submission for approval of business operation plan for the ... · 3/1/2017 · submission for...

This English text is a translation of the

Japanese original. The Japanese

original is authoritative. March 1, 2017

Submission for Approval of Business Operation Plan

for the Fiscal Year Ending March 31, 2018

Nippon Telegraph and Telephone Corporation (“NTT”) today submitted its business operation plan for the fiscal year ending March 31,

2018 to the Minister for Internal Affairs and Communications for approval.

For more information, please contact:

Business Planning Group

Corporate Strategy Planning Department

Nippon Telegraph and Telephone Corporation

Tel: +81-3-6838-5151

E-mail: [email protected]

Information and communications services have started to realize the creation and provision of new value in a wide range of fields

including improvements in the convenience of people’s lives and greater efficiency in each industry. It is now possible to store and

analyze various types of data due to the enhancement of the broadband communications environment, including FTTH and LTE, the

proliferation and penetration of smartphones, tablets and other devices, the growing use of cloud computing and advances in

technologies such as AI, Big Data, and IoT.

The use of ICT by a number of service providers in the information and communications services market is becoming more widespread,

and business partnerships that go beyond the boundaries of industry sectors and business types have started to generate an increasing

variety of innovative new services in order to contribute to greater economic growth and the vitalization of local economies driven by

the Olympic and Paralympic Games Tokyo 2020, and also to work to resolve Japan’s anticipated social issues, such as the low birthrate

and aging population.

At the same time, the strengthening of countermeasures against increasingly sophisticated and complex security threats and for disaster

prevention demonstrate that the role of information and communications services in achieving the secure and reliable operation of social

systems and enriching people’s lifestyles is becoming increasingly important.

To help ensure that universal services are maintained amid this evolving information and communications environment, NTT intends to

provide all necessary advice, coordination, and other assistance to Nippon Telegraph and Telephone East Corporation and Nippon

Telegraph and Telephone West Corporation (the “regional companies”). NTT will also endeavor to promote research and development

in information communications technology, which serves as a foundation for telecommunications.

In addition, NTT Group’s Medium-Term Management Strategy entitled, “Towards the Next Stage,” announced in November 2012 was

revised in May 2015. Each NTT Group company, including the regional companies, will continue to pursue a B2B2X model by

working to reform its own business model with the aim of becoming a “Value Partner” that customers continue to select and

collaborating with a variety of service providers.

As NTT undertakes these initiatives, it intends to continue to ensure fair competitive conditions under the existing legal framework.

In addition to these measures, NTT will also work to increase corporate value by actively expanding its global business, strengthening

the profitability of its network services, and to engage in management directed at the development of NTT Group as a whole.

Based on these fundamental concepts, in the management of its business operations for the fiscal year ending March 31, 2018, NTT will

aim to continuously grow its businesses by actively developing global business and strengthening the profitability of its network

services, while also striving to accelerate the shift to a B2B2X model for business growth by supporting the creation of new services

and business opportunities through collaborations with business partners in a variety of industrial fields.

NTT will seek to ensure the stable development of its operations in the future, and to return the fruits of these efforts to customers,

shareholders and society by providing an advanced broadband network, creating a variety of services, and engaging in research and

development activities that will produce the technology and human capital to support a new business model by sustaining and

strengthening open innovation.

Based on the concepts outlined above, pursuant to the business operation plan for the fiscal year ending March 31, 2018, NTT expects

to manage its business by prioritizing the following activities, and doing so in a flexible manner so as to respond to changes in the

business environment.

1

1. Advice, coordination, and other assistance

NTT will aim to exercise appropriate shareholder rights and provide all necessary advice, coordination and other assistance to its

regional companies to ensure the maintenance of high-quality and stable universal services. Such assistance will include planning and

coordination relating to the quality and upgrading of telecommunications networks, deployment of control and coordination capabilities

in the event of natural disasters and other emergencies, efficient financing, and formulation of policies for material procurement.

NTT will support the efforts of each NTT Group company, including the regional companies, to streamline their business operations

and expand their business opportunities, and will assist with the development of human capital that will form the core of NTT Group as

well as compliance with applicable regulations.

