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ANNUAL REPORT 2021

https://group.ntt/en/

Contents

Table ofNTT ANNUAL REPORT 2021

42 Addressing Social Issues
Reinforcement of Disaster Countermeasures

44

Enhancement of Security

46 Addressing Human Rights, Diversity and Inclusion
46

Maximizing Well-Being

This is an integrated report that combines information that is important to shareholders and investors, including not only such information
as growth strategies and financial results but also sustainability-related information. The report focuses on explanations of NTT Group’s
initiatives targeting increases in corporate value over the medium to long term. The report is intended to help readers better understandNTT Group, which is accelerating its self-transformation to become “Your Value Partner” and working to increase corporate value by contributing to the realization of a sustainable society.

Report Scope ● Directly Affiliated Companies (8 Companies)	NTT, NTT DOCOMO, NTT East, NTT West, NTT Communications, NTT DATA, NTT FACILITIES, NTT COMWARE● Their Affiliated Companies (10 Companies)	Six NTT East Group Companies (NTT EAST-HOKKAIDO, NTT EAST-TOHOKU, NTT EAST-KANSHINETSU, NTT EAST-MINAMI KANTO,NTT EAST SERVICE, NTT-ME), and four NTT West Group Companies (NTT MARKETING ACT, NTT Business Solutions, NTT Field Techno,
NTT BUSINESS ASSOCIE WEST)•	In this Annual Report, “NTT DOCOMO” refers to NTT DOCOMO, INC., “NTT East” refers to Nippon Telegraph and Telephone East Corporation,“NTT West” refers to Nippon Telegraph and Telephone West Corporation, “NTT Communications” refers to NTT Communications
Corporation, “NTT DATA” refers to NTT DATA CORPORATION, “NTT Urban Solutions” refers to NTT Urban Solutions, Inc., and “NTT AnodeEnergy” refers to NTT Anode Energy Corporation.

Operations in Review

68 Operations in Review
76 Data Section

Editorial Policy 

NTT Group's
Sustainability

54 Corporate Governance

The forward-looking statements and projected figures concerning the future performance of NTT and its subsidiaries and affiliates contained or referred to in this report are based on a series of assumptions, projections, estimates, judgments, and beliefs of the managementof NTT in light of information currently available to it regarding the economy, the telecommunications industry in Japan, and other factors.
These projections and estimates may be affected by the future business operations of NTT and its subsidiaries and affiliates, the stateof the economy in Japan and abroad, possible fluctuations in the securities markets, the pricing of services, the effects of competition, theperformance of new products, services, and new businesses, changes to laws and regulations affecting the telecommunications industry inJapan and elsewhere, and other changes in circumstances that could cause actual results to differ materially from the forecasts containedor referred to in this report.

Research & Development

42

Forward-Looking Statements Refinement of MediumTerm Management Strategy

Reducing Environmental Burden

Value Creation Process

36

NTT at a Glance

36 Addressing Environmental Challenges

Message from the CFO

34 Pursuit of a Sustainable Society

Message from the CEO

2 Message from the CEO
10 Message from the CFO
14 NTT at a Glance
16 Value Creation Process
18 Refinement of Medium-Term Management Strategy
24 Research & Development
34 NTT Group Sustainability

Other Materials Securities Reporthttps://group.ntt/en/ir/library/yuho/index.html

Shareholders’ Meeting Materials
https://group.ntt/en/ir/shares/shareholders_meeting/Sustainability Reporthttps://group.ntt/en/csr/data/report.html

Data Section

Presentation Materials
https://group.ntt/en/ir/library/presentation/

ANNUAL REPORT 2021

1

CEOMessage
Message from the CEO
Message from the CEO

on well-being. By developing its business with these focuses, NTT Group will contribute to the realization of a sustainable society.

NTT Group is pursuing increases incorporate value through the refined
which is centered on a new management

Contributions to
the Realization ofa Sustainable Society

Looking back at our history, it could be said that NTT has been contributing to the

Message from the CFO

medium-term management strategy,

realization of a sustainable society through its business activities since its establishment through the privatization of Nippon Telegraph and Telephone Public Corporation.
Going forward, NTT Group will need to fulfill the missions of both a public utility andsystem that focuses on remote worka private company, which it has embraced since its founding, in order to contribute toto respond to social trends during andcantly COVID-19 changes the economy and society. Telecommunications services

after the COVID-19 pandemic.

terrupted telecommunications services as a public institution as designated by the

NTT at a Glancesociety as a sustainable entity. These missions will not change, no matter how signifiare an important part of social infrastructure. Our mission of providing reliable, uninBasic Act on Disaster Control Measures is becoming increasingly more important
amid the current conditions. At the same time, we are pressed with our mission of

Value Creation Process

generating ongoing profits as a private company.
We have also embraced the basic philosophy of “Self as We” to guide us in contributing to the realization of a sustainable society. Under this philosophy, people areencouraged to see that they themselves are supported by the connections between
diverse people, things, and technology. Modern society is plagued by various oppos-

Jun Sawada

economy. Moreover, the perception and meaning of reality can change based on the

President andChief Executive Officer,
Member of the Board

paraconsistent society in which such opposing concepts and viewpoints are incorpo-

Refinement of MediumTerm Management Strategy

ing concepts, including global and local perspectives and the environment and theviewer. The sustainable society envisioned by NTT is one achieved by promoting a
rated and in which mutual acceptance of diverse values is the norm. To help us real-

Research & Developmentize such a society, we have established the new NTT Group Global Sustainability
Charter, which prescribes three themes: ensuring the positive coexisting of natureand humanity, improving prosperity for all people and cultures, and maximizing wellbeing for all.
This is the course we have charted for NTT Group’s transformation, doing so

Operating Environment The accelerated division of the world driven by the COVID-19 pandemic, coupled withthe rapid spread of digitization and digital transformation (DX), has expedited theChanges and Course
shift toward a remote world and decentralized society. These is also a rising moveof NTT Group’s
ment to fundamentally transform society in order to achieve carbon neutrality asTransformation

NTT Group's
Sustainability

based on our unchanging commitment to fulfilling the missions of both a public utility and a private company while pursuing self-transformation to resolve social issues
through our business by working together with partners as “Your Value Partner.” This
course also accounts for our new approach toward contributing to the realization ofabnormal weather events continue to spark catastrophic natural disasters around thea sustainable society.

world. Meanwhile, we are witnessing swift progress in research and development on

Operations in Review

Beyond 5G, 6G, quantum, and other new technologies with the potential to shatter
existing paradigms. These changes in the operating environment signal a need toalter the approaches toward business that we have adopted previously.
NTT Group has charted a new course for its transformation in response to thesemajor operating environment changes. On this course, we will transform to a newsociety expected to become the norm during and after the pandemic, enhancedomestic and global business amid the advancing trends toward digitization and DX,
and move forward with the enhancement of corporate value through environmental,social, and governance (ESG) initiatives in response to society’s increased emphasis

2

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Based on the aforementioned course for NTT Group’s transformation, we announced
a refinement to our medium-term management strategy in October 2021. The refined
strategy has three major pillars. The first is the transformation to a new management
style based on remote work. The second pillar is to enhance domestic and global

Data Section

management style that is more compatible with the remote world and decentralized

Refinement of
Our Medium-Term
Management Strategy

business through the growth and reinforcement of the new DOCOMO Group and thedevelopment and introduction of the “Innovative Optical and Wireless Network”(IOWN). The third and final pillar is the enhancement of corporate value through

ANNUAL REPORT 2021

3

Message from the CEO

operating profit margin of 7% in the fiscal year ending March 31, 2024, as well as ashareholder returns.

capital expenditure (capex) to sales ratio of 13.5% or less for our domestic network
business to be achieved by the fiscal year ending March 31, 2022. We had previously

namely those for earnings per share (EPS) and for cost reductions. The EPS target

set a target for overseas sales, but this target has since been canceled in reflection of

was raised by ¥50 from the prior target of ¥320, making for an ambitious target thatchanges in the accounting standards applied to overseas subsidiaries and therepresents an increase of 75% from the EPS figure of ¥212 posted in the fiscal year

impacts of the COVID-19 pandemic.

Message from the CFO

The refinement also entailed the revision of our medium-term financial targets,

Message from the CEO

environmental and disaster response initiatives coupled with the improvement ofended March 31, 2018. We will look to achieve this lofty target through earnings growthof ¥100.0 billion accomplished by generating synergies at the new DOCOMO Groupand reducing costs of over ¥200.0 billion via the promotion of DX, factors which are
expected to contribute to increases in earnings in the fiscal year ending March 31,
2024. As for cost reductions, we have put forth the new target of achieving cost
the fact that we are set to achieve our prior target two years ahead of schedule. The

We are faced with a need to accommodate the burgeoning remote world and decentralized society, and NTT will thus be unable to survive if it continues to cling to prior

NTT at a Glance

reductions of more than ¥1 trillion by the fiscal year ending March 31, 2024, based on

Transformation toa New Management
Style

work styles and management styles. Rather than clinging to the past, I believe that NTT,
with its long history of providing telecommunications services, should be at the fore-amount of ¥1 trillion was arrived at by adding the cost reductions expected to be

front of transforming work styles and management styles. We must also team up withachieved through the promotion of DX to the prior target. Meanwhile, we will continue

our partners and customers to help them transform their work styles. This approach

to work toward our targets of return on invested capital (ROIC) of 8% and an overseas

should enable us to contribute to the realization of a society that is considerate of wellValue Creation Process

being. What we pursue is a new management style that is compatible with a remoteworld and decentralized society. Accordingly, NTT will advance process reform, DX,system revision, and workplace environment cultivation initiatives in order to promote
remote work and facilitate work-in-life (health management) and thereby realize work
processes that are more open, global, and innovative. By transforming ourselves, weRefinement of MediumTerm Management Strategy

look to support the DX of customers, facilitate regional economic development,
improve social resilience, and contribute to a remote world and decentralized society.
NTT plans to advance various process reform and DX initiatives. The first of these
initiatives will be to implement cloud-based and zero-trust systems. The installationof these systems is scheduled for completion by the fiscal year ending March 31,

Research & Development

2024, and their introduction will create an environment in which any employee is able
to work in any location at any time. Our next step will be to automate and standardize
sales, maintenance, development, and other processes. This undertaking will entail
promoting the creation of a connected value chain that links NTT with its partners inorder to automate more than 100 processes by the fiscal year ending March 31, 2026.

NTT Group's
Sustainability

At the same time, we will seek to expand the scope of our customer reach throughdigital marketing targeting small and medium-sized enterprises and thereby growearnings via online sales. NTT also intends to install its high-precision 3D spacial
information system, which uses underground facilities, in all ordinance-designatedcities in Japan by January 2023 so that it can facilitate the DX of society as a whole
via means such as the development of smart infrastructure platforms. Alongside

Operations in Review

these initiatives, we will strengthen corporate governance systems in a manner thatis mindful of conduct and other risks. In doing so, we hope to maintain appropriate
relationships with stakeholders, accurately manage the life cycles of services andother offerings, improve crisis response capabilities, and implement other measures.
We also aim to completely phase out paper, including that used for bills and order

Data Section

processing documents, by 2025 together with other proactive process reform andDX initiatives.
These initiatives will be supported by system revision and workplace environment
cultivation efforts. For example, we look to begin redeveloping information security

4

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

5

Message from the CEO

to the realization of a sustainable society by driving regional urban development as

fiscal year ending March 31, 2023, while also fostering core DX human resources.

well as the development and introduction of social infrastructure. We also hope toDiversity and inclusion will also be an area to which we devote significant effort. As

help create resilient infrastructure and advance disaster preparedness initiatives inpart of these efforts, we are bolstering our career support programs to help female

response to the intensification of natural disasters.

Message from the CEO

systems and revising office environments to be suited to remote operations in theemployees be promoted to managerial and corporate officer positions. We thereby

Message from the CFO

look to raise the ratio of female managers to 15%, roughly double the current level,
and increase the ratio of female officers from 25% to 30% by the fiscal year ending
March 31, 2026. We will also actively recruit non-Japanese individuals as well as
people currently working outside of the Group while bolstering efforts to cultivate
global management personnel. In addition, our job-based personnel system will be
extended to all managers as we seek to facilitate the optimal allocation of human

Enhancement ofDomestic andGlobal BusinessIn December 2020, NTT DOCOMO was converted into a wholly owned subsidiary forthe purpose of bolstering its competitiveness while contributing to its growth as wellas to the growth of the entire NTT Group. With an eye to its medium-term growth anddevelopment, NTT Group is deploying and supplying new services that accommodate
the remote world, promoting resource concentration and DX, advancing global-scaleautonomous career development.

R&D activities, and strengthening smart life and other new businesses. As we move

Meanwhile, the Company will promote work-in-life (health management) andforward with these activities, the strategic, Groupwide utilization of resources andGroup will undertake new initiatives including the conversion of NTT Communications

allowing employees freedom in choosing their work location, we will transition from aand NTT COMWARE into subsidiaries, the integration of functions, and the clarifica-

centralized organization to a decentralized and autonomous network-style organiza-tion of business responsibilities. NTT Group will lend its support to these initiatives.

tion. This transition will also help facilitate work-in-life by enabling employees to work

Specific efforts will include the expansion of businesses targeting corporations as

close to home. As part of this transition, NTT will look to increase its number of satel-

well as the smart life business, the strengthening of communications businesses andlite offices to more than 260 by the fiscal year ending March 31, 2023. Furthermore,international businesses, the reinforcement of IT and R&D activities, and the promo-

our headquarters and back-office functions will be decentralized and spread amongtion of ESG. Looking ahead, we will target earnings of ¥100.0 billion in the fiscal

various regions. We thereby aim to contribute to regional economic development by

year ending March 31, 2024, and more than ¥200.0 billion in the fiscal year ending

taking a hands-on approach toward resolving the issues faced by local primary indus-

March 31, 2026, to be generated through synergies between NTT DOCOMO, NTTtries together with municipalities and partners. Another focus will be the development

Communications, and NTT COMWARE.

Refinement of MediumTerm Management Strategy

assets will be crucial, as will swift decision-making. Going forward, the new DOCOMO

vative. Remote work will be the standard work style for employees going forward. By

Value Creation Processadvance initiatives for realizing work processes that are more open, global, and inno-

of information infrastructure. IOWN will be promoted as a game changer to contribute

NTT at a Glance

resources, regardless of age or number of years of service, in order to promote

Efforts to enhance global businesses will include the reinforcement of digital busi-

Research & Development

ness consulting capabilities as a united “One NTT.” We are currently moving ahead
with joint sales and marketing activities based on the “One NTT” value proposition.
One example of these activities would be the start of smart city solution provision in
North America. We are also collaborating with NEC Corporation, Fujitsu Limited, andother partners in our global businesses promoting O-RAN and vRAN. Through thisNTT Group's
Sustainability

collaboration, we aim to launch a global radio access network (RAN) business late in
the fiscal year ending March 31, 2023, through which we will offer multivendor integration, maintenance monitoring, intelligent control software, construction, maintenance, operation, and other services. After the fiscal year ending March 31, 2024, we
will branch out from the RAN field into the network field as we seek to promote more
open systems and grow businesses that will form the foundations for the future

Operations in Review

implementation of IOWN.

Data Section

Talk session with Mr. Takuma Sato at NTT R&D Forum 2020

6

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

7

Message from the CEO

treasury stock, equivalent to approximately 7% of the total number of shares issued,

later updated with the formulation of our new environment and energy vision, NTT

were canceled in November 2021 based on a resolution by the Board of Directors.
NTT Group will accelerate its transformation as “Your Value Partner,” aiming toments such as the announcement of the Japanese government’s goal of achieving

continue being a reliable partner to its stakeholders, including customers, sharehold-carbon neutrality by 2050. By reducing the environmental impact of our businessers, and local communities. In doing so, we will focus all of our efforts on sustainably

activities and creating breakthrough innovation, we look to help society achieve zeroincreasing our corporate value and contributing to the realization of a sustainable

environmental impacts while continuing economic growth.

society.

Message from the CFO

Green Innovation toward 2040, which was designed to accommodate recent develop-

Message from the CEO

NTT Green Innovation
toward 2040

completing them prior to the end of the fiscal year. Furthermore, 280 million shares of
In May 2020, NTT Group unveiled its Environment and Energy Vision. This vision was

We have set a target of reducing Groupwide greenhouse gas emissions by 80%
from the level from the fiscal year ended March 31, 2014, by the fiscal year ending

I ask all of our shareholders and investors to continue supporting our efforts.

March 31, 2031. In addition, we will target carbon neutrality in our mobility communiNTT at a Glance

cations (NTT DOCOMO) and data center business a step ahead of other businesses

November 2021

before striving to achieve carbon neutrality on a Groupwide basis by the fiscal year
ending March 31, 2041.
We expect that the current trends will lead to an increase in electricity consumption, and consequently greenhouse gas emissions, as a result of rapid growth in data

Value Creation Processtraffic. In response to these trends, we will take a three-pronged approach towardachieving carbon neutrality. First of all, we will target a 10% decrease in greenhousegas emissions through the continuation of energy conservation initiatives. Second,
we will cut emissions by 45% through increased use of renewable energy. Third andlast, we will seek to reduce electricity consumption by 45% via the introduction of

Refinement of MediumTerm Management Strategy

IOWN. Through these three initiatives, NTT will achieve carbon neutrality.
As we work to reduce our own emissions, NTT will also strive to contribute to the
reduction of greenhouse gas emissions across society. By promoting the installationand popularization of IOWN in the communications fields and in a variety of otherindustrial fields, we hope to reduce emissions in Japan by at least 4% while lowering

Research & Development

overseas emissions by 2% or more. We will also deploy new services that contributeto carbon neutrality, such as Green 5G and docomo Denki Green. At the same time,
NTT will ramp up its development and introduction of renewable energy.
Going forward, NTT will advance concrete initiatives based on four objectives:
reduction of environmental impact through business activities, creation of breakthrough innovation, greening of society by use of ICT (Green by ICT), and greening

NTT Group's
Sustainabilityof NTT (Green of ICT).

Shareholder Returns

As we exercise consideration for our various stakeholders through an array of meaOperations in Review

sures, we continue to recognize the enhancement of shareholder returns as one ofour most important management responsibilities. This responsibility even formed thefoundation based on which we refined the medium-term management strategy. Ourbasic policy for dividends is to continuously increase dividend payments. In addition,
NTT takes a flexible stance toward treasury stock acquisitions based on its financial

Data Section

position with a view of improving capital efficiency. The planned dividend for the fiscal
year ending March 31, 2022 is ¥110 per share, which will make for the 11th consecutive year of dividend increases. Meanwhile, in August 2021 we resolved to acquire¥250.0 billion worth of treasury stock, or 100 million shares, in the fiscal year ending
March 31, 2022, and we are moving forward with these acquisitions with the goal of

8

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

9

CFOMessage
Message from the CFO
New Targets(Reference) FY2021 Plan

Approx. ¥320
(FY2023)¥370(FY2023)¥302

Overseas Sales*1 *2$25B(FY2023)―(FY2023)$19B

Overseas Operating Profit Margin*1

7%(FY2023)

7%(FY2023)

6%

At least ¥(800.0) billion(FY2023)

At least¥(1,000.0) billion

8%(FY2023)

8%(FY2023)

7.4%

13.5% or less
(FY2021)

13.5% or less
(FY2021)

13.5%

EPS

Cost Reductions(In Fixed-Line / Mobile Access Networks)*3

Capex to Sales (Domestic Network Business)*4

Representative Member of the Board
Senior Executive Vice President andChief Financial Officer

EPS
NTT looks to grow earnings in order to accomplish the new EPS target of ¥370 for the fiscal year ending March 31, 2024. Specifically,
we will pursue higher operating revenues and operating profit by strengthening domestic and global operations and generating synergies via the growth and reinforcement of the new DOCOMO Group, through which we aim to boost earnings by approximately¥100.0 billion in the fiscal year ending March 31, 2024. In addition, we will promote DX as part of our transformation to a new management style in order to achieve ongoing cost reductions and thereby increase earnings by more than ¥200.0 billion in the aforementioned fiscal year.
Our efforts to boost earnings by ¥100.0 billion through synergies at the new DOCOMO Group will include coordinating sales­targeting corporate clients. By merging the functions and assets of NTT DOCOMO, NTT Communications, and NTT COMWARE, wewill aim to increase sales from corporate clients for these entities from the ¥1.6 trillion achieved in the fiscal year ended March 31,
2021 to above ¥2.0 trillion in the fiscal year ending March 31, 2026. In addition, we will target the swift creation of innovative services
by ramping up intra-Group service and solution coordination in NTT DOCOMO’s smart life
business and merging the services and solutions of NTT Communications with the software development capabilities of NTT
COMWARE and the R&D capabilities of NTT DOCOMO. At the same time, we will work to streamline capital investment and operating
costs by consolidating the network functions of NTT DOCOMO and NTT Communications in the telecommunications business.
To cut costs by more than ¥200.0 billion through DX, we will seek to increase efficiency across the value chain by digitizing sales,
maintenance, development, and other Group processes to achieve automation and standardization. We will also target reductions in
all types of costs, including personnel, equipment, and sales-related costs, going forward.
We will also advance an array of other initiatives aimed at accomplishing the ¥370 EPS target. For example, we will look toheighten earnings in the overseas businesses of NTT Ltd. and NTT DATA, grow real estate and energy businesses, and sell assets totransfer assets off of our balance sheet. Such efforts to grow revenue and profit will be continued even after the fiscal year ending
March 31, 2024, the final year for our medium-term financial targets.

Effect of Synergies in the Newly Formed
DOCOMO GroupFY2023
Profit Increase of¥100.0 billion
FY2023
Cost Reductions over¥200.0 billion

Achieving EPS of¥370 in FY2023

Data Section

Transformation to a New Management Style(Further Promotion of DX)

Operations in Review

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONNTT Group's
Sustainability

Initiatives for Accomplishing the ¥370 EPS Target

New Environment and Energy Vision

10

Research & Development

NTT has revised the financial targets put forth in the medium-term management strategy announced in November 2018.
NTT has consistently positioned EPS as one of its main financial indicators based on the recognition that growth in this indicator
will help the Company to achieve steady profit growth and enhance shareholder returns. It became apparent that we were on course
to achieve the prior EPS target for the fiscal year ending March 31, 2024 of ¥320, which represents growth of 50% from the fiscal
year ended March 31, 2018, a year ahead of schedule. Accordingly, we chose to raise the target for the fiscal year ending March 31,
2024 by ¥50, to ¥370, which will make for an increase of roughly 75% from the level of ¥212 in the fiscal year ended March 31, 2018.
To achieve this incredibly ambitious target, we will conduct flexible share buybacks while also pursuing earnings growth. Major factors projected to contribute to earnings growth under the refined medium-term management strategy include growth, reinforcement,
and synergies at the new DOCOMO Group and reductions in costs through the promotion of DX, which are anticipated to buoy earnings by approximately ¥100.0 billion and over ¥200.0 billion, respectively, in the fiscal year ending March 31, 2024.
We have also revised our target for cost reductions. The prior target prescribed reductions of at least ¥800.0 billion to be achievedby the fiscal year ending March 31, 2024. However, our current position has allowed us to target cost reductions of ¥840 billion in thefiscal year ending March 31, 2022, meaning that we will be able to achieve this target two years in advance. We have thus raised thistarget by ¥200.0 billion, the aforementioned amount of cost reductions to be achieved via DX, to make for a target of cost reductions
surpassing ¥1 trillion for the fiscal year ending March 31, 2024.
Meanwhile, NTT Group plans to aggressively develop its business in a manner oriented toward sustainable growth while maintaining financial discipline with an emphasis on capital efficiency. Accordingly, we continue to pursue our prior target for ROIC of 8%
for the fiscal year ending March 31, 2024.
Other financial targets include a capex to sales ratio of 13.5% or less for our domestic network business to be achieved by thefiscal year ending March 31, 2022, as well as an overseas operating profit margin of 7% for the fiscal year ending March 31, 2024. As
for overseas sales, we had previously set a target of $25.0 billion for the fiscal year ending March 31, 2024. However, this target has
since been canceled due to changes in the accounting standards applied to overseas subsidiaries andthe impacts of the COVID-19 pandemic.
Our medium-term financial targets will, of course, be incorporated into the evaluation indicators for officers of NTT, the holding
company. They will also be incorporated into the evaluation indicators for officers of the operating companies under the holding
company to entrench these targets into Groupwide strategies in order to drive more effective initiatives.

*1 Includes results from the global holding company, its subsidiaries and its affiliates.
Overseas Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets.
*2 In addition to the change in accounting for some of the income, the impact of COVID-19 is also significant, so no target is set.
*3 Figures above show cumulative reductions since FY2017.
*4 Excludes NTT Communications’ data centers and certain other items.

Refinement of MediumTerm Management Strategy

Medium-Term Financial Targets and Underlying Policies(FY2023)

Value Creation Process

Akira Shimada¥(840.0) billion

NTT at a Glance

ROIC

Message from the CFOWith its refined medium-term
management strategy, NTT has
instituted an upward revision
to its target for EPS, one of its
main financial indicators, and isaccelerating earnings growth.

Current Targets

Message from the CEO

Medium-Term Financial Targets

FY2023
Minimal Impact
on Costs

ANNUAL REPORT 2021

11

Message from the CFO

The enhancement of shareholder returns is among NTT’s most important management issues.
Our basic policy is to pursue ongoing increases in dividend payments, and flexible share buybacks are conducted to improve
capital efficiency. There has been no change to this policy under the refined medium-term management strategy.
For the fiscal year ending March 31, 2022, NTT plans to issue dividend payments of ¥110 per share, an increase of ¥10 per sharefrom the previous fiscal year, making for the 11th consecutive year of dividend increases. This amount will also represent an increaseof roughly 3.7 times from the fiscal year ended March 31, 2011, a decade ago.
Meanwhile, in August 2021 the Company approved share buybacks with an upper limit of ¥250.0 billion, or 100 million shares, tobe conducted leading up to March 31, 2022. The total number of shares acquired over the past 10 years has reached 30% of the total
number of shares issued in the fiscal year ended March 31, 2011. These efforts have made large contributions to the growth of EPS,a main performance indicator of the medium-term management strategy.
In addition, we canceled 280 million shares of treasury stock, equivalent to approximately 7% of the total number of shares issued,in November 2021.
The Company’s total shareholder return, which accounts for dividends and stock price fluctuations, over the past 10 years was 373%,
outperforming the TOPXDVNET index, which is calculated post-tax and including dividends.

110

90

60

60

36.4 40
30

20

0(Fiscalyear)

Dividends per share (Yen) (left scale)

Payout ratio (%) (right scale)

Debt Repayments

641.5

600

100

59.1
300

50

0
(Fiscalyear)

02010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Plan)

 otal dividends (Billions of yen) (left scale)TShare buybacks (Billions of yen) (left scale)
Total return ratio (%) (right scale)

Average Number of Shares Issued (Excluding treasury stock)Total Shareholder Return(Millions of shares)

(%)

6,000
5,000

400

373

300

279

5,293

3,692

4,000

200

3,000
100

1,000
(Fiscal 2010
year)

0

2011 20122013 20142015

2016 2017 20182019 2020(Fiscal 2010year)

NTT (%)¥1.1 trillion¥4.3 trillion

150

NTT Group's
Sustainability(¥9.0 trillion)

Securitizations ofReceivables

(%)

900

Research & Development

Spin-Off ofLeasing Business(Billions of yen) 02010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Plan)

2,000

Acquisition of
NTT DOCOMO

80

Refinement of MediumTerm Management Strategy

In October 2021, NTT Group issued NTT Group Green Bonds. With an issue amount of ¥300.0 billion, these green bonds have one of
the world’s largest issue amounts for a first issue of green bonds through an operating company. These bonds are symbolic of ourstrong commitment to advancing Groupwide financial initiatives for contributing to the realization of a sustainable society throughNTT Green Innovation toward 2040, the new environment and energy vision announced in September 2021.
The Company’s level of interest-bearing debt has risen temporarily to a high level following the conversion of NTT DOCOMO into
a consolidated subsidiary in the fiscal year ended March 31, 2021. Nevertheless, we plan to maintain financial health by utilizing ourGroupwide capacity to generate stable, consistent profits and cash in order to lower financial leverage. The free cash flow produced
through business activities will be used to enhance shareholder returns, to invest in growth, and to repay debt that exceeds fundprocurement amounts. We will thereby seek to reduce liabilities to a level of roughly double the amount of EBITDA over the medium
term. At the same time, NTT will lower financial leverage to maintain financial health along with a single A credit rating so that it cancontinue to procure funds at low interest rates.

(%)

120

30

Diversification of Funding Sources and Interest-Bearing Debt Target

Total Dividends and Share Buybacks(Yen)

Value Creation Process

COLUMN

Changes in Dividend

NTT at a Glance

NTT has proceeded to maintain ownership and practice in-house operation of access networks, network equipment, and a vast
amount of other communications equipment in order to establish a communications network that spreads to every corner of Japanand supply reliable, high-quality communications services. Our telecommunications business will continue to function as our corebusiness foundation going forward. However, we aim to move away from business models that presume asset ownership and totransition to management emphasizing cash flows. NTT also intends to diversify its portfolio by proactively developing new businesses targeting future growth. Accordingly, we will be downsizing our overall asset portfolio while securing cash flows in order toimprove invested capital efficiency. These efforts will take the form of disposal of inefficient Company assets and idle equipment
and curtailment of investments through equipment sharing. We thereby aim to create an asset portfolio that will allow for the cash
generated through business activities to be invested in new businesses.
As one example of these activities, we transferred our leasing businesses to NTT TC Leasing Co., Ltd., a joint venture between
Tokyo Century Corporation and NTT, in the fiscal year ended March 31, 2021, thereby achieving a ¥1.1 billion reduction in interestbearing debt. In addition, we have been moving ahead with the liquidation of receivables, namely credit card receivables and installment payment receivables from sales of mobile phones, in NTT DOCOMO’s finance business. We liquidated ¥50.0 billion worth ofthese receivables in the fiscal year ended March 31, 2020, ¥350.0 billion in the fiscal year ended March 31, 2021, and then ¥650.0
billion, including ¥300.0 billion in credit receivable roll over, in the six months ended September 30, 2021. We plan to continue liquidating such receivables based on funding needs going forward.
In addition, we commenced joint operation of data centers in India with Tokyo Century with the aim of improving efficiency andgrowing operations in our data center business. The first data center to be operated through this joint scheme was opened in
Mumbai in August 2021. Data center business assets will be held jointly through an intermediate holding company established in
Singapore in November 2021 in order to facilitate the growth of our data center operations in India. In the future, we will look to utilize
third-party capital in order to develop operations efficiently while limiting capital investment.

Message from the CFO

Shareholder Returns

Message from the CEO

ROIC

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

TOPXDVNET (%)¥1.0 trillion¥0.9 trillion

Ratio ofInterest-Bearing
Debt to EBITDA
Approx. 2 times¥4.7 trillion

Approx.
¥6.0 trillion*

FY2019Target level

Data Section

Ratio ofInterest-Bearing
Debt to EBITDA
Approx. 1.5 times

Operations in Review¥2.2 trillion* Dividends per share and Average Number of Shares Issued have been adjusted to reflect the hundred-for-one stock split carried out on January 4, 2009, two-for-one stock split carried out
on July 1, 2015, and two-for-one stock split carried out on January 1, 2020.
* U.S. GAAP were applied for fiscal years up to and including the fiscal year ended March 31, 2018, while International Financial Reporting Standards (IFRS) have been applied for fiscal years
from and including the fiscal year ended March 31, 2019.
* The amount for total dividends for the fiscal year ending March 31, 2022, has been calculated in reflection of the share buybacks with an upper limit of 100 million shares approved at themeeting of the Board of Directors held in August 2021.

* Level set on an assumption of EBITDA at ¥3 trillion(Reference) FY2020 Result: ¥3.11 trillion, FY2021 Plan: ¥3.16 trillion

12

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

13

at a glanceNTT
NTT at a Glance

As “Your Value Partner”, we aim to work

telecommunications business. We operate

together with our partners to solve social

in a wide range of domestic and overseas

issues through our business activities. We

markets by utilizing the customer basework to make the world a place where alland expertise in communication networks

people can enjoy the benefits of ICT soand ICT that we have cultivated over ourthat they may be able to live and work

history.

more comfortably and happily.

Formulate management strategies for NTT Group andpromote basic research and development

Mobile Communications BusinessBusiness
Activities

Mobile communications business,
smart life business, etc.

Major
Services

Mobile phone services, “d market” services such as movie
and music distribution and e-book services, and financeand payment services¥

Competitive ● A stable communications network that can be usedcomfortably anytime, anywhere
Advantages● 
Top-notch research and development capabilities● 
Large market share and stable customer base(Billions of yen)

FTTH and other services

FY2019FY2020Operating revenues

11,879.8

11,899.4

11,944.0

Operating profit

1,693.8

1,562.2

1,671.4

Profit attributable to NTT

854.6

855.3

916.2

Business
Activities

Long-distance telecommunications operations in Japan,
international telecommunications business, solutions
business, and related businesses

Total assets

22,295.1

23,014.1

22,965.5

Major
Services

NTT shareholders’ equity*1

9,264.9

9,061.1

7,562.7

Cloud services, data center services,migration support services,and other services

231.21

248.15Book-value per share (BPS) (yen)*2 *3

2,416.01

2,492.60

2,087.98

Cash flows from investing activities
Free cash flows*4(Cash flows from operating activities - Cash flows from investing activities)

Main Company
NTT DOCOMO, INC.

2,771.5

3,009.1(1,774.1)(1,852.7)(1,424.5)

Competitive ● Comprehensive solutions from
Advantages application to IT infrastructure● Global coverage● Strong customer engagement

Main Companies
Nippon Telegraph andTelephone East Corporation

54.2%(¥913.2 billion)

Nippon Telegraph andTelephone West Corporation

NTT, Inc.

