we need to maintain our market share. Therefore, in order to achieve the overall full-year performance, that needs to be done thoroughly, as well as the cost reduction efforts. These are things we would like to continue to do in the full-year basis. And also for Docomo, the enterprise business side, the DX demand, and also we have the special elements factors such as Giga School. The enterprise business is steadily growing. What was slightly a concern, which was the SME customer's side of the business, their revenue is increasing, so we are seeing signs of improvement on that part of the business as well. Therefore, for the integrated ICT communication segment, that is something to evaluate. And for the, there was an announcement about NDT data yesterday, and though there's some FX impact, they were able to secure the revenue in line with what they did last year. So same as the domestic DX demand, they were able to capture that demand. And as that is for the global solutions and also for the regional communications, they are increasing their profit and that can be highly evaluated. There was some impact of selling the asset last fiscal year, there were some ups and downs. But the trend is that the profit trend based on the network is starting to bottom out. That is all. Thank you very much. That is all from me.

Thank you very much. Well, then, next is from Diver Securities for Tokunaga-san. Well, after meeting yourself, please start asking your questions. Tokunaga-san, can you hear us? I hope you can hear me. Yes, well, Tokunaga from Daiwa. I have two questions. First question, entity data TOB progress. Well, in the past, Well, from the autumn to winter, well, I think this will be done. And last year, well, as of the end of September, you had the I.L. Day. I think, well, disclosure will be, well, made. And it's that the correct understanding. And also, the MIC is now conducting hearing. And on that basis, well, the timeline and for generating synergy, this would be the data. it's not going to change. Well, TOV processes, well, we are really making steady progress in TOV, and so our 81% being purchased, and as of the end of September, we are to complete the entire TOV process, and so there is not much major concern with this kind of process. Also, in this way, And as you have pointed out, the market verification of our council or survey is conducted, and then there are various opinions expressed. But on our part, as for the welfare competition, well, there are legal requirements, and we are complying with those legal requirements. And some kind of concerns have been expressed but what exactly is their concern, which is not so clear. And so, within the rules, we are responding. And so, we don't expect to see any major sort of negatives from these concerns. And so, also, the share of entity data is quite different from that of NTT or Docomo. And so it may not be really giving major impact to market because of the smaller share. And so with this kind of verification procedures, we hope that we will be able to remove this kind of anxieties or concerns, and we hope that we will be able to really well make progress in line with the plan for TLB. Thank you very much. And the second point is related to disclosure. This time, NTT East and West. And so you have changed a lot in terms of breakdown of revenues. And what you have presented, well, according to the four quadrants, and then you will be breaking down on a quarterly basis. And so you have the work in progress and also the legacy and the profit margin. and others, well, I hope you will, once again, will help me understand. And also, we have about 25 billion, well, increase, and also 40 billion increase. And so with this, well, increase in revenue will come from all these, well, major SO business segments. Is this the correct understanding? Inakamura speaking. Thank you for your question. As Mr. Tokunaga pointed out, on IR day last year, and for the regional communication segment. Where are we going to grow? And so in which of the areas are we going to really well organize and sort the business out? And so that was announced on that day. And in line with that, we have separated the quadrants and then to really well assure the revenue by such classification. And as for the profit or income, as you have just well mentioned, the income from services by service, and we think that we need to further clarify and present the income from different segments or different business domains more clearly, and so this is something we need to work on and improve on that. And so please allow us to spend some more time. I hope I have answered to your question. And a follow-up question, and the net as of Hikari is very steady, and also the fixed line migration and you are presenting the path going forward, and also both for the optical fiber business and also the fixed-line, I think what you are saying were more upside compared to what you presented on IELTS Day. Is that the correct assumption? Well, in a longer-term plan, and lately, as Hiroisa mentioned, as for the optical services, we have been implementing various measures many areas and also the service desk is growing and has been growing steadily. And the revenue from that is growing steadily. And as for the fixed-line telephone communications and the number we are presenting has some noises and also we have some one-off factor. And so we hope that we will be able to really well talk more in details and so I think we're excluding that while the revenue is decreasing. But in terms of the overall trend, we are seeing favorable trend. Well, that's it. That's all from me. Thank you very much. Thank you very much.