2. Promotion of basic research and development

NTT will work to harmonize network platform technologies, technologies that provide a basis for new services and applications, as well

as general advanced and basic technologies, while focusing its efforts on higher value-added research and development. NTT will also

be actively involved in innovation in collaboration with business partners, starting with other research and development institutions, in

technology exchanges both in Japan and abroad and expansion and standardization activities.

NTT will seek to further increase research efficiency and ensure the continuous execution of basic research and development efforts

through revenues from basic R&D generated from the regional companies and other NTT Group companies that use the fruits of these

efforts and bear related expenses on an ongoing basis.

Specifically, NTT will give priority to the following areas of NTT’s research and development activities:

(1) Infrastructure-related research and development

In order to develop an information network infrastructure to “connect” everything, NTT will undertake research and development to

realize a highly profitable information network that can flexibly respond to the various needs of the customers and service providers

who use it.

Specifically, NTT will pursue research and development such as technology for transmission-related functions that combines

general-use equipment to develop a flexible network, and a server architecture with high scalability and redundancy in which the scale

can be changed flexibly using software in response to demand, in addition to control technology for these network functions.

NTT will also pursue research and development for technology related to the maintenance of communications facilities, a vital part of

social infrastructure, research and development that supports disaster-resistant networks as well as research and development directed

toward realizing common network platforms usable in different fields such as the fusion of various services such as voice and videos

that make use of the unique characteristics of IP networks.

(2) User-related research and development

With a view toward creating advanced services that enrich the lives of and provide comfort to customers, NTT plans to undertake

research and development in technologies that integrate telecommunications and computer technology, such as media processing,

personalization, cloud services and security.

2

Specifically, NTT will promote research and development in the following technologies: technology for the real-time transmission of

highly immersive videos that makes comprehensive use of media synchronization technology and next-generation video compression

technology, data analysis technology to provide services in accordance with the user’s circumstances and intentions, cloud-based device

cooperation control platforms that enable the linking of sensors and robots that support AI and IoT, and security-related technology to

counteract cyberattacks such as authentication and encryption in anticipation of the change in environment due to the development of

IoT.

NTT also intends to engage in activities that provide support to other companies, universities and other institutions with the goal of

raising the cybersecurity skill level in all industries while simultaneously developing security experts within NTT Group.

(3) Research and development in basic technologies

NTT is committed to contributing to innovative improvement and development of information and telecommunications in Japan to

ensure a leading position in technology research that will support the future of telecommunications. To fulfill these commitments, NTT

will undertake research and development activities in basic technologies.

Specifically, this will include research in areas such as: the next generation extra high-speed fiber-optic communications technologies

that aim to realize a high capacity fiber-optic communications infrastructure that can support connectivity of 1 Tbps, and optical devices

and integrated nanophotonics technologies.

NTT will also pursue research on innovative principles and new concepts, including quantum computing-related technology that

exceeds current information processing capabilities; a broad range of cutting-edge materials and nanobiology, including nitride

semiconductors and grapheme; and a scientific analysis of the human sensory, physical and emotional mechanisms related to

communications.

The following table presents an overview of NTT’s capital investment plan for the above-mentioned activities.

3

Capital Investment Plan for

the Fiscal Year Ending March 31, 2018

(Billions of yen)

Item Expected investment

1. R&D facilities 15

2. Other facilities 3

Total 18

4

Attachment 1

Revenues and Expenses Plan for


(Billions of yen)

Item Amount

Revenues

Operating revenues 610*

Non-operating revenues 23

Total revenues 633

Expenses

Operating expenses 130

Non-operating expenses 26

Total expenses 156

Recurring profit 477

* This figure includes revenues from basic R&D of 95 billion yen and revenues from Group management and other sources of

21 billion yen.

5

Attachment 2

Planned Sources and Applications of Funds for


(Billions of yen)

Item Amount

Sources:

Operational: 545

Operating revenues 522


Financial: 312

Long-term loans and bonds 60

Other financial income 252

Estimated consumption tax receipts 11

Balance brought forward from previous fiscal year 1

Total 869

Applications:

Operational: 137

Operating expenses 114


Financial: 540

Capital investments 18

Other financial expenses 522

Account settlement expenses 183

Provisional consumption tax payments 8

Balance carried forward to following fiscal year 1

Total 869

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Nippon Telegraph and Telephone East Corporation (“NTT East”) today submitted its business operation plan for the fiscal year ending

March 31, 2018 to the Minister for Internal Affairs and Communications for approval.