(Global holding company)
Main businesses
Governance, strategy
planning, and policy
promotion for the global
business of NTT Group

Main Companies
NTT Ltd.
(Global Operating Company)

Business
Activities

Network system services, system integration, etc., inJapan and overseas

Major
Services

ERP services, ICT outsourcing, and other services

623.8

918.8

1,584.5

Competitive ● High-level technology development and project manAdvantages agement capabilities● 
Large market share and stable customer base in Japan● 
Powerful service delivery capabilities using development bases in EMEA and in Central andSouth America(584.3)(1,041.3)(1,689.5)

Other Businesses
Business
Activities

Real estate, finance, construction / electric power,system development, advanced technology
development, etc.

23.3%(¥3,207.4 billion)

NTT Communications
Corporation(Japan Operating Company)

Data Communications Business*1 NTT shareholders’ equity does not include the portion attributable to non-controlling interests.
*2 EPS is calculated based on the average number of shares outstanding during the fiscal year, excluding treasury stock, and BPS is calculated based on the number of shares
outstanding at the end of the fiscal year, excluding treasury stock.
*3 NTT conducted a two-for-one stock split of its common stock with an effective date of January 1, 2020. The figures reflect the impact of this stock split.
*4 Amount excluding the impact of the last day of the previous fiscal years having been a non-business day

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

34.3%(¥4,725.2 billion)

Long Distance and International Communications Business

11.0%

2,397.9billion

15.0%(¥2,065.6 billion)

25.0%(¥420.2 billion)

Main Company
NTT DATACORPORATION

16.8%(¥2,318.7 billion)

8.7%(¥146.2 billion)

Main Companies
NTT Urban Solutions, Inc.
NTT Anode Energy
Corporation

Data Section

Cash flows from financing activities

9.3%

1,671.4

Operations in Review

Cash flows from operating activities*

4

9.3%

¥

NTT Group's
Sustainability

220.13

11,944.0

Research & Development

Earnings per share (EPS) (yen)*2 *3Competitive ● Secure, highly reliable, stable communications network
Advantages ● Provision of and support for ICT solutions with strong
local ties
● Large market share and stable customer base

(FY2020)

Refinement of MediumTerm Management Strategy

FY2018

Ratio of profit attributable to NTT (ROE) (%)

14

Major
Services(FY2020)

Value Creation Process

Financial Highlights (IFRS)

Regional telecommunications operations in Japan andrelated businesses, etc.

Operating
Profit*billionRegional Communications BusinessBusiness
Activities

Operating
Revenues*

NTT at a Glance

NTT Group is a leading company in theMain Businesses

Message from the CFO

What we do

Message from the CEO

Who we are

Nippon Telegraph andTelephone Corporation(Holding Company)

8.3%

10.6%

(¥1,467.1 billion)(¥139.2 billion)

3.8%(¥64.8 billion)* The percentage of each segment’s simple total (including inter-segment transactions)

ANNUAL REPORT 2021

15

Value Creation Process
Contribute to
Realization of
Smart World /Society 5.0

NTT's attributes include a solid customer base in Japan and overseas, global brand power,
human resource capabilities, and world-class research and development capabilities.
We will leverage these to sustainably increase our corporate value in a manner unique
to NTT through DX together with our partners.

Toward a sustainable
society / SDGs

Financial Targets
Initial Targets

Social Issue Resolution
through Business Operation

Outcome

Human Resources

As a

PublicUtility

Brand ImageICT Infrastructure

Cost Reductions*2(in fixed-line /mobile access networks)

at least ¥800 billion

at least¥

FY2023

1 trillion(FY2023)

ROIC

Return on invested capital

NTT Group's
Sustainability

8%Capex to Sales(Domestic Network Business)*3
Capital expenditure to sales ratio

Operations in Review

Customer Base

13.5% or lessEnhancement ofManagement Resources

FY2021*1 Includes results from the global holding company, its subsidiaries and its affiliates. Overseas
Operating Income excludes temporary expenses, such as M&A-related depreciation costs ofintangible fixed assets.
*2 Figures above show cumulative reductions since FY2017.
*3 Excludes NTT Communications’ data centers and certain other items.

ANNUAL REPORT 2021

Data Section

Collaboration with
Various Partners

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

FY2023

FY2023

Realization of a Well-Being Society

Enhancement of Corporate Value through ESG Initiatives

16

Overseas Operating
Profit Margin *1
7%

Advancement of Digitalization / DX

Enhance Domestic and Global Business
Financial Base

(FY2023)

FY2023

Research & Development

A New Management Style Suitable fora Decentralized Network Society

and aPrivateCompany

Society During COVID-19 and Post-COVID-19

370¥
per share

Refinement of MediumTerm Management Strategy

Directionality of NTT Group’s Transformation

EPS Growth
Approximately¥320 per share

Value Creation Process

Digital Transformation
x CSR

New Targets (announced October 2021)

NTT at a Glance

Input

R&D Capabilities

Message from the CFOManagement Resources,
Expertise

Message from the CEO―A Cycle of Sustainable Corporate Value Enhancement―

17

NTT Group

Refinement of MediumTerm Management
Strategy

Future Changes in the Environment
Society / Economy

During and After COVID-19
Acceleration of the division of the world
Co-existence with the threat of infectious
diseases●
Advancement of a remote / decentralized society●Social advancement of diverse kinds of personnel●●●

Cost Reductions(In Fixed-Line / Mobile Access Networks)*3

Capex to Sales(Domestic Network Business)*4$25B(FY2023)—(FY2023)

7%(FY2023)

7%(FY2023)

At least ¥(800.0) billion(FY2023)

At least¥(1,000.0) billion
8%(FY2023)

13.5% or less

13.5% or less

(FY2021)(FY2021)

18

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONNTT Group’s Directionality

Society During
A New Management Style
COVID-19
Suitable for a Decentralized
andNetwork Society
Post-COVID-19

New Strategic
Frameworks

Transformation toa New Management
Style

$19B

Advancementof digitalization / DX

Enhance Domestic andGlobal Business

Enhance Domestic andGlobal BusinessInitiatives to Achieve the Strategy• New style premised on remote work

P.20−21, 46−47• Growth and strengthening of the newly
formed DOCOMO GroupP.22−23• Promotion of the IOWN development /rollout plan

P.26−31• Enhance competitiveness in global business• Promote B2B2X model

6%¥(840.0) billion

7.4%• Strengthening of new businesses

Realizationof a WellBeing
SocietyEnhancement of Corporate
Value through ESG
Initiatives

Enhancement ofCorporate Value• New Environmental and Energy Vision

P.36−39• Disaster countermeasures initiatives

P.42−43• Enhancement of returns to shareholders

P.13

13.5%

Data Section*1 Includes results from the global holding company, its subsidiaries and its affiliates.
Overseas Operating Income excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets.
*2 In addition to the change in accounting for some of the income, the impact of COVID-19 is also significant, so no target is set.
*3 Figures above show cumulative reductions since FY2017.
*4 Excludes NTT Communications’ data centers and certain other items.

Social /Economic
Directionality¥302(FY2023)

8%(FY2023)

Directionality of NTT Group’s Transformation and New Strategic Frameworks

Operations in Review

ROIC(FY2023)

 reaking the existing paradigm,
Bwith new technologies: Beyond 5G / 6G,
Quantum, Genome, etc.

NTT Group's
Sustainability

Overseas Operating Profit Margin*

1

¥370

●

Research & Development

Overseas Sales*1 *2

Approx. ¥320
(FY2023)

FY2021 PlanIncreasing scale of natural disasters worldwide
Realizing carbon neutrality by 2050

Refinement of MediumTerm Management Strategy

EPS

New Targets(Reference)●

Value Creation Process

Medium-Term Financial Targets●

Technology

NTT at a Glance

NTT Group works together with its partners as “Your Value Partner” to resolve social issues through its business operations andthereby respond to future changes in the operating environment, such as the advancement of digitization and DX. To guide us in thispursuit, we refined the NTT Group Medium-Term Management Strategy announced in November 2018 in order to accelerate ourtransformation into an open, global, and innovative new NTT.
Based on social and economic trends, the refined plan describes three strategic frameworks: transformation to a new management style, enhance domestic and global business, and enhancement of corporate value. We have also put forth nine initiatives inaccordance with these frameworks.
At the same time, the Company has revised its medium-term financial targets for EPS and cost reductions. The target for EPS for
the fiscal year ending March 31, 2024 has been raised by ¥50 from the prior target of ¥320, to ¥370. We will work to accomplish thistarget via earnings growth to be pursued by generating synergies at the new DOCOMO Group, which is expected to boost earnings
by approximately ¥100.0 billion in the fiscal year ending March 31, 2024, and by reducing costs through the promotion of DX, which is
projected to contribute to an increase of more than ¥200.0 billion in earnings in the same fiscal year.

Message from the CFO

Advancement of digitalization / DX
Increasing the importance of economic security● Expansion of AI / robotics usage●Pluses and minuses of digitalization(surveillance capitalism)●

Environment / Resources, Energy

Current Targets

Message from the CEO

Background for Medium-Term Management Strategy Refinement and New Strategic Frameworks

Contribution to the Achievement of a Sustainable Society

ANNUAL REPORT 2021

19

NTT Group

Refinement of MediumTerm Management
Strategy

Transformation to a New Style Premised on Remote Work

Re-examination of Systems /Promotion of Remote WorkBusiness / DX

Message from the CFOTransformation of

To transform to a new management style, NTT will advance process reform, DX, system revision, and workplace environment cultivation initiatives in order to promote remote work and facilitate work-in-life (health management), and thereby realize work processes that are more open, global, and innovative. In terms of process reform and DX initiatives, we will introduce a cloud-based
system to install IT infrastructure that will enable any employee to work in any location at any time. At the same time, we will digitize
processes to facilitate automation and standardization while expanding the application of digital marketing sales approaches.
Through the promotion of such DX, we will look to achieve cost reductions of more than ¥200.0 billion in the fiscal year ending
March 31, 2024, which will make for an aggregate total of more than ¥1.0 trillion in cost reductions from the fiscal year ended
March 31, 2018.

Message from the CEO

Transformation to a New Management Style

General Improvements

Process Automation and Standardization (Sales, Maintenance, Development, etc.)

Promotion of “work-in-life” (health management)
Open, global and innovative business operations

Optimization and
Digitization of
Logistics

Transformation of Business / DX
Introduction of Cloud-Based Systems / Zero-Trust Systems
Development of an IT environment that enables employees to work from anywhere

Digitization of
Procurement
Processes

Sales /
Applications

Construction

Payments /Invoices

Installation

Digitization of Sales Activities for SMEs / SOHOs

Automation /Flow-Through of
Design andConstruction
Processes

Automation of
Helpdesk

Digitization of C-Facing Front

Automation and
Making Remote ofEquipment
Inspections, etc.

Digitization of Application / Installation / Invoicing

Completion in FY2022 (Staff and sales teams)
Completion in FY2023 (All)

Automation / Standardization of Business Processes (Sales, Maintenance, Development, etc.)

MaintenanceValue Creation Process

Initiatives to Achieve of a Management Style Transformation

Procurement /Logistics

NTT at a Glance

We will digitize Group processes (sales, maintenance, development, etc.) in order to facilitate standardization and automation andthereby promote efficiency across the value chain, create new value through the use of data, and foster a workplace environmentthat is conductive to remote work.

Support Activities
Automated Processes: 20 in FY2021
Over 100 in FY2025

Expand customer reach through digital marketing (SMEs)

FY2025 Revenues: ¥140 billion

Contribute to the DX of society as a whole by offering the PF leveraged in our own DX to customers as well
(Smart Infra Platform, etc.)

Completion in All Ordinance-Designated Cities inJanuary 2023

Refinement of MediumTerm Management Strategy

Promote the conversion into a Connected Value Chain that includes partner companies

IT / AI MaintenanceDigitization of Finance and Accounting

Enhancement of Governance in Consideration of Conduct Risks
Identifying more than 170 risks and implementing measures such as building appropriate relationships with stakeholders,
accurately managing the life cycle of services and other items, and improving crisis management capabilities

From FY2021

Approximately 100 automated processes for 10 DX initiatives

Paper usage of NTT Group to be reduced to zero in principle* (FY2020: 6,000t)* Excluding paper usage based on customer requests, documents submitted to government offices, telegrams and telephone directories

By 2025

Re-Examination of Systems / General Improvements

ExampleAutomated / Remote Equipment Inspections, etc.

Re-Examination of Systems to Promote Business Transformation / DX
Systematizing information security that is appropriate for remote work
From FY2022

Development of core personnel for promoting DX (advanced personnel for data utilization, etc.)

FY2023: 2,400 persons

Active Promotion of Women, External Personnel and Foreigners
Advancement of the promotion of female managers and directors
Expansion of various kinds of support and training programs

New Manager Appointments: 30% in FY2021
Managers: 15% in FY2025
Directors: 25–30% in FY2025

Active recruitment of foreigners and external personnel, and development of global management personnel(expansion of overseas personnel development program)

Mid-Career Hire Ratio: 30% in FY2023
FY2025 Total Number: 200 persons

Previously, inspections and diagnoses of telephone poles needed to be conducted on-site. However, the introduction of a mobile­mapping system that employs vehicle-mounted cameras has made it possible to use images from this system to conduct remote,AI-powered automatic detection of deterioration in poles. This approach has reduced labor requirements.

Expansion of job-based personnel system for all managers

October 2021

Promotion of autonomous career development (personnel self-selection)

FY2022

DesignSchematics

As-Built
Drawings

Automated
Ordering

Automated
DesignAutomated
Completion

Promotion of Work-in-Life (Health Management) through the Workplace-Residence Proximity

Behavior
Detection

Filtering

Construction
Partners

From FY2021

Promote regional urban development and the introduction of new social infrastructure development (IOWN introduction plan, etc.)

Bending

N 34°33’43.8”
E 135°29’33”

Wear
and
Tear

Crack

Manhole Covers

Area-Free / Remote

Utility Poles

Data Section

Further acceleration of community-based regional revitalization businesses towards local primary industries

Promotion of the Development of Information Infrastructure

RepairrequiredAutomated
Decision

Coordinates
Data

NTT
From FY2022

Automated
Reflection

Encryption

Enhancement of Security

From FY2022

Decentralization of the organization from major metropolitan areas to regional areas (major urban areas)

AI

GIS

Utility Poles

Transformation from a “highly centralized organization” into an autonomous, decentralized “network-like organization”

Decentralization of the Organization (Including Head Officers and Back-Offices)

Annotation

Coordinates
Data

Image Data
Multi-Factor
AntiAuthentication Malware(ID
Management) Measures

Promotion of Work-in-Life, and Open, Global and Innovative Business Operations
FY2022 260 or more locations(Satellite offices)

Image Data

Operations in Review

Introduction of Job-Based Personnel System (Released from Job Year-Based Placement)

Order
Schematics

N 34°33’43.8”
E 135°29’33”

NTT Group's
Sustainability

Re-examination of the office environment (increase the amount of space per person in the office by 1.5x, and enhance thespace for idea creation and co-creation)

Employees’ work will be premised on remote work, and they can choose their own workplace (no need for relocations andunaccompanied assignments, recruitment of remote-based employees, expansion of satellite offices, etc.)

Research & Development

Promotion of Paperless Operations (Including Invoices / Purchase Orders)

N 34°33’41.2”
E 135°29’31”
Manhole Covers

Automated On-Site Data Collection

Automating Inspection Work: On-site operations to be reduced by 50% (FY2023)
Automating Equipment Diagnostics Work (AI): Intensive operations to be reduced by 50% (FY2025)

Contributing to the development of resilient infrastructure and disaster mitigation against increasingly large natural disasters

20

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

21

NTT Group

Refinement of MediumTerm Management
Strategy

Overview of Medium-Term Strategy for New DOCOMO Group

Changing worlds with you.

IoT

MaaS

Smart City DX Support

Investment alliance strategy

Enterprisebusiness

Creation of new values and lifestyles
Finance / payment

Video

XR

MedicalUtilities

HandsetSmart life business

Fixed-mobile convergence

Next-gen. NW

Structural reformOMO UX renewal

Strengthening thepower of service
creation and­development and­promoting DX

Integrate R&D of DOCOMO, services of Communications andsoftware capability of COMWARE, leading to quick response
in creating innovative services, and accelerating DX of the
New DOCOMO Group

Provide innovative services quickly /Promoting DXIT•	Develop global businesses through converging capabilities of DOCOMO and NTT Communications andlinkage with NTT Data, and NTT Ltd.

IT

•	Strengthen the software development capability to quickly provide new services to customers, and toaccelerate DX of the whole group

R&D•	Lead the open innovation, and change the world with partners

ESG•	Pursue business and ESG comprehensively, and contribute toward creation of sustainable society

1

January 2022

DOCOMO

Communications and COMWARE
become subsidiaries

100%

subsidiaries

Communications

STEP

2

NTT
66.6%

33.4%

COMWARE
Integration

Integration of functions and business
responsibilities
clearly defined

Plala

DOCOMO

Around Q2 FY2022(direction set)
Telecommunications
business

100%

subsidiary

Resonant

MVNO /
ISP

Globalbusiness

Network

R&D

Smart life
business

DOCOMO
Systems

Enterprise

Integration

Communications

COMWAREEnterprise business

Software development / operation

ANNUAL REPORT 2021

Data Section

Global Business

STEP

Operations in Review•	Quick expansion of 5G, and integration of network of DOCOMO and Communications realizes
a higher-quality, economical network, enabling inexpensive, easy-to-use fixed / mobile services•	We realize with partners rates / services that meet diverse needs as well as reform of sales channels,
and create customer experience beyond their expectations•	Maintain mid-term profit in telecommunications business / Realize a shift to the growth trajectory(Reference)
Execution Flow to Move to the New Formation

NTT Group's
Sustainability

Smart Life Business•	Through seamlessly linking membership base, data usage and services with a variety of handsets,co-create new values and lifestyles with partners•	Boosting existing businesses like finance / payment and video / entertainment, plus expansion into
new domain will lead the growth of the new DOCOMO Group•	Make the majority of revenues of the new DOCOMO Group in FY2025 with smart life business andenterprise business

As the synergistic effect of integrating NTT DOCOMO, NTT Communications and NTT Comware,
Create profits of ¥100.0 billion in FY2023, and over ¥200.0 billion in FY2025

Research & Development

Enterprise Business• Integrate enterprise business as the new DOCOMO Group•	Support all corporate customers with one stop through building up salesorganization and enhancing FMC services / solutions• Expand enterprise revenue to over ¥2 trillion in FY2025

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Refinement of MediumTerm Management Strategy

Accelerate innovations with state-of-the-arts technology and development capacity

Initiatives by Business Segments

22

Fixed and Mobile convergence brings higher quality andeconomical network; provide inexpensive cost, easy-to-use
services and accelerate evolution toward 6G / IOWN

Globalbusiness

Lead the world in 6G / IOWN

Telecommunications
Business

More competitive
network

NTT Communications and
NTT COMWARE become subsidiaries
of DOCOMO

Local ICT support location

Telecombusiness

R&D

Integrate all enterprise businesses under the new DOCOMOGroup; support all corporate customers through one stop —contribute toward DX of society and industry

Value Creation Process

High-quality, economical network — customer experience beyond expectations

Expansion ofenterprise businesses

NTT at a Glance

5G

Make
majority ofrevenues

Synergies through Integration

Successful model
globally launched

Structural reform of society /industry
Support with DX in local
communities

Message from the CFOWith ‘Structural Reformʼ and ‘Creation of New Lifestylesʼ we are…

NTT DOCOMO is slated to convert NTT Communications and NTT COMWARE into subsidiaries. This reorganization will entail
integrating the management policies of these three companies, merging their functions, and clarifying their divisions of responsibility. The new DOCOMO Group will thereby seek to expedite decision-making and facilitate flexible business operation while accelerating the reformation of telecommunications businesses and the expansion of corporate client and smart life businesses. In addition,
the new DOCOMO Group will endeavor to generate massive synergies through the expansion of enterprise businesses, the development of a more competitive network, and strengthening the power of service creation and development and promoting DX. Throughthese synergies, this Group will target earnings of ¥100.0 billion in the fiscal year ending March 31, 2024, and more than ¥200.0 billion in the fiscal year ending March 31, 2026. Such ongoing increases in earnings are anticipated to drive the rapid growth of the new
DOCOMO Group.

Message from the CEO

Growth and Reinforcement of New DOCOMO Group23

Research & Development

What NTT R&D
Aims forNTT Laboratories
Number of research anddevelopment staff

Number of patents
Some

Some

NTT

Japan (excluding NTT)

Received IEEE Milestones

3.8%

4 times

1,900 / year

Standardization Activities
Participation in de jure standardization
organizations, such as ITU(FY2020)
Participants to domestic /international SDO

Total

192

Total

Other countries

Degree of participation in de jureinternational standardization meetings(FY 2020)

1,093

Members of domestic
committees

94.4%

Estimated from the former study period (2017–2020) data of ITU-T
and of the Ministry of Public Management, Home Affairs, Posts andTelecommunications, Japan.

person-days(excluding preparatory studies)

262

1.8%

For more information on awards, please refer to the
NTT corporate website.
https://www.rd.ntt/e/news/?cat=Awards

NTT R&D Authority TeamNTT assembled researchers who are known authorities in their respective fields to form the NTT R&D Authority Team. These
researchers take part in R&D activities at NTT to contribute to the realization of IOWN and help shape our vision after realizing thisconcept. Specifically, they are responsible for driving research in their fields of expertise by directing, providing guidance, and advising activities regarding research themes.
As one facet of our efforts to accelerate R&D from a long-term perspective, NTT established the Institute for Fundamental
Mathematics.* This research center is overseen by Dr. Masato Wakayama, a member of the NTT R&D Authority Team who serves as
the Fundamental Mathematics Research Principal. It will work on establishing a basic theoretical framework for modern mathematics and will accelerate research towards innovation in quantum technology by challenging to uncover the basic principles behind thesuperior power of quantum computing. It will also seek to contribute to NTT’s R&D aimed at realizing IOWN by proposing the use ofmodern mathematics in groundbreaking new approaches to addressing various research problems, including the elucidation of
unknown diseases and the discovery of new drugs.

Refinement of MediumTerm Management Strategy
Research & Development

Executive Vice President
Head of Research and Development
Planning

Number of papers and presentationsat academic conferences43(including those retired)

Value Creation Process

Katsuhiko Kawazoe

2,300

NTT at a Glance

To help make people’s lives more rewarding and business activities more convenient, we have been enhancing the efficiency of information and communications technology through digitalization. However, we are now faced with unprecedented challenges such as
pandemics, there are still walls to be broken through. For the solution to these problems and the development of a sustainable society in the future, it is imperative to create entirely new values not only by quantifying tangible information but also by incorporating
and utilizing different ways of perceiving things and recognizing the diversity of all beings in the world.
To achieve the above, we need to have an even more powerful information processing infrastructure. The volume of traffic on theInternet continues to rise and will, in time, exceed the limit of the current processing capacity. Also, enormous energy consumption
will become an unavoidable problem. What are required now to ensure advancement of
humankind are innovations that will break through these limitations.
To provide a solution, NTT R&D has proposed the concept of Innovative Optical andWireless Network (IOWN), a future communication infrastructure that will enable environmentally friendly, sustainable growth and diversity-tolerant total optimization. This concept ischaracterized by ultra-high capacity, ultra-low latency, and ultra-low power consumption,
which are made possible through adoption of photonic and other innovative technologies.
Utilizing this innovation, we have formulated a new environment and energy vision “NTTGreen Innovation Toward 2040” to simultaneously achieve zero environmental impact andeconomic growth. We aim to achieve carbon neutrality by 2040.
When processing power is boosted by IOWN, the computation required for interactions
between digital twins and for long-term forecasting of their behavior will become available,
leading to highly accurate future prediction and resolution of various social issues. We see
happiness not as an instantaneous event but, rather, as an integral value that can be sustained from the past into the future. The aim is to ensure comprehensive and sustainable“well-being” for all members of society.
As it works to realize IOWN, NTT R&D will address social issues and will research anddevelop transformative technologies that will bring about a smart world in which everyone
can benefit from technology without even noticing it.

Some

Percentage of contributions submitted to ITU-T(2017–2020 study period)

Message from the CFO

Message from the Head of Research and Development Planning

18,000

Number of IEEE Fellows

Message from the CEO

Message

R&D by the Numbers

NTT has established the Institute for Fundamental Mathematics
Advancing the pace of exploration into the unexplored principles of quantum computing
https://group.ntt/en/newsrelease/2021/10/01/211001a.html

Realization of a sustainable society by mapping
the world with photoelectric merging technology
NTT IOWN Integrated
Innovation Center

NTT Service
Innovation
Laboratory GroupNTT Network Innovation Center
NTT Software Innovation Center

NTT Computer and Data Science Laboratories

Creation of innovative network technologies
with an eye to 2030

Research on world-first and world-best
innovations that will surprise society

NTT Network Service Systems Laboratories
NTT Access Network Service Systems Laboratories

NTT Science & CoreTechnology
Laboratory GroupNTT Network Innovation Laboratories
NTT Device Technology Laboratories
NTT Communication Science Laboratories
NTT Basic Research Laboratories

NTT Machine Learning and Data Science Center

NTT Bio-Medical Informatics Research Center

NTT Research Center for Theoretical Quantum Physics

NTT Institute for Fundamental Mathematics

NTT Digital Twin Computing Research Center

NTT Nanophotonics Center

NTT Innovative Photonic Network Center

NTT Smart Data Science Center

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Hitonobu Tomoike
Former Director of MEILab, NTT Research, Inc.

Cryptography
Tatsuaki Okamoto

Director of PHI Lab,NTT Research, Inc.

Director of CIS Lab,NTT Research, Inc.

Mathematics
Masato Wakayama
Former Vice President ofTokyo University of Science

NTT R&D
AUTHORITY TEAM

Nuclear fusion

Geoenvironmental
future prediction

Kenkichi Ushigusa
Former Managing Directorof the Fusion Energy
Research and Development
Directorate, QST

Keiko Takahashi

Opticalinterconnection
Ryo Nagase
Professor, Chiba Instituteof Technology

Internet of
medical things
Takashi Kawahara
Former Director-Generalat the Japan Institute ofSport Sciences

Wireless
communication

Data Section

24

NTT Social Informatics Laboratories

NTT Device Innovation Center

NTT Space Environment and Energy Laboratories
Research Centers inSpecific Fields

NTT Human Informatics Laboratories

Medical healthinformatics

Quantum optics
Yoshihisa Yamamoto

Operations in Review

NTT Information
Network Laboratory
Group

Shaping of a world in which everyone can be
happy, healthy, safe, and secure

NTT Group's
Sustainability

Research and Development System

Professor, Comprehensive
Research Organization,
Waseda University

Masahiro Morikura
Emeritus, Kyoto
University

ANNUAL REPORT 2021

25

Research & Development

What NTT R&D
Aims forNTT’s next-generation communication platform concept being developedwith the goal of practical application in 2030

Information
processing
platform

Photonics-electrics
convergence devices* Target power efficiency for the photonics part

26

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Provider A

Provider B

Provider C
Ctrl

Ctrl
Device Agent

API

Ctrl

All-Photonics Network

PublicPrivateLight●

Transmission per wavelength●

No queueing●

No data compression

Wavelength A

High-capacity video (uncompressed)

Wavelengths
No latency

Optical fiber

1,000 [Tbps/fiber]

In an instant (0.3 sec), 10,000 two-hourmovies can be downloaded (with 5G, one
movie can be downloaded in three seconds).

Wavelength B

SpeechIOWN GLOBAL FORUM Linking Companies and Academic Institutions across the GlobeIOWN is garnering interest from various companies and academic institutions
around the world.
In response to the interest from such organizations, we established IOWN Global
Forum, Inc., a new industry forum based in the United States, together with Intel
Corporation and Sony Corporation in January 2020. This forum has grown to boast
membership by 79 organizations as of October 31, 2021.
IOWN Global Forum’s objective is to accelerate the adoption of a new communication infrastructure that will bring together an all-photonic network infrastructure
including silicon photonics, edge computing, and wireless distributed computing tomeet our future data and computing requirements through the development of newtechnologies, frameworks, specifications, and reference designs.

Data Section

Various information communication
services are provided using 1/100th ofpower consumption.

End-to-end delay:
1/200*A
B
C
D

Light /
Light

Ctrl

Operations in Review

Light (wavelength)throughout

Light

Network service
API

NTT Group's
Sustainability

Transmission
systems

Light

End-to-End coordination of ICT resources

Low latency

Wavelength (optical signal)
Independent

Edge

Research & Development

Optical fiber cables

Ctrl

Processor using­ hotonics-Electronics
P
Convergence Technologies

125 times higher●

Transmission
media

Cloud

Refinement of MediumTerm Management Strategy

100 times higher*

Ctrl

Value Creation Process

Transmission capacity:

NTT at a Glance

Power efficiency:

API

API

High quality andhigh capacity

Digital Twin Computing

API

Against this backdrop, NTT is advocating its IOWN concept as a new form of communication infrastructure for shaping our future.
IOWN prescribes a network and information processing infrastructure that utilizes optical and other innovative technologies to realize ultra-high capacity, ultra-low latency, and ultra-low power consumption and thereby allow us to harness the various types of information whose processing requires capabilities exceeding those of our existing infrastructure. We are currently in the process of
discussing and conducting verification tests with our partners with the goal of finalizing the specifications for the 2024 iteration ofthis infrastructure and moving toward its full-scale realization in 2030.
Through IOWN, we aim to achieve a number of objectives. These include substantially reducing power consumption amounts,
providing processing capacity that can handle the increased computing needs created by broader-width communications, andenabling the real-time sharing of data that surpasses the scope of human senses collected from various sensors through highcapacity, low-latency communications. In addition, we look to utilize resources in a manner that exceeds industry and regional

Cognitive
Foundation®

Multi-orchestrator

Technologies Underpinning Social Infrastructure

boundaries through multi-orchestration functions that realize integrated management of a range of resources. To accomplish theseobjectives, IOWN proposes infrastructure comprised of three main technology components.
These technology components are all-photonic networks that use photonic-based technologies for everything from networks toterminals, the Cognitive Foundation® service for linking and controlling various different articles, and digital twin computing for projecting future trends and promoting optimization by comparing the physical world with digital models. By combining these threetechnology components, IOWN will be able to demonstrate its incredible effectiveness by increasing transmission capacity by 125
times, reducing latency to one-200th of its current level, and improving power efficiency by 100 times.

Agile allocation of ICT resources
Optimization of structure

The spread of the internet and smartphones has fundamentally transformed society. Today, IoT devices and various other articles
encountered in our daily lives are linked to one another. These changes can be seen in a move away from standardized offices todiverse work styles that are free of restrictions of location, allowing people to work at home or at shared offices. Moreover, the actof ordering products and services online, as opposed to making purchases at a physical store, has become commonplace. In thismanner, the internet is now an integral part of our everyday lives. These changes have led to exponential growth in the amount ofdata traffic on the internet, and this increased data traffic has turned attention toward the issues surrounding the limits of the transmission and processing capabilities of existing telecommunications systems and of the rising amount of energy consumed by
IT equipment. At the same time, it has become difficult to further increase the density of large-scale integrated circuits and othersemiconductors, which have previously been increasing in density in line with Moore’s law. These limits mean that the informationsociety will no longer be able to continue growing in the same manner as it has thus far.
Meanwhile, the impact of ICT infrastructure on global warming indicates a need to pursue carbon neutrality. Accomplishing thisimportant goal, however, is not feasible with existing technologies, and we must therefore look for some type of breakthrough innovation. It could even be said that the technology required for the future development of humanity is the one that will allow us toachieve carbon neutrality while also achieving economic growth.

Message from the CFO

Current Environment and Challenges

Low power consumption

Message from the CEO

IOWNInnovative Optical andWireless Network

Video is transmitted in real-time without
the latency experienced with digital TV or
satellite broadcast.
* Latency target value in video traffic not requiring­compression in the same prefecture

ANNUAL REPORT 2021

27

Research & Development

What NTT R&D
Aims for

Optimization of Cities and Mobility

Revitalization of the Global Environment and Realization of a Sustainable Society

There is urgent need to create a society that can cope with global environmental changes such as climate change, major disasters, andpandemics. Developing next-generation energy technologies and technologies to enable resilient environmental adaptation will reduce theburden placed on the global environment and thereby prevent environmental destruction, opening the door to a sustainable society inwhich humans can continue to live in harmony with the environment.
One notable energy technology built on the IOWN platform makes possible operation of nuclear fusion reactors. In July 2020,
NTT established NTT Space Environment and Energy Laboratories, and we are collaborating with the International Thermonuclear
Experimental Reactor (ITER) Project and Japan’s National Institutes for Quantum and Radioactive Science and Technology. Managing
nuclear fusion reactions while minutely controlling the plasma and sharing experimental results requires innovations in computing andcommunications protocols to transmit massive amounts (petabyte level) of information to various locations at ultra-low latency. A newcommunications platform like IOWN is essential to such innovation. We are also pursuing developmentof a more diverse energy network than ever before, including power generation from lightning andspace-based solar power generation. Combining these energy technologies with weather forecasting
will allow us to create a society that can respond more flexibly to changes in the environment.

5

28

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Areas in Which Value Is Created
Bio-digital twins, biometric sensing, distribution optimization, safe and securevalue chains

The digitalization of society has made it possible for people toenjoy more convenient services. At the same time, the risk ofcybercrime is increasing. As telemedicine becomes commonplace and digital twins make it possible for information andthe human body to impact each other, cybercrime could havelife-and-death implications.
That is why NTT wants to create a platform that can support a safe and secure society. In order to exchange large
amounts of information remotely and with peace of mind, weneed to build trust in a different manner than before. Value
chains that allow companies to share information acrossindustries are required in order to further advance digitization,
and we will also need an environment that enables securecommunication between public organizations and companies
around the world. Safe and secure communication will only beachieved when we ensure stronger security thatleverages the merits of IOWN’s high-capacity
and high-speed communications platform.