From Nomura Securities, Mr. Masano, please unmute and then ask your question. Mr. Masnow, can you hear us? We can hear you. Please go ahead. I have two questions. First is a negative and second question is kind of positive. April to June, if I look at the numbers during this period, The structural issue, NTT Docomo's telecommunications business, NTT Data's overseas SI business seems to be struggling. So I'm wondering, how are you going to respond to this situation? First of all, the mobile communications service revenue of Docomo It's flat for handsets and MNP is a plus. Both is plus, but it's a negative $15.8 billion for revenue. Why is there such a decline? And the consumer communications operating profit in three months went down by $42.8 billion. And in full years, $30.7 billion decrease. So you have already exceeded the full year. So how are you going to recover to the full year level? So the integrated ICT communications business segment, the mobile part, and NTT data, the overseas business, I'm sure there's an FX impact. But I believe you're saying the same thing for about the last 10 years. What can be done to this to become that? I would like to hear your thoughts on these points. This is Hiroi speaking now. As you have pointed out, Mr. Masuno, now, first of all, Dokomo's consumer's mobile telecommunications service revenue, regarding the ARPU, we are starting to see a bottoming out, and MNP is the plus minus zero. However, Since the last fiscal year, there was a continuous decline, and that impact seems still remaining if you look at the numbers. So this flat trend, if this starts to stay that way, I think it will start to bottom out. So for this fiscal year, there's still a declining trend impact that was continuing from last fiscal year. And the challenge here, well, structurally speaking, the ARPU or the numbers of subscribers should stabilize moving forward. However, on the other side, we are spending a lot of marketing costs to strengthen the sales capabilities. So how much are we going to be able to absorb that cost is the challenge we need to overcome. However, the customer base, we need to surely support that or else the declining trend is not going to stop. Therefore, though it requires cost, we would like to surely absorb that and strengthen it. If we make it too strong or relax it, in the mobile handset business, we have the mass retailers and the agents. Through them, we're selling the handsets. So the sure commitment to these people or the tokomo's sales policy needs to be surely strengthened in the medium term and showing that to those is important and that is why we like to do that the management of the profit as they are pointed out towards the fiscal year end though it's not easy maybe a smart life our business as it has a structure as we go in the later in the fiscal year, it will generate more profit. So in a total perspective, we would like to manage the profitability to achieve the annual plan. And also the second NTT data, especially the overseas business, you have pointed out that is my understanding because the Japan domestic business comparatively speaking, is performing steadily. That was announced by NTT data yesterday, and the numbers are telling that story as well. However, for the overseas business, they are going through trials and errors still. You've mentioned that it hasn't changed for 10 years. That was quite a severe comment. But there have been improvements that have been made by region. For example, North America, the orders I received and the sales both were declining. However, still continuing for the first quarter, but from the second quarter onwards, they are starting to see signs that it's going to bottom out. and they are able to win a large account as well, so we would like to keep an eye on that. And for Asia, the foundation, the base of business is stable. The last fiscal year regarding the Australian business, it had many issues, and that is starting to come about. and we are actually responding to that right now. So we'll be able to see that positive effect towards the latter part of the year. The most concern is the Central Europe, well, Europe, the Holland and the German country. They have a high dependency on the automobile manufacturing industry, and the automobile industry is facing difficult times. therefore the businesses that are conducted in those countries and area, we're still not seeing signs of improvement. However, even these areas, well, they also have the data center businesses that are performing strongly. And so in a total picture, we believe that we are heading towards, and we are evaluating it as they are heading towards improvement directions. I hope you understand that. Thank you very much. Maybe I said for the last 10 years you haven't changed. It was a bit rude, so I would like to take that back. And the second question is for the business that is growing. When I look at your share price, how would your data center be evaluated as a key point is what I think. If we just look at the P&L, there's amortization, depreciation, interest rates, so it's a very small profit. So it does not become a large valuation. However, this part, not from the P&L, and not EBTA, but the true cash flow after interest payment, after tax, and after maintenance capex adjusted funds from operation, if we look at it from the recurring cash flow perspective, we were able to make a higher valuation than just looking at the profit level. So, in addition to the EVDA, AFXO's disclosure is what I would like to request. Of course, we can estimate it. However, if there is an official number, then at the market, multiplying it, we'll be able to see a clear number, then multiplying it PER. So after interest rate payments, tax or capex, the cash flow of that, how much is that increasing or in what way is it going to increase? If you do have some visibility, I would like you to share that with me. This is Hiroi speaking. Mr. Masano, what you have requested and pointed out, Well, the data center business, in order for it to be correctly evaluated from all of you, I think what you pointed out is extremely important. We also have a REIT, so from that perspective, the evaluation of the REIT will be conducted. So we will be coming up with the estimation calculation of that. So in a very forward-looking perspective or positive direction, we would like to work on the disclosure of such information, so I'm hoping that you'll give us a little bit of time. And to get, in addition, the movement of the actual cash flow, currently, I'm sure you'll be able to conduct your own estimation, looking at the profit. You'll be able to estimate the movement of the cash flow, and of course, it's going towards the positive direction. However, for this as well, as you have pointed out, in line with the timing of the disclosure, we would like to come up with a way about disclosing it. So at that time, I would like to give more specific explanation. Yes, what I am assuming is that looking at just the overseas data center business, AFFO. In two years, it's probably going to double the cash flow pace, starting this year as a base, fiscal year 27, fiscal year 2028, March of 2028, when the medium-term plan is going to end. Seems that there will be a double of a cash flow that will be generated is what I'm assuming or estimating. Is that a too high number? well regarding that point please forgive me of refraining from answering that question in a quantitative way but it is a fact that it is heading towards improvement so we would like to gather the material and explain that in appropriate timing please please do so if you will do that The external evaluation, well, it will be easy to understand your business from the external perspective, so please do that.