For inquiries, please contact:


Nippon Telegraph and Telephone East Corporation

Tel: +81-3-5359-2997

Information and communications services have become an essential part of the infrastructure of socio-economic activity. These services

are expected to make significant contributions to increasing the convenience of people’s daily lives and the vitalization of local

economies, while also improving corporate efficiency, creating new businesses and enhancing industry-wide international

competitiveness.

The information and communications market is undergoing structural changes beyond the existing framework, including an increasing

shift to broadband services and globalization, fixed-mobile convergence, AI, Big Data and IoT utilization, cloud computing

development, penetration of high-speed wireless and Wi-Fi compatible devices such as smartphones and tablet devices, and widespread

use of applications that enable free phone calls and messaging.

Regional telecommunications markets are also changing dramatically. The competition in both broadband access facilities and services

centered around the shift to fiber-optic access is intensifying. New services using a variety of wireless devices are also expanding. This

leads to diversification in the way customers use these devices and increasing offloading needs due to the expansion of the volume of

data communications.

Amid such a challenging and volatile business environment, as a carrier with an important leadership role in the information and

communications industry, NTT East will aim to continue to provide high-quality, stable universal services, work to develop a

sophisticated and strong information and communications network that takes into consideration disasters and cybersecurity threats, and

to promptly restore services in times of large-scale natural disasters and other calamities in order to ensure their reliability as part of the

social infrastructure, and respond to network migration appropriately. NTT East will do this while striving to ensure that it strictly

abides by the requirements of fair competition and seeking to secure a stable and solid foundation for its business, as well as complying

with applicable regulations.

Furthermore, NTT East will endeavor to enhance the broadband network environment and further expand fiber-optic access through

offering services and products that leverage the advantages of the next-generation network (“NGN”) with customer-friendly and long-

term appealing pricing. NTT East will contribute to the further enrichment and sustained development of society by using ICT to

confront the various economic and social issues facing Japan, such as the low birthrate and aging population, achieving a low-carbon

society and work style reforms.

- 1 -

With regard to the management of its business operations for the fiscal year ending March 31, 2018, amid expectations of increased

domestic demand resulting from a positive economic growth cycle, NTT East plans to continue expanding and promoting the use of

fiber-optic access, and aims to achieve the upgrade, strengthening and expansion of its broadband network environment through the

NGN on the basis described above. These objectives will be achieved through the creation of new uses for ICT that are closely

connected to daily domestic life and community activities, the enhancement of the ICT environment through, among other things, the

use of Wi-Fi, and the development and provision of services for business users.

NTT East plans to offer an even wider range of services including optical IP telephony services and video services as well as

maintenance and support on this network infrastructure. As an “accessible, full-service ICT company,” NTT East at the same time aims

to develop and provide a variety of high value-added and user-friendly services designed to provide customers and local communities

with a sense of security, safety and convenience through further collaboration with companies in diverse industries, and to further

improve customer services. In addition, NTT East will provide service providers in a wide range of fields with fair and equal services

on the basis of its world-class network through the Hikari Collaboration Model, as well as support a variety of value creation

opportunities.

At the same time, NTT East will also take steps to build a stable and stronger management base and to ensure steady business growth

into the future by further increasing operating efficiency. NTT East will strive to return the results of these measures to customers, the

local community and, through its holding company, to its shareholders.

NTT East plans to manage its business in the fiscal year ending March 31, 2018 on the basis of the above outlined concepts,

emphasizing the items outlined below, while maintaining the flexibility needed to respond to changes in the business environment.

- 2 -

1. Voice transmission services

(1) Telephone subscriptions

NTT East will aim to respond promptly to all demands for telephone subscriptions, including the relocation of existing lines. The

number of subscriptions is projected to total approximately 8.99 million by the end of the fiscal year ending March 31, 2018.

