May 14, 2014 5:41 am JST

NTT's profit edged up 1% in fiscal 2013

TOKYO -- Nippon Telegraph and Telephone Corp. said Tuesday that its consolidated operating profit ticked up 1% to 1.21 trillion yen ($11.72 billion) for the year ended March 31.

     While mobile carrier NTT Docomo Inc. and NTT Data Corp. both registered profit declines, group profit was buoyed by such factors as cost cuts for fixed-line networks and growth at overseas businesses. NTT follows U.S. accounting standards.

     Sales rose 2% to 10.92 trillion yen. Revenue from voice telephone service fell, but sales for cloud services overseas were brisk. Net profit jumped 12% to 585.4 billion yen, lifted by revised real estate valuations.

     This fiscal year, while sales will likely rise 3%, operating profit is seen roughly on par with the fiscal 2013 figure, coming in at around 1.21 trillion yen. The company will be weighed down by discounts on monthly rates for Docomo customers with smartphones.

     The annual dividend this year will climb 10 yen to 180 yen. In preparation for the government's divestment of NTT stock, the company will spend up to 250 billion yen on share repurchases.

     NTT's operating profit puts it second only to Toyota Motor among listed nonfinancials in Japan. While it has the might to continue generating over 1 trillion yen annually, NTT pales in comparison with other major telecommunication companies globally when it comes to profitability.

     AT&T Inc. of the U.S. and China Mobile Communications Corp. boast operating profit margins of over 20%, whereas NTT's is 11%. U.S. carriers are rapidly expanding data networks, while Chinese players ride the wave of an expanding market.

     NTT is laden with inefficiencies from older fixed-line networks, for which its annual maintenance bill apparently runs into the trillions of yen. The company's move to start wholesaling fiber-optic access services is one way of effectively capitalizing on assets.

     In light of the maturing domestic market, NTT has identified overseas business as a pillar for growth, and aims to expand its cloud business, with a particular focus on corporate clients. Overseas sales this fiscal year are expected to surge 28% to 1.53 trillion yen. Plans call for raising overseas sales to around 2 trillion yen in fiscal 2016.