Data Section

Areas in Which Value Is CreatedTelemedicine, sports and entertainment viewing, remote support,
multimodal communication, emotion and thought communication

Fulfillment of Mind
and Body throughIntegration of Past,
Present, and Future

Realization of Safe and Secure
Communication

Operations in Review

In the wake of the global COVID-19 pandemic, many industries have undertaken a clear shift
toward remote activities. In addition to remote work and online education, there is also anurgent need to develop telemedicine. Meanwhile, the entertainment and sports industries
demand systems that can go beyond just watching or listening online to provide value
similar to that experienced in the physical world without the need to gather.
Through IOWN, we aim to enhance social and economic activities, even amid the kindof limitations imposed by the pandemic, and offer the value of the remote world. This goesbeyond simply implementing various remote activities; it also includes making possible
activities that transcend barriers of people’s abilities, cultures, and values. The field of entertainment and sports calls for bringing realism to online live events as well as for creating
environments where people can come together regardless of time or place. There is alsoa need to create frameworks through which people can even experience sports andentertainment by becoming other people. These innovations willlead to a society that transcends the boundaries of space, people,
and culture.

3

Secure Value Chains

NTT Group's
Sustainability

Creation of a Collaborative Space That Transcends
All Constraints

In the past, economic and health indicators have been used to measure human happiness and pleasure, but none of these figures can besaid to reflect the multitude of human characteristics. The concept ofwell-being that has recently been garnering attention encompasses
not only physical well-being but also mental and social well-being, andhas spurred a growing number of initiatives that seek to understandhuman well-being through medical, hedonistic, sustainable, and otherdimensions along with personal, social, and transcendental factors. Of
course, this notion of well-being is deeply connected to NTT’s development of IOWN and other architectures and services.
We have long viewed people as belonging to different groups, but
as new architectures make it possible to rapidly process enormous
amounts of data, we will be able to respond minutely to the tastes andneeds of each individual. Well-being requires that people first understand their own situation, then have the ability to choose and put into
practice the best options for them. NTT aims to build the foundations
that will allow each individual to achieve a state of well-being, theaggregate of experiences stretching from the past to the future, attheir own pace.

Research & Development2

Well-Being

Refinement of MediumTerm Management Strategy

Areas in Which Value Is CreatedResilient smart cities, plasma digital twins, CO2 negative technologies

Areas in Which Value Is Created
Connected cars and automated driving, smart cities, MaaS, smart infrastructure management, environment, disaster preparedness

Remote World

Value Creation Process

Digitalization is rapidly progressing in many industries, including transportation, urban infrastructure, and manufacturing. Methodologies
that entail the recreation and analysis of a variety of assets in digital spaces are expected to contribute to more efficient operations while
helping address large social challenges, such as those indicated by the United Nations Sustainable Development Goals (SDGs). At thesame time, services that create new value by linking data on a cross-industry basis still remain a work in progress.
4D digital platform™ is a solution to be provided through IOWN
that can be used to unite and integrate 4D data, comprised of latitude,
longitude, elevation, and time information, in a highly precise manner
through the Advanced Geospatial Information Database, which iscomprised of a wealth of highly precise semantic information. The
platform can then compile this data in real-time. Through this process, the platform helps facilitate high-speed analysis and processing and highly accurate future prediction.
By combining this platform with the IoT data of various industries, it
is possible to more effectively direct road traffic, optimally utilize city
assets, and reduce social infrastructure maintenance costs. NTT Groupis working together with partners from multiple industries to contributeto the harmony between society and the natural environment.

4

Zero Environmental Impact

NTT at a Glance

Future Predictions and Optimization Made Possible by Integration of Diverse Sensing Data with Highly Precise
Spatiotemporal Information

Message from the CFOWith eyes to the world after the COVID-19 pandemic, NTT is going beyond simply responding to technologicaltrends on an individual basis in order to promote integrated technologies for realizing the society it envisions.
The technologies NTT seeks to create are those that, like IOWN unveiled in 2019, support the social infrastructurethat enriches people’s lives. Through the architecture that forms this infrastructure, the platforms developed using
this architecture, and the five values born out of these platforms, NTT looks to create a blueprint of the world
to come.

Five Kinds of Values
That Support Our Lives

1

Message from the CEO

Smarter WorldPowered by IOWN

Areas in Which Value Is Created
Smart cities, remote work, supply and demand
forecasting systems, value chain reform

ANNUAL REPORT 2021

29

Research & Development

What NTT R&D
Aims for

Creation and Utilization of PhotonicsElectronics Convergence Technology

Optical–electricco-packages

Miniature 400G coherent opticaltransceiver

Digital signal
processor

COSA

Hidehiro Tsukano joined Fujitsu Limited in 1981, where he
was assigned to a division responsible for procuring
semiconductors and other items. He became generalmanager of this company’s Corporate Strategy Office in2001 and then senior executive vice president and chief
financial officer in 2017. Mr. Tsukano has also held theposition of chief strategy officer and has overseen allareas of operations as assistant to the president, before
becoming vice chairman in 2019. He later became consultant to Advanced Technology Corporation in 2020 andthen senior advisor to NTT’s research and development
planning function before assuming his current position in
July 2021.

4th Generation
Chip-to-chip
Interconnect(Tens of mm–1cm)

Commercialization (planned)

2023–2025 stablishment of the IOWN Integrated Innovation
E
CenterITER

Strengthening manufacturing technologies of ­photonicselectronics convergence devices (Establishment of
NTT Electronics Cross Technologies Corp.)

Osaka / Kansai Expo

Real-world sports viewing remotely (Ultra-realistic
video transmission/ Low-latency connections)Exhibit

Red: Photonics-electronics Convergence Technology

2026–2030
Deploying to specific applications /areas
Phased expansion

Advanced services for early adopters

Cloud gaming for eSports (Low-latency connections)(6G / IOWN exhibition, demonstration)

Wired-and-WirelessConvergence (WWC) services

Traffic flow management

 hotonics-electronics convergenceP
devices for mobile equipment
 ptical loop for access network
O(Reliability / Flexibility / Extendability)

Quantum cryptographic communication
 uper White BOX
S(Next-generation computing platform)
Space data center, etc.

Next-generation advanced office, “Urbannet
Nagoya Nexta Building” (PoC of DTC for urban
development)

Underground installation management with high-precision visualization (joint
management with other utility companies)

5th Generation
Photonics in Chip(<1cm) Photonics layer

Smart city projects (Phase 1)(Phase 2)

Connected car safe driving support

Collection and analysis of massive sensor data

Cognitive
Foundation

Prediction of wireless communication quality
affected by hand-over / masking

Integrated resource control for
immediate responses to demandchanges (including wirelesscommunications)

DisaggregatedComputing

Super White BOX: Step 0 (Optical direct path)

Super White BOX: Step 1(Optical backplane)

All-Photonics
Network

Post-quantum cryptographic communication

Autonomous driving /Precise group control of robots

High-speed
Event-driven,
Centimeter-level understanding of­spatiotemporal
real-time AI analytical
vehicle position and precise
searching for tens ofprocessing
prediction of traffic volume inmillions of vehicles
technology
cities and mountain areas

Digital Twin
ComputingDirect optical connection(Hundreds of Gbps /Non-dynamic routing)Other smart city projects

 evel 3 autonomous driving ofLagricultural machinery

Direct optical connection(Hundreds of Gbps /Semi-dynamic routing)

Optical transceivers
for APN

High-precision clock
time distribution

On-board co-packaged
optical transceiver

Super White BOX: Step 2 (Full optical)

Remoteoptical pathswitching

WWC core
network

Data Section

Utilization of optical communication technologies
for various applications• Telecom Long-Haul-Metro (1st Generation)• Data-Center Interconnect (2nd Generation)• Intra-Data-Center (3rd Generation)• Chip-to-Chip interconnect (4th Generation)• Photonics in chip (5th Generation)

2021–2022
Field verification

Rollout Plan

PoC

Green: related to Smart City Blue: related to Maps / Vehicles

Operations in Review

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Optical signal
input / output

Laser
OpticalreceiverNTT Group's
Sustainability

30

SiP COSA
DCI (100km)

COSA+DSP CoPKG
DCI(10km–100km)

CO

P

DS

Research & Development

SiP COSA
Telecom Metro (<1,000km)

P

DS

SA

DSP

Refinement of MediumTerm Management Strategy

SA

FY

Head of NTT IOWN Integrated Innovation Center

CPO: Co-Packaged Optics

COBlack: related to Communications

Hidehiro Tsukano

Chip-to-chip
Interconnection
2nd Generation

Opticaltransmitter

Actions

CMOS layer

1st Generation

Basic optical transceiver components

IOWN Rollout Plan

Technological Components

3rd Generation
Photonic Chiplet
Intra Data-Center(IF for ASIC) (–2km)

Figure 2: Photonics-electronics Converged Devices
Development Status

Value Creation Process

Figure 1: Photonics-electronics Converged Devices R&D Road Map

produced by NTT, with its long history of emphasizing basic
research. My mission is to ensure that this new idea can beeffectively developed into a tangible form. I was raised in a
culture that differs from NTT’s rather homogeneous one. As
such, I believe the new insight, experience, thinking, andideas I bring to NTT will be a powerful asset to accomplishing this mission.
Photonics-electronics convergence technology is thought
to be a technological innovation the likes of which only comesonce every 50 years. I hope that NTT, with its expertise inthese technologies, will be able to dominate the global
market by capitalizing on the ultra-low levels of latency andpower consumption made possible by these technologies.
Supporting NTT in this endeavor is the very reason for the
IIC’s existence. I like to express this sentiment with phrases
like “global technological game changer” and “revitalizationof Japan’s technological prowess.”

NTT at a Glance

The creation and utilization of photonics-electronics convergence technologythat combines optical and electric signals will be key to the realization of IOWN.
The NTT IOWN Integrated Innovation Center was established on July 1, 2021, inorder to accelerate the creation and utilization of these technologies. The word“center” was chosen for the name of this organization, as opposed to “laboratory,” and this decision has significant meaning. In advancing research anddevelopment, we view laboratories as organizations focused on the researchside of the equation. The IIC, meanwhile, is meant to devote more attention to
the development side, specifically seamlessly linking research to development
and moving innovations along the process up until the stage directly before
commercial development by operating companies. The IIC was dubbed acenter to signify this function.
Of particular importance to the process of realizing IOWN will be photonicselectronics converged devices.
We have prepared a five-generation road map to guide the R&D of photonicselectronics converged devices as we seek to create innovative technologies andquickly bring these technologies to practical application. Initiatives are alreadyunderway based on this road map (see Figure 1). In the past, NTT has succeeded in achieving practical application of coherent optical subassemblies(COSAs), which are miniature communication modules with optical interfacefunctions for converting optical and electric signals. The Company recently built
upon this success with the development of optical–electric co-packages that
integrate COSAs, which have traditionally been used as standalone components, with digital signal processors (see Figure 2). These new co-packages
make it possible to reduce both the size and power consumption of opticalinterfaces. We will first move ahead with the practical application of theseco-packages in data center interconnects in order to reduce energy consumption. In the future, we will work to apply optical wiring to make interconnect
between and within chips by further converting optical and electric signals. We
thereby aim to create information processing infrastructure with ultra-low levelsof latency and electricity consumption.
I previously worked at Fujitsu. Prior to my appointment as head of the IIC,
I had the opportunity to speak with President Sawada, during which he statedthat accelerating initiatives for realizing IOWN would require the ideas andexperience of people from outside of NTT. The converting of optic and electricity, two different forms of energy, is an innovative idea that could only be

Global technological game changer and revitalization ofJapan’s technological prowess

Message from the CFO

Message Message from the Head of NTT IOWN Integrated Innovation Center

Message from the CEO

Key to Realization of IOWN

Direct opticalconnection(1Tbps / On demand)

Photonics-electronics
convergence processor

ANNUAL REPORT 2021

31

Research & Development

What NTT R&D
Aims forUnified with Business Strategy and R&D Strategy
Based on Medium-Term Management Strategy

Intellectual Property Strategy

Message Message from the Head of NTT Intellectual Property Center

Kenichi Minami, Head of NTT Intellectual Property Center

Build/maintaincommunications
infrastructure

Number of Patents Owned

Materials Semiconductor
process
Circuit design(Number of patents)

2018

2020

Other devices

Databases

Audio and visual
processing(Fiscalyear)

Clarivate Top 100
Global Innovator 2021

Overseas

Intellectual Property That Contributes to DX at Customers

Refinement of MediumTerm Management Strategy

No.1 share of RPA!
To advance DX projects outlined in NTT Group’s vision, NTT Group offers services that utilize the fruits of its R&D efforts that areprotected by patents.
WinActor, which is offered by NTT Advanced Technology, is a software robot that can automate a large volume of work performedby people. Using technologies for generating and editing automation scenarios that was developed by NTT R&D, WinActor is an RPA
tool made in Japan that boasts the top share of the domestic market with more than 6,700 companies using the tool, which enables
DX regardless of sector type or business scale, such as client companies and local governments.
In recognition of this track record, WinActor has received awards including the 9th Technological Business Innovation Award(Screening Committee Special Prize) from the Japan Techno-Economics Society, and the 9th ICT Business Commendation Award
from the Telecommunications Association.

Research & Development
NTT Group's
Sustainability• Reduce business risk and comply with laws and regulations related to intellectual property rights, by
sharing among Group companies information about intellectual property trends and their impact,
such as revisions to systems around the world, cases of conflict and court decisions

2019

Sensors
Communications
controls

Value Creation Process• Build an intellectual property portfolio through the strategic development of intellectual property rightsfrom fruits of R&D activities, based on technologies and anticipated business models

about

17,900Power sources
and batteries

Software‌ Domestic➁ Risk management that protects our intellectual • When Group companies deploy the results of R&D in their operations, we examine the intellectual
property rights and respects the rights ofproperty rights of others inside and outside Japan up until the stage where R&D results are applied inothersorder to avoid infringing on the rights of third parties➂ Develop business and partners through broad
deployment of intellectual property rights

2017

about

17,300Hardware

Formulate and Advance Intellectual Property Strategy➀ S trengthening our competitiveness withstrategic rights creation (build an intellectual
property portfolio)

17,900Communications
equipment

Artificial
intelligence

Security

The NTT Intellectual Property Center is NTT Group’s core organization for managing intellectual property. The Center aims to securecompetitive advantages by proactively and appropriately protecting and managing intellectual property rights (i.e., patents),
or internal expertise, from the results of R&D, the source of all business activities.
NTT aims to share the benefits of its R&D by broadly licensing out its technologies that help advance industry and technologies
can be standardized and used throughout society. When deploying the results of R&D in their operations, each company in NTT
Group respects the intellectual property rights of other companies.
With our intellectual property strategy as the basis of these activities, we take a three-pronged approach to formulating andadvancing our business strategies and R&D strategy, based on our medium-term business strategy and vision: (1) develop strategic
intellectual property rights, (2) manage risks, and (3) deploy the intellectual property we own.

about

about

17,200ComputingdeviceArchitecture(conceptual design)

NTT at a Glance

NTT is accelerating R&D for solving challenging problems in its Innovative Optical and Wireless Network (IOWN) while envisioning
a world where IOWN is a reality. IOWN cannot be make a reality by NTT Group acting alone, and requires global collaboration withtrustworthy partners. Such collaboration will greatly augment the business activities of NTT Group as it contributes to the realizationof a sustainable society while advancing digital transformation (DX) and CSR. To this end, it has become more important to formulate and execute an intellectual property strategy in tune with the times, and appropriately protect the fruits of R&D as intellectual
property, while respecting the intellectual property rights of others.

The results of R&D, which plays a major role in the creation of intellectual property for NTT Group, has translated into ownership ofapproximately 17,900 patents around the world in a wide range of technological fields. NTT Intellectual Property Center is putting
more effort into filing patent application in foreign countries with the intention of reinforcing the global operations of NTT Group.
Clarivate Analytics, which analyzes trends in intellectual property based on patent filings, has selected the NTT Group as a
Clarivate Top 100 Global Innovator, which names the world’s most innovative companies and institutions, for ten consecutive years,
in recognition of NTT Group’s activities and track record on this front.

Message from the CFO

We believe that appropriately protecting our intellectual property, created through R&D, and rightfully using theintellectual property of others is an important step on the path to a sustainable society.

Message from the CEOIntellectual Property Portfolio (Technology Field / Patent Ownership)

For more information, please refer to the WinActor website.
https://winactor.biz/en/• Deploy intellectual property in business to help our customers and society, and to secure competitive
advantages in business• Proactively engage in activities to standardize intellectual property

Prior to introduction

Business strategy
Intellectual property strategy

2 Enhance Domestic andGlobal Business1) Strategic rights creation(build an intellectual property portfolio)

3 Enhancement ofCorporate Value32

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

2) Risk management
3) Deploy intellectual property

R&D strategy

NTT Group’s
VisionLarge volume of administrative work

Operates 24 hours a day

Human errors caused by fatigue

Zero fatigue and zero mistakes

Work piles up

Concentrated processing of work

Manual labor

Automation

ANNUAL REPORT 2021

Data Section

1 Transformation to a
New Management Style

After introduction
Operations in Review

Medium-term
management strategy

Diagram manual labor process

33

NTT
Sustainability

Simultaneous Existence ofConflicting Things that are

Not Defined as Dualism

Nine Challenges

1 )	Promoting energy conservation

Moving toward adecarbonizedsociety

Ensuring the­positive coexistingof natureand humanity

Addressing
social issues

Moving toward asafe, secure, andresilient society

Respect forhuman rights

Maximizing­well-being for all

Addressing
human rights,
diversity andinclusion

Diversity andinclusion17 )	Protection and respect for intellectual property

P.32−33

18 )	Contribution to the revitalization of local communities
and economies
19 )	Ensuring the stability and reliability of services

P.42−4320) Strengthening information security and personal
information protection

P.44−4521 )	Promoting a decentralized society based onremote work

P.20−21
46−4722)	Compliance with the NTT Group Global Human
Rights Policy23)	Encouraging society as a whole to respecthuman rights

P.5324)	Promoting recruitment, training, and education ofdiverse human resources and women’s advancementin the workplaceP.48−5225)	Encouraging of understanding of LGBTQ andpromoting the advancement of disabled people

P.50−5126)	Support for balancing work and life such as childcare
and nursing care

P.5027 )	Promoting remote work and other workplace models

P.20−21
46−47

Data Section

Creating newwork style models

16 )	Promoting the B2B2X model

Operations in Review

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

P.54−67

NTT Group's
Sustainability

34

Prepare for a new
future with thepower oftechnology

Improving prosperity for all people
and cultures
Maximizing well-being for all13 )	Appropriately managing conduct risk
14 )	Thoroughly reinforcing corporate governance andcompliance

Research & Development

Altruistic Co-Existence(Co-Existence of One’s Own Happiness andOthers’ Happiness)

Refinement of MediumTerm Management Strategy

Improving­ rosperity for allppeople and cultures* The idea that the “Self” exists as a “Self” within a “We” (which consists of everything,including people, things and technology), and is supported by connections consisting ofdiverse people, things and technology

Culture and Society are Secured byConnecting “We” with the Thread of Ethics8 )	Proper treatment, storage and management of
hazardous waste

15 )	Sharing high ethical standards with business partners“Self as We”* Philosophy for
the Achievement of that Goal

Ensuring the positive coexisting of natureand humanity7 )	Reduction of plastic use and promotion of recycling12 )	Establishing and thoroughly complying with ethicalstandards
Establish shared
ethical standards

Nature is an Altruistic Force,and “We” is a Part of That4 )	Providing new services that contribute to carbon
neutrality

A future where
10 )	Thoroughly implementing environmental assessment
people and nature11 )	Contributing to natural ecosystem conservation
are in harmony

ParaconsistentThree themes

P.36−419 )	Appropriate and efficient management of water
resources(Simultaneous Achievement of Conflicting Goals)“Self as We” Concept3 )	Developing and expanding the use of renewableenergy6 )	Increasing the reuse and recycling of communications
equipment, mobile terminals, and other technologies
A commitment toa resourcerecycling future

Different Realities Exist
Depending on Viewpoints2 )	Reducing power consumption by introducing
IOWN technologies5 )	Creating innovative environmental and energy
technologies

Addressing
Environmental
Challenges

Facts Interpretation Differ

Sustainable
Society

30 Activities

Value Creation Process

Modern society is plagued by a number of opposing concepts that cannot be properly assessed through traditional
dualist thinking, such as those pertaining to global andlocal perspectives, the environment and the economy, andhuman rights issues. It is also true that a single phenomenon can have a different meaning and significance basedon the perceiver.
NTT believes that realizing a paraconsistent society, inwhich these opposing concepts and phenomenon are
included and diverse values are accepted, will contributeto the realization of sustainable society.
The concept of “Self as We” will form the basis of NTT
Group’s efforts to contribute to the realization of such asustainable society.
Through this concept, people are encouraged to findthemselves within the “We” and to realize that we are supported by the connections between diverse people, things,
and technologies. Based on this concept, we look to implement various initiatives founded on the principles of altruistic co-existence through which people will seek to increase
their happiness along with the happiness of others.
The “Self as We” concept casts light on the need tocontribute to the realization of a sustainable society
through initiatives for ensuring the positive coexisting of
nature and humanity, improving prosperity for all people
and cultures, and maximizing well-being for all.

Three Themes

NTT at a Glance

NTT’s Vision for a Sustainable Society

The NTT Group Global Sustainability Charter defines nine challenges and 30 activities based on three themes. Important indicators, designated with red boxes in the table below, will be reflected in the compensation of executive officers.

Message from the CFO

In November 2021, NTT Group announced its revision of the NTT Group CSR Charter, based on a resolution by
the Board of Directors, to create the new global-level NTT Group Global Sustainability Charter, which infuses
the prior charter with a wider range of concepts—including the United Nations Sustainable Development Goals(SDGs), ESG issues, and the creation of shared value. Guided by the new charter, the Board of Directors will
make decisions regarding priority sustainability issues and indicators while also accelerating Groupwide sustainability initiatives. These initiatives will be advanced based on the enhanced oversight functions granted byplacing the Sustainability Committee, previously positioned under the Executive Officers Meeting, under the
direct control of the Board of Directors.

Message from the CEO

Pursuit of a Sustainable Society

NTT Group Global Sustainability Charter28)	Achieving zero fatal accidents as well as maintaining
and promoting employee health29)	Supporting autonomous capacity development

P.5130)	Promoting paperless operations

ANNUAL REPORT 2021

35

Sustainability
NTT
Addressing Environmental Challenges

Reducing Environmental Burden—Realizing Carbon Neutrality

In addition to the Green of ICT, which will curb the environmental impact of NTT Group by introducing IOWN and expanding theuse of renewable energy, we will also work on Green by ICT, which will contribute to reducing the environmental impact of society
as a whole.

NTT Group aims to simultaneously achieve zero environmental impact and economic growth by reducing theenvironmental impact of its business activities and coming up with breakthrough innovations. In September 2021,
NTT Group announced a new vision for the environment and energy, “NTT Green Innovation toward 2040,” withthe aim of achieving zero environmental impact.

Specific Initiatives toward Carbon Neutrality

Reducing society’s environmental impact
u Further acceleration of DX and promotion of Remote

NTT Green Innovation toward 2040

World

Green by ICT

Carbon-Neutral

Mobile (NTT DOCOMO) /Data Centers

80% Reduction(compared to FY2013)

Green of ICT* Scope of reduction targets
GHG protocol: Scope 1 (own direct emissions of GHG) and Scope 2 (indirect emissions from using electricity, heat and steam supplied by other companies)
Mobile: 15 companies in NTT DOCOMO Group (as of September 28, 2021)* NTT Group’s SBT targets (Scope 1, 2): Raised to 1.5°C scenario

To achieve carbon neutrality, NTT Group will strive to reduce power consumption through the introduction of IOWN, expand theuse of renewable energy to reduce greenhouse gas emissions.

Outcome

OutcomeReduce 10%

IOWN

Reduce 55%
Reductionof Energy
Consumption

Reduce 45%

2400

Greenhouse
Gas Emissions

95

2020

Introduction ofInternal Carbon
Pricing System

1

Energy, etc.

Offsets2022
2013

Reduce 45%
Renewable Introduction
Energies of Renewable

2030

Mobile, Data Centers
to be Carbon Neutral

2040 (Fiscal year)

NTT Group to be
Carbon Neutral

36

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

8.3
billionkWh

IOWN

Electricity
DerivedFrom Fossil
Fuels
2013

2020

Renewable
Energies

2030

Mobile, Data Centers
to be Carbon Neutral* Energy, transportation, logistics, etc.

Achievement of Ultra-Low Power Consumptionu Photonics-electronics Convergence Technologies(IOWN All-Photonic Network)

Creation of Decentralized Technology
u Photonic disaggregated computing
u Space integrated computing network

1

2

2040 (Fiscal year)

NTT Group to be
Carbon Neutral(1) Estimated Introduction of Renewable Energy(including actual renewable energy through Non-Fossil Fuel Certificates)
FY2020: 1.0 billion kWh; FY2030 to FY2040: around 7.0 billion kWh
The introduction of renewable energy will have the optimal types of energy determinedon the basis of each country’s energy composition, etc. Approximately half of thedomestic renewable energy usage is anticipated to be from energy sources owned by
NTT (FY2030).
(2) Energy consumption used in calculating greenhouse gas emissions on the left.

The Green by ICT initiative takes a three-pronged approach to reducing the environmental impact of society.
		
1. Expanding adoption of IOWN technologies from the telecommunications field into other industries		
2. Providing new services that contribute to carbon neutrality		
3. Strengthening development and expanding introduction of NTT Group’s Renewable Energy Plan
By advancing these initiatives, NTT Group aims to reduce its own GHG emissions and across the entirety of society.

Expanding adoption of IOWN technologies from the telecommunications field into other industries•	Contribute to the reduction of greenhouse gases(1) inJapan and the world
Japan: Reductions: over 0.02 billion tons;
		 Reduction Rate: over 4%
World: Reductions: over 0.3 billion tons;
		 Reduction Rate:over 2%

P.26–31• Further accelerate DX(2) (e.g. of digital twin computing)• Promote greenhouse gas reduction across the entire
supply chain

Providing new services that contribute to carbon neutrality

P.38

Strengthening development and expanding introduction of NTT Group’s Renewable Energy Plan

P.38

• Promotion of local energy production for local consumption

Data Section(1) Estimated Introduction of Renewable Energy (including actual renewable energy throughNon-Fossil Fuel Certificates)
FY2020: 1.0 billion kWh; FY2030 to FY2040: around 7.0 billion kWh
The introduction of renewable energy will have the optimal types of energy determined on
the basis of each country’s energy composition, etc. Approximately half of the domestic
renewable energy usage is anticipated to be from energy sources owned by NTT (FY2030).
(2) Estimated Reduction of Energy Consumption through the Introduction of IOWN(Comparison to Outcome)
FY2030: (2.0) billion kWh ((15)%); FY2040: (7.0) billion kWh ((45)%)
Percentage of Introduction of IOWN (Photonics-electronics Convergence Technologies,etc.) out of Total Energy Volume FY2030: 15%; FY2040: 45%(3) GHG Protocol: for Scope 1 and 2(Compared to FY2013)(Reduction in
EnergyConsumption)(Collaboration)

Operations in Review

Reduce 80%

Approximately Doubled

EnergySavings
Electricity Consumption

Greenhouse Gas Emissions

EnergySavings

465

Energy Consumption Outcome: will be approximately doubled by FY2040• Approximately half of energy consumption will be reduced by introducing
1
IOWN• Renewable energies will be introduced for the other approximate half(1) 2(860)

u Applied genome-editing technology for “Green”

NTT Group's
Sustainability(10,000 tons)u Lightning charging

Contributing to the Reduction of Society’s Environmental Impact

Illustration of Transition Trends in NTT Group’s Energy
Consumption(2) (Domestic + Overseas)• Increased use of renewable energy: Reduce greenhouse gas emissions
1
by 45%(1)
• Lower energy consumption with IOWN technologies: Reduce greenhouse2
gas emissions by 45%(2)

introduction of IOWNu Expansion of the development and usage of
renewable energy
u Introduction of an internal carbon pricing systemu Issuance of green bonds

optimal use of urban assets*u Optimal operation of fusion reactors (ITER / QST)

Research & Development

Illustration of NTT Group Greenhouse Gas Emission
Reductions (Domestic + Overseas)(3)u Reduction of energy consumption through theu Use of 4D digital platformTM for future predictions /Refinement of MediumTerm Management Strategy

Reducing NTT’s
Own
Environmental
ImpactCarbon-Neutral

Introduction of IOWN and Expansion of
Renewable Energy

Creation of innovative environmental energy
technology

Value Creation Process

Greenhouse Gas Emissions

introduction of new social infrastructuredevelopmentu Promotion of greenhouse gas reduction across theentire supply chainu Provision of new services that contribute to carbon
neutralityu Contribute to local production and consumption ofenergy, through smart grids based on battery farms
u Expansion of green electricity retail

Creation of Breakthrough Innovation

NTT at a GlanceContributions to
Reducing Society’s
Environmental
Impact2040

u Promotion of regional urban development and the

Message from the CFO

Reduction of Environmental Impact through Business Activities

Environment and Energy Vision

2030

Message from the CEO

Key Initiatives Toward Carbon Neutrality(1) Conditions for Reduction Estimates• Target: beginning in FY2040• Adoption Rate of IOWN for Electric Semiconductors, etc. (Photonics-electronics Convergence Technologies, etc.): approximately 50%• CO2 Emission Factor: Japan...0.185kg-CO2/kWh; World...0.130kg-CO2/kWh(2) CO2 Reduction Potential: approximately 50 (2030; Target: World, calculated based on GeSI and IEA estimates)

ANNUAL REPORT 2021

37

Sustainability
NTT
Addressing Environmental Challenges

Issuance of NTT Group Green Bond

• Thorough power saving of network / data center; Use of renewable energy

Realize Carbon-Neutral
in 2030• Provide green power through eco-friendly Green 5G and docomo Denki Green• Providing ‘Caboneuʼ platform everyone can participate and contribute toward reductionof CO2 in the world
Initiatives to reduce GHG emissions for society as a wholein cooperation with customers and partner companies

Conserve energy in telecommunications networks

Development of services that use
renewable energy

Actively introduce renewable energy* Effective renewable energy includes non-fossil fuelcertificates designated as renewable energy.

We plan to provide a platform where anyone canenjoyably participate in activities to becomecarbon neutral, such as by visualizing contributions
to reducing the GHG emissions of customers.

Green 5G

October 2021
issuance
Amount issued:¥300 billion

Company

Increase inParticipants

Promotion of
Cooperation

Expansion ofServices

Illustration of Usage of “Battery Farms”

kWh / year

Biomass

Solar

Biomass

BiomassNIPPON TELEGRAPH AND TELEPHONE CORPORATION

Charging andDischarging at
Battery FarmWind

Realize a world
where renewableenergy power sources
are readily available

Unstable Increaseof Renewable
Energy Power
Plants (or, cannot be
increased)Wind
Hydroelectric* Company estimate based on the Ministry of the Environments“CO2 Emissions Fact-Finding Survey of the Household Sector in 2019 (Confirmed Value)”

38

Renewableenergyhttps://www.ntt-finance.co.jp/news/211022.html

Eligible projects
Specific projects
5G-related• Development and installation of energy-saving 5G base stations / installation of commercial
base stations and development of base stations capable of conserving electricity by automatiinvestment
cally switching to sleep mode, such as during the evenings and time of low traffic
FTTH-related• C onstruct and operate optical fiber networks (FTTH) as foundation for a remote world, to help
reduce amount of electricity used compared with the Company’s conventional equipment
investment
R&D to make
IOWN a reality• Roll out / aim to commercialize by 2030 photonics-based connections between bases at endpoint devices, such as handsets and computers, R&D to make possible an optical disaggregatedcomputing architecture that should sharply reduce electricity usage through the use of photonics connections (optics inside LSI) when transmitting signals between chips on circuit boards• S olar power projects and wind power projects

Fund allocation reporting: May 2022 (plan)(reducing loss ofrenewable energies)

Geothermal

Hydroelectric
Solar

IOWN

Impact reporting item
• Number of 5G base stations installed• Number of subscribers (households)• E xplain impact of aims in R&D projects• Introduce examples of products and services tobe created, and progress on R&D• Generation capacity / generated electricity (GWh)• A mount of CO 2 reduced (t-CO 2)

Impact reporting: May 2022 (plan)

June 2020
issuance
Issue amount:¥40 billion
Issue period:
3 years
Interest rate:
0.001%

Stabilizing
power grid

Eligible projects: Green buildings

Impact reporting: May 31, 2021

Green buildings
Building name

Certification level

Acquisition /evaluation date

Shinagawa Season Terrace

BELS 5 Stars

December 201910,391 tons CO2

December 2019

Under construction(to be completed in January 2022)

URBANNET NAGOYA
nexta BUILDINGCASBEE Nagoya S Rank

FY2020 (April 2020–March 2021)
CO2 emissions

Data Section[Equivalent to the annual
energy consumption of allhouseholds in the city of
Fukuoka*]
Geothermal

EMS

Investment ineligible projects

Operations in Review

3.8 billion

Wind

Loans

For details about conditions for this green bond and companies earmarked for investment, please see the following news release (in Japanese only)

RenewableenergyReduction of Power
Transmission Loss throughthe Promotion of Local
Generation for Local
Consumption

FTTH

NTT Group's
Sustainability

 e aim to reduce social cost (reduce power transmission loss, etc.)Wby helping to expand renewable energy power plants that facilitate
local production of electricity for local consumption, by utilizing NTT
buildings around Japan as places to store electricity.

5G

NTT Groupcompanies

Investors

Avoiding Power
Output Suppression

2030

Geothermal

0.270%

Research & Development

●

Solar

Solar

0.100%

Issuance ofgreen bonds, withNTT Group as
representative

Battery Farm(NTT Facilities)

kWh / year

0.001% / issue price ¥100.003

Interest rate

October 2021

Towards the Local Generation for
Local Consumption of Renewable Energies

Renewable energy generation by NTT Group

0.42 billion¥100 billion

Investment* Plan to start offering in March 2022

 trengthen development of renewable energy power plants in a bid
S
to decarbonize customers and NTT Group2020

10 years¥100 billion

Applicable projects: To move NTT Group closer to becoming carbon neutral, project scope included R&D for IOWN,
key renewable energy projects, and investments in 5G and FTTH, the basis for realizing remote worlds.

Partners

docomo Denki GreenWe provide an earth-friendly plan* that actively
utilizes renewable energy sources such as solar,
wind, and geothermal.

 TT Group uses approximately 1% of total electricity in Japan at itsNnationwide telecommunications facilities.