Item Planned number (subscriptions)

Additional installations (0.45 million)

Relocations 0.90 million

(2) Social welfare telephones

As social welfare programs continue to expand and develop, social demand for welfare-oriented telecommunications services has

increased. In response to this need, NTT East plans to continue to promote the provision of welfare-oriented products, such as its

“Silver Phone series” (“Anshin” (relief), “Meiryo” (clearness), “Hibiki” (sound) and “Fureai” (communication)).

Item Planned number (units)

Silver Phones

Anshin (relief) 2,000

Meiryo (clearness) 0

- 3 -

(3) Public telephones

NTT East plans to continue to meet the minimum requirements for providing a public means of communication for safety and when

outdoors. NTT East will also strive to continue to improve convenience by, among other things, publicizing the locations of public

telephones in order to promote their increased usage and to prepare for disasters and other emergencies. The number of public telephone

units is projected to total approximately 70,000 by the close of the fiscal year ending March 31, 2018.

Item Planned number (units)

Public telephones (1,000)

(4) Integrated digital communications services

The numbers of INS-Net 64 and INS-Net 1500 subscriber lines are projected to total approximately 1,069,000 and 13,000, respectively,

by the close of the fiscal year ending March 31, 2018.


INS-Net 64 subscriber lines (89,000)


- 4 -

2. Data transmission services

To respond to the increasing demand for broadband services, NTT East will endeavor to expand its fiber-optic access services by

targeting the appealing power of services unique to fiber-optic technologies, such as Hikari Denwa and video services, and will aim to

provide a wide range of other services. The number of FLET’s Hikari subscriptions is projected to total approximately 11.57 million by

the close of the fiscal year ending March 31, 2018.


FLET’S Hikari* 0.50 million

* This figure for FLET’S Hikari includes subscribers to the Hikari Collaboration Model.

3. Leased circuit services

Subscriptions for conventional leased circuit services and high-speed digital transmission services are projected to total approximately

105,000 and 51,000, respectively, by the close of the fiscal year ending March 31, 2018.


Conventional leased circuit services (4,000)

High-speed digital transmission services (3,000)

4. Telegraph services

NTT East will conduct maintenance of its systems in order to promote the enhancement and operational efficiency of its telegraph

services.

- 5 -

5. Improvements and advances in telecommunications facilities

(1) Optical access network

NTT East plans to promote the efficient shift to fiber optics in its access network in response to, among other things, the demand for

broadband services.

Item Planned number (million fiber km)

Optical subscriber cables 1.0

(2) Telecommunications network

In its telecommunications network, NTT East will aim to upgrade network services and improve network efficiency, among other

things, while continuing its efforts to meet demand for broadband services.

(3) Disaster prevention measures

NTT East expects to take necessary measures in response to disasters. Such measures would include disaster prevention measures to

prepare for damage to telecommunications equipment and facilities, securing lines for emergency communications, strengthening its

organizational structure for crisis management and restoring systems in the event of large-scale disasters, and supporting information

distribution after a disaster.

(4) Underground installation of transmission cables

In order to improve the reliability of communications facilities, ensure safe and pleasant roads and other transit areas, and enhance the

appearance of the urban landscape, NTT East will work, in coordination with the national and local governments and with other

companies, to install transmission cables underground.

- 6 -

(5) Facility maintenance

NTT East will aim to provide stable and high-quality services by conducting cable maintenance and replacement, and by ensuring

quality customer services, safe operations, harmonization with the social environment and stabilization of communications systems.

NTT East will seek to minimize costs by making full use of existing equipment and facilities in improving and upgrading its

communications facilities.

6. Promotion of research and development activities

In order to further stabilize and strengthen its management base and to provide better communication services to its customers, NTT

East will continue to promote research and development in network systems and access systems, with the aim of advancing its

telecommunications networks. In addition, in order to offer customers more choices while providing a range of safe and convenient

services through telecommunications networks, NTT East will also conduct research and development in such areas as communication

devices, cloud platforms, security, and in new market development including, among other things, value-added businesses utilizing

telecommunications networks.

The following tables present an overview of the business plans for the above principal services and capital investment plans.

