Nippon Telegraph & Telephone (NTT)

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.