2012
0.004 billion
kWh / year

5 years¥100 billion“Caboneu”

Initiatives to develop renewable energy power plants●

3 years

Issuance amount

Customers

Strengthening the Development and Expanding the Introduction of Renewable Energy by NTT Anode Energy●

Issuance period

Refinement of MediumTerm Management Strategy

Working together with NTT Anode Energy, NTT
DOCOMO will promote the introduction of renewable energy directly procured from solar power
plants and other sources exclusively for DOCOMO.
In addition, the Company aims for an effectively
100% renewable energy ratio for the electricity
used in our business activities, including thepurchase of non-fossil
fuel certificates designated as renewableenergy.

State of Green Bond Issuance

Value Creation Process

The power consumed by mobile network
communications will be greened by introducing
effective renewable energy*.
The ratio of real renewable energy* to total
electricity consumption will be greater than theratio of the number of 5G subscriptions to
DOCOMO’s total subscriptions, making 5G
environmentally friendly without greenhousegas emissions.

Provide Caboneu platform

NTT at a Glance

We are developing technologies
and installing equipment for
reducing the power consumption of networks, such as
improving the sleep functionsof base stations and using
energy-saving 5G equipment.
NTT DOCOMO will reduce power consumption
by consolidating into high-density base stationequipment, supplying power directly from highvoltage DC equipment with less power transmission
loss, actively introducing air conditioning control
systems with self-learning functions, and upgrading
to high-efficiency air conditioning equipment.

Visualize contributions to reducing
GHG emissions of customers

In June 2020, the NTT Group issues its first-ever green bond. Green bonds are bonds issued by companies and local governments toraise money for green projects (renewable energy, energy conservation and other projects that help improve the environment) aroundthe world.
NTT Group places top-level priority on environmental issues. Accordingly, as a Group we are undertaking a host of measures
to address these issues. One example is the issuance of NTT Group green bonds by NTT Finance, the Group’s core financial firm.
The funds raised through this issuance will be used to fund projects that address environmental issues.
In conjunction with the September 2021 unveiling of NTT Green Innovation toward 2040, our new environment and energy vision,
we revised the framework for green bonds to make it easier to continue issuing green bonds by expanding the scope of applicableprojects to 5G-related investments, FTTH-related investments, and R&D to realize IOWN, in addition to green buildings, highly efficient and electricity-conserving data centers, and renewable energy.

Message from the CFO

Reduce GHG emissions in own
business activities

Message from the CEO

COLUMNNTT DOCOMO’s Initiatives toward Carbon Neutrality

Battery Farm(NTT Facilities)

ANNUAL REPORT 2021

39

Sustainability
NTT
Addressing Environmental Challenges

Key activities

Medium-term target

TCFD

Governance /Risk management

While reducing CO2 emissions of
the Company, contribute to the
reduction of CO2 emissions of allsociety, including value chains, throughthe utilization of ICT

Organization for Environmental Management Electric vehicles asa ­percentage of generalvehicles in Japan
Effectively use
resources

TCFD

Strategy

Final disposal ratio of waste

FY2030Carbon neutral

FY2040At least 10x
FY2013 level

FY20304.5 times 5.4 times 6.2 times

At least 2x
FY2017 level

FY2025

1.2 times 1.5 times 1.7 times

100%

FY203050%

FY2025Zero­ missionse(under 1%)

FY2030

4,722
4,605
3,986
thousand thousand thousand
tons
tons
tons

0.40%

1.45%

8.28%

0.91%

1.13%

1.38%

Impact of Climate Change on Businesses 

Climate change has the potential to affect the cost of electricity for providing communications services and other purposes,
and may lead to large-scale disasters causing enormous damage to communications infrastructure. NTT Group takes thefollowing perspectives on the risks of climate change in terms of business operation, measures to deal with those risks, as well
as opportunities.

* Transitioned to a committee under the Board of Directors in November 2021

As society as a whole expands the use of renewable energies in an effort to decarbonize, the risk of increased costs due to renewable energy charges and carbon pricing is expected. Charges on renewable energy are rising year by year, and there is a possibility
that electricity prices will continue to rise. In addition, there is a risk that such natural disasters as torrential rain or typhoons could
damage access networks, which could give rise to physical and economic losses. With respect to the aforementioned risks, we are
implementing the following measures.
●Green Innovation Committee**** Newly established in November 2021

Sustainability Committee

 onsolidating telecommunications equipment and facilities, which account for most of NTT Group’s power use and upgrading toCequipment with higher levels of energy efficiency (including carrying out upgrades ahead of schedule)●

Installation of high-voltage direct current (HVDC) systems and systems for analyzing the status of electricity usage●

Our own use of renewable energy●

Investment in R&D for IOWN to help reduce electricity use●

Securing the stability and reliability of telecommunications services in anticipation of large-scale natural disasters

Research & Development

Strategy committees
Article 9 of Executive Officers
Meeting rules

Control the final disposal ratio ofwaste and work toward the effective
use of resources

2020

Refinement of MediumTerm Management Strategy

Sustainability Committee

Improve power efficiency to reduce theenvironmental impact of business
operations

2019

80% reduction
vs. FY2013
level

Potential Risks

Compensation Committee

Executive Officers Council

Electricity efficiencyof domestic
telecommunications
businesses(electricity efficiency perunit of communication)

Results (FY)2018

Value Creation Process

Nomination Committee

Reduce environmental
impact of business
operations

Goal
Achievement
Time

NTT at a Glance

Board of Directors

Total GHG emissions(Scope 1, 2)

KPIs

Message from the CFO

To address climate change and other environmental issues, the Board of Directors decides policy after deliberating. Unveiled in
September 2021, NTT Green Innovation toward 2040 was deliberated upon and approved by the Board of Directors as its new vision
for the environment and energy.
We also established the Green Innovation Committee as an internal unit under the Sustainability Committee, which reports
directly to the Board of Directors, to discuss and determine the environmental activities policies for the entire Group.
We are planning the transfer of functions from the NTT Group Global Environmental Protection Promotion Committee, which
was previously under the purview of the Executive Officers Meeting, to the Green Innovation Committee.
The NTT Group Global Environmental Protection Promotion Committee, which met regularly throughout the year, was chaired by
the general manager of the NTT Environmental Protection Office (Head of Research and Development Planning) with membershipcomprising heads of environmental departments at major Group companies. Also, this committee oversaw the Climate Change
Actions Committee, the Closed-loop Recycling Committee, and the Natural Harmony Working Group and drafts basic policies,
manages targets, and addressed issues related to environmental protection.
Further, risks and opportunities identified as having a significant impact on business, such as laws, regulations, and systems
related to the environment, are presented to the Business Risk Management Committee, which identifies Companywide risks, and to
the Board of Directors.
In addition to working with the environmental departments, the committee cooperates with other departments to pursue related
initiatives. Particularly with regard to electricity use, which accounts for more than 90% of NTT Group’s CO2 emissions, the committee collaborates with the High Performance Energy Use Promotion Committee, which is responsible for promoting the Total Power
Revolution (TPR) campaign, NTT Group’s energy conservation activities. As for the risks and opportunities presented by environmental issues to our facilities and equipment, monitoring and assessment are conducted through a collaborative effort between staff incharge of environmental issues and those responsible for facilities, and these individuals are appointed for every Group company.

Quantitative indicator

Message from the CEO

TCFD

TCFD

Indicators andtargets

Goals for the Reduction of Environmental Impact [Assumptions and basis for calculations](1) Carbon pricing ($100/t-CO2) x FY2030 target emissions (reduction of 80% in FY2030 based on actual Scope 1 + 2 emissions of 4.65 million tons in FY2013)<Carbon pricing: Estimated unit price for FY2030 on IEA World Energy Outlook 2019, Advanced economics: 100USD>(2) Increase in the unit price of the renewable energy charges (¥1.2) x domestic electricity usage in FY2020 (6.67 billion kWh)
Renewable energy charges in FY2030: ¥4.1/kWh, FY2020: ¥2.9/kWh(3) Estimated impact from repairs to damage caused by heavy rainfall and typhoons in FY2020(4) Estimated air conditioning costs increase based on domestic electricity consumption in FY2020

Operations in Review

In addition to reducing environmental impact through its business activities, NTT Group prioritizes the reduction of environmental
impact within society through the use of ICT. Based on our analysis of materiality issues related to environmental problems, we have
set targets for environmental activities to undertake by the fiscal year ending March 31, 2041, and we are working to reduce environmental impact accordingly.

NTT Group's
Sustainability* Estimated impact on annual profits: (1) –¥10 billion if carbon pricing introduced, (2) –¥6.4 billion from increase in renewable energy charges, (3) –¥2 billion due to repairs to damage
caused by heavy rainfall and typhoons, (4) –¥0.5 billion (if outdoor temperatures rise 1) or –¥2 billion (if outdoor temperatures rise 4) due to higher air conditioning costs as
temperatures rise

Potential Opportunities

A further increase in demand for the smart energy business in relation to its provision of ICT-enabled energy management and otherservices and for low-power-consumption data centers due to growing demand for efficient energy use in areas, buildings, and homes●

40

NIPPON TELEGRAPH AND TELEPHONE CORPORATION rowing demand for ICT services as teleworking and remote working become more familiar and mainstream, and to supportG
work style transformation due to DX, as well as to reduce environmental impact●

Increasing demand for BCP-oriented ICT services addressing such factors as natural disasters and system failures●

Development of Green 5G and docomo Denki Green

ANNUAL REPORT 2021

Data Section●

 xpansion of the business continuity solutions business leveraging ICT and cloud technologies in line with the corporate migrationEto the cloud and digitalization

41

Sustainability
NTT
Addressing Social Issues

Reinforcement of Disaster Countermeasures

Stable and Reliable Telecommunications Services in Preparation for Large-Scale Disasters

Flooding Countermeasures at Communications Buildings

NTT implements countermeasures to prevent flooding at communications buildings as aresult of tsunamis, floods, or other natural disasters. These measures include replacing doors
with more durable, water-resistant doors, sealing windows and other gaps, and reinforcing
walls with concrete to ensure they can withstand the force of tsunamis.

Ventilation relocation
Critical room
Projected
flooding level

Window sealing

NTT at a Glance

Water-resistantdoorsBlackout Countermeasures at Communications Buildings and Base Stations

Communications buildings and wireless communications base stations are equipped with batteries, engines, and other auxiliary
power supplies that can be used as a prolonged source of electricity in the event of a blackout. Moreover, we are enacting the lessons learned from the Great East Japan Earthquake by implementing blackout countermeasures for engine generators and having
batteries available for use around the clock at its roughly 1,900 base stations in important areas, such as those where municipal
disaster response headquarters or city offices are located.

Value Creation Process

NTT Group has defined three key themes for disaster countermeasures—improving the reliability of communications networks,
securing critical communications systems, and promptly restoring telecommunications services. We have been strengthening
efforts based on these themes since the Great East Japan Earthquake.
Specifically, we are taking measures to improve the reliability of our telecommunications infrastructure. To ensure that our telecommunications services operate without interruption at all times, we employ transmission trunk line multi-routing, have enacted
blackout countermeasures for communications buildings and base stations, and are making communications buildings more disaster resistant. In addition, we are expanding the assortment of power supply vehicles and other disaster response equipment that wehave positioned throughout Japan and are continuously conducting training to prepare for major natural disasters. Furthermore, we
are making a daily effort to guarantee that, in the event of a disaster, we are able to immediately set up a Disaster Countermeasures
Office, implement other emergency preparations, and make the necessary emergency and critical communications as a public institution as designated by the Basic Act on Disaster Control Measures.
In recent years, natural disasters have been becoming more frequent and causing wider, bigger, and more lasting damage.
Recognizing the potential for natural disasters to have greater impacts on telecommunications facilities and services and forrecovery efforts to be prolonged, NTT is increasing the resilience of its facilities and taking steps to expedite recovery efforts.

Damage from natural disasters is becoming increasingly common in recent years as climate change causes more frequentinstances of heavy rains, frequent typhoons, and other natural disasters. As a result, there is a growing risk of water and lightning
damage and power outages, which now threaten to cause extensive damage should they occur. NTT is committed to building disaster-resilient networks and equipment to ensure that it is able to provide reliable communications services even in the event of a largescale natural disaster.

Message from the CFO

As well as ensuring the stability and reliability of telecommunications services by anticipating the potential damage
resulting from large-scale disasters, NTT Group helps clients restore their operations and maintain business continuity in the event of disasters.

Message from the CEO—Protection of Service Stability and Reliability

Disaster-Resilient Networks and Equipment

Transmission Trunk Line Multi-Routing and Distributed Location of Important Communications Buildings

1

I mprove
Communications
Network Reliability

 ecure CriticalS
Communications
Systems

Major Facility Resilience Initiatives
 xpansion of medium-zone base stations withE
countermeasures for blackouts and natural disasters
Blackout countermeasures at base stations using electricvehicles● 
Integrated management and operation of NTT Group’s power
supply vehicle fleet (approx. 400 vehicles)● 
Examination of possibility of installation of undergroundcables or wireless fixed-line telephony systems for disaster
preparedness purposes●
Secure100, 119, and otheremergency services● 
Provide tools to checksafety status (171)●●

Our nationwide network of trunk lines has been designed to secure communications andprevent disruption of services over the network as a whole by automatically diverting transmission through other routes when a certain route is damaged. Meanwhile, if communications
buildings (important communications buildings) fitted with transit switches suffer disasterdamage, communications via such buildings may be severed. Distributing important communications buildings in different locations helps avoid the risk of multiple buildings suffering
disaster damage at the same time.

Transmission
route

Major Initiatives for Expediting Recovery Efforts

Enhanced Support for Affected Customers*

Swift Restoration of Service

3

Promptly Restore Services
Deploydisaster countermeasure equipment(power supply vehicles, portable satellite equipment, etc.)● 
Procure and convey materials and equipment
for restoration purposes● Use drones●

Disasters causing wider, bigger,
and more lasting damage

Disaster Response Equipment

NTT has positioned mobile base stations and power supply vehicles across Japan thatcan be quickly deployed to disaster sites should a wireless communications base station
be damaged by a disaster. Moreover, we have adopted off-shore base stations comprisedof mobile communications base stations mounted on ships. Should a tsunami or otherdisaster knock out service over a wide spread of coastal area, we can provide service byusing entrance satellite lines to transmit signals to the coastal areas from anchored ships.

Disaster Site Confirmation with Drones

When damage to roads or other conditions prevent us from reaching base stations,drones will be deployed to confirm the status of the site and facilitate the quick restorationof service thereafter.

Large-scale power supply vehicle for poweringcommunications buildings

Data Section

Lessons from the Great Hanshin-Awaji
Earthquake and the Great East Japan
Earthquake

Should a disaster strike, swift action will be taken to restore service via the utilization of mobile disaster response equipment and theuse of drones to confirm the situation.

Operations in Review

 rovision of accurate, easy-to-understand information toPsupport evacuation, etc. (information on communications
disruptions, recovery status, charging points, emergency-use
public telephones, support for non-Japanese visitors andresidents of Japan, etc.)● 
Establishment of local trouble support stations in disasterstricken regions to respond to issues and consultations
regarding communications services● 
Coordination with municipal government agencies, etc., tosecure communications capabilities in times of disasterthrough installation of Wi-Fi systems and storage batteries for
public telephones●

Transit switch

NTT Group's
Sustainability re-disaster establishment of recovery teams (nationwide
Psupport teams, etc.) through AI-powered prediction ofdamages● 
Reinforcement of recovery teams and securing of staff throughmobilization of retired NTT employees, etc.

Distributed location in
preparation for large-scaledisasters

Connection to
global network●

Disasterstrikes

Improvement of reliability
through multi-routing

Research & Development

 mploy transmission trunkEline multi-routing● 
Install large-zone basestations● Build disaster-resistantfacilities●

2

Further efforts

Refinement of MediumTerm Management Strategy

Past initiatives* Disaster Voice Messaging Service scheduled to be discontinued on March 31, 2022

42

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

43

Sustainability
NTT
Addressing Social Issues

Enhancement of Security

Security Expert Training at NTT Group

Message Message from the Chief Information Security Officer

Head of the Security
and Trust Office
Chief Information Security
Officer (CISO)

Security Initiatives Supporting the Medium-Term Management Strategy

NTT used to offer basic level certification. However, the rising number of certification holders coupled with the increase in awarenessregarding the importance of security prompted us to reinvent our security training programs to target all employees worldwide.
People tend to shy away from security training due to the perceived complexity and limited applicability of the subjects covered.
To address this issue, we positioned raising employee interest in these subjects as our top priority, which we went about doing withanimated videos and other endearing content, including a humorous introductory message by the CISO structured like a dramatic
performance. Through these programs, we hope to make all employees recognize the necessity of security awareness and instill inthem the basic practice of reporting any suspicious activities in their daily work. We thereby aim to motivate employees to participate in and contribute to our organization-wide drive to quickly detect and address security issues.

Research & Development

Security initiatives will be imperative to the transformation to a new management style that has been defined as one of the pillars of
the refined medium-term management strategy.

Basic Level

Refinement of MediumTerm Management Strategy* NTT’s Contribution to Olympic and Paralympic Games Tokyo 2020
–From the perspectives of Telecommunication Services with Cybersecurity–
https://group.ntt/en/newsrelease/2021/10/21/211021a.html

Intermediate and expert level security staff members are core to our efforts for combating the ever-evolving threat of cyberattacks.
Individuals certified as intermediate level under the certification system play a central role in strengthening security at NTT Group as
principal members on the front lines of the Group’s cybersecurity efforts. Adapting to and preventing damages from the constantly
emerging new threats requires staff to gain experience combating new forms of cyberattacks in a simulated environment. Our practical, hands-on security training programs are an effective means of endowing employees with such experience. Moreover, NTT
partners with security training companies to shape its practical security training programs based on the latest trends. Intermediatelevel security staff members are required to undergo regular training in order to keep their skills up to date.
In order to be certified as expert level, an individual must have industry-leading security experience in Japan and overseas, behighly trusted and have a strong reputation both inside and outside of the organization. Expert level certification represents that anindividual is contributing to improved cybersecurity within NTT Group and throughout the business sphere in Japan and around theworld. Moreover, we recognize that it is important to deploy the expertise of such high-level experts and to use this expertise tofoster the next generation of employees. We also must create forums in which expert level and other security professionals canmeet to share their experience and discuss. For these purposes, NTT Group holds an annual global conference. This internal conference provides an opportunity for exchanges between professionals active in various fields, including R&D, operations, consulting, andinformation provision, around the world. In the fiscal year ended March 31, 2021, the COVID-19 pandemic made it difficult for people
to gather in person for this conference, as has been done traditionally. We therefore held the conference online for the first time, amove that proved beneficial as this conference drew a record-breaking number of around 700 participants.

Value Creation Process

Shinichi YokohamaIntermediate and Expert Level

NTT at a Glance

NTT is transforming, and we must therefore move away from the customs and practices we haveembraced thus far. Moreover, Group governance is imperative to promoting this transformation.
The word “governance” does not necessarily refer to issuing orders, but rather can mean creating
frameworks that allow all members of the Group to naturally arrive at the optimal course of action.
I hope to lead NTT Group in developing governance systems that accommodate the security needsof the zero-trust, cloud-native era.
We have issued a news release explaining the cybersecurity initiatives NTT implemented at the
Olympic and Paralympic Games Tokyo 2020 as well as the success of these efforts.* Our experience
with this event made it apparent that damages from cybersecurity incidents can be kept at a minimum, even in the increasingly challenging cybersecurity environment, so long as effective measures
are put in place.
There are three focuses to NTT’s security initiatives: 1) protecting the internal security of customers, 2) protecting the digital services provided to customers, and 3) protecting ourselves. We plan tofurther enhance these initiatives based on our experience with the Olympic Games.

NTT Group launched a security expert certification system in 2015 with the aim of increasing the quality and number of its security
personnel. This system defines three levels based on human resource type and skill level.
We must be constantly vigilant in our effort to remain abreast of the recent changes in security technologies and circumstances(zero trust, cloud native, DX, teleworking, etc.). As such, the effective and consistent training of security experts is a matter of utmost
importance.

Message from the CFO

To resolve social issues through its business operations, NTT Group works together with its partners as “Your Value
Partner.” Based on this approach, we are contributing to the healthy development of a digital economy and remotesociety by exercising our responsibility as a supplier of safe and secure ICT infrastructure to guarantee effective
information security.

Introduction of zero-trust systems
Development of IT infrastructure with security measures prefaced on cloud and mobile usage for accommodating the shift toremote work styles
Revision of information security regulations
Revision of information security regulations to implement zero-trust security measures and IT infrastructure to transition to lessambiguous and more easily understood measures to increase the security awareness of all employees, not just information security staff, and ensure compliance with measures

NTT Group's
Sustainability

IT infrastructure thatallows people to workfrom anywhere

Message from the CEO

TOPICS 2—Preparation for the Zero-Trust, Cloud-Native Era

TOPICS 1
Employee security training program

Data Section

Partnering with IT companies, global network providers, and law enforcement agencies, NTT helped roll out measures that lock out
the primary platform for TrickBot, a major botnet threat that has continued to cause damage in various IT systems, and was eventhought to have had an impact on the U.S. presidential election.*
NTT Group is promoting threat intelligence information research collaboration between the Global Threat Intelligence Center(GTIC) of NTT Ltd., Security Operation Centers (SOCs), and NTT R&D. These research efforts have involved the analysis of our global
internet backbone traffic, and this ongoing collaboration contributed to the aforementioned measures.
Modern threats are without boundaries, so our approach to cybersecurity must also be borderless. Accordingly, we expect thatcross-country and cross-company cybersecurity collaboration will continue to be evolved and pursued, even in regard to various
global events.

Operations in Review

NTT Group’s Contributions to Global Measures for Combating Malware* International efforts in the fight against global cybercrime:
Disrupting cybercriminal operations

https://hello.global.ntt/en-us/insights/blog/
international-efforts-in-the-fight-against-global-cybercrime44

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

45

Sustainability
NTT
Addressing Human Rights, Diversity and Inclusion

Maximizing Well-Being―Advocating Work-in-Life with Work Style Reforms

NTT Group intends to shift toward new work styles centered on remote work, by upgrading IT environments and reviewing various
systems, in addition to advancing DX projects and work reforms with an eye on the post-pandemic world. In the fiscal year ended
March 31, 2021, NTT introduced a super flex-time system, stopped subsidizing commuter passes, and created an allowance for
employees working at home and other remote locations, in a bid to promote remote work styles.
To encourage more remote work, we will update systems and work environments and advance reforms toward a decentralized,
self-disciplined network-style organization. We aim to create a work-from-anywhere environment that frees employees from timeand location, allowing everyone to work anywhere and anytime.

Recommendations for Remote Work

(1) General Improvements

Promote Remote Work

Work-from-home (limited frequency)

Remote work (unlimited)

Commuting allowance (fixed payments)

Commuting allowance (payment of actual costs)

No work-from-home stipends

New remote work stipends

Flex (with Core Times)

Super Flex (without Core Times)(3) Re-Examination of Systems

Future Initiatives(2) Promotion of DX

Ratio outside
personnel*1

Ratio of employeeswith disabilities*2

11.4%

7.3%

12.5%

27%

2.45%

(July 2021)(fiscal year ended
March 31, 2021)(fiscal year ended
March 31, 2021)(fiscal year ended
March 31, 2021)(June 2021)

Target new
25–30% by fiscal year
ending March 31, 2026

Target
15% by fiscal year ending
March 31, 2026

Target new
30% from fiscal year
ending March 31, 2022

Target new
30% by fiscal year ending
March 31, 2024

TargetAt least 2.3%

Total work hours*3

Employee satisfaction*6

65.5%

80.4%

1,901 hours

3.9(March 2021)(fiscal year ended
March 31, 2020 and 2021)(fiscal year ended
March 31, 2021)(fiscal year ended
March 31, 2021)

Target
70% by fiscal year ending
March 31, 2023

Target100% ratio of male
employees taking time off
for childrearing by thefiscal year ending
March 31, 2023

TargetUnder 1,800 hours
by fiscal year ending
March 31, 2023

TargetYoY improvement(5 points = perfect score)(From FY2022)

Work from anywhere

OfficeHome

Any Person, At Any Time,Can Make Any Place a Workplace
Workcation

Satellite Office

Operations in Review

Male employees taking
leave for childrearing*3 *5(FY2022 260 or more locations)

Re-Examination of the Office Environment
increase the amount of space per person in the office by 1.5x,
and enhance the space for idea creation and co-creation

NTT Group's
Sustainability

Remote work ratio*3 *4

Expansion of Satellite Offices

Research & Development

Ratio of newly appointed
female managers*1

Destination

Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATION(From FY2021)

Refinement of MediumTerm Management Strategy

Ratio of female
managers*1*1 Six major domestic companies (NTT, NTT East, NTT West, NTT Communications, NTT DATA, NTT DOCOMO)*2 Domestic Group companies (at least 43.5 employees)*3 NTT (holding company) only
*4 Work-from-home ratio (excluding essential workers)*5 Percentage of total number of male workers using paternity leave or leave for purposes of child raising (items disclosed by companies with “Platinum Kurumin Certification”)
Number of employees with children entering grammar school by the fiscal years ended March 31, 2020 and 2021 who took time off work for child raising / number of employees who
gave birth (or whose partners gave birth) in the fiscal yeasr ended March 31, 2020 and 2021.
*6 Domestic Group companies

46

Decentralization of the Organization(Including Head Officers and Back-Offices)(From FY2022)

Ratio of female
directors*1

Value Creation Process

No Need for Relocations and Unaccompanied
Assignments Recruitment of Remote-Based
Employees

Promote work-in-life (health management)
Open, global and innovative business management

NTT at a Glancee-Examination of
Systems To-Date

Shift to new work styles premised on remote work

Message from the CFO

As work styles change, it is necessary to review work processes in order to accommodate diverse ways of working. Allowing diverse
work styles leads to greater opportunities to employ people of diverse backgrounds, while improving their motivation to work andease of working. This results in better employee engagement and sparks innovation.
The NTT Group engages in a variety of initiatives to promote diverse work styles. In particular, we are changing work styles while
focusing on better treatment and environments for mainly remote work.
When changing work styles, it is important to ensure openness, globalization and innovative work management from a businessperspective. From the standpoint of employees, we believe the first step is to promote work-in-life and their well-being.

Message from the CEO

Changes in Work Styles

ANNUAL REPORT 2021

47

Sustainability
NTT
Addressing Human Rights, Diversity and Inclusion

Employee Satisfaction, Turnover Rate

Turnover Rate

(Points)

(%)

5
4

3.64

3.96

2.8
2.0

2

Male

FY2020

7.3%

21.9%

22.7%

(1,378)General Employees(1,506)(10,867)(11,166)

FY2019

15.0%

1,800

Number of female managers
Ratio of female managers* Six major domestic companies(NTT, NTT DOCOMO, NTT East,
NTT West, NTT Communications,
NTT DATA)

1,200

600

0

FY2019

6.7%

(17)

680

589

Female

1,261

1,145

1,506

7.3%
6.7%

6.0%

5.5%

5.0%

4.4%

4.0%

3.6%

3.3%

FY2020

1,005

884

780

1,378

or moreValue Creation Process

1
0

10.6%

(11)

Managers

Number of Female
Managers

3.7

3.78

3

7.1%

Directors* Six major domestic companies (NTT, NTT DOCOMO, NTT East, NTT West, NTT Communications, NTT DATA)

4.0

3.79

FY2020NTT at a Glance

Employee Satisfaction

FY2019Message from the CFO

NTT Group endeavors to identify issues in creating a company where it is easier to work, improving corporate systems and updating
work environments. As a part of these efforts, we periodically conduct surveys of employee satisfaction to help improve work
environments.
In the fiscal year ended March 31, 2021, the employee satisfaction survey for NTT Group employees came back with a score of
3.9 points out of 5.0 points, it highest level since the survey began in 2014.
In particular, with remote work becoming the norm, questions about work styles saw marked improvement in scores versus theprevious fiscal year, such as questions about easy-to-work environments, and ability to work efficiently.
Moreover, on questions about satisfaction and pride about working at the Company, scores by female employees rose, narrowing
the gap in workplace satisfaction between men and women. The turnover rate declined by 0.9 percentage point from the previous
fiscal year. Remote work has helped to improve employee engagement.

Message from the CEO

Ratio of Women by Rank

0
(Fiscal year)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2025
(Target)Initiatives for Skills and Career Development

New Targets for Empowering Women

Women

Managers

25% to 30% of Directors in 2025

11.4% in July 2021

30% of New Manager Appointment
from FY2021

12.5% in FY2020

15% of Managers in 2025
(up from 10% previously)

7.3% in FY2020

30% per year

Achieved each year since FY2013* Targets and current conditions at six main companies (NTT, NTT DOCOMO, NTT East, NTT West, NTT Communications, NTT DATA)

By rank

Managers

Mentoring

Careerdevelopmenttraining

Human networks(Executive
Manager class)
Human networks(Deputy Manager
class)
Human networks(Chief Manager
class)

Human networks(Groupwide)

Seminar forencouraging
participation inchildrearing

D&I training
Unconscious
bias training

Seminar for
returning
employees afterchildrearing
leave (for theemployee andtheir manager)

Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Foster understanding of surroundings

Human networks(Board Member
class)

Directors

General
Employees

48

Nurture skills and mindsets among female employees

Operations in Review

Employment

Current Status

NTT Group's
Sustainability

Directors (Members of the Board,
Audit & Supervisory Board Members,
Executive Officers)

Measurable Target

NTT is stepping up initiatives to groom more female employees for decision-making management positions and positions for providing guidance.
Specifically, for female employees interested in management positions, we are implementing women career development training
programs Groupwide and programs for building up necessary leadership skills and awareness through dialogues with upper management and exchanges with other companies.
Moreover, we will expand training opportunities with the aim of increasing the ratio of women participating in internal and external
training programs, mainly for managers. NTT Group also offers mentoring by female directors and a human network program forstrengthening vertical and horizontal connections for women within the Group, spanning all positions and ranks. In addition to offthe-job training, we provide on-the-job training, including putting employees in tough assignments, with the intention of training
women with the skills, mindsets and experiences necessary for promotions.
NTT University has been established for the purpose of grooming candidates for upper management positions within NTT Group,
and it aims to have at least 30% women in the program.

Research & Development

NTT Group has set a new target of 25−30% for the ratio of women in director positions by the fiscal year ending March 31, 2026, inorder to incorporate diverse opinions in decision-making settings.
At the same time, we see the necessity of expanding the pipeline of female candidates in order to continue reflecting diverse
opinions in decision-making. In the fiscal year ending March 31, 2022, we set a target of 30% for the ratio of new manager appointment. We also raised our target for the percentage of women in managers and directors positions from 10% to 15% in the fiscal year
ending March 31, 2026.
With regard to hiring women, in the fiscal year ended March 31, 2014, NTT set a target of 30% or higher for the percentage ofwomen in new hires straight out of college, and it has achieved at least 30% each year since then.
Subject

Refinement of MediumTerm Management Strategy

Empowerment of Women in the Workforce

ANNUAL REPORT 2021

49

Sustainability
NTT
Addressing Human Rights, Diversity and Inclusion

Initiatives for Employing People with Disabilities

Systems

With respect to the approximately 200,000 employees of NTT Group companies in Japan, in April 2018 we began the application, in
principle, of all systems for spouses to same-gender partners who have the equivalent of spousal relationships with employees.
Allowance for dependent, allowance for working away from home, expenses of returning home, relocation expenses(family relocation expenses)

Work

Special leave (marriage, bereavement), life plan leave, nursing care leave, short-term leave for nursing care, childcare
leave, long-term care leave, shorter working hours to provide childcare or nursing care, limit on or exemption fromovertime work, limit on nighttime work, shift work on an individual unit basis to provide childcare or nursing care,reemployment of employees who resigned due to childcare, nursing care, or the relocation of their spouse’s job

WelfareCongratulatory / condolence payments (special payments for marriage, condolence payments), company housing,NTT Benefits Package, M3PSP (health consultations with specialist physicians, “best doctor” referrals, and healthcare
policy proposals)

Overseas
Assignments

Family members included in the calculation of cost-of-living in their home country, spouses in receipt of empty homeallowance, handling of relocation expenses of family members of employees working overseas

Business Partnership with OryLab Inc.

NTT has formed a capital and business tie-up with OryLab Inc. for the purpose of strengthening its business responsiveness inremote environments while advancing the interests of people with disabilities. Through this partnership, NTT Group’s R&D capabilities are combined with the advanced product development capability of OryLab, such as OriHime, a robot that can be controlled
remotely by people who have disabilities. We aim to provide employment opportunities and broader access to people with physicaldisabilities or find it difficult to go outdoors through this effort to connect remotely to the world.

In October 2021, NTT Group introduced a job-based system for all management positions, where people are assigned to jobs regardless of their seniority, age or years of experience. For general employees, we are encouraging self-guided career formation, instead ofcompany-guided career formation. By increasing the specialization of each employee, we aim to nurture professionals who decide
their own careers by themselves.

Job-Based Personnel Compensation System

Self-Guided Career Formation

In July 2020, NTT introduced a job-based personnel compensation system for high-ranked managers at the main operating companies, where compensation varies according to theweight of the work at their assigned posts. NTT expanded thissystem to all management positions in October 2021. The
job-based system defines the work for each post based on
business plans and business operation policies of each company, and assigns the best-suited personnel to posts regardless of age. The ultimate aim is to increase corporate value
over the longer term and sustain growth as a company, while
ratcheting up the motivation of individuals to take on challenges and change perceptions of one’s own post and thecompany’s earnings.

The system seeks to assign the best-suited person to thework and post, regardless of age, and stimulate growth by
improving the motivation of individuals to take on challenges
and acquire specialized knowledge and skills. We believe thissystem will lead to stronger earnings for the company. To
realize this, it is important to clarify the types of specializations, skills and skill levels required to perform the work invarious fields. We will create a framework where employees
can enhance their careers by improving their specializations
on their own.

ANNUAL REPORT 2021

Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONNew Personnel System for Self-Guided Career Formation and Assigning Right Person to Right Job

Operations in Review

50

NTT Group proactively hires outside personnel for the purpose of incorporating diverse opinions in business operations. In the fiscal
year ended March 31, 2021, the ratio of mid-career hires at the six major domestic Group companies was 27%. We will continue tohire outside personnel in order to have diverse personnel on staff, and aim for a 30% ratio of mid-career hires by the fiscal year
ending March 31, 2024.