- 7 -

Table 1

Principal Services Plan for the Fiscal Year Ending March 31, 2018

Type of service Plan

Voice transmission services

Telephone subscriptions

Additional installations (0.45 million) subscriptions

Relocations 0.90 million subscriptions

Social welfare telephones (Silver Phones) 2,300 units

Public telephones (1,000) units

Integrated digital communications services

INS-Net 64 subscriber lines (89,000) subscriptions

INS-Net 1500 subscriber lines (1,000) subscriptions

Data transmission services

FLET’S Hikari* 0.50 million subscriptions

Leased circuit services

Conventional leased circuit services (4,000) subscriptions

High-speed digital transmission services (3,000) subscriptions

* Including the Hikari Collaboration Model

- 8 -

Table 2

Capital Investment Plan for the Fiscal Year Ending March 31, 2018

(Billions of yen)


1. Expansion and improvement of services 231*

(1) Voice transmission 133

(2) Data transmission 14

(3) Leased circuits 83

(4) Telegraph 1

2. Research and development facilities 2

3. Common facilities and others 17

Total 250

* This figure includes approximately 80 billion yen to be invested in the fiber-optic access network.

- 9 -

Attachment 1

(Reference)

Revenues and Expenses Plan for the Fiscal Year Ending March 31, 2018

(Billions of yen)

Item Amount

Revenues

Operating revenues 1,627

Voice transmission 551

Data transmission 269

Leased circuits 483

Telegraph 10

Others 314


Total revenues 1,632

Expenses

Operating expenses 1,447

Operating costs 1,139

Taxes and dues 74

Depreciation 234


Total expenses 1,452

Recurring profit 180

- 10 -

Attachment 2

(Reference)

Planned Sources and Applications of Funds


(Billions of yen)

Item Amount

Sources:

Operational: 1,839



Financial: 0

Proceeds from issuance of long-term loans and bonds 0




Total 2,235

Applications:

Operational: 1,384



Financial: 390






Total 2,235

- 11 -

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Net i

nco

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30

13

0—






Nippon Telegraph and Telephone West Corporation (“NTT West”) today submitted its business operation plan for the fiscal year

ending March 31, 2018 to the Minister for Internal Affairs and Communications for approval.

For further information, please contact:

Business Management Unit,


Nippon Telegraph and Telephone West Corporation

Tel: +81-6-4793-3521

Information and communications services are expected to make significant contributions to the invigoration and increased efficiency of

social and economic activities, improvements in lifestyle convenience and the vitalization of local economies through the formation of a

new ICT society from the development of AI, Big Data and IoT. The government and the private sector are working in partnership to

achieve these goals.

Moreover, the information and telecommunications market is undergoing a structural change as a result of the shift to broadband and

globalization, as well as the spread of smart devices and social media. The market is catering to increasingly sophisticated and

diversified needs and patterns of usage by, among other things, utilizing Big Data and IoT, as well as expanding platform services and

cloud services. Regional telecommunications markets are also undergoing significant changes, such as the convergence of fixed and

mobile services, and of telecommunications and broadcasting, and the introduction of new services as a result of the use of a diverse

range of wireless devices. This is due in part to an increase in competition not only between the providers of fiber-optic access services

and cable television-based broadband services but also between the various services made available by faster mobile connections.

Within this challenging and dramatically changing business environment, NTT West is striving to promote the smooth migration to

IP-based networks and enhance the fiber-optic access network that is the backbone of broadband services, as well as continue to provide

high-quality, stable universal services. NTT West also aims to contribute to the development of fair telecommunications markets and

promote applied research and development to ensure the reliability and public utilization of telecommunications services.

While strictly adhering to fair terms of competition within the current legal framework and encouraging thorough compliance, NTT

West will also aim to realize a broadband network environment that will enable customers to connect “anytime, anywhere and with

anyone or anything” and “in comfort, safety and with peace of mind.” NTT West will achieve this by offering an open next-generation

network (“NGN”) that utilizes the unique characteristics of fiber optics and by expanding its Wi-Fi platform. At the same time, NTT

West will endeavor to contribute to the development of an ICT society through the creation of a new lifestyle by expanding the use of

fiber-optic services and through developing solutions for issues facing society, including the provision of “various services that match

each customer’s patterns of usage.”