Okay? Well, then, moving on to the next question, Goldman Sachs and Tanaka-san. Well, please unmute yourself and start asking your question, please. Tanaka from Goldman. I hope you can hear me. We can hear you. Thank you. I have two questions. First question, in the regional communications business segment and the background of the increase in revenue. And I think while you have included the effect from the price increase, but the one-time cost, which was recorded in the previous year, it's gone now. And so one of the sort of the expense will drop. And also, if you could just separate all these factors, and so whether you'll be able to maintain this kind of the trend into the second quarter or not, I hope you will give me the sort of the breakdown of the factors contributing to that. Breakdown? No, not exactly a breakdown, but basically speaking. And there were we have been steadily increasing the revenue from fiber optics service, and relatively speaking, this is not exactly the base trend, but the impact for the shorter term, and the enterprise business revenue, and particularly this year, or particularly the first quarter, We had some of the impact from Giga School, and the profit contribution came from that. And somewhat detailed, but in Western Japan last year, and there was disaster recovery of Noto Peninsula, and there was this sort of cost incurred, and so that has pushed down profit significantly. revenue last year, and so that has really been the background factor of the increase in revenue this year. So you have the effect of really with the absence of one-time cost, and also you have this further continuous trend going into the second quarter as well. Can we expect that? As you have said, the fiber optic network business and also the enterprise business of NTT East and West have been performing quite strongly, and so this will be contributing to our profit as the underlying supporting factor. And the second question is related to data center. And yesterday, NTT data, the financial results announcement and overseas, and it, I, think that the data center business is really supporting all that and also data center business is profitable and the capex well planned for this year is almost flat from that of the last year and so going forward is there any potential increase in capex because where you are really going to make it wholly owned subsidiary company and then there is the growth potential so in the midterm view Is there any idea to really enhance or increase the capex from the midterm perspective? And so from this fiscal year, is it going to be flat, or do you see any potential increase? Well, data center investment in the midterm, I think that is a question. And still, vis-a-vis data center, demand is still very strong. and as with investment into data centers. I cannot really well clearly say how much, but in order to really respond to the strong demand and investment-wise, well, we would see a somewhat upward trend. That's what we think. And the Demand for AI, there are mixed views, and some people say that it is very strong, and some people are saying it is a kind of a bubble in demand, and a very solid demand for cloud. So we have that kind of demand. So we expect that the strong demand is going to continue. And so we would like to capture business opportunities in line with that and to really have this sort of reflection of that into this world of revenue as well as income. So we think that we can be quite bullish on that. Well, thank you. That's all from me.

I would like to take the next question. From Okasan Securities, Mr. Okumura, please unmute and ask your question. This is Okumura from Okasan Securities. Can you hear me? Yes, we can hear you. Please go ahead. Thank you very much. I just have one question, a qualitative question, and may be overlapped with the previous question. Entity data, overseas business, is run by Entity Data Inc. regarding this company. Your company, if I read the material you submitted MIC, your interest is transferred and made it wholly owned a company by Entity Data is my understanding. The decision making process being centralized, what is that going to change? In the last several years, What kind of specific challenges were there? And towards that, on a global basis, expanding the data center business, what are your expectations or what are you expecting to happen? Sorry, it's quite of a broad question, but if you can answer as much as possible, I will appreciate it. This is from a corporate strategy, wholly owning NTT data and data Inc capital being centralized as we explained at that time when we announced this this deal we have explained it several times decision-making will be a centralized and we are able to have a flexible decision-making what we're saying about this is that there's a specific decision-making between the holding company and data or between data and data Inc if It's not that we have problems agreeing to a certain decision. However, looking at the current AI demand and within the global solution area, the environment is changing quite rapidly. And so in order to be able to make a flexible, agile decision-making regarding the capital investment and investments, at each level of the decision-making, if they have a certain group of the shareholders and trying to get the consensus of that and then try to move it forward, then the reaction will be behind the speed that the market is moving at. So it's not that there was a difference in decision-making with centralizing it, we'll be able to make a decision. But it's not that. It's the responding to the environment and being able to have a more agile, flexible decision-making that will be in line with the market trend. Thank you very much.

Thank you. Any other questions? Well, if you have any questions, please press the raise hand button. There seems to be no further questions. Well, then, there seems to be, well, no further questions. And so with this, we would like to conclude the briefing session. And we are going to have the brief session of NTT DoCoMo after this. And so please, we'll keep your line connected. And thank you very much for your attendance today.