NTT Group's
Sustainability

In addition to direct hires, NTT Group established a special subsidiary in order to provide more employment opportunities for people
who have disabilities. NTT Group currently employs around 3,700 people with disabilities, representing 2.45% (up 0.01 percentage
point from the previous fiscal year) of its workforce as of June 2021.
Examples of work that are performed by people with disabilities include web accessibility diagnosis, lectures for better
understanding people with disabilities (barrier-free mindset seminars), production of hand-made paper from recycled paper,and office massages.

Mid-Career Hiring Initiatives

Research & Development

Increase in Employment Opportunities for People with Disabilities

NTT Group voices its approval of LGBTQ-related initiatives.
To deepen understanding of LGBTQ issues, NTT Group stands with LGBTQ people byparticipating in the Tokyo Rainbow Pride parade and the DIVERSITY CAREER FORUM,
one of the largest career forums in Japan related to diversity.
This fiscal year, we held an online ALLY meeting twice for the entire NTT Group, inviting external lecturers to give presentations and lead discussions. Around 110 employees
joined the ALLY meeting, discussing what they want to accomplish in future ALLY meetings and details about future ALLY initiatives.

Refinement of MediumTerm Management Strategy

The NTT Group is using OriHime in a variety of scenarios.
Sports:	Joint experiment with E Cheer Up!, a project for
ICT x sports x regional co-creation
Culture: 	Collaborative agreement with a Kyogen troupe
about making DX a reality (Nomura Mansai II(Mansaku no Kai))
Education:	OriHime and NTT R&D offer well-being classes
at elementary schools
Research:	At robot café DAWN, conduct experiments withremote robot control based on based on IOWN
OriHime-D, a robot that can be controlled remotely, is being
used by people with physical disabilities to offer employment
opportunities and broaden their range of activity while maintaining physical distancing during the pandemic. In recognitionof this achievement, OriHime-D was awarded the Special Prizein the Environment Creation Category of the 2020 ACE Awards,
sponsored by the Accessibility Consortium of Enterprises (ACE).

Major Initiatives

Value Creation Process

Use of OriHime Remote-Controlled Robot

NTT at a Glance

SalaryMessage from the CFO

NTT offers Life Plan Leave (up to 40 days) where up to three days of unused annual paid leave can be carried over each year, in addition to five days granted for every five years of continuous service. This leave can be taken for any reason, separately from annual
paid leave.
NTT has set a target for having 100% of male employees take paid leave for childrearing by the fiscal year ending March 31, 2023,
in a bid to create systems and work environments where employees feel free to take time off for childrearing. In the fiscal years
ended March 31, 2020 and 2021, the ratio of male employees taking leave for childrearing was 80.4%.
Starting in the fiscal year ending March 31, 2022, NTT will hold seminars to encourage employees to participate in childrearing,and through panel discussions featuring explanations of the system and talks by employees who took time off, strive to create aworkplace culture that encourages childrearing.

Message from the CEO

LGBTQ

Balance between Work and Childcare or Nursing Care51

Sustainability
NTT
Addressing Human Rights, Diversity and Inclusion

Each year, we conduct Group training for senior managers of NTT Group in Japan and overseas, called Global Leadership
Development Program Leadership Excellence and Accelerating Diversity (GLDP LEAD). This training is designed to foster leadershipamong managers aiming to move to higher positions. This training, in which more than half of the participants are female, emphasizes diversity and innovative culture as organizational capabilities of topmost importance. In the fiscal year ended March 31, 2021,
42 employees from nine countries underwent this training in an online format.

NTT Group Global Human Rights Policy
Background of NTT Group Global Human Rights Policy and Approach

Due Diligence

Health management is an important part of our management strategy, based on the idea that helping employees maintain andimprove their health will lead to greater motivation and productivity, and translate into growth in corporate earnings.
At NTT Group, we firmly believe that in addition to employees, helping their families maintain and improve their health will result ingreater motivation and vitality of all employees, and ultimately lead to the further growth and development of the Group.

Main Initiatives

Mental Healthcare
NTT Group implements various measures from prevention to early discovery and treatment of mental health issues. While employees continue to work remotely, we endeavor to improve mental health measures by periodically scheduling simple inquiries about mental health tohelp employees better understand and manage their moods (self-care). We aim to enrich our ongoing initiatives by introducing pulse surveys
and other ideas to facilitate communications between employees and their managers (line care).

Human rights due
diligence process
Disclose andassessVerifypracticality andeffectivenessResearch & Development

NTT Group identifies serious human rights issues to monitor from the four following perspectives.

Workplace exercise with videos of affiliatedsports teams

Theme 1

NTT Group's
Sustainability

Promotion of “Diversity & Inclusion”

Aiming to create new value, NTT Group believes it is essential to respect the diverse values and individuality of its employees in order to address the diversifying needs of its customers.

Promotion of “Technology that is based on high ethical standards.”
Theme 2

Theme 3

New technology will be necessary to strike a balance between people and nature. We believe it will
therefore be necessary to pursue R&D and the social implementation of technologies while maintaininga high level of ethics.

Operations in Review

Promotion of “Healthy work in daily life (health management)”

We believe it is important to create safe and secure work environments and promote diverse work styles
so that employees can work in physical and mental health with enthusiasm and motivation.

Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Instill in
operations

Addressing Human Rights Issues of Particular Importance

Theme 452

Risk
identificationand evaluation

Refinement of MediumTerm Management Strategy

Below, we introduce key initiatives being undertaken on various fronts to help employees maintain and improve their health.

Based on the UN Guiding Principles of Business and Human
Rights, we will use the human rights due diligence process to
identify, prevent, mitigate, and correct human rights issues
globally. And we will strive to improve human rights awarenessand human rights management throughout NTT Group.
In addition, due diligence will be conducted among thestakeholders in the entire business value chain, and a direct
dialogue will be the basis of our efforts, especially with major
suppliers. The status will be disclosed on our website, in our
Sustainability Report, and in our Human Rights Report to evaluate and improve the process continuously.

Value Creation Process

Policy and Approach

NTT has received certifications as a Health & Productivity Stockand Certified Health and Productivity Management Organization(White 500) from third parties. The Company will continue toenhance its initiatives for promoting health management.

NTT at a Glance

NTT Group Global Human Rights Policy
https://group.ntt/en/newsrelease/2021/11/10/211110c.html

Promotion of Health Management

To augment periodic health checkups, employees are eligible for an extensive health checkup
every five years, from age 30 to age 60 (younger and older people can also receive these checkups if they wish). We also support employees who wish to join sports gyms.

Message from the CFO

NTT is committed to respecting global human rights and believes it is an important corporate social responsibility. NTT Group will
strive to correctly understand and recognize each country and region's laws, cultures, religions, and values. We aim to create a safe,
secure, prosperous and sustainable society by fulfilling this responsibility. We will also replace NTT Group's existing Human Rights
Charter with the new NTT Group Human Rights Policy. We will include the NTT Group Global Human Rights Policy, the Environmental
Vision, and the New Management Style in the new NTT Group Global Sustainability Charter.
While supporting international covenants and treaties as a company with global operations, NTT Group internally and externallydiscloses its global human rights policy. This policy applies to all employees and board members on NTT Group, and we ask all of
our suppliers and business partners to support this policy and respect human rights.

GLDP LEAD

Physical Healthcare
The NTT Group also takes steps to help employees fortify their physical health by using ICT.
Specifically, we focus on the two measures below.
(1) Encourage healthy activities with smartphone app (d health care)		Information about how to refresh oneself and eat and sleep better, as well as information
about NTT Group’s symbolic sports teams (Exercise Videos), are pushed to the smartphone
app to get employees more engaged in healthy activities(2)	Guidance for specific health guidance via smartphones
		Introduce ICT-based specific health guidance so that employees can conveniently receive
specific guidance anytime and anywhere on their smartphone apps

Message from the CEO

Promotion of Global Diversity

Promotion of “appropriate expression, speech, and display”

With the spread of the internet, corporate messaging must be even more balanced and appropriate than
before. We take care to avoid discriminatory expressions, phrases and signage.

ANNUAL REPORT 2021

53

Sustainability
NTT

Corporate Governance―Reinforcement of Governance for Sustained Growth―Members of the Board* As of June 30, 2021

Jun Sawada

Chairman of the Board

President and Chief Executive Officer

Years Served as Member of the Board Shares Owned 1249,300Election / removal

7
38,3001978	Joined Nippon Telegraph andTelephone Public Corporation2018 President and Chief Executive Officer

Election / removal

Decision-making /supervisory functions

Nomination Committee

Audit

Board of Directors

Supervision

Election / removalGroup
Companies

1978	Joined Nippon Telegraph andTelephone Public Corporation2018 Chairman of the Board of the Company
2021 Member of the Board of Yamaha Corporation

Years Served as Member of the Board Shares Owned General Meeting of Shareholders

Audit & Supervisory Board

Senior Executive Vice President

Senior Executive Vice President
924,508

1981	Joined Nippon Telegraph andTelephone Public Corporation2018 Senior Executive Vice President

Years Served as Member of the Board Shares Owned 

President (executive officers council)
Proposal / reportingon important matters1
11,600Delegation of executive
authority Instruction /supervision

Executive officers

1985 Joined the Company
2020 Senior Executive Vice President

Various Committees

Business sections

Instruction /reportingAccounting audit

Supervision
Coordination

Independent Auditor
Cooperation

Cooperation

Refinement of MediumTerm Management Strategy

Years Served as Member of the Board Shares Owned Business executionfunctions

Office of Audit &Supervisory Board
Members

Evaluation

Naoki Shibutani

Reporting

Reporting

Akira Shimada

Election / removal
and supervision

Cooperation

SupportSustainability Committee

Value Creation Process

Compensation Committee

NTT(Holding
Company)

NTT at a Glance

Hiromichi Shinohara

NTT, in order to strengthen functions for appropriately supervising business execution, appoints several outside independent
Members of the Board and has established the Audit & Supervisory Board, of which outside independent Audit & Supervisory
Board Members make up a majority to strengthen its auditing system. With our adoption of an executive officer system, we arealso configured to clearly separate the functions of managerial decision-making / supervision and business execution, and we areworking to improve our business mobility. Additionally, NTT has voluntarily established the Nomination Committee andCompensation Committee, which consist of five members, including three outside independent Members of the Board, to further
increase the objectivity and transparency of decisions related to appointments and compensation for directors, and it has determined that the governance functions of the Audit & Supervisory Board structure are thoroughly effective.
In addition, NTT has established various meetings and committees as has been deemed necessary on important business execution, in order to ensure that appropriate decisions are made for facilitating Group management.

Message from the CFO

NTT strives to meet the expectations of various stakeholders, including its shareholders and other investors as wellas customers, business partners, and employees. The Company also recognizes the need to strengthen its corporate governance system based on the intent of the principles of Japan’s Corporate Governance Code. NTT is in conformity with all 83 principles of Japan’s Corporate Governance Code.

Message from the CEO

Corporate Governance System

Internal Control OfficeInternal audit

Outside independent directors and outside independent Audit & Supervisory Board Members

Sadayuki Sakakibara

Outside Independent Member of the Board

Outside Independent Member of the Board

Years Served as Member of the Board Shares Owned Years Served as Member of the Board Shares Owned 

1,300

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

2018–

Further reinforcement of oversightfunction by enhancing diversity,
Advancement of disclosure

●
●

2019

2018

Strengthening of information
disclosure with an awareness of
dialogue with stakeholders

2017
2015

Years Served as Member of the Board 

●

2
1,500

2019	Member of the Board of the Company
2019	Audit & Supervisory Board Member of
MITSUI MINING & SMELTING CO., LTD.
2021	Specially Appointed Professor and Dean ofFaculty of Global Business and Director of
the Institute of Women's Culture ofShowa Women's University
2021 Director of Sekisui House, Ltd.
2021	Director of MITSUI MINING & SMELTING
CO., LTD.

Response to Corporate Governance Code
Establishment of independence standards for independent Members of the Board and independent Audit & Supervisory Board Members
Commencement of issuance of sustainability reports●Commencement of disclosure of the notices of convocation before they are sent (henceforth, 42–45 days before the date of the conveningof the Ordinary General Meeting of Shareholders, in Japanese and English on the same date)●Appointment of first female corporate officer (1 outside Audit & Supervisory Board Member)●●

Outside Independent Member of the Board
Shares Owned 

Expanded ratio of performance-linked compensation: 30% 50%
Increased number of outside directors on Nomination Committee and Compensation Committee: 2 3
Transfer the existing Appointment and Compensation Committee into the separate Nomination Committee and Compensation Committee
based on their application functions●
Disclosed skill matrix for Members of the Board and Audit & Supervisory Board members●
Optimizing the size of the Board of Directors Ratio of outside directors: 27% 50%●
Adoption of executive officers system Separation of the functions of managerial decision-making / supervision and business execution●
Disclosure of specific KPIs for officers’ earnings-linked remuneration●
Establishment of NTT, Inc. (strengthening of the governance of the global business), appointment of three foreign-national directors●
Conducting of evaluation questionnaire on the effectiveness of the Board of Directors●
Commencement of ESG information disclosure in notices of convocation●
Appointment of two female directors (one inside and one outside), a Company first●
Increase in the number of outside Members of the Board: 2 54●
Strengthening of the reflection of KPIs in performance-linked compensation●
Expansion and improvement of statements regarding the compensation of directors, strategic shareholdings, succession plans, andevaluations of the effectiveness of the Board of Directors●
Inclusion of summary of directors in notices of convocation●
Introduction of notices of convocation that are viewable via smartphones
●

2006–

Strengthening of supervisory
function and improvement ofcorporate governance transparency
Establishment of a foundation forcorporate governance

2011
2006

●
●
●

2005

Increase in number of outside Audit & Supervisory Board Members: from 2 members
Appointment of financial expert as Audit & Supervisory Board Member
Commencement of disclosure of Corporate Governance Report

3 members

Establishment of Disclosure Committee
Establishment of Nomination Committee and Compensation Committee
Commencement of issuance of CSR reports●
Increase in number of Audit & Supervisory Board Members: from 4 members (2 inside members, 2 outside members)
inside members, 2 outside members)●
Appointment of multiple outside Members of the Board

Data Section

2002	Director of YRP Ubiquitous Networking
Laboratory2014	President of Vitalizing Local Economy
Organization by Open Data & Big Data
2017	Professor and Dean of Faculty of Information
Networking for Innovation and Design of
Toyo University
2017	Emeritus Professor of the University of Tokyo
2019	Member of the Board of the Company
2019	President of Association for IoT Services
Coordination

2021

Operations in Review

2

Separation of the functions ofmanagerial decision-making /supervision and business execution

2020

2011–

Keiko Takegawa

Outside Independent Member of the Board
Shares Owned 

921,9002012 Member of the Board of the Company
2018	Honorary Chairman of the Japan Business
Federation
2019 Outside Director of SHIMANO INC.
2019 Outside Director of Nitori Holdings Co., Ltd.
2019	Director and Chairperson of the Board ofJapan Investment Corporation
2020	Chairman of the Board of
The Kansai Electric Power Co., Inc.

Ken Sakamura
Years Served as Member of the Board 

2020–

NTT Group's
Sustainability

2012 Member of the Board of the Company
2016 Honorary Advisor of Waseda University

54

A History of Strengthening Corporate GovernanceKatsuhiko Shirai
910,800Research & Development

Inside directors and inside Audit & Supervisory Board Members

●
●
●

2003
1985

5 members (3ANNUAL REPORT 2021

55

Sustainability
NTT

Message from the CEO

Board of Directors

Evaluation of the Effectiveness of the Board of Directors

The Board of Directors is sized according to the content of our business portfolio and is structured in consideration of balance anddiversity of fields of specialization. The Board consists of eight directors, including four independent outside directors, who havebeen appointed in order to enhance the supervision of business execution. In addition, in principle, a regular Board meeting is held
once a month, with extraordinary Board meetings held as necessary. The Board determines matters stipulated by the “Board of
Directors Regulations,” which include matters stipulated by law and important matters pertaining to Company and Group management. It also supervises the execution of duties by directors and executive officers by regularly receiving reports on the status of
duty execution from those directors and executive officers.

Participants

All 8 directors and all 5 corporate auditors

Evaluation
Implementation

April 2021

Questionnaire Format

Anonymous surveys comprised 26 questions involving 4-level rankings as well as open-ended questions

Breakdown of Agenda Items Presented to the Board of Directors

Major Subjects

Roles and responsibilities of Members of the Board and of the Board of Directors itself, composition of
the Board of Directors, operation of the Board of Directors, support systems for outside independent
Members of the Board

Results Aggregation andAnalysis Method

Aggregation by third-party organization, analysis by Board of Directors’ organizing office, and then sharing of results and discussion of issues and improvement measures at Board of Directors’ meeting

Management Strategy

46%
●

●

●

●

42%

General Meeting of Shareholders-related
 valuation of the effectiveness of internalE
control systems
 perational status of internal
O
whistleblowing system
Human resources
Policy on even stronger governance, etc.

●●

 eview of NTT Group operationalR
structure●

Global strategy●

M&A matters of operating companies

●

●

●

 eport on the status of execution
Rof duties pproval of Annual Reports andAfinancial statements
Research and development plans, etc.

Capital Policy

12%●

Financing and loans, etc.

In the evaluation of the fiscal year ended March 31, 2021, positive responses were received for all questions, indicating thatthe Board of Directors is effectively fulfilling its important expected roles and responsibilities. All Members of the Board positively noted that the effectiveness of the Board of Directors had improved as a result of a series of governance-relatedchanges, such as creating opportunities to exchange opinions and the introduction of an executive officer system, implemented to invigorate strategic discussions. Therefore, we have evaluated that the effectiveness of the Board of Directors is
being ensured.
However, a number of areas in need of improvement were noted in the compliance structure and supervision system. NTT
is strengthening supervision functions and reviewing the compliance structure, mainly by reviewing and strict application ofinternal rules, such as for dinner meetings and other matters.
Moreover, NTT will continue efforts to achieve improvements by aiming for more effective operation of the Board of
Directors by further enhancing opportunities for exchanges of opinions with the executives of the major subsidiaries.

Refinement of MediumTerm Management Strategy●

 eturns to shareholders
R(share buybacks and dividends)

u Evaluation Results

Value Creation Process

Number of Agenda Items
Presented to theBoard of Directors in thefiscal year ended March 31, 2021
(Number of Board of Directors’Meetings held in the fiscal year
ended March 31, 2021: 13)

NTT Group operations

NTT at a Glance●

Message from the CFO

Corporate Governanceu Overview of Evaluation

Status of Activities of Independent Outside Members of the Board (FY2020)
Statements made at Board of Directors’ Meetings

Katsuhiko Shirai

Outside Member of the Board Katsuhiko Shirai made comments mainly concerning the circumstances of Group management and global strategies from his perspective as an operational director of an educational institution with extensive experience.

Outside Member of the Board Sadayuki Sakakibara made comments mainly concerning the
Sadayuki Sakakibara circumstances of Group management and shareholder return from his perspective as a corporate executive with extensive experience.

13/13(100%)
13/13(100%)

Member of the Board Ken Sakamura made comments mainly concerning organizational
operations and human resources strategies from his perspective as an administrator of universities and other research institutions with extensive experience.

13/13(100%)

Keiko Takegawa

Member of the Board Keiko Takegawa made comments mainly concerning system designfrom her perspective with extensive experience in PR and diversity measures at government
institutions.

13/13(100%)

In principle, important decisions are made by the Company after deliberation by the “Executive Officers Meeting” consisting of executive officers and other officers. The Meeting will convene approximately once a week. Moreover, to enhance the transparency ofdecision-making, one corporate auditor will also participate in the Executive Officers Meeting.

Various Committees
A number of committees have been established under the Executive Officers Meeting to discuss important matters related to business execution. Major committees include the Technology Strategy Committee, which deliberates on the Group’s R&D vision andtechnology development strategy; the Investment Strategy Committee, which examines investment projects that are larger than acertain scale; and the Finance Strategy Committee, which discusses basic financial strategies and financial issues. These committees, which are convened as necessary throughout the year, are, in principle, chaired by the president or a senior executive vice president and are attended by relevant executive officers and others.

NTT Group's
Sustainability

Ken Sakamura

Executive Officers Meeting

Research & Development

Name

Rate of attendanceat Board of Directors’Meetings

Operations in Review

56

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Data Section

Further, with a view to deepening the understanding of outside independent Members of the Board in relation to NTT Group’sbusinesses, we implement a variety of measures.
●
In addition to providing prior explanations of agenda items, explanations of near-term issues and the progress of examinations
are provided by the Representative Member of the Board, and details to be focused on in execution and the aims of initiatives
are clarified.
●
We facilitate exchanges of opinion with Audit & Supervisory Board Members, the Representative Member of the Board, the senior
management teams of major subsidiaries, and the outside independent Members of the Board of respective companies.
●NTT enables participation in exhibitions related to its R&D.

ANNUAL REPORT 2021

57

Sustainability
NTT

Message
Messages from Outside Independent Members of the Board
Message from the CEO
Message from the CFO
NTT at a Glance
Value Creation Process
Refinement of MediumTerm Management Strategy

Based on my experience as a science and engineering educator and as manager of an educational institution, I make recommendations andparticipate in decision-making with a focus on confirming the competitiveness of NTT Group, the potential benefits and risks of new partnerships and collaboration projects, and the Group’s compliance system. Overseeing management is an important role of an outside Memberof the Board. I also am also deeply concerned with issues regarding the development of a comfortable workplace environment or in theprovision of mental healthcare for employees. These tasks are crucial amid the rise in teleworking seen in response to the COVID-19 pandemic. I also provide advice regarding the need to continuously confirm the status of compliance with internal rules related to matters suchas dining with coworkers and to ensure that appropriate pre-checks are performed.
When it comes to monitoring the business execution status of Members of the Board, I
mainly conduct checks related to the competitiveness of mobile service businesses, the future
potential of global businesses, and other matters related to the pursuit of sustainable growth.
Opportunities to discuss with Audit & Supervisory Board Members and outside Members of theBoard are invaluable to performing the monitoring duties of an outside independent Memberof the Board and thus to improving the objectivity and transparency of Board proceedings, andI have voiced my desire for the Company to arrange such opportunities on a regular basis.
I will continue to contribute to proper business operations and to the enhancement of enterprise value by advising the Board of Directors, continuously monitoring business execution, andproviding appropriate support for risk-taking for the sake of growth.
New lifestyles and work styles will likely become more commonplace going forward. We
can thus project that the needs and expectations for ICT
will become greater and more diverse in the future. It will
therefore be crucial for NTT to fulfill its social mission as
Katsuhiko Shiraian ICT company, specifically with regard to disaster
Outside Independent Member
preparedness and CO2 emissions reductions as well asof the Board
Assumed the position of Outside Member
to the development of next-generation ICT, in order toof the Board of the Company in June 2012
achieve ongoing improvements in enterprise value.

The global economy and society have been changing at breakneck speed since the start of the COVID-19 pandemic, and DX has fundamentally altered the way we work and live.
Taking advantage of my long experience in corporate management at Toray Industries, Inc. and Keidanren (Japan Business
Federation), I work to supervise management from the perspective of resolving social issues through business activities and contributing
to accomplishment of the Sustainable Development Goals (SDGs). I am also helping enhance governance. In the fiscal year ended March
31, 2021, NTT adopted an executive officer system and revised the membership of the Board of Directors to make outside Members of
the Board a majority. These changes represented a major step forward for NTT’s governance system. I believe one of the major roles ofoutside Members of the Board is to help determine the ideal governance system for theCompany based on social trends.
On the Board of Directors, I have made recommendations and voiced various observations regarding global business strategy and governance, the establishment of internal rules related to matters such as dining with coworkers, appropriate management
systems, and shareholder returns. I am impressed with NTT’s declaration of a clear
stance toward promoting DX and the elimination of CO2 emissions for itself as well
as for society as a whole. This declaration was the result of an ongoing process of
discussion.
In the fiscal year ended March 31, 2021, I met with institutional investors as an outside Member of the Board of NTT and also participated in the Company’s NTT IR DAY
event, where I discussed the governance reforms that NTT has implemented. While
keeping the views of shareholders and investors constantly in mind at meetings ofthe Board of Directors and other forums, I will continue to monitor management froma medium- to long-term perspective with the aim of helping achieve sustainablegrowth and enhance NTT’s enterprise value by providing proactive input utilizing my
independence as an outside Member of the Board and my experience in corporate
management.
NTT has substantial potential for growth. I hope NTT will become a company capaSadayuki Sakakibara
ble of achieving greater growth beyond the period of its medium-term management
Outside Independent Member of the Board
Assumed the position of Outside Member of the Board of thestrategy and into 2030 and 2040.
Company in June 2012

Outside Independent Memberof the Board

Assumed the position of Outside Memberof the Board of the Company in June 2019

Operations in Review
Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONNTT Group's
Sustainability

58

Innovation and the creation of new services are indispensable for addressing social issues. Such innovation requires that a company securetalented human resources while promoting diversity. Particularly in the rapidly evolving ICT industry, I believe it is necessary to incorporate
new perspectives and value by promoting diversity. As a civil servant, I have long been involved in the promotion of diversity, and I have beenencouraging the active participation of women in various fields, specifically through the promotion of corporate initiatives and support for theappointment of female corporate executives.
As the COVID-19 pandemic sparks demand for accelerated DX, I am aware that NTT has a number of issues that still require attention.
It needs to coalesce its Group abilities to deal with a competitive environment and enhance global Group governance. NTT also has abundantbusiness resources including a diverse work force, as well as a great social responsibility.
At meetings of the Board of Directors, I have contributed to appropriate decision-making by voicing opinions and advice on a variety ofmatters. Such matters included the establishment of systems for preventing misconduct as well as systems for monitoring global businesses from Japan. I have also spoke about measures for preventing flooding and for responding to electrocution hazards resulted fromheavy rains. Furthermore, I believe that strong messages from senior management are imperative to uniting employees and raising themorale of frontline organizations, which will be important to improving the enterprise value of NTT Group. The Company is advocating a new
management style that puts forth a clear vision for employee diversity and work styles from the perspective of bettering society as a whole. I
think it is spectacular that NTT presented such a vision.
The role of an outside Member of the Board is to support healthy risk-taking. Going forward, I will continue contributing to NTT’s sustainable growth and to the medium- to longterm enhancement of enterprise value through the oversight of decision-making and of
business execution.

Research & Development

Ken Sakamura

I have experience contributing to the realization of ubiquitous computing and the IoT.
Specifically, I have been involved in an open architecture R&D project centered on a real-time
OS called TRON (The Real-time Operating system Nucleus) for over 40 years, and we havereleased the fruits of those efforts openly and free of charge throughout the world. As DX is
promoted with the aim of sculpting a new society based on our experience with COVID-19,
global competition is spreading across regional and national boundaries and growing more
intense. At the same time, we will need to defend against cyberattacks and respond to newlaws and regulations in business operations, new concepts of privacy, and the standardization of ethics in the information field.
Based on my experience thus far, I have voiced opinions at meetings of the Board of
Directors that are mainly related to technology. Topics I have raised include the verification of
procured articles from the perspectives of national defense and export control as well as theexamination of NTT’s ability to adapt to technologies likely to become mainstream in the
future. I also offered advice about the potential of diverse technologies in order to help support the implementation of the medium-term management strategy. The new management
style NTT seeks to adopt was shaped over the course of multiple discussions. I have highpraise for this style as it incorporates a vision for contributing to society as a whole. I havealso offered input regarding the need to clarify internal rules for dining with coworkers andother matters and to enhance and expand compliance measures. It is in this manner that I
oversee the establishment of strategies and business execution by management from an
objective standpoint and judge the appropriateness of these activities.
Achieving the DX of NTT Group and of its customers and greater Japanese society will
require the utilization of NTT’s various management resources, such as its R&D resources,
ICT infrastructure, and human resources, as well as collaboration with partners. As weapproach a new era of telecommunications, characterized by such innovations as IOWN,
I hope to contribute to the ongoing growth of NTT while remaining considerate of the needto prepare for various potential business changes.

Keiko Takegawa
Outside Independent Memberof the Board

Assumed the position of Outside Memberof the Board of the Company in June 2019

ANNUAL REPORT 2021

59

Sustainability
NTT* As of June 30, 2021

Takao Maezawa

Kanae Takahashi

Full-Time Audit & Supervisory
Board Member

Full-Time Audit & Supervisory
Board Member
520,508Years Served as Audit &Supervisory Board Member 
Shares Owned 

1
5,600

1987	Joined the Company
2020	Full-Time Audit & Supervisory Board Member

Takashi Iida

Hideki Kanda

Outside Independent Audit & Supervisory
Board Member

Outside Independent Audit & Supervisory
Board Member

Years Served
as Audit & Supervisory Board Member 
Shares Owned Years Served
as Audit & Supervisory Board Member 
Shares Owned 

7
7,300

2016	Professor of the Professional School of Law(Law School) of Gakushuin University
2016	Emeritus Professor of the University of Tokyo
2017	Director of Sumitomo Mitsui Trust Bank,
Limited2019	Outside Audit & Supervisory Board Memberof the Company

Kaoru Kashima
Years Served
as Audit & Supervisory Board Member 
Shares Owned 

20

Audit & Supervisory Board

60

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONStatements made at Board of Directors’ meetings and Audit & Supervisory Board meetings

Takashi Iida

Audit & Supervisory Board Member Takashi Iida made comments mainly concerning corporate
governance based on the professional perspective fostered through his extensive experience asa lawyer.

13/13(100%)

20/20(100%)

Hideki Kanda

Audit & Supervisory Board Member Hideki Kanda made comments mainly concerning corporate
governance from his expert perspective based on his abundant experience as a university
professor.

13/13(100%)

20/20(100%)

Kaoru Kashima

Audit & Supervisory Board Member Kaoru Kashima made comments mainly concerning
accounting auditing from her expert perspective based on her abundant experience as a certified
public accountant.

12/13
(92%)

20/20
(100%)

Evaluation of the Effectiveness of the Audit & Supervisory Board
The effectiveness of the Audit & Supervisory Board has continued to be evaluated since the fiscal year ended March 31, 2019. We
looked back at the audit activities of the fiscal year under review, reflecting such evaluation in the audit plan for the following fiscal
year and improving the quality of audits. When conducting the evaluation of effectiveness for the fiscal year ended March 31, 2021, in
addition to a questionnaire being given to each Audit & Supervisory Board Member, interviews of three independent outside Audit &Supervisory Board Members were conducted. To ensure anonymity and to introduce fresh perspectives, a third-party organization
was enlisted to implement the questionnaire and interviews and to analyze the collected results. The primary items of evaluation for
the fiscal year ended March 31, 2021, were as follows: the audit plan; advice to the management and audits of business execution;
the Group’s audit system; responses to acts in violation of rules, etc.; cooperation between the three audits (audit by the Audit &Supervisory Board, audit by the Independent Auditors, and audit by the internal audit division); and operation of Audit & Supervisory
Board meetings, among other matters. As a result of discussion and inspection by the Audit & Supervisory Board based on theabove, the effectiveness of the Audit & Supervisory Board was evaluated as being secured.
NTT will continue to strengthen cooperation between the various bodies, such as the Internal Control Office and Group companies’ respective Audit & Supervisory Board Members, and work to further develop the sophistication of the Group’s audit system,
based on NTT Group’s business development and reorganizations both in Japan and overseas. Also, going forward, in light of theinternal and external management environment, NTT will work to further improve the effectiveness of the Audit & Supervisory Board
by further strengthening cooperation with outside Members of the Board while conducting audits on executive management.
ANNUAL REPORT 2021

Data Section

For the fiscal year ended March 31, 2021, amid continued significant changes in management, including the global business reorganization, expansions of areas of business and the conversion of NTT DOCOMO into a wholly owned subsidiary, the Audit &Supervisory Board conducted an efficient and effective audit in collaboration with the Internal Control Office, Independent Auditors
and Group company corporate auditors on both audit matters required by law and on other matters such as the progress of theMedium-Term Management Strategy and initiatives to maintain and improve corporate governance, on the basis of the audit plan.
Furthermore, despite the ongoing COVID-19 pandemic, through the cooperation of related audit organizations and the active utilization of web conferencing for site visits, the effectiveness of the audit was not impaired.
Audit & Supervisory Board Members, which include independent outside corporate Audit & Supervisory Board Members, attend
meetings of the Board of Directors and other important meetings. In addition, Audit & Supervisory Board Members meet withRepresentative Members of the Board and outside Members of the Board to exchange ideas and opinions in order to maintain anunderstanding of the status of the execution of duties by Members of the Board and Executive Officers, and to provide their opinions

Name

Operations in Review

Activities of the Audit & Supervisory Board

Attendance rate
Board of Directors’ Audit & Supervisory
meetings
Board meetings

NTT Group's
Sustainability

The Audit & Supervisory Board comprises three outside independent Audit & Supervisory Board Members (one of whom is female)
who have experience and knowledge in wide-ranging professions—as a lawyer, university professor, and certified public accountant—and two inside Audit & Supervisory Board Members (one of whom is female). We conduct effective audits by combining the independent perspective of outside Audit & Supervisory Board Members with the superior information collection capabilities of inside Audit &Supervisory Board Members. Among the Board members, Audit & Supervisory Board Member Takao Maezawa has experience in theaccounting division of NTT and its affiliated companies, while Audit & Supervisory Board Member Kaoru Kashima, a Certified Public
Accountant, has considerable knowledge in the areas of finance and accounting.

Status of Activities of Outside Independent Members of the Audit & Supervisory Board (FY2020)

Research & Development

1985	Registered as a Certified Public Accountant(registration up-to-date)2019	Outside Audit & Supervisory Board Memberof the Company
2020	Audit & Supervisory Board Member of Kirin
Holdings Company, Limited
2021	Director of Sumitomo Mitsui TrustHoldings, Inc.