These are the basic concepts that underlie the business plan for the fiscal year ending March 31, 2018. In its broadband services, NTT

West expects to provide a more comfortable, safer and more secure NGN. In addition, NTT West will strive to provide customers with

greater convenience by developing Hikari Denwa services that make use of fiber-optic access lines, video distribution services, and

services for corporate users, as well as by providing the Hikari Collaboration Model to a wide-range of service providers in an

appropriate and fair manner, and promoting collaborations in order to create new services. NTT West also plans to maintain its

community-oriented sales activities in order to respond to customers’ opinions and requests in an appropriate and timely manner,

develop ICT solutions aimed at resolving issues facing society, improving the quality of services for customers and contributing to the

development of local communities.

In conjunction with this, and in recognition of its responsibilities as an operator of social infrastructure, NTT West will aim to

contribute to the creation of a safe and secure society by seeking to ensure the stable provision of its broadband access, Hikari Denwa

and other services, attempting to prevent equipment failures, strengthening facilities countermeasures in preparation for possible large-

scale disasters, responding vigorously to restore service and providing victims and affected individuals with various means of

communication in times of disaster, and bringing all of its group resources to bear on activities and services that will earn the continued

trust of its customers. NTT West will strive to continue to improve the efficiency of its operations and to achieve a stable and strong

management base.

NTT West will work to lay the foundations for the stable development of its business into the future by proactively working to facilitate

connectivity and ensure the openness of its networks, actively promoting human resource development, expanding into new business

areas in coordination with its group companies, and making a positive contribution to reducing its burden on the environment. As these

policies and programs bear fruit, NTT West will endeavor to share the benefits with its customers, local communities and, through its

holding company, its shareholders.

NTT West foresees a decrease primarily in voice-related revenues in the fiscal year ending March 31, 2018, but will respond flexibly to

the changing business environment by prioritizing the following items, as called for by the concepts and strategies outlined above.

1

1. Voice transmission services

(1) Telephone subscriptions

NTT West will aim to promptly respond to all demands for telephone subscriptions, including the relocation of existing lines, and

forecasts that it will have approximately 8.83 million subscriptions by the close of the fiscal year ending March 31, 2018.

Item Projected number (subscriptions)

Additional installations (0.56) million

Relocations 0.90 million

(2) Social welfare telephones

As social welfare programs continue to expand and develop, social demand for welfare-oriented telecommunications services has

increased. In response to this need, NTT West plans to continue to promote the provision of welfare-oriented products, such as its

“Silver Phone series” (“Anshin” (relief), “Meiryo” (clearness), “Hibiki” (sound) and “Fureai” (communication)).

Item Projected number (units)

Silver Phone

Anshin (relief) 3,100

Meiryo (clearness) 100

2

(3) Public telephones

NTT West plans to continue to maintain public telephone facilities to ensure public safety and meet the minimum requirements for

providing a public means of communication. At the same time, NTT West will review its plan with respect to underutilized public

telephones, and will also strive to provide social welfare services by continuing the maintenance of wheelchair-accessible public

telephone booths. The number of public telephone units is projected to total approximately 87,000 by the close of the fiscal year ending

March 31, 2018.

Item Projected number (units)

Public telephones (2,000)

(4) Integrated digital communications services

The total numbers of INS-Net 64 subscriber lines and INS-Net 1500 subscriber lines are projected to be approximately 1.053 million

and 7,000, respectively, by the close of the fiscal year ending March 31, 2018.




2. Data transmission services

To respond to the increasing demand for broadband services, NTT West will endeavor to expand its fiber-optic access services and

provide a wider range of services. The number of FLET’s Hikari subscriptions is projected to total approximately 9.19 million by the

close of the fiscal year ending March 31, 2018.


FLET’S Hikari* 0.30 million

* This Figure for FLET’S Hikari includes subscribers to the Hikari Collaboration Model.

3

3. Leased circuit services

Subscriptions for conventional leased circuit services and high-speed digital transmission services are projected to total approximately

113,000 and 41,000, respectively, by the close of the fiscal year ending March 31, 2018.