Refinement of MediumTerm Management Strategy

Outside Independent Audit & Supervisory
Board Member

Value Creation Process

1974	Registered as Attorney-at-Law (Daini Tokyo
Bar Association) (registration up-to-date)2012	Established Kowa Law Office2013	Outside Director of Alps Electric Co., Ltd.
(currently registered as Alps Alpine Co., Ltd.)2014	Outside Audit & Supervisory Board Memberof the Company

20

NTT at a Glance1978	Joined Nippon Telegraph and Telephone
Public Corporation
2016	Full-Time Audit & Supervisory Board Member

Message from the CFO

Years Served as Audit &Supervisory Board Member 
Shares Owned Summary of Opinion Exchanges
as needed. In the fiscal year ended March 31, 2021, opinions were exchanged
with representative directors and outside directors on 26 occasions.
Exchanges with Representative Members of the Board
26
In the fiscal year ended March 31, 2021, the Audit & Supervisory Board
Audit & Supervisory Board meetings20
met 20 times (with Mr. Takao Maezawa, Mr. Takashi Iida, Mr. Hideki Kanda
Audit & Supervisory Board Members Preliminary
and Ms. Kaoru Kashima each attending 20 out of 20 meetings, and with
Deliberation Meeting
33
Ms. Kanae Takahashi attending 13 out of the 13 meetings that were conExchanges with Independent Auditors
8
vened after her appointment on June 23, 2020).
Exchanges with the Internal Control Office10
Moreover, separate from meetings of the Audit & Supervisory Board, theListening to and discussing the status of corporate
Audit & Supervisory Board Members Preliminary Deliberation Meeting met
governance and efforts to maintain and improve itfrom the representative directors of major Group
33 times. These meetings provide a venue for the sharing of information.
companies
19
For example, at these meetings Audit & Supervisory Board Members receive
Number of major domestic bases visited
26
explanations from corporate officers of matters to be discussed at the
Executive Officers Meeting. Furthermore, Audit & Supervisory Board
In addition, the Audit & Supervisory Board received reports on
Members work closely with Independent Auditors and the Internal Control
audit results from the auditors of major Group companies andexchanges opinions.
Office. Audit & Supervisory Board Members exchanged opinions with
Independent Auditors eight times and the Internal Control Office 10 times,
and receive explanations of audit plans and reports on the status of internal control systems and provide advice as needed.
In initiatives related to Group companies, site visits were conducted at locations that were selected from among Group companies inJapan and overseas on the basis of materiality and risk approach. Audit & Supervisory Board Members received information from theRepresentative Members of the Board of 19 major Group companies regarding the status of corporate governance and measures tomaintain and enhance corporate governance, and discussions were conducted on those matters. In addition, Audit & Supervisory Board
Members conducted site visits to 26 locations in Japan and overseas, received information from senior management, and conducteddiscussions. Furthermore, Audit & Supervisory Board Members received reports regarding audit results from Audit & Supervisory Board
Members of major Group companies and exchanged opinions with them. In addition, the Audit & Supervisory Board is implementing
initiatives that contribute to enhancing the auditing activities of Audit & Supervisory Board Members of major Group companies, including regularly holding training sessions by outside experts for Audit & Supervisory Board Members of major Group companies.
Through these activities, Audit & Supervisory Board Members support the sound, steady growth of NTT and Group companies
from an independent perspective that differs from that of executives. In addition, Audit & Supervisory Board Members contribute to
the strengthening of corporate governance systems and the fostering of awareness of compliance matters.
Regarding the case in which members of NTT’s management dined with ministry officials, the Audit & Supervisory Board will
undertake the necessary response based on the report of the Special Investigations Committee and measures to prevent reoccurrence based on the report. In addition, the Audit & Supervisory Board will confirm the maintenance and operational status of internal
rules regarding dining events.

Message from the CEO

Members of the Audit & Supervisory Board

61

SustainabilityNTT

5Compensation Preliminary
Committee
deliberation
items
Specificallydelegated items

Nomination-related matters regarding Members of the Board, executive officers and others, for which the committee receives requests for deliberation from the Board of Directors
1. Policies for determining compensation of Members of the Board and executive officers, and composition and levels of compensation
2. In addition to the foregoing matters, other compensation-related matters regarding Members of the Board and executive officers, for which thecommittee receives requests for deliberation from the Board of Directors
1. Ratios, calculation methods and amounts of compensation for each individual Member of the Board and executive officers
2. Other matters that are specifically delegated by the Board of Directors regarding the determination of compensation-related decisions ofMembers of the Board and executive officers

NTT Group strives to contribute to the resolution ofsocial issues and the realization of a safer, moresecure, and more affluent society. To accomplish
this goal, the Group acts as a trusted “Your Value
Partner” that customers continue to select in orderto provide them with new value on a global basis.
NTT has established the policy of positioning
individuals that share these ideals in the upper
ranks of NTT Group’s management, and NTT iselecting such individuals from both inside andoutside the Group.

In regard to Member of the Board candidates, individuals are elected based on the broad-ranging
perspectives and experience, superior management
skills and leadership, and business senses andmotivation necessary to contribute to the overall
development of NTT Group in order to facilitate theimprovement of the Group’s corporate value. The
Board of Directors is of a size appropriate to theGroup’s business, and the composition of the Boardof Directors takes into account a balance of specialties and diversity. From the perspective of strengthening the function of supervising business execution,for outside independent Members of the Board, NTTelects individuals who present no risk of a conflict ofinterest with general shareholders. In principle, NTTappoints several outside independent Members of
the Board.

NTT has the policy of electing candidates for Audit& Supervisory Board Members who have thecapacity to provide audits based on specialized
experience and insight. From the perspective ofguaranteeing fair audits of the execution of duties
by Members of the Board, with respect to outside
independent Audit & Supervisory Board Members
NTT elects individuals who present no risk of aconflict of interest with general shareholders. In
accordance with the Companies Act, NTT ensuresthat outside independent Audit & Supervisory Board
Members make up half or more of the Audit &Supervisory Board.

Supervisory Board Members

Compensation Amounts, Calculation Methods

Maximum limits on total annual compensation of Members of the Board had previously been set at up to ¥750 million for Membersof the Board at the 21st Ordinary General Meeting of Shareholders held on June 28, 2006. At the 36th Ordinary General Meeting of
Shareholders held on June 24, 2021, however, it was resolved that compensation would be revised to comprise the following three
types: (i) amount of monetary compensation: up to ¥600 million per year; (ii) amount to be paid to Members of the Board as funds toacquire company shares through the Board Members Shareholding Association: up to ¥50 million per year; and (iii) funds to be contributed to the performance-linked stock compensation system: up to ¥100 million per year. If all three types of compensation are
aggregated, the resulting amount of up to ¥750 million per year would maintain the previous level of compensation.

Data Sectionu Nomination of Candidates for Audit &With regard to compensation policy and the composition and levels of compensation of Members of the Board of NTT, in order toensure objectivity and transparency, NTT established the Compensation Committee, comprised of five Members of the Board,
including three outside independent Members of the Board. Compensation matters are decided by the Board of Directors after deliberation by this committee. Compensation ratios, calculation methods and individual compensation amounts are decided by theCompensation Committee at the direction of the Board of Directors.

Operations in Review

u Nomination of Candidates for Members ofDecision-Making Policy and Process for Board Member Compensation

NTT Group's
Sustainability

NTT Group Personnel Policy
u Basic Policy

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONNTT Group works to cultivate candidates suitable for top management who are able to respond to the rapidly changing management
environment, by creating a range of training opportunities in areas including domestic and overseas economic and social issues,compliance, and risk management, and by allowing employees to accumulate new job experiences. Additionally, outside independent
Members of the Board can gain a deeper understanding of NTT Group’s businesses through opportunities to deepen their understanding of the business trends of NTT Group companies and of the latest NTT Group works to cultivate candidates suitable for top
management who are able to respond to the rapidly changing management environment, by creating a range of training opportunities
in areas including domestic and overseas economic and social issues, compliance, and risk management, and by allowing employees
to accumulate new job experiences. Additionally, outside independent Members of the Board can gain a deeper understanding of
NTT Group’s businesses through opportunities to deepen their understanding of the business trends of NTT Group companies andof the latest R&D results at the research facilities of NTT.

Research & Development

In terms of the composition of the Company’s Board of Directors, the nomination of executives is based on the “NTT Group Personnel
Policy,” and personnel with the skills to resolve issues recognized by NTT Group are nominated broadly from inside and outside of theGroup. Outside Members of the Board and outside Audit & Supervisory Board Members are elected with the expectation that they canprovide opinions based on a broad management perspective or as an expert. Furthermore, both inside and outside Members of theBoard are elected in line with NTT Group’s promotion of diversity. The Board of Directors consists of eight directors, including four
independent outside directors (one of whom is a woman), and the ratio of outside directors is 50%. Furthermore, appointments anddismissals of Members of the Board are made upon deliberation by the Nomination Committee, which consists of five Members of
the Board, including three outside independent Members of the Board. In addition, pursuant to applicable law (Article 10(1) of the Act
on Nippon Telegraph and Telephone Corporation, etc.), NTT is not permitted to appoint non-Japanese Members of the Board.

62

Training for Members of the Board and Audit & Supervisory Board Members

Compensation for Board Members

Nomination Policy

the Board

With respect to successor candidates for the CEO position, NTT views it as important to secure successor candidates who can
respond to technological innovation, market trends, and the speed of changes in the business environment. By securing the diversityof candidates through offering experience of a broad range of jobs and appointments to important posts, NTT is cultivating personnel for promotion who, in addition to possessing integrity and insight, are exceptionally well-suited to the times. The decision regarding the appointment is made by the Board of Directors after it has been presented for deliberation to the Nomination Committee,
which consists of five Members of the Board, including three outside independent Members of the Board.

Refinement of MediumTerm Management Strategy

Specificallydelegated items

1. Policies with respect to the appointment and dismissal of Members of the Board and executive officers of the whole group, and the nominationof candidates
2. Matters related to the appointment and dismissal of Members of the Board
3. Matters related to the selection and dismissal of representative Members of the Board of major group companies
4. Selection and dismissal of representative Members of the Board and other named roles of Members of the Board
5. Selection and dismissal of the Chairman
6. The order of Members of the Board to assume the responsibilities of the President of the Company in the event that anything occurs to the President
7. Determination of the allocation of responsibilities for Members of the Board and assignment of employee duties
8. Appointment and dismissal of executive officers and assignment of duties
9. In addition to the foregoing matters, other nomination-related matters regarding Members of the Board, executive officers and others, for which
the committee receives requests for deliberation from the Board of Directors

Succession Plan

Value Creation Process

Preliminary
deliberationitems

To see NTT’s independence standards, please refer to
the NTT corporate website.
https://group.ntt/en/ir/mgt/governance/04.html

NTT at a Glance

Nomination
Committee

From the perspectives of strengthening supervisory functions for execution and guaranteeing appropriate audits of the execution ofduties by Members of the Board, NTT has a policy of selecting individuals to serve as outside Members of the Board and outside
Audit & Supervisory Board Members who do not represent risks of conflicts of interest with general shareholders. NTT designates
outside Members of the Board and outside Audit & Supervisory Board Members who fulfill both the independence criteria stipulatedby Tokyo Stock Exchange, Inc., and NTT’s own independence standards as outside independent Members of the Board or outside
independent Audit & Supervisory Board Members.

Message from the CFO

For the purpose of improving objectivity and transparency in the decisions ofComposition of the Nomination Committee
nominations and compensation of Members of the Board, NTT has establishedand Compensation Committee
on a non-statutory basis the Nomination Committee and the Compensation
Committee, which each consist of five Members of the Board, including three
Outsideoutside independent Members of the Board, as institutions to conduct preliminary
Insideindependent
Members ofreviews and other matters for the Board of Directors, and is increasing the effecMembers of
the
Board
tiveness of governance.
the Board
Furthermore, from and after August 6, 2021, a majority of committee member2
3
ship consisted of independent outside Members of the Board, increasing independence. Additionally, from and after November 10, 2021, NTT decided to separate
and transfer the existing Appointment and Compensation Committee into the separate Nomination Committee and Compensation
Committee based on their application functions, and further delineating the authority and role of each committee. Membership ofeach committee consists of Jun Sawada (Representative Member of the Board, President), Akira Shimada (Representative Memberof the Board, Senior Executive Vice President), Katsuhiko Shirai (outside Member of the Board), Sadayuki Sakakibara (outside
Member of the Board) and Ken Sakamura (outside Member of the Board), with Jun Sawada (Representative Member of the Board,
President) serving as chairman of each committee.
Resolutions of each committee are made by a majority of such committee’s members in attendance, at meetings in which amajority of committee members are present.

Reason for Nomination and Nomination Procedure for Outside Members of the Board andOutside Audit & Supervisory Board Members

Message from the CEO

Composition and Activities of Nomination Committee and Compensation Committee

ANNUAL REPORT 2021

63

Sustainability
NTT

Performance-linked compensation: About 50%::

3

Bonus (short-term performancelinked compensation)

Monthly salary (base compensation)2

Stock compensation(medium- to long-term performance-linked compensation)

KADOKAWA
Corporation

2,040,000

2,781Tokyo Century
Corporation

12,302,800

41,645

Toyota Motor
Corporation

29,730,900

Zenrin Co., Ltd.

Performance indicator*

Evaluation weight

Evaluation method

35%

Year-on-year
improvement

Evaluation weight

Evaluation method

35%
9%
6%
6%
6%

Achievement of targets

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

231

248

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

15,9006.8%
13.8%
18,3902.2%

16,7147.2%
13.6%
18,6483.0%* In addition to the above, the degree of achievement for number of B2B2X projects is also evaluated.

Number of Persons Paid
(persons)

12

Monthly Remuneration(millions of yen)

290

Board Member Bonuses(millions of yen)

97

Total Amount(millions of yen)

387

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Comprehensively taking into account NTT Group’s aim of expanding the usage area of NTT Group’s
technology, including through demonstration experiments of a variety of advanced technologies, thecontribution to medium- to long-term business results resulting from the evolution of services thatutilize them, as well as the company’s business results and future management strategies, NTT
Group continues to hold their shares.

91,533Mainly strengthening ourcooperative relationship in theleasing and asset business fields

In addition to the expected contribution to our mid- to long-term business performance through thestrengthening of the leasing business and joint development of the asset business through the joint
venture with the said company, NTT Group continues to hold the shares of Tokyo Century after
periodically reviewing its business performance and future management strategies.

256,161

Mainly strengthening thecollaborative relationship in thesmart city businessIn addition to the fact that it is expected to contribute to the medium- to long-term business performance of NTT Group through R&D, planning, design, construction, and implementation of a smart
city platform jointly with Toyota Motor and long-term continuous efforts in the smart city business,
NTT Group’s Board of Directors has reported that it has decided that NTT Group will continue to holdthe shares of Toyota Motor after periodically reviewing the business performance and future
management strategies of Toyota Motor.

—

5,565

Mainly strengthening its
collaborative relationship in thearea of increased map
sophistication

In order to solve various social problems and create value in new business fields by utilizing the“advanced geospatial information database” to be jointly developed with the company, NTT Group’s
Board of Directors has reported that it has decided that NTT Group will continue to hold the sharesof Zenrin after periodically reviewing the business performance and future management strategies
of Zenrin.

—

84,914Mainly strengthening thecollaborative relationship in joint
R&D and global development,
mainly utilizing innovative opticaland wireless technologies

During the fiscal year under review, NTT Group entered into a capital and business alliance with thecompany with the aim of strengthening the collaborative relationship in joint research and development and global development, mainly utilizing innovative optical and wireless technologies, andacquired and held shares in the company. In addition to the expected contribution to NTT Group’s
medium- to long-term business performance through the expansion of sales of jointly developed
products, NTT Group’s Board of Directors has reported that it has decided that NTT Group willcontinue to hold NEC’s shares after periodically reviewing the business performance and future
management strategies of NEC.

74

—

74

15

364

97

461

NEC
Corporation

13,023,600—

Internal Control
NTT has established the Basic Policies Concerning the Maintenance ofInternal Control Systems for NTT Group, which was approved via resolution
by the Board of Directors.
Based on these policies, NTT Group has established the Internal Control
Office, which oversees the establishment of internal control rules and frameworks. In addition, NTT Group evaluates the effectiveness of the internal
control systems based on audit reviews and uniform audits regarding highrisk matters affecting the entire Group. Necessary improvements will be
implemented accordingly.
In regard to internal control systems for financial reporting based on the
Financial Instruments and Exchange Act, the Company takes appropriate
measures to ensure the reliability of its financial reporting. To facilitate thesemeasures, tests and evaluations are performed on the implementation
status of pertinent internal control systems.

A History of Internal Control / Risk Management
2002

●

●

●

●

2006

●

●

Establishment of Corporate Ethics Committee
 stablishment of NTT Group Corporate Ethics
E
Charter stablishment of Groupwide Corporate Ethics
E
Help LineEstablishment of Internal Control Office stablishment of Basic Policies Concerning theE
Development of Internal Control Systems

2010

●

Establishment of Risk Management Rules

2018

●

Establishment of the IT Strategy Office●More information on the Basic Policies Concerning the Maintenance of Internal Control
Systems for NTT Group can be found on NTT’s corporate website.
https://group.ntt/en/corporate/internalcontrol.html

 stablishment of Business Risk Management
E
Committee

Data Section

3*1 The figures above include eight Members of the Board and one Audit & Supervisory Board Member who retired at the conclusion of the 35th General Meeting of Shareholders held on
June 23, 2020.
*2 Held on June 28, 2006, the 21st General Meeting of Shareholders passed a resolution that capped the total amount of compensation paid to Members of the Board at ¥750 million per
year. At the June 24, 2021, 36th General Meeting of Shareholders, a resolution was approved to change the breakdown of compensation into three types, while (1) capping the maximum
amount of monetary compensation at ¥600 million per year, (2) capping the maximum amount paid to Members of the Board as funds for acquiring the Company’s stock through theBoard Members Shareholding Association at ¥50 million per year, and (3) capping the maximum amount of compensation from the performance-linked stock compensation system at¥100 million per year. The total amount of all three types of compensation is no higher than ¥750 million per year, unchanged from before. The total amount of compensation paid out inthe fiscal year ended March 31, 2021 was ¥447 million.
*3 In addition to the above figures, a total of ¥3 million was paid for the salaries of assistants and assistants to Members of the Board.

64

Mainly strengthening businesscollaboration in the field of
R&D for video and social
media services

Operations in Review

Total Compensation of Members of the Board and Audit & Supervisory Board Members (Fiscal Year Ended March 31, 2021)
Members of the Board(excluding Outside Members of the Board)
Audit & Supervisory Board Members(excluding Outside Audit & Supervisory
Board Members)
Total

8,762

NTT Group's
Sustainability

Operating profit
ROIC
Capex to sales
Overseas sales
Overseas operating profit margin

Effects of holding

Research & Development

EPS

Purpose of holdings

2020

Amounts above certain amounts of base salaries and bonuses are used forstock purchases through the Board Members Shareholding Association

Performance indicators for bonuses
Performance indicator*

4,200,000

2019

Refinement of MediumTerm Management Strategy

5

Number ofsharesValue Creation Process

Fixed compensation: About 50%

Balance sheet value(millions of yen)Company
nameNTT at a Glance

In order to maintain a high level of independence, compensation of outside Members of the Board consists of monthly fixedcompensation only, and is not linked to NTT’s business results. Compensation of Audit & Supervisory Board Members is determinedby resolution of the Audit & Supervisory Board. In order to maintain a high level of independence, compensation of Audit &Supervisory Board Members is paid monthly and is not linked to NTT’s business results.
Starting in the fiscal year ending March 31, 2023, NTT plans to link the compensation of Members of the Board to key ESG indicators, such as carbon neutrality, B2B2X earnings, and the ratio of women newly promoted to management positions.

NTT does not hold any shares to create stable shareholders, and has no plans to hold them in the future.
NTT primarily hold shares strictly for portfolio investment, seeking financial return on short-term fluctuations in interest rates andcurrencies and securities market prices, or market disparities. However, we also pursue collaboration and open innovation with partners in various industries to contribute to medium- to long-term improvement in corporate value. Based on this policy, we own strategic shares of partner companies as necessary.
NTT’s policy on strategic shareholdings is to own shares of partner companies as necessary to pursue collaboration and open
innovation with partners in various industries to contribute to medium- to long-term improvement in corporate value. With regard to
the shares held pursuant to these policies, the Investment Strategy Committee evaluates the appropriateness of holding individual
stocks by comprehensively taking into consideration the contribution to the medium- to long-term results of NTT, the progress ofbusiness collaborations, future considerations concerning business collaborations, performance trends of the investment targets,and future business strategies of NTT. Moreover, regarding strategic shareholdings of NTT Group companies as well, we conduct
annual reviews of the appropriateness of each individual stock and move to sell off those deemed unnecessary.
With respect to exercising voting rights of strategic shareholdings, NTT exercises voting rights acquired through share ownership,
as it sees fit, from the perspective of sustainable growth of the companies NTT invests in and improving corporate value for both
NTT and the companies.

Message from the CFO· Monthly salary (base compensation): This fixed monthly compensation amount is based on the duties and responsibilitiesof each Member of the Board.
· Bonus (short-term performance-linked compensation): The bonus is paid in June each year, taking into account NTT’s business results for the current fiscal year. The amount of this bonus is based on the achievement of indicators based on targets
in the Medium-Term Management Strategy.
· Purchases of the Company’s stock and stock compensation (medium- to long-term performance-linked compensation):
Members of the Board make contributions of a certain defined amount or more every month for the purchase of NTT sharesthrough the Board Members Shareholding Association. The purchased stock must be held in its entirety during their terms ofoffice. Stock compensation is made through a trust established by NTT. Members of the Board are granted points corresponding to their role in June of each year, and a performance-linked coefficient corresponding to the achievement of performance indicators is determined in June of the year following the last fiscal year of the Medium-Term Management Strategy.
The number of shares to be granted to each Member of the Board is calculated by multiplying the performance-linked coefficient by the number of accumulated points. Shares are granted upon retirement.

Strategic Shareholdings

Message from the CEO

Compensation of Members of the Board (excluding outside Members of the Board) consists of a monthly salary (base compensation), a bonus (short-term performance-linked compensation), and purchases of the Company’s stock through the Board Members
Shareholding Association and stock compensation (medium- to long-term performance-linked compensation). In cases where earnings are at standard levels of achievement, the ratio of compensation types is 50% fixed compensation, 30% short-term performancelinked compensation and 20% medium- to long-term performance-linked compensation (before the change, the composition ofcompensation, assuming standard levels of earnings, was 70% fixed compensation and 30% performance-linked compensation).

Improvement of the management and operationof the Groupwide Corporate Ethics Help Line(establishment of a reporting route to Audit &Supervisory Board Members that is separate from
reporting routes to the senior management team)

ANNUAL REPORT 2021

65

Sustainability
NTT

Stakeholder Engagement
With its ever-more global and complex value chain, NTT Group provides products and services to a diverse
range of stakeholders across the globe. These stakeholders have a wide variety of needs and expectations
regarding our operations. Stakeholder engagement serves as a means of understanding and taking into consideration the needs and expectations of our stakeholders in the way we conduct our business.
Examples of Engagement

Identification of Risks and Specified Material Risks

Risk analyses

Material risks, etc.

u General Meetings of Shareholders, financial results

Through the procurement of productsthat consider the environment andhuman rights, and the creation of fairpartnerships, we fulfill our social responsibility as a company and aim to growsustainably with our business partners.

u Creation of inquiry forms

We will further our discussions on the
direction and initiatives of the informationand telecommunications industry, taking
the global market into account, aiming tostimulate the entire industry and to promote solutions for various social issues.

u Participation in industry groups and initiatives

We will support employees’ lives and promote the creation of workplaces thatenable employees to work with confidence, thereby enabling each employee
to realize their full potential and work witha high awareness of CSR.

u Conducting of employee satisfaction surveys

We will contribute to the creation ofabundant local communities, understanding local issues and contributing to theirresolution in multiple ways through ourbusinesses.

u Support and collaboration through social contribution

We will respond appropriately to the policies of the central and local governments,
conducting appropriate business activities and contributing to solutions forsocial issues facing citizens and local
governments.

u Compliance with laws and regulations

u Utilization of websites and social media

announcementsu Explanatory presentations for individual investorsu Explanatory presentations for institutional investors
u Publication of annual reports

Material risks●

Information security risks●

Disaster risks●

Investment risks●

Compliance risks

Large

MediumOther risks that need tobe considered
Small

●

●

Low

MediumHighu Surveys for suppliersu Explanatory presentations for suppliers

 uman resource andHlabor risks···

ICT Companies andIndustry Associations

Risk
countermeasures

Damage to network caused by major disasters
Indirect damage caused by major disasters
Impact of COVID-19

Employees(Employees, Their Families,
and Retired Employees)

u Regular interviews

NTT Group's
Sustainability

Designated Priority Risksu Participation in committees, etc.

Research & Development

Evaluation /Improvement

Business Partners

u Disclosure of procurement policies and guidelines, etc.

Financial risks

Frequency of occurrence

System failure, network failure, and related risks

Shareholders andInvestors

We will return profits to shareholders
while maintaining a sound financial
standing and enhancing our corporate
value. Furthermore, we will communicate
proactively to provide the informationneeded to make investment decisions.

u Conducting of customer satisfaction surveys

Refinement of MediumTerm Management Strategy

Degree of influence on business operations

Formulation of risk
­analysis processes

Risk correlation analyses(Enterprises and Individuals)

u Venues for customer inquiries

Value Creation Process

Business Risk Management
Committee

Customers

Aiming to become “Your Value Partner”,
we will strive to increase customer­satisfaction by providing safe, secure services that are high in quality and convenient from the customer’s standpoint.

NTT at a Glance

From time to time, NTT reviews assumed risks and management policies based on changes in the social environment.
In the identification of risks, the Business Risk Management Committee plays the central role. Analysis processes for the risks
faced by NTT Group are formulated, and risk analyses are periodically implemented in accordance with these processes. In this way,
Companywide risks are identified. In addition, correlation analyses are implemented for these risks. Those risks with the potential tohave the greatest influence are specified as material risks, and countermeasures are formulated.

Message from the CFOWith respect to business risk management, NTT has established Risk Management Rules stipulating basic policies on risk management with the aims of, among others, anticipating and preventing the materialization of potential risks and minimizing losses if any
risk materializes. Chaired by a senior executive vice president, the Business Risk Management Committee spearheads efforts todevelop and operate a PDCA cycle for managing risks. During the fiscal year ended March 31, 2021, the committee held one meeting
during which discussions involved identifying risks that could potentially have a Companywide impact, policies for managing suchrisks, and other such matters.
NTT has also formulated the NTT Group Business Risk Management Manual and distributed it to each Group company, in orderto facilitate Groupwide risk management initiatives. On the basis of the manual, which stipulates matters that include proactive
measures for potential risks, collaborative Groupwide approaches and policies for addressing risks that materialize, and pathways
for communicating information, systems have been developed and implemented that enable swift action to be taken.

Message from the CEO

Promotion of Risk Managementu Communication between management and employeesu Groupwide Corporate Ethics Help Lineu CSR conferences

Service level compromised or other damage caused by cyberterrorism
Decline of NTT Group's consolidated operating revenues

Environmental issue response-related risks

Substantial damage to corporate value due to market judgment that
response to environmental issues is lacking

Local Communities

Domestic and overseas investments not producing expected Investments do not produce expected returns
returns
Loss of social trust and damage to income stemming from complianceviolations

Risk of terrorism or similar incidents domestically orinternationally

Loss of ability to conduct business due to employees or companies falling
victim to terrorist or similar incidents

For more information on risk factors, please refer
to NTT’s corporate website.
https://group.ntt/en/ir/mgt/risks_factors.html

66

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Central Government
and Administrative
Agenciesu Negotiation with local community residents whenconstructing or installing equipmentu Donations, sponsorship, and other supportu Suggestions for government policy

Data Section

Domestic and overseas scandals, contractual issues, andrelated risks

activities

Operations in Review

Risk of operating revenues decline due to changes in market
structure and increased competitionu Participation in public–private partnership projects

ANNUAL REPORT 2021

67

Review
Operations in Review

Mobile Communications BusinessBilling Plans Matched to Individual Lifestyles

Competitive Advantagesu A stable communications network that can be used comfortably anytime, anywhereu Large market share and stable customer base

Results for the Fiscal Year Ended March 31, 2021

4,725.2 billion(Billions of yen)¥

Capital Investment

913.2 billion(Billions of yen)

987.0

569.1 billion*1 The d POINTS will be allocated by Economy MVNO as opposed to DOCOMO.
*2 Period- or application-limited d POINTS are not applicable.

Freely selectable plans from large to small capacity

Enriched rate plans for young users(Billions of yen)

1,013.6
854.7

913.2

577.0

593.7

572.8

569.1
5G Gigaho Premier

Large capacity

Refinement of MediumTerm Management Strategy

4,762.3 4,840.8 4,651.3 4,725.2¥

Value Creation Process¥

Operating Profit

NTT at a Glanceu Top-notch R&D capabilities

NTT DOCOMO has continued to bolster its lineup of billing plans to accommodate the needs of individual lifestyles.
Our latest billing plan is ahamo. Launched in March 2021, this plan is focused on internet use and is thus a perfect match to theneeds of the digital native generation, which tends to be in the middle range of data transfer use.
Furthermore, DOCOMO revised its line of Premier billing plans in April 2021. This line is designed to meet the needs of customers
wanting complete support at stores and features plans covering the full spectrum of data usage volumes, from small-volume tounlimited use. The revision included the launch of the new 5G Gigaho Premier plan. We later augmented our Premier line with the
U15 Hajimete Sumaho Plan and U30 Long Wari to provide a more comprehensive lineup of convenient billing plans that offer savings
while being easy to choose based on customer life stages.
DOCOMO also formed an alliance with a mobile virtual network operator (Economy MVNO) that utilizes d ACCOUNTs andd POINTs in October 2021. Through this alliance, we aim to accommodate the needs of customers seeking affordable options fortheir main plan.
The alliance with Economy MVNO will allow DOCOMO to expand its service menu to meet the needs of customers looking forbilling plans that are even more affordable than its existing Premier small capacity plans.
These billing plans will be provided by Economy MVNO, but they will feature convenient and beneficial offerings that are madepossible by its alliance with DOCOMO. For example, users will be able to receive d POINTs based on billing amounts,*1 access theiruser pages through their d ACCOUNTs, and allocate their accrued d POINTs to pay their communications bills.*2

Message from the CFO

In the Mobile Communications Business Segment, we worked to promote sales of
5G services, the new ahamo billing plan and other mobile communications services, and docomo Hikari, and collaborated with various business partners in thesmart life area, in an effort to provide new value-added services.

Operating Revenues

Message from the CEO

TOPICS

U15 Hajimete Sumaho Plan

Gigaho Premier
U30 Long Wari

2018

2019

2020

(Fiscal year) 2017

2018

2019

2020

(Fiscal year) 2017

2018

2019

2020

Middle capacity

Research & Development(Fiscal year) 2017

5G-enabled home router service
Gigalight
Hajimete Sumaho Plan

Churn Rate

Financial / Payment Transaction Volume(Thousand subscriptions)(%)(Billions of yen)

3,091

1.22
0.86

64,210
0.65

1.07
0.76
0.57

6,980
0.96

0.93

0.72

0.69

0.54

3,170

Co-Creation of a 5G Open RAN Ecosystem for Providing Optimal RAN Systems
to Overseas Telecommunications Carriers

0.48

2020

5G

NIPPON TELEGRAPH AND TELEPHONE CORPORATION(Fiscal year) 2017

2018

2019

2020

SoftBank‌ NTT DOCOMO ‌ KDDI
* Created by NTT based on published financial results ofeach company.

(Fiscal year) 2017

2018

2019

2020

ANNUAL REPORT 2021

Data Section

68

‌ 4G

2019

DOCOMO is engaged in a project targeting the co-creation of a 5G open radio access network (RAN) ecosystem together with12 companies: NVIDIA; Qualcomm Technologies, Inc.; Wind River; Xilinx, Inc.; Intel K.K.; VMware K.K.; Dell Technologies Japan Inc.;NEC Corporation; Fujitsu Limited; Mavenir; Red Hat; and NTT DATA CORPORATION. This ecosystem will be oriented toward the overseas deployment of open RANs that will allow for the development of flexible networks capable of accommodating the diverse
needs of telecommunications carriers and companies in the 5G era.
Together with these 12 partners, DOCOMO is engaged in discussions for introducing open RANs at overseas telecommunications
carriers. Specifically, we aim to supply carriers considering the adoption of open RANs with RAN packages that have been optimized
based on their needs and to support these carriers in the introduction, operation, and maintenance of these networks. DOCOMO haslong been promoting open RANs and boasts expertise as the first company in the world to realize practical allocation of a 5G open
RAN. We expect to be able to provide flexible and highly augmentable networks by utilizing this expertise to fully leverage and combine the strengths of partners.

Operations in Review

‌ 3G

2018

DOCOMO’s Economy MVNO

5,320
3,910

15,331(Fiscal year) 2017

Small capacity

NTT Group's
Sustainability

Number of Subscriptions (3G, 4G, 5G)

69

Operations in Review

Regional Communications Business

Competitive Advantages
u Secure, highly reliable, stable communications networku Large market share and stable customer base

Results for the Fiscal Year Ended March 31, 2021¥

Operating Profit

3,207.4 billion¥(Billions of yen)

Capital Investment

420.2 billion(Billions of yen)

351.6

527.4 billion(Billions of yen)

360.7

388.3

420.2

549.6

541.0

522.5

527.4

Data Integration and Analysis(Fiscal year) 2017

2018

2019

2020

(Fiscal year) 2017

2018

2019

2020

(Fiscal year) 2017

2018

2019

2020

u Productivity improvement, future prediction, and planning basedon data collected from livestock and environmentu Automation and remote support for routine work

ICT Human Resource
Education andExchanges●●

XX,XXX
Fixed-Line Broadband Services Subscriptions

Grazing Area
Management

NTT East

Total forNTT East and
NTT West%

2019

NTT West

10.06 million
subscriptions

2020

CATV
‌ FTTH ‌ DSL* Created by NTT from materials published by the Ministry of Internal Affairs andCommunications.

* Created by NTT from materials published by the Ministry of Internal Affairs andCommunications. Includes subscriptions related to provision of wholesaletelecommunications services.

Image judgmentof silage quality

Herd Management

Simplification of herd
management through image
analysis of individual livestock

Processing and Sale

Analysis of food production process
Reduction of reliance on experienceand improvement of efficiency

ELGANA Business Chat Service Users Surpass 1.2 Million
NTT West is a social ICT pioneer seeking to resolve issues brought about by changes to the social climate with the power of ICT.
As one facet of these efforts, NTT Business Solutions launched the ELGANA business chat service*1 in April 2020 as a communication tool designed to be used by anyone with peace of mind. As of October 31, 2021, which is roughly 19 months since the launchof this service, the number of user IDs issued had surpassed 1.2 million.*2
Peace of mind is a major selling point of ELGANA. Based on this point, we will continue to improve the ease of use and increase thefunctionality of this service while incorporating customer feedback in order to support smooth communication between customers.
We will also coordinate this service with those of various partner companies in order to assist customers in improving productivity
and generating innovation.

Operations in Review

53.8

12.89 million
subscriptions

Image monitoringof pasture

Feed Management
and Design

NTT Group's
Sustainability

35.02

2018

 ractical education through jointP
research

Farm-to-Table Testing Field

6.58
1.07

2017

AI seminars

Number and Share of Subscriptions
for Fixed-Line Broadband Services(Million subscriptions)(Fiscal year)

Research & Development

Telecommunications
infrastructure● Cameras● IoT sensors● Alert systems● Databases, etc.
●

Refinement of MediumTerm Management Strategy

3,231.6 3,152.3 3,079.9 3,207.4¥

Value Creation Process

Operating Revenues

An alliance agreement has been concluded between Obihiro University of Agriculture and Veterinary Medicine and NTT East for the
purpose of developing sustainable smart agriculture and livestock business models.
The agreement calls on the two parties to advance research and education related to sustainable smart agriculture and livestockbusinesses. The parties will also contribute to the development of the agriculture and livestock industry and the greater economy byfacilitating the social implementation of sustainable models through inter-company coordination.
The population of agriculture and livestock industry workers is aging and declining in Hokkaido Prefecture. Meanwhile, the working
environment in this prefecture is becoming more trying as the amounts of land needing to be farmed and livestock needing to beraised by a single person are increasing. Other of the numerous management issues faced in this industry include those related tothe improvement of productivity and the transference of techniques to new workers.
ICT has a role to play in the resolution of these issues. However, the introduction of ICT in the agriculture and livestock industry as
well as the education of individuals who can promote this introduction is lacking. This alliance was formed based on this backgroundwith the goal of combining the domestic-scale-leading farms and robust agriculture and livestock industry research experience of
Obihiro University with the data analysis technologies that utilize the telecommunications infrastructure and ICT of NTT East.
Through this alliance, ICT will be installed at the testing field of Obihiro University in order to collect, integrate, and analyze datafrom all processes spanning from the farm to our tables. These processes include grazing area management, feed management anddesign, herd management, and food product processing and sale. This approach will be used to advance research for developing
sustainable smart agriculture and livestock business models while fostering agriculture and livestock industry workers.
NTT East established Biostock, NTT Group’s first company combining livestock and ICT, in July 2020 and is also engaged in otherinitiatives for addressing the issues faced in the agriculture and livestock industry. By combining the strengths of NTT East withthose of Obihiro University, NTT Group aims to enhance ICT research and education infrastructure, and thereby contribute to thedevelopment of the agriculture and livestock industry and the greater economy and ultimately invigorate regional economies.

NTT at a Glanceu Provision and support of ICT solutions with strong local ties

Alliance Between Obihiro University and NTT East for Developing Sustainable Smart Agriculture andLivestock Business Models

Message from the CFO

In the Regional Communications Business Segment, we deployed the Hikari
Collaboration Model, which provides wholesale fiber-optic access services to various service providers, while also strengthening our solutions business with the aimof revitalizing local communities and regional economies.

Message from the CEO

TOPICS

Data Section*1	ELGANA is a registered trademark of NTT Business Solutions. Please refer to the following website for details on the ELGANA service (in Japanese only).
https://elgana.jp/*2 Figure includes users within NTT Group.

70

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

71

Operations in Review

Data Communications Business

Competitive Advantages

Competitive Advantages

u High-level technology development and project management capabilitiesu Comprehensive solutions from application to IT infrastructureu Large market share and stable customer base in Japanu Global coverage

and South America

Results for the Fiscal Year Ended March 31, 2021

(Billions of yen)¥

146.2 billion
146.2

2020

(Fiscal year) 2017

100.1

103.6

2018

2019

2020

235.0

(Fiscal year) 2017

2,318.7 billion(Billions of yen)

244.3

2018

279.3

2019

259.0

2020

TOPICS

2,045.2(Fiscal year) 2017¥139.2 billion(Billions of yen)

2,163.6

2,266.8 2,318.7

2019

2020

147.7

(Fiscal year) 2017169.5 billion(Billions of yen)

123.2

2018

¥

2018

130.9

2019

139.2

194.8

2020

(Fiscal year) 2017

179.2

2018

193.8

2019

169.5

2020

TOPICSTOYOTA Connected Corporation and NTT DATA announced a new business alliance on April 1, 2020. The aim of this alliance is toincrease the functions and services of the Mobility Service Platform (MSPF) offered globally by Toyota Motor Corporation in order
to expand the number of countries in which connected cars are used, increase software development capabilities, and expand operation systems.
TOYOTA Connected brings its experience in the business of connected car services, as well as its know-how in service development and operations such as car sharing, which it has been developing in Japan and overseas. These strengths will be combinedwith NTT DATA’s global IT resources and know-how in utilizing technologies such as cloud and big data. At the same time, bothcompanies will work to strengthen and advance their global development and operation capabilities through joint development andpersonnel exchanges in the MSPF and other mobility services businesses.
In the medium term, both companies will work to maximize synergies through cooperation by utilizing the customer contact
points of TOYOTA Connected and the wide-ranging customer base of NTT DATA, which includes customers in industries such as
distribution, retail, and finance. The companies will thereby seek to enhance the service capabilities of the MSPF with regard to the
Smart City Initiative and further expand their platform businesses on a global scale.
Through this business alliance, TOYOTA Connected and NTT DATA will share their value to contribute to the creation of a rich andexciting mobility society through the provision of services created together.

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

Data Section

On September 30, 2020, NTT Communications launched SmartGo™ Staple, a new service for achieving the DX of expense calculation procedures through an expense calculation app that can be linked to Mobile Suica and corporate prepaid cards.
SmartGo™ Staple can be used to transition to cashless options for paying employee transportation fares and other expenses andto automatically perform the troublesome task of calculating such expenses. Data collected by the expense calculation app can thenbe linked to accounting systems through an easy application and confirmation process,*1 thereby massively streamlining corporate
expense calculation procedures.
SmartGoTM Staple is an evolution of the SmartGoTM automatic transportation fare calculation service released by NTT Communicationsin 2019. This evolution was achieved by linking the prior service to the Staple business expense calculation service developed andsupplied by Crowd Cast, Ltd., as well as to its Staple Card prepaid cards. This linkage allows the new service to automatically calculatea range of business expenses in addition to transportation fares.
NTT Communications is promoting digitization throughout work environments in order to achieve DX of work styles and realize
smart work styles.*2

Operations in Review

Mobility Service Business Alliance between TOYOTA Connected and NTT DATANTT Group's
Sustainability

Launch of SmartGoTM Staple Service for Automatically Calculating Transportation Fares and Other Expenses*1 Expenses data is presented as comma-separated values.
*2	NTT Communications aims to realize a smart world through the resolution of social issues with ICT, and smart work styles is one area targeted in this quest. This company’s concept ofsmart work styles entails changing how we think to create new social norms, and NTT Communications hopes to shape a world in which everyone can choose their ideal work style andcontribute based on this concept. SmartGoTM Staple is one example of a service that contributes to smart work styles.

72¥

Capital Investment

Research & Development

2019259.0 billion

Operating Profit

Refinement of MediumTerm Management Strategy

2018

¥

Operating Revenues(Billions of yen)

2,065.6
90.6(Fiscal year) 2017

Capital Investment(Billions of yen)

2,242.2 2,278.7 2,205.8

Results for the Fiscal Year Ended March 31, 2021
Value Creation Process

Operating Profit

2,065.6 billion

NTT at a Glanceu Powerful service delivery capabilities using development bases in EMEA and in Central

u Strong customer engagement¥

Message from the CFO

In the Data Communications Business Segment, we responded to the accelerationof our customers’ DX at a global level, and to their increasingly diversified andsophisticated needs, by working to expand our business in the global market and toextend and consistently provide a range of IT services, such as digitalization andsystem integration offerings, that are responsive to the changes in the market.

In the Long Distance and International Communications Business Segment, in
addition to enhancing our ability to provide ICT solutions that combine network,
security, and other services, we worked to enhance our service provision in growthareas such as cloud and managed services.

Operating Revenues

Message from the CEOLong Distance and International
Communications Business73

Operations in Review

Other Businesses
In the Other Businesses Segment, NTT Group mainly provided services related to
the real estate business, finance business, electric power business, and systemdevelopment business.

(Billions of yen)

98.7
85.6

238.2

90.9

64.8

2019

2020

(Fiscal year) 2017

203.3 billion

2018

2019

2020

141.5

138.7

(Fiscal year) 2017

2018

2019

203.3

2020

Major Initiatives

NTT Group promoted its office and commercial business,
residential business, and global business through NTT Urban
Solutions, a company managing its real estate business.

We provided billing and collection services for telecommunications service bills, and credit card transaction settlement services centered on NTT FINANCE.

Electric Power Business

System Development Business

Led by NTT Anode Energy, which promotes smart energy business, we promoted the greening of energy through expanded
generation of renewable energy as well as the provision of newelectricity supply solutions that utilize NTT Group’s assets.

To promote DX, we have begun developing and deploying acluster of IT systems that will become the new service platform. We were also developing solutions for resolving social
issues, such as those related to maintaining the efficiency ofsocial infrastructure and invigorating regional economies.

Operations in Review

Finance Business

Through U.K. subsidiary of the Company UD EUROPE LIMITED, NTT Urban Development
acquired a 100% stake in the 130 Wood Street office building in London.
This building boasts a convenient location near St Paul’s Cathedral in central London
offering each access from St. Paul’s station, Bank station, Mansion House station, andother train stations. In addition to office buildings as well as restaurants, cafes, and otherdining options, 130 Wood Street is also located nearby One New Change, the Museum ofLondon, Barbican Centre, and other commercial and culture facilities in an area that isbustling with activity among office workers and tourists alike.
Moreover, 130 Wood Street is a rare office building in the St Paul’s Cathedral area as
skyline regulations restrict the construction of skyscrapers in this area. Accordingly, we
anticipate demand from a wide variety of clients.

NTT Group's
Sustainability

Real Estate Business

Acquisition of London Office Building

Research & Development

2018

¥

Off-site PPA is a scheme in which electricity users conclude contracts with power generation business operators to procure renewableenergy over the long term.
Numerous on-site PPA arrangements are in place in Japan. These arrangements entail the construction of power generation
facilities on roofs, idle land, or other locations adjacent to users to generate electricity to be supplied directly to the user. Conversely,
off-site PPA arrangements involve the use of power generation facilities in locations removed from users to supply them with electricity through the power grid.

Refinement of MediumTerm Management Strategy

1,467.1

1,214.6 1,240.3(Fiscal year) 201764.8 billion(Billions of yen)

1,601.7

Off-Site PPA

Capital Investment

Value Creation Process(Billions of yen)¥

NTT at a Glance

1,467.1 billion

NTT has teamed up with Seven & i Holdings Co., Ltd., in a project to power Seven & i stores completely with renewable energy. In thisundertaking, we began introducing electricity procured through Japan’s first off-site power purchase agreement (PPA)*1 as well asfrom green power plants owned by NTT Group at certain stores in April 2021.
This joint project with Seven & i is aimed at powering 40 Seven-Eleven stores as well as the Ario Kameari shopping center completely with renewable energy. Specifically, NTT Anode Energy will provide electricity via the power grid from two solar power plants
established through an off-site PPA.*2 This arrangement will represent Japan’s first off-site PPA scheme, an arrangement that entails
business operators building renewable energy power plants in locations removed from users for use exclusively by specified consumers, such as companies or municipalities, and supplying these users with electricity via the power grid over the long term. Whenthe off-site PPA scheme is insufficient for meeting the electricity demand of the stores, NTT Group’s green power plants will step into help fill the gap to ensure that the stores are running on 100% renewable energy.

Message from the CFO¥

Operating Profit

Realization of Stores Powered Completely by Renewable Energy through Collaboration
between Seven & i and NTT
Introduction of Green Power from Japan’s Off-Site PPA Scheme and Other Sources*1 The off-site PPA scheme was judged to be the first in Japan based on meetings between RTS Corporation and NTT Anode Energy.
*2 The supply of electricity will be conducted through a distributor of NTT Anode Energy subsidiary ENNET Corporation (electricity retailer registration number: A0009).

Results for the Fiscal Year Ended March 31, 2021
Operating Revenues

Message from the CEO

TOPICS

Data Section

74

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

75

Financial Summary
Nippon Telegraph and Telephone Corporation and its subsidiaries
Fiscal years ended March 31
Billions of yen

Billions of yen

U.S. GAAP

2012

2013

2014

2015

2016

2017

2018

2018

2019

2020

2021

Profit and loss (For the year)

Operating revenues¥10,507.4¥10,700.7¥10,925.2¥11,095.3¥11,541.0¥11,391.0¥11,799.6

Operating revenues¥11,782.1¥11,879.8¥11,899.4¥11,944.0

Operating expenses

9,284.4

9,498.8

9,711.5

10,010.8

10,192.8

9,851.2

10,156.7

Operating expenses

10,141.1

10,186.0

10,337.3

10,272.6

Operating income

1,223.0

1,202.0

1,213.7

1,084.6

1,348.1

1,539.8

1,642.8

Operating profit

1,641.1

1,693.8

1,562.2

1,671.4

16.4

(4.3)

80.5

(17.9)(18.9)(12.0)

112.8(53.2)(11.9)(3.3)(19.0)

Other income (expenses)
Income before income taxes and equity
in earnings (losses) of affiliated companies
Equity in earnings (losses) of affiliated companies

Share of profit (loss) of entities accounted for using
the equity method

1,239.3

1,197.6

1,294.2

1,066.6

1,329.3

1,527.8

1,755.6

583.2

474.0

486.5

397.3

354.8

468.4

541.9

Profit before tax
Income taxes(7.6)(16.1)(50.8)

5.9

5.8

(0.0)

5.6

Net income

648.6

707.6

756.9

675.2

980.2

1,059.4

1,219.3

Less—Net income attributable to non-controllinginterests

180.9

185.7

171.4

157.1

242.5

259.2

309.6

Less—Profit attributable to non-controllinginterests

909.7

Profit attributable to NTT

Net income attributable to NTT

¥

467.7

¥

521.9

¥

585.5

¥

518.1

¥

737.7

¥

800.1

¥

(10.1)

11.3

2.3

1,671.9

1,570.1

1,652.6

533.8

533.2

458.8

524.7

1,206.7

1,138.7

1,111.3

1,127.9

308.8
¥

897.9

284.1
¥

854.6

256.0
¥

855.3

211.7
¥

916.2

Balance sheet (At year-end)¥ 9,806.4¥ 9,776.7¥ 9,839.7¥ 9,801.5¥ 9,551.9¥ 9,719.0¥ 9,821.1

Property, plant and equipment¥ 8,812.2¥ 9,012.9¥ 9,087.5¥ 9,282.3

Total assets

19,389.7

19,549.1

20,284.9

20,702.4

21,035.9

21,250.3

21,675.8

Total assets

21,541.4

22,295.1

23,014.1

22,965.5

Total current liabilities

3,494.3

3,499.4

3,676.8

3,721.7

3,741.1

4,131.4

4,239.0

Total current liabilities

4,622.4

5,228.1

6,607.6

7,426.2

Total long-term liabilities

5,847.7

5,527.7

5,657.4

5,902.7

6,009.6

5,560.4

5,354.3

Total non-current liabilities

5,353.4

5,262.3

4,943.9

7,336.3

3,334.5

3,279.2

3,190.6938.0

9,050.4

9,264.9

9,061.1

7,562.7

Capital stock (common stock plus additional
paid-in capital)

3,770.1

3,765.6

3,765.0

3,784.7

3,817.5

3,800.0

3,791.6

Capital stock (common stock plus additional
paid-in capital)

Total NTT shareholders’ equity

7,882.6

8,231.4

8,511.4

8,681.9

8,833.8

9,052.5

9,486.0

Total NTT shareholders’ equity
Non-controlling interests

Non-controlling interests

2,165.1

2,290.6

2,413.5

2,368.0

2,406.3

2,455.3

2,546.6¥10,047.7¥10,522.0¥10,924.8¥11,049.8¥11,240.1¥11,507.8¥12,032.6

Total equity¥ 2,508.3¥ 2,453.7¥ 2,727.9¥ 2,391.8¥ 2,711.8¥ 2,917.4¥ 2,637.5

Net cash provided by operating activities

Net cash used in investing activities(1,971.2)(1,776.3)(2,106.8)(1,868.6)(1,759.8)(2,089.3)(1,841.8)

Net cash used in investing activities

Net cash used in financing activities¥   (948.1)¥   (745.2)¥   (622.4)¥   (678.0)¥   (707.6)¥   (981.5)¥   (931.7)

Net cash used in financing activities¥ 4,274.0¥ 4,036.0¥ 4,200.0¥ 4,406.7¥ 4,163.3¥ 4,088.2¥ 3,854.8

D/E ratio

54.2%

49.0%

49.3%

50.8%

47.1%

45.2%

40.6%

D/E ratio

Capital investment (For the year) (1)1,946.6

1,970.0

1,892.8

1,817.5

1,687.2

1,700.0

1,674.8

Depreciation and amortization (For the year)

1,910.7

1,899.2

1,880.3

1,828.0

1,766.3

1,462.2

1,339.4

267.9

269.2

249.3

233.8

213.4

211.6

213.9

EBITDA

3,234.1

3,244.2

3,204.2

3,063.4

3,277.9

3,183.3

3,215.8

EBITDA margin (1)

30.8%

30.3%

29.3%

27.6%

28.4%

27.9%

Free cash flows

537.1

677.4

621.1

523.2

952.1

Total equity

2,515.3

2,539.9

2,401.5

640.3¥11,565.7¥11,804.8¥11,462.6¥ 8,203.0¥ 2,541.3¥ 2,406.2¥ 2,995.2¥ 3,009.1(1,746.2)(1,774.1)(1,852.7)(1,424.5)¥   (968.3)¥   (584.3)¥ (1,041.3)¥ (1,689.5)¥ 3,971.6¥ 4,262.7¥ 4,699.9¥ 7,624.3

43.9%

46.0%

51.9%

100.8%

Capital investment (For the year)

1,697.9

1,697.0

1,806.6

1,728.3

Depreciation and amortization (For the year) (1)1,346.9

1,333.6

1,465.3

1,507.2

208.6

211.3

224.9

232.6

EBITDA (1)3,237.1

3,241.4

29,686

3,111.6

27.3%

EBITDA margin (1)

27.5%

27.3%

24.9%

26.1%

828.0

795.8

Free cash flows

795.1

632.0

1,142.5

1,584.5

Cash flows (For the year)

Value Creation Process

Net property, plant and equipment

Cash flows (For the year)

Other financial data, performance indicators, etc.
Interest-bearing liabilities

Interest-bearing liabilities

Research and development expenses (For the year)

224

227

240

242

241

275

283

(2)

5,102,077,600

4,847,523,076

4,599,032,856

4,374,720,036

4,211,565,656

4,093,356,288

3,991,825,514

Weighted average number of shares outstanding (4)Cash dividends, applicable to earnings for the year (2)

35

40

42.5

45

55

60

75

Cash dividends, applicable to earnings for the year (4)

75

90

95

105.0

Dividend payout ratio (%)

38.2%

37.2%

33.4%

38.0%

31.4%

30.7%

32.9%

Dividend payout ratio (%)

33.3%

40.9%

41.1%

42.3%

ROE (%)

5.9%

6.5%

7.0%

6.0%

8.4%

8.9%

9.8%

ROE (%)

10.2%

9.3%

9.3%

11.00%EPS (Yen) (2)

91.67

107.67127.31118.43175.17

195.47227.89EPS (Yen) (4)224.93220.13231.21

248.15

Overseas sales (Millions of dollars) (5)18,354

18,911

19,454

18,648Overseas operating profit margin (%) (5)

3.1%

3.2%

2.4%

3.0%

—

(220.0)(500.0)(670.0)

Employees (Thousands) (At year-end) (3)

283

308

319

325.0

3,991,825,514

3,882,137,457

3,699,278,775

3,691,993,269

NTT Group's
Sustainability

Employees (Thousands) (At year-end)

Other financial data, performance indicators, etc.

Research & Development

Research and development expenses (For the year)

Refinement of MediumTerm Management Strategy

Net cash provided by operating activities

Weighted average number of shares outstanding

NTT at a Glance

Balance sheet (At year-end)

Profit5.0
1,740.5

Message from the CFO

Income tax expense

Finance income and costs

Message from the CEO

Profit and loss (For the year)

IFRS

Cost reductions (Billions of yen) (6)Capex to sales (%)

18.5%

18.4%

17.3%

16.4%

14.6%

14.9%

76

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONROIC (%)

7.4%

7.4%

6.6%

7.2%

Capex to sales (%) (Domestic network business (7))

13.7%

13.9%

13.8%

13.6%
Data Section(1) Please refer to Reconciliation of Capital Investment and Reconciliation of EBITDA Margin on page 89.
• Capital investment is on an accrual basis for the acquisition of property, plant and equipment.
• From the fiscal year ended March 31, 2017, the method for calculating EBITDA has been revised.
EBITDA = Operating income + Depreciation and amortization + Loss on sales of property, plant and equipment + Impairment loss
EBITDA margin = (Operating income + Depreciation and amortization + Loss on sales and disposal of property, plant and equipment + Impairment loss) / Operating revenues × 100
Beginning on April 1, 2020, NTT Group has excluded all depreciation expenses related to right-of-use assets from EBITDA and depreciation, as a component of EBITDA.
As a result of the change described above, EBITDA and depreciation, as a component of EBITDA, for FY2019 have been retroactively revised to be reduced by ¥10.9 billion.
(2) Adjusted for the 2-for-1 stock split with an effective date of July 1, 2015.

14.2%

Operations in Review

Medium-term financial targets(3) Past figures have been retroactively revised as a result of expanding the scope of the personnel counted at certain
overseas subsidiaries.
(4) EPS amounts reflect the two-for-one stock split with an effective date of January 1, 2020 as approved by the Board of
Directors on November 5, 2019.
(5) Includes results from the global holding company (NTT, Inc.) and its subsidiaries and affiliates.
Operating Profit excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets.
(6) Cumulative reductions from FY2017.
(7) Excludes NTT Communications’ data centers and certain other assets.

ANNUAL REPORT 2021

77

Financial Summary

Business Segment Data
Capital Investment(Billions of yen)(Billions of yen)

15,0002,000

12,0006,000

3,766.3

3,000

1,678.7

04,461.2

4,383.4

4,527.1

4,584.6

4,769.4

4,762.3

4,470.1

3,505.5

3,407.9

3,308.2

3,232.9

3,231.6

3,659.8

3,572.3

1,657.9

1,809.9

1,998.6

2,250.9

2,129.3

2,218.9

2,242.2

4,840.8

3,152.3

2,278.7

4,651.3

3,079.9

2,065.6
2,318.7
1,467.1

1,251.8

1,303.5

1,343.9

1,511.0

1,616.8

1,718.7

2,043.1

2,045.2

2,163.6

1,083.2

1,251.9

1,328.5

1,272.2

1,294.5

1,282.3

1,236.6

1,214.6

1,240.3

1,601.7

2013

2014

2015

2016

2017

2018

2018

2019

Regional communications business
Other businesses

661.8

595.2

597.1

576.4

577.0

593.7

811.8

786.0

722.8

666.2

622.1

583.4

549.6

549.6

541.0

152.3

147.5
122.1

168.4

198.1

227.6

244.9

232.5

235.0

244.3

147.7

140.9

158.1

194.1

179.2

160.7

150.7

150.6

134.0
108.3

194.8

116.6

122.1

141.5

138.7

134.0
121.7

0

2021

‌ Long distance and international communications business

703.1

500

(Fiscal year
ended
March 31)

IFRS

U.S. GAAP‌ Mobile communications business Data communications business

2020

753.7

‌

2012

2013

Mobile communications business Data communications business

2014

2015

2016

2017

2018

2018

572.8

569.1

522.5

527.4

279.3

2019

259.0

193.8

169.5

238.2

203.3

2020

2021

NTT at a Glance

2012

726.8

1,000

3,207.4

2,205.8
2,266.8

1,500

4,725.2

IFRS

U.S. GAAP

Regional communications business
Other businesses‌ Long distance and international communications business(Billions of yen)

Billions of yen

12,000

NTT DOCOMO (Consolidated)
3,633.7

3,363.6

3,747.6

3,738.8

3,632.9

3,787.3

3,775.3

3,827.2

3,336.7

3,142.9

2,948.7

2,878.6

2,880.0

2,791.6

2,154.2

1,885.1

2,088.4

2,125.3

2,151.6

2,178.5

1,562.0

1,536.7

1,682.4

1,180.3

1,217.7

1,275.9

1,424.7

1,504.1

1,610.8

1,915.3

1,922.0

2,015.9

1,198.6

1,272.4

1,204.8

1,220.4

1,205.0

1,158.0

1,115.9

1,154.6

1,032.2

2012

2013

2014

2015

2016

2017

2018

2018

2019

3,812.0

Fiscal year ended March 31

Operating revenues
2,691.6

2,787.2

2,102.2

1,919.4

2,135.9

2,179.5

1,510.8

1,402.3

2020

2019
1,740.6

2020
1,677.1

1,726.1

2019
1,462.3

2020
1,434.3

1,505.9

3,827.2

3,796.6

3,812.0

1,498.0

1,421.1

1,462.1

1,344.0

1,302.1

1,350.1

854.7

913.2

242.7

256.0

264.0

118.3

132.2

155.8

Profit before taxes

1,002.6

868.0

915.6

241.0

255.0

263.3

113.7

129.3

154.4

663.6

591.5

629.0

166.0

178.4

180.4

80.7

91.8

105.2

Profit attributable to NTT

Billions of yen

NTT, Inc. (Global
Holding Company)
Group*3
2021

NTT Ltd. Group*4
2021

NTT Communications
Group*5*6
2021

NTT DATA (Consolidated)
2021

2020
4,426.8

4,337.8

2020
897.7

1,058.8

2020
794.6

1,070.4

2019
2,163.6

2020
2,266.8

2,318.7

Operating expenses / Selling, general andadministrative expenses

4,193.2

4,053.7

919.1

1,049.6

698.4

933.1

2,015.9

2,135.9

2,179.5

233.5

284.1

(21.4)

9.2

96.2

137.3

147.7

130.9

139.2

Profit (loss) before taxes——(31.6)

(2.4)

108.9

148.7

146.9

120.2

130.5

Profit (loss) attributable to NTT——(34.0)(13.6)

110.5

115.7

93.6

75.1

76.8

NTT Group's
Sustainability

Operating revenues

Operating profit (loss)

Total Operating Profit

2021

4,725.2

1,013.62021‌ Long distance and international communications business

2021

2020
4,651.3

Operating expenses

Fiscal year ended March 31

Regional communications business
Other businesses

2021

2019
4,840.8

Operating profit

IFRS

U.S. GAAP‌ Mobile communications business Data communications business

3,796.6

NTT West Group*2

Research & Development(Fiscal year
ended
March 31)3,445.1

3,566.9

3,677.903,644.0

NTT East Group*1

Refinement of MediumTerm Management Strategy

6,000

3,000

Value Creation Process

Group Data

Operating Expenses

9,000

Message from the CFO

4,240.0

9,000(Fiscal year
ended
March 31)

Message from the CEO

Total Operating Revenues(Billions of yen)
Billions of yen

1,800

NTT Urban Solutions
Group*7

1,500

600
300
0

876.4

87.3
116.7
71.5
56.6

2012

836.4

93.0
121.3
85.8
53.3

2013

‌ Mobile communications business Data communications business

78

817.2

127.2
127.5
67.9
56.1

2014

982.1

987.0

854.7

635.8

168.9
113.6
86.4
67.5

2015

265.0

359.5

96.7
112.7
74.0

40.8
107.9
77.3

2016

U.S. GAAP

Regional communications business
Other businesses

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

951.6

2017

354.3
93.6
127.8
78.6

2018

351.6
90.6
123.2
98.7

2018

360.7

388.3

100.1

103.6

147.7
85.6

130.9
90.9

2019

IFRS

‌ Long distance and international communications business

2020

420.2
146.2
139.2
64.8

2021

2021

2020
426.0

447.7

2019
168.0

2020
147.9

143.9

Operating expenses / Selling, general andadministrative expenses

384.2

410.3

140.4

122.1

122.0

Operating profit

48.8

45.1

28.7

32.2

27.4

Profit before taxes

42.5

40.4

25.7

24.3

22.6

Profit attributable to NTT

27.4

26.2

16.2

16.0

14.1

*1 The scope of aggregation for each of the figures presented for NTT East Group is internal management figures after eliminating internal transactions between NTT East and its subsidiaries. Suchfigures are not audited and are provided for reference only.
*2 The scope of aggregation for each of the figures presented for NTT West Group is internal management figures after eliminating internal transactions between NTT West and its subsidiaries. Suchfigures are not audited and are provided for reference only.
*3 The scope of aggregation for each of the figures presented for NTT, Inc. Group is internal management figures after eliminating internal transactions between NTT, Inc. and its subsidiaries. Suchfigures are not audited and are provided for reference only.
*4 The scope of aggregation for each of the figures presented for NTT Ltd. Group is internal management figures after eliminating internal transactions between NTT Ltd. and its subsidiaries. Suchfigures are not audited and are provided for reference only.
*5 The scope of aggregation for each of the figures presented for NTT Communications Group is internal management figures after eliminating internal transactions between NTT Communications
and its subsidiaries. Such figures are not audited and are provided for reference only.
*6 Overseas subsidiaries of NTT Communications Group were transferred to NTT Ltd. Group as part of the global reorganization of NTT Group in July 2019.
*7 The scope of aggregation for each of the figures presented for NTT Urban Solutions Group is internal management figures after eliminating internal transactions among NTT Urban Development(on a consolidated basis), NTT FACILITIES and its subsidiaries. Such figures are not audited and are provided for reference only.

ANNUAL REPORT 2021

Data Section(Fiscal year
ended
March 31)

788.4

913.2

Operations in Review

9,00

1,013.6

2021

Operating revenues

Fiscal year ended March 31
1,200

NTT Urban Development(Consolidated)

79Financial Summary

Consolidated Data (IFRS)Business Segments (IFRS)
Billions of yen

Years Ended March 31

2020

2021

NTT Consolidated Financial Results
Operating revenues

11,899.4

Fixed voice-related services

1,077.7

999.4

935.3

Mobile voice-related services

946.7

966.5

1,115.8

3,721.2

3,619.3

3,488.0

929.2

691.8

674.1

3,594.1

3,731.4

3,801.6

IP/packet communications services
Sales of telecommunications equipment
System integration services
Other11,944.0

1,891.0

1,929.3

10,337.3

10,272.6

Personnel expenses

2,391.6

2,428.5

2,461.4

Expenses for purchase of goods and services and other expenses

5,917.7

6,006.4

5,875.3

Depreciation and amortization

1,333.6

1,465.3

1,507.2

Impairment losses

126.4

16.7

25.7

Goodwill

39.4

2.9

2.7

Metal cable-related

66.0

—

—

Other

21.0

13.7

23.0

Operating profit

1,693.8

1,562.2

1,671.4

Profit before taxes

1,671.9

1,570.1

1,652.6

854.6

855.3

916.2

22,295.1

23,014.1

22,965.5

6,580.0

6,703.5

5,326.4(incl.) Cash and cash equivalents

946.1

1,033.6935.7(incl.) Trade and other receivables

4,391.4

3,502.8

3,534.6

15,715.2

16,310.6

17,639.1

9,012.9

9,087.5

9,282.3

22,295.1

23,014.1

22,965.5

10,490.4

11,551.5

14,762.4

5,228.1

6,607.6

7,426.2

2,092.5

2,142.8

2,356.7

5,262.3

4,943.9

7,336.3(incl.) Long-term liabilities

2,865.2

2,165.8

4,455.7(incl.) Defined benefit liabilities

1,878.0

1,873.5

1,731.6

11,804.8

11,462.6

8,203.0

4,262.7

4,699.9

7,624.3

1,728.3

Profit attributable to NTT
NTT Consolidated Financial Position
AssetsCurrent assets

Non-current assets(incl.) Property, plant and equipment
Liabilities and Equity
Liabilities
Current liabilities(incl.) Trade and other payables
Non-current liabilities

EquityInterest-Bearing Liabilities (Consolidated)
Interest-bearing liabilities
Capital Investment
Capital investment

1,806.6

593.7

572.8

569.1

Regional Communications Business

541.0

522.5

527.4

Long Distance and International Communications Business

244.3

279.3

259.0

Data Communications Business

179.2

193.8

169.5

Other Businesses

138.7

238.2

203.3

(Ref.) Capital investment by group
274.1

271.0

268.7

266.9

251.5

258.6

NTT Ltd. Group

—

113.6

155.5

NTT Communications Group (from July 2019)*

—

113.5

97.8

NTT Communications Group

219.3

—

—

Dimension Data (Consolidated)

20.9

—

—

—

129.4

92.1

NTT Urban Solutions Group* Overseas subsidiaries of NTT Communications Group were transferred to NTT Ltd. Group as part of the global reorganization of NTT Group in July 2019.