Conventional leased circuit services (3,000)

High-speed digital transmission services (5,000)

4. Telegraph services

NTT West will conduct maintenance of its systems in order to promote the enhancement and operational efficiency of its telegraph

services.

5. Improvement and advances in telecommunications facilities

(1) Optical access networks

NTT West plans to efficiently promote the shift to the fiber optics in its access network in response to, among other things, the demand

for broadband services.

Item Projected number (million fiber km)

Optical subscriber cables 0.65

(2) Telecommunications network

In its telecommunications network, NTT West will aim to upgrade network services and improve network economy and efficiency,

among other things, while working to meet demand for broadband services.

4

(3) Disaster prevention measures

NTT West expects to take necessary measures in response to disasters. Such measures would include disaster prevention measures to

prepare for damage to telecommunications equipment and facilities, securing lines for emergency communications, strengthening its

organizational structure for crisis management and restoring systems in the event of large-scale disasters, and supporting information

distribution after a disaster.

(4) Underground installation of transmission cables

In order to improve the reliability of communications facilities, ensure safe and pleasant roads and other transit areas, and enhance the

appearance of the urban landscape, NTT West will work in coordination with the national and local governments and with other

companies in installing transmission cables underground.

(5) Facility maintenance

NTT West will conduct necessary cable maintenance and replacement to provide stable and high-quality services and ensure quality

customer services, safe operations, harmonization with the social environment and stabilization of communications systems.

NTT West will seek to minimize costs by making full use of existing equipment and facilities in improving and upgrading

communications facilities.

6. Promotion of research and development activities

NTT West will promote experimental and research measures and policies for technical areas by focusing on the following three points,

in order to realize a “social information infrastructure network” in response to the needs of its customers and corporate businesses,

among others.

(1) Review towards the development of network technologies for IoT (next generation wireless networks and devices), analysis

that creates new value from collected data and the technology that utilizes the new value (video and images analysis,

visualization and control of living environment).

(2) Review the realization of cost-effective, high-speed and high capacity networks as well as a sophisticated and efficient

operations practice, and the migration from PSTN (Public Switched Telephone Network) to IP network.

(3) Development of a security countermeasure technology that promotes the utilization of data and devices in response to the

change in the diversifying customer environment, and the review of enhancing countermeasures against new threats

(virtualization technology).

The following tables present an overview of the business plan for the above principal services and capital investment plans.

5

Table 1

Principal Services Plan for the Fiscal Year Ending March 31, 2018

Type of service Plan

Voice transmission services

Telephone subscriptions

Additional installations (0.56 million) subscriptions

Relocations 0.90 million subscriptions

Social welfare telephones (Silver Phone) 3,200 units

Public telephones (2,000) units

Integrated digital communications services

INS-Net 64 (104,000) subscriptions

INS-Net 1500 (1,000) subscriptions

Data transmission services

FLET’S Hikari* 0.30 million subscriptions

Leased circuit services

Conventional leased circuit services (3,000) subscriptions

High-speed digital transmission services (5,000) subscriptions

* Including the Hikari collaboration Model

6

Table 2

Capital Investment Plan for the Fiscal Year Ending March 31, 2018

(Billions of yen)


1. Expansion and improvement of services 239*

(1) Voice transmission 144

(2) Data transmission 17

(3) Leased circuits 77

(4) Telegraph 1

2. Research and development facilities 2

3. Common facilities and others 19

Total 260

* This figure includes approximately 73 billion yen to be invested in the fiber-optic access network.

7

Attachment 1

Revenues and Expenses Plan for the Fiscal Year Ending March 31, 2018

(Billions of yen)

Item Amount

Revenues


Voice transmission 531

Data transmission 194

Leased circuits 416

Telegraph 11

Others 290


Total 1,446

Expenses


Operating costs 1,071

Taxes and dues 68

Depreciation 213


Total 1,361

Recurring profit 85

8

Attachment 2

Planned Sources and Application of Funds for the Fiscal Year Ending March 31, 2018

(Billions of yen)

Item Amount

Sources:

Operational: 1,585



Financial: 120

Proceeds from issuance of long-term loans and bonds 60




Total 1,877

Applications:

Operational: 1,237



Financial: 470






Total 1,877

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