80

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

3,079.9
1,006.1
1,489.7
76.6
206.1
301.3
2,691.6
682.7
1,357.6
414.5
0.9
96.7
139.3
388.3

3,207.4
950.3
1,544.1
69.5
292.7
350.8
2,787.2
675.4
1,447.4
422.9
14.1
88.3
139.3
420.2

2,278.7
220.3
427.5
11.5
1,439.1
180.3
2,178.5
411.4
1,541.6
178.4
19.7
7.9
19.6
100.1

2,205.8
207.9
418.3
11.0
1,442.6
125.9
2,102.2
415.7
1,442.6
210.7
8.6
7.1
17.5
103.6

2,065.6
196.1
419.7
29.8
1,320.9
99.2
1,919.4
393.3
1,300.4
204.0
0.8
9.5
11.5
146.2

2,163.6
2,163.6
2,015.9804.2
1,043.0
153.6
0.7
2.2
12.2
147.7

2,266.8
2,266.8
2,135.9840.1
1,083.4
196.3
2.3
2.2
11.6
130.9

2,318.7
2,318.7
2,179.5
884.0
1,059.2
209.0
8.9
6.0
12.4
139.2

1,240.3
24.6
152.1
1,063.5
1,154.6
253.9
763.7
90.9
3.6
9.0
33.6
85.6

1,601.7
26.7
159.4
1,415.6
1,510.8
277.0
1,058.7
131.9
2.8
5.2
35.1
90.9

1,467.1—
186.7
1,280.4
1,402.3
293.4
933.0
134.3
2.6
4.4
34.6
64.8

Data Section

NTT East GroupNTT West Group

3,152.3
1,085.2
1,500.7
76.6
168.9
320.9
2,791.6
707.6
1,338.9
448.0
69.7
90.3
137.1
360.7

Operations in Review

1,697.0

Mobile Communications Business

4,725.2
1,127.6
1,985.1
575.7
1,036.7
3,812.0290.9
2,808.2
606.1
0.2
58.2
48.4
913.2

NTT Group's
Sustainability

156.9
246.1

4,651.3
976.3
2,102.5
608.2
964.2
3,796.6
288.2
2,808.6
580.8
2.2
71.5
45.3
854.7

Research & Development

171.6
248.8

4,840.8
956.2
2,159.3
844.4
880.9
3,827.2
288.9
2,923.8
470.9
32.8
68.8
42.0
1,013.6

Refinement of MediumTerm Management Strategy

172.2
244.5

2021

Value Creation Process

Expenses on disposal of fixed assets
Taxes and dues2020

NTT at a Glance

1,611.0
10,186.0

Operating expenses

2019

Message from the CFO

11,879.8

Mobile Communications Business
Operating revenues
Mobile voice-related service
IP/packet communications service
Sales of telecommunications equipment
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Regional Communications Business
Operating revenues
Fixed voice-related service
IP/packet communications service
Sales of telecommunications equipment
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Long Distance and International Communications Business
Operating revenues
Fixed voice-related service
IP/packet communications service
Sales of telecommunications equipment
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Data Communications Business
Operating revenues
System integration services
Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Other Businesses
Operating revenues
IP/packet communications service
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit

Message from the CEO

2019

Billions of yen

Years Ended March 31

Note: Figures for each segment include intersegment transactions.

ANNUAL REPORT 2021

81

Financial SummaryGroup Summary (IFRS)
Billions of yen

Years Ended March 31

2020

2020

2021

NTT, Inc. (Global Holding Company) Group*1
4,725.2

Operating revenues—

4,426.8

4,337.8

3,094.3

3,127.9

Operating expenses—

4,193.2

4,053.7

2,844.4

2,757.8

2,741.2

Operating profit

—

233.5

284.1

286.3

336.4

386.7

NTT Ltd. Group*2

Equipment sales

844.4

608.2

575.7

Operating revenues

—

897.7

1,058.8

Other

865.8

948.8

1,021.6

Operating expenses

—

919.1

1,049.6

3,827.2

3,796.6

3,812.0

Personnel expenses

—

214.6

265.1

288.9

288.2

290.9

Expenses for purchase of goods and services and other expenses

—

624.1

694.8

Depreciation and amortization

—

71.3

87.4

Impairment losses

—

6.7

0.7

Expenses on disposal of fixed assets

—

0.2

0.5

Mobile communications services
Optical-fiber broadband service and other telecommunications services

Operating expenses
Personnel expenses
Expenses for purchase of goods and services and other expenses

2,422.2

2,397.9

470.9

580.8

606.1

Impairment losses

32.8

2.2

0.2

Communication network charges

432.0

431.7

458.6

Taxes and dues

—

2.3

1.1

Expenses on disposal of fixed assets

68.8

71.5

58.2

Operating profit (loss)—(21.4)

9.2

Operating profit

1,013.6

854.7

913.2

Profit (loss) before taxes—(31.6)(2.4)

Profit before taxes

1,002.6

868.0

915.6

Profit (loss) attributable to NTT Ltd.

—

(34.0)(13.6)

663.6

591.5

629.0

NTT Communications Group (from July 2019)*3
1,070.4

Profit attributable to NTT DOCOMO, INC.
NTT East Group*

Operating revenues*4

—

794.6

Cloud computing platforms

—

75.2

102.8

500.7

Data networks

—

292.9

391.1
221.8

1

Operating revenues

1,740.6

1,677.1

1,726.1

Fixed voice-related service

573.6

534.2

842.5

842.1

884.8

Voice communications

—

170.4

30.3

31.0

27.9

Applications & content

—

60.3

74.1

System integration services

75.4

99.9

144.6

Solution services

—

174.9

255.1

Other

—

20.8

25.4

—

698.4

933.1

Other

218.8

169.9

168.0

1,498.0

1,421.1

1,462.1

Personnel expenses

372.6

359.6

353.3

Personnel expenses

—

91.6

126.6

Expenses for purchase of goods and services and other expenses

733.3

713.0

755.2

Expenses for purchase of goods and services and other expenses

—

501.5

671.5

Depreciation and amortization

237.9

222.1

225.0

Depreciation and amortization

—

87.0

115.7

Impairment losses

38.7

—

13.6

Impairment losses

—

0.1

—

Expenses on disposal of fixed assets

43.5

52.1

39.9

Expenses on disposal of fixed assets

—

6.3

9.0

Operating expenses

Taxes and dues

72.1

74.3

75.0

—

11.9

10.3

242.7

256.0

264.0

Operating profit

—

96.2

137.3

Taxes and dues

Profit before taxes

241.0

255.0

263.3

Profit before taxes

—

108.9

148.7

Profit attributable to NTT East

166.0

178.4

180.4

Profit attributable to NTT Communications

—

110.5

115.7

NTT West Group*2
Operating revenues

NTT DATA Consolidated
1,434.3

1,505.9

2,163.6

2,266.8

2,318.7

522.0

480.5

456.4

Public and Social Infrastructure

479.9

500.2

540.5

IP/packet communications service

658.6

648.1

660.3

Financial

559.1

580.4

607.6

Sales of telecommunications equipment

46.7

46.0

42.0

Enterprise and Solutions

529.8

588.6

590.9

System integration services

95.4

108.3

149.7

North America

421.9

426.0

429.4

Other

139.6

151.5

197.5

EMEA and LATAM

440.1

455.4

454.2

1,344.0

1,302.1

1,350.1

Eliminations or Corporate(267.3)(283.7)(303.9)Personnel expenses

336.8

323.6

322.1

Cost of sales

1,618.6

1,694.6

1,734.1

Expenses for purchase of goods and services and other expenses

653.1

675.4

716.8

Gross profit

545.0

572.2

584.6

Depreciation and amortization

210.3

192.6

198.2

Selling, general and administrative expenses

397.3

441.3

445.4

Net sales

31.0

0.9

0.5

Operating profit

147.7

130.9

139.2

47.7

44.6

48.3

Profit before taxes

146.9

120.2

130.5

Taxes and dues

65.0

65.0

64.2

Profit attributable to NTT DATA

93.6

75.1

76.8

Operating profit

118.3

132.2

155.8

Profit before taxes

113.7

129.3

154.4

Profit attributable to NTT West

80.7

91.8

105.2

NIPPON TELEGRAPH AND TELEPHONE CORPORATION*1 The scope of aggregation for each of the figures presented for NTT, Inc. Group is internal management figures after eliminating internal transactions between NTT, Inc. and its subsidiaries. Such figures are not audited and are provided for reference only.
*2 The scope of aggregation for each of the figures presented for NTT Ltd. Group is internal management figures after eliminating internal transactions between NTT Ltd. and its subsidiaries. Such figures are not audited and are provided for reference only.
In addition, beginning with the fourth quarter of the fiscal year ended March 31, 2020, expenses related to the acquisition of shares of the former Dimension Data (including PPA depreciation) have been presented under operating expenses, and accordingly, past figures have been retrospectively adjusted.
*3 The scope of aggregation for each of the figures presented for NTT Communications Group is internal management figures after eliminating internal transactions between NTT Communications and its subsidiaries. Such figures are not audited and are provided for reference only.
Overseas subsidiaries of NTT Communications Group were transferred to NTT Ltd. Group as part of the global reorganization of NTT Group in July 2019.
*4 The following are the main services included in each line item:- Cloud computing platforms: “Data center services” and “Private cloud services (Enterprise cloud, etc.)”- Data networks: “Closed network services (Arcstar Universal One, etc.)” and “Open network services (OCN, etc.)”- Voice communications: “Telephone services” and “VoIP services (050 plus, etc.)”- Applications & content: “Application services (Mail services, etc.)”- Solution services: “System integration services”

ANNUAL REPORT 2021

Data Section*1 The scope of aggregation for each of the figures presented for NTT East Group is internal management figures after eliminating internal transactions between NTT East and its subsidiaries.
Such figures are not audited and are provided for reference only.
*2 The scope of aggregation for each of the figures presented for NTT West Group is internal management figures after eliminating internal transactions between NTT West and its subsidiaries. Such figures are not audited and are provided for reference only.

Operations in Review

Impairment losses
Expenses on disposal of fixed assets

NTT Group's
Sustainability

1,462.3

Fixed voice-related service

Operating expenses

Research & Development

Operating profit

Operating expenses

Refinement of MediumTerm Management Strategy

IP/packet communications service
Sales of telecommunications equipment

Value Creation Process

2,533.7

Depreciation and amortization

NTT at a Glance

4,651.3

3,130.7

Telecommunications services

Message from the CFO

4,840.8

Operating revenues

82

2019

2021

NTT DOCOMO Consolidated

Message from the CEO

2019

Billions of yen

Years Ended March 31

83

Financial Summary

Message from the CEO

Billions of yen

Years Ended March 31
2019

2020

2021

NTT Communications Group*1
Operating revenues*2—

Data networks

487.9

—

—

Voice communications

266.6

—

—

Applications & content

134.5

—

—

Solution services

266.2

—

—

Other

29.2

—

—

1,259.8——

Personnel expenses

202.8

—

—

Expenses for purchase of goods and services and other expenses

879.6

—

—

Depreciation and amortization

151.5

—

—

Impairment losses

2.7

—

—

Expenses on disposal of fixed assets

7.9

—

—

Taxes and dues

15.4

—

—

Operating profit

132.1

—

—

Profit before taxes

132.1

—

—

Profit attributable to NTT Communications

98.5

—

—

893.3

—

—

893.3

—

—

Cost of sales

718.7

—

—

Gross profit

174.6

—

—

Selling, general and administrative expenses

155.2

—

—

Operating profit

19.4

—

—

Profit before taxes

11.8

—

—

Profit attributable to Dimension Data

5.2

—

—

Operating revenues

—

426.0

447.7

Operating expenses

—

384.2

410.3

Personnel expenses

—

70.1

88.5

Expenses for purchase of goods and services and other expenses

—

263.3

266.8

Operating expenses

Value Creation Process——

NTT at a Glance

—

207.5

Message from the CFO

1,392.0

Cloud computing platforms

Dimension Data Consolidated*3
Operating revenues
System integration services

Refinement of MediumTerm Management Strategy

NTT Urban Solutions Group*4

—

35.8

39.7

—

0.5

—

Expenses on disposal of fixed assets

—

—

—

Taxes and dues

—

14.6

15.3

—

48.8

45.1

—

41.5

40.4

Profit attributable to NTT Urban Solutions

—

27.4

26.2

Operating revenues

168.0

147.9

143.9

Operating expenses

140.4

122.1

122.0

Personnel expenses

10.8

10.2

12.0

Expenses for purchase of goods and services and other expenses

97.8

75.4

70.4

NTT Group's
Sustainability

Operating profit
Profit before taxes

Research & Development

Depreciation and amortization
Impairment losses

NTT Urban Development Consolidated

17.7

23.5

26.5

1.8

0.5

—

Expenses on disposal of fixed assets

—

—

—

12.2

12.5

13.1

Taxes and dues
Operating profit

28.7

32.2

27.4

Profit before taxes

25.7

25.3

22.6

Profit attributable to NTT Urban Development

16.2

16.0

14.1

Operations in Review

Depreciation and amortization
Impairment losses

84

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Data Section*1 The scope of aggregation for each of the figures presented for NTT Communications Group is internal management figures after eliminating internal transactions between NTT Communications and its subsidiaries. Such figures are not audited and are provided for reference only.
*2 The following are the main services included in each line item:- Cloud computing platforms: “Data center services” and “Private cloud services (Enterprise cloud, etc.)”- Data networks: “Closed network services (Arcstar Universal One, etc.)” and “Open network services (OCN, etc.)”- Voice communications: “Telephone services” and “VoIP services (050 plus, etc.)”- Applications & content: “Application services (Mail services, etc.)”- Solution services: “System integration services”*3 These are figures from the United Kingdom statutory financial reports of Dimension Data. The quarterly financial results above are not audited and are provided for reference only.
*4 The scope of aggregation for each of the figures presented for NTT Urban Solutions Group is internal management figures after eliminating internal transactions among NTT Urban Development (on a consolidated basis), NTT FACILITIES and its subsidiaries. Such figures are not audited and are provided for reference only.

ANNUAL REPORT 2021

85

Financial Summary

Operational Data
Fixed-Line Broadband Services Subscriptions

Mobile Aggregate ARPU

ARPU of FLET’S Hikari(Thousands of subscriptions)(Thousands of subscriptions)

(Yen)

(Yen)

90,00025,00082,63260,0004,850

18,692

15,00010,00030,000

6,000

6,000

22,56420,000

Message from the CEO

Mobile Communications Services Subscriptions

4,690

4,000

4,000

2,000

2,000

4,740

0
(Fiscal year)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FOMA (3G)‌ LTE (Xi)0
(Fiscal year)

5G

02011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FLET’S Hikari(Fiscal year)‌ Hikari Denwa
‌

‌

0

2011

2012 2013 2014 2015 2016 2017 2018 2019 2020

Mobile ARPU ‌ docomo Hikari ARPU
Voice ARPU ‌ Packet ARPU ‌ Smart ARPU

FLET’S ADSL / FLET’S ISDNNTT Group Major ISPs

(in thousands)(in thousands)(Thousands of subscriptions)

40,0004,000

12,00030,000

3,000

9,000

2,000

6,000

15,869(Fiscal year)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Telephone subscriber lines(Fiscal year)‌ INS-Net

Fiscal years ended March 31(Thousands of subscriptions)
3,500

11,430

2,947

2,500
2,000
1,000

3,000
0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(Fiscal year)

500
02011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(Fiscal year)‌ FLET’S ISDN

2013

1,916

1,500

428

FLET’S ADSL

2012

Hikari TV / FLET’S TV Transmission Services

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Hikari TV

2014

2015

2016

2017

2018

2019

Value Creation Process00‌ NTT West

3,000

1,000

10,0002011 2012 2013 2014 2015 2016 2017 2018 2019 2020

NTT East

NTT at a Glance

Telephone Subscriber Lines + INS-Net

20,000(Fiscal year)

Message from the CFO

5,000‌ FLET’S TV transmission services

2021

2020

Mobile Communications Services Subscriptions(Thousands of subscriptions)
—

—

—

—

—

—

—

—

14

3,091

LTE (Xi)

2,225

11,566

21,96530,744

38,67944,54450,09755,872

61,66464,210FOMA (3G)

57,90549,97041,14035,85132,28530,33626,273

22,581

18,64815,331

FLET’S Hikari

16,56417,30018,05018,716

19,25920,053

20,53321,07821,65822,564

Hikari Denwa

13,90015,16916,256

17,10817,37417,75918,032

18,24418,503

18,692

Telephone subscriber lines

27,521

25,042

23,00021,286

19,943

18,797

17,53816,363

15,144

14,102

INS-Net

4,150

3,724

3,366

3,058

2,776

2,539

2,331

2,138

1,942

1,767

FLET’S ADSL

2,322

1,848

1,483

1,219

1,053

919

780

602

483

381

FLET’S ISDN

152

127

109

95

85

77

70

62

54

47

11,882

11,611

11,466

11,586

11,411

11,231

11,057

10,945

11,517

11,430Refinement of MediumTerm Management Strategy

5GFixed-Line Broadband Services Subscriptions(Thousands of subscriptions)*1

Research & Development

Telephone Subscriber Lines + INS-Net (in thousands)*2

FLET’S ADSL / FLET’S ISDN (in thousands)

NTT Group Major ISPs (Thousands of subscriptions)*3

Hikari TV
FLET’S TV Transmission Services*1
Fiscal years ended March 31

2,004

2,453

2,823

3,014

3,052

3,023

3,016

3,001

2,983

2,947

861

1,003

1,161

1,345

1,432

1,521

1,615

1,716

1,828

1,916

2012

2013

2014

2015

2016

2017

2018

2019

NTT Group's
Sustainability

Hikari TV / FLET’S TV Transmission Services(Thousands of subscriptions)

2021

2019

Mobile Aggregate ARPU (Yen)*4*5
—

—

—

—

—

—

—

4,360

4,230

4,280

docomo Hikari ARPU

—

—

—

—

50

190

340

440

510

570

Voice ARPU

2,200

1,760

1,490

1,280

1,210

1,250

1,370

—

—

—

Packet ARPU

2,590

2,720

2,880

2,820

2,910

2,990

2,970

—

—

—

Smart ARPU

350

420

—

—

—

—

—

—

—

—

NTT East

5,920

5,860

5,660

5,490

5,510

5,250

5,080

4,910

4,790

4,690

NTT West

5,940

5,880

5,830

5,680

5,470

5,280

5,100

4,930

4,820

4,740

Old

Operations in Review

Mobile ARPU (5G + LTE (Xi) + FOMA)New

ARPU of FLET’S Hikari (Yen)*4

Data Section*1 The number of subscriptions for FLET’S Hikari, Hikari Denwa, and FLET’S TV transmission services includes wholesale services provided to service providers by NTT East and NTT West.
*2 The number of telephone subscriber lines is the total of individual lines and central station lines (including the Subscriber Telephone Lite Plan). “INS-Net” includes INS-Net 64 and INS-Net
1500. In terms of the number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases approximately 10 times greater than INS-Net 64. For this reason,
one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions (including subscriptions to the INS-Net 64 Lite Plan).
*3 “NTT Group Major ISPs” includes WAKWAK and InfoSphere, in addition to OCN and Plala.
*4 Please see page 88 for the ARPU calculation method and other details.
*5 The ARPU calculation method was changed in the fiscal year ended March 31, 2016. Accompanying this change, the new method has been applied retroactively to the ARPU figures forthe fiscal year ended March 31, 2014, and the fiscal year ended March 31, 2015. A subsequent change to the ARPU calculation method was instituted in the fiscal year ended March 31,
2019, that entailed the integration of Voice ARPU and Packet ARPU.

86

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

87

Financial Summary

Reference Information(b) NTT East and NTT West

Average Monthly Revenue per Unit (ARPU)

Reconciliation of Capital Investment

Billions of yen

Payments for property, plant and equipment
Payments for acquisition of intangible fixed assets
Purchase of property, plant and equipment, intangible assets,
and investment property
Total
Differences between capital investment

2017(U.S. GAAP)2018(U.S. GAAP)2019 (IFRS)

2020 (IFRS)

2021 (IFRS)¥1,301.7¥1,308.7

—

—

—

400.1

402.0

—

—

—

—

—

¥1,672.4¥1,856.4¥1,795.2¥1,701.8¥1,710.7¥1,672.4¥1,856.4¥1,728.3

1.8

36.0

(24.6)

49.7

66.8

Billions of yen

2018(U.S. GAAP)2018 (IFRS)

2019 (IFRS)

2020 (IFRS)

2021 (IFRS)

Operating income / Operating profit¥ 1,539.8¥ 1,642.8¥ 1,641.1¥ 1,693.8¥ 1,562.2¥1,671.4

1,462.2

1,339.4

1,346.9

1,333.6

1,305.9

1,332.5Loss on sales and disposal of property, plant and equipment

107.4

71.4

71.2

87.5

83.9

81.9

Impairment losses

73.9

162.2

177.9

126.4

16.7

25.7

EBITDAEBITDA margin

3,183.3

3,215.8

3,237.1

3,241.4

2,968.6

3,111.6¥11,391.0¥11,799.6¥11,782.1¥11,879.8¥11,899.4¥11,944.0

27.9%

27.3%

27.5%

27.3%

24.9%

26.1%

Operations in Review

Fiscal years ended March 31

2017(U.S. GAAP)

Operating revenues

NTT Group's
Sustainability

Reconciliation of EBITDA Margin

Research & Development

Fiscal years ended March 31

Depreciation and amortization

Refinement of MediumTerm Management Strategy

Revenues from communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver,” andwholesale telecommunications services and interconnecting telecommunications facilities that are provided to MVNOs, and the impact ofd POINTs-related revenues, among others, are not included in NTT DOCOMO’s ARPU calculation.

Value Creation Process

NTT computes ARPU for NTT DOCOMO as follows:
Aggregate ARPU = Mobile ARPU + docomo Hikari ARPU.
(1) Mobile ARPU: Mobile ARPU-related revenues (basic monthly charges, voice communication charges and packet communication
charges) / Number of active users docomo Hikari ARPU: docomo Hikari ARPU-related revenues (basic monthly charges and voicecommunication charges) / Number of Active Users(2) Number of Active Users used in the ARPU calculation of NTT DOCOMO is as below.
Sum of number of Active Users for each month during the applicable period
Active Users = (number of users at end of previous month + number of users at end of current month) / 2.
(3) The number of “users” used to calculate ARPU is basically total number of subscriptions, excluding the subscriptions listed below:
Number of active users = subscriptionsa. Subscriptions of communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver”
and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to MVNOs; andb. Data Plan subscriptions in the case where the customer contracting for such subscription in his/her name also has a subscription
for 5G, Xi or FOMA services in his/her name.

NTT at a Glance

Method of Calculating ARPU(a) NTT DOCOMO

Message from the CFO

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues on a per subscriber (user) basis. In thecase of the mobile communications business, ARPU is calculated by dividing communications services revenue items included in operating
revenues from NTT Group’s mobile communications business segment, such as revenues from 5G mobile phone services, LTE (Xi) mobile
phone services, FOMA mobile phone services and docomo Hikari services (with certain exceptions), by the number of Active Users to therelevant services. In the case of NTT Group’s fixed-line business, ARPU is calculated by dividing revenue items included in the operating
revenues of NTT Group’s regional communications business segment (i.e., fixed-line (telephone subscriber lines plus INS-Net subscriber lines)
and FLET’S Hikari) by the number of Active Subscribers to the relevant services. The calculation of these figures excludes revenues that are
not representative of monthly average usage, such as telecommunications equipment sales, activation fees and universal service charges.
NTT believes that its ARPU figures calculated in this way provide useful information regarding the monthly average usage of its subscribers.
The revenue items included in the numerators of NTT Group’s ARPU figures are based on its financial results comprising its IFRS resultsof operations.

Message from the CEO

 TT separately computes the following two categories of ARPU for the fixed-line business conducted by each of NTT East and NTT West,N
using the following measures:• Aggregate Fixed-line ARPU (Telephone Subscriber Lines + INS-Net Subscriber Lines): Calculated based on revenues from monthly
charges and call charges for Telephone Subscriber Lines and INS-Net Subscriber Lines, which are included in operating revenues from
Voice Transmission Services (excluding IP Services), and revenues from FLET’S ADSL and FLET’S ISDN, which are included in operating
revenues from IP Services.
• FLET’S Hikari ARPU: Calculated based on revenues from FLET’S Hikari (including FLET’S Hikari optional services), which are included
in operating revenues from IP Services and Supplementary Business, revenues from monthly charges, call charges and device connection charges for Hikari Denwa, which are included in operating revenues from IP Services, and revenues from FLET’S Hikari optional
services, which are included in Supplementary Business revenues.
(1) FLET’S Hikari includes FLET’S Hikari Cross, B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light, FLET’S Hikari Lightplus and FLET’S
Hikari WiFi Access provided by NTT East; FLET’S Hikari Cross, FLET’S Hikari Next, FLET’S Hikari Mytown Next, FLET’S Hikari Light and
FLET’S Hikari WiFi Access provided by NTT West; and the Hikari Collaboration Model wholesale provision of services provided by NTT
East and NTT West to service providers. FLET’S Hikari optional services include wholesale services provided to service providers by
NTT East and NTT West.
(2) Revenues from interconnection charges are excluded from the calculation of Aggregate Fixed-line ARPU (Telephone Subscriber Lines+ INS-Net Subscriber Lines) and FLET’S Hikari ARPU.
(3) For purposes of calculating Aggregate Fixed-line ARPU (Telephone Subscriber Lines + INS-Net Subscriber Lines), the number of subscribers is that for fixed-line services (telephone subscriber lines or INS Net subscriber lines).
(4) In terms of number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases roughly ten times greaterthan INS-Net 64. For this reason, one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions.
(5) For purposes of calculating FLET’S Hikari ARPU, the number of subscribers is determined based on the number of FLET’S Hikari
subscribers (including FLET’S Hikari Cross, B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light, FLET’S Hikari Lightplus and FLET’S
Hikari WiFi Access provided by NTT East, FLET’S Hikari Cross, FLET’S Hikari Next, FLET’S Hikari Mytown Next, FLET’S Hikari Light and
FLET’S Hikari WiFi Access provided by NTT West), and Hikari Collaboration Model wholesale services provided by NTT East and NTT
West to service providers.
(6) Number of Active Subscribers used in the ARPU calculation of NTT East and NTT West is as below:
FY Results: Sum of number of Active Subscribers for each month from April to March Active Subscribers = (number of subscribers at
end of previous month + number of subscribers at end of current month) / 2

88

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

Data Section

Note: From April 1, 2020, depreciation and amortization associated with right-of-use assets is excluded from the calculation of EBITDA and depreciation and amortization. In conjunction withthis change, the amounts of EBITDA and depreciation and amortization for the fiscal year ended March 31, 2020 were retroactively reduced by ¥10.9 billion.

89

Consolidated Statements of Financial Position

Consolidated Statements of Profit or Loss andConsolidated Statements of Comprehensive Income

Nippon Telegraph and Telephone Corporation and its subsidiaries
March 31

Nippon Telegraph and Telephone Corporation and its subsidiaries
Year ended March 31
Millions of yen

2021

Cash and cash equivalents¥ 1,033,574¥

Trade and other receivables

3,502,834

ASSETS

Consolidated Statements of Profit or Loss
Operating revenues

Current assets
935,727
3,534,555

Millions of yen

2020

2021

¥11,899,415¥11,943,966

Operating expenses
Personnel expenses

2,428,484

2,461,410

6,006,379

5,875,302

32,384

41,732Inventories

257,329

315,437

Depreciation and amortization

1,465,310

1,507,153

Other current assets

530,073

498,106

Loss on disposal of property, plant and equipment and intangible assets

171,597

156,869

5,356,194

5,325,557

Impairment losses

16,65525,699Assets held for sale

1,347,307

816

Total current assets

6,703,501

5,326,373

9,282,286

446,828

639,627

Goodwill

980,841

1,056,187

Intangible assets

1,694,060

1,765,858

Investment property

1,106,145

1,182,713

Investments accounted for using the equity method

283,291

411,033

Other financial assets

846,285

1,515,922

Deferred tax assets

1,153,042

993,858

712,677

791,635

16,310,632

17,639,119¥23,014,133¥22,965,492

Current liabilities
Short-term borrowings¥ 2,054,506¥ 3,168,613

Trade and other payables

2,356,705

154,126

193,915

Other financial liabilities

16,94328,334

Accrued payroll

469,395

509,416

Income taxes payable

214,098

115,965

Other current liabilities

996,360

1,053,196

6,048,180

7,426,144

246,142
10,272,575

Operating profit

1,562,151

1,671,391

Finance income

46,986

31,785

Finance costs

50,25350,830Share of profit (loss) of entities accounted for using the equity method

11,257229

1,570,141

1,652,575

Profit before taxes
Income taxes

458,795

524,719

1,111,346

1,127,856

Profit attributable to NTT

855,306

916,181

Profit attributable to non-controlling interests

256,040

211,675

ProfitEarnings per share attributable to NTT

559,432

18

6,607,612

7,426,162¥

231.21¥

248.15

Note: NTT conducted a 2-for-1 stock split of its common stock, with an effective date of January 1, 2020. Basic earnings per share has been adjusted to reflect the impact of these stock splits.

Research & Development

Total current liabilities

248,839
10,337,264

Total operating expenses

Refinement of MediumTerm Management Strategy

2,142,752

Lease liabilities

Subtotal

22,997

Basic earnings per share (yen)

LIABILITIES AND EQUITY

Liabilities directly associated with assets held for sale

13,722

Value Creation Process

Total non-current assets
Total assets

2,702

Other

NTT at a Glance

9,087,463

Right-of-use assets

Other non-current assets

2,933

Taxes and dues

Non-current assets
Property, plant and equipment

Goodwill

Message from the CFO

Other financial assets

Expenses for purchase of goods and services and other expenses

Subtotal

Message from the CEO

2020

Non-current liabilities
Long-term liabilities

4,455,724

378,346

553,836

Other financial liabilities

129,229

137,620

Defined benefit liabilities

1,873,501

1,731,645

Deferred tax liabilities

70,24981,420

Other non-current liabilities

326,791

376,042

Total non-current liabilities
Total liabilities

4,943,894

7,336,287

11,551,506

14,762,449

EquityNippon Telegraph and Telephone Corporation (“NTT”) shareholders’ equity
937,950

937,950

Additional paid-in capital

2,252,672—

Retained earnings

6,499,942

7,068,008

Treasury stock(653,369)(704,793)

Other components of equity

23,908

261,542

Total NTT shareholders’ equity

9,061,103

7,562,707

Non-controlling interests

640,336

11,462,627

8,203,043

Total liabilities and equity¥23,014,133¥22,965,492

NIPPON TELEGRAPH AND TELEPHONE CORPORATION¥1,111,346¥1,127,856

241,404

Other comprehensive income (net of taxes)
Items that will not be reclassified to profit or loss
Change in the fair value of financial assets measured at fair value through other comprehensive income(68,503)

Share of other comprehensive income of entities accounted for using the equity method(2,266)(922)

Remeasurements of the defined benefit plans

11,365

121,455

Total of items that will not be reclassified to profit or loss

(59,404)

361,937

Items that may be reclassified subsequently to profit or loss
Cash flow hedges

1,689(2,012)Hedges cost

(1,707)(16,555)

Foreign currency translation adjustments(84,107)

81,356

Share of other comprehensive income of entities accounted for using the equity method
Total of items that may be reclassified subsequently to profit or loss

1,774

7,029

(82,351)

69,818

Total other comprehensive income (net of taxes)(141,755)

431,755

Total comprehensive income

969,591

1,559,611

Comprehensive income attributable to NTT
Comprehensive income attributable to non-controlling interests

90

2021

743,451

1,275,214¥ 226,140¥ 284,397

ANNUAL REPORT 2021

Data Section

2,401,524

Total equity

ProfitMillions of yen

2020

Operations in Review

Common stock

Consolidated Statements of Comprehensive Income

NTT Group's
Sustainability

2,165,778

Lease liabilities

91Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Nippon Telegraph and Telephone Corporation and its subsidiaries

Nippon Telegraph and Telephone Corporation and its subsidiaries
Year ended March 31

Fiscal year ended March 31, 2020

Millions of yen
Millions of yen

Additional
Common stock paid-in capital

As of March 31, 2019

¥937,950¥2,341,206

Retainedearnings

Treasury stock

Other
componentsof equity¥5,954,305¥(150,635)¥ 182,087

Non-controllinginterests

Total equity¥9,264,913¥2,539,877¥11,804,790—

855,306——

855,306

256,040

1,111,346

—

—

—

—

(111,855)(111,855)(29,900)(141,755)——

855,306—(111,855)

743,451

226,140

969,591

Transactions with owners andother transactions—(354,827)——(354,827)(151,414)(506,241)—

46,324—(46,324)

—

—

—

—

1

—

(502,734)—(502,733)—(502,733)

Changes in ownership interestin subsidiaries without loss of control—(104,613)———(104,613)(210,163)(314,776)

Share-based compensation transactions—(1,386)———(1,386)

7(1,379)Put options granted to non-controllinginterests—

19,392———

19,392(1,916)

17,476

Other—(1,928)(1,166)——(3,094)(1,007)(4,101)—(88,534)(309,669)(502,734)(46,324)(947,261)(364,493)(1,311,754)¥937,950¥2,252,672¥6,499,942¥(653,369)¥ 23,908¥9,061,103¥2,401,524¥11,462,627

Fiscal year ended March 31, 2021

Millions of yen

Treasury stock

Other
componentsof equity

Total

Total equity¥ 2,252,672¥6,499,942¥(653,369)¥ 23,908¥ 9,061,103¥ 2,401,524¥11,462,627

Profit——916,181——

916,181

211,675

1,127,856

Other comprehensive income

—

—

—

—

359,033

359,033

72,722431,755——

916,181—359,033

1,275,214

284,397

1,559,611

Transactions with owners andother transactions
Dividends of surplus——(358,470)——(358,470)(152,543)(511,013)

Transfer to retained earnings—

109,983

11,416—(121,399)———

Purchase and disposal of treasury stock

—

1,290

—

(51,424)—(50,134)—(50,134)—(2,366,079)

—

—

—

(2,366,079)(1,891,495)(4,257,574)

Share-based compensation transactions

—

3,043

—

—

—

3,043

—

3,043

Put options granted to non-controllinginterests—(2,364)———(2,364)(2,124)(4,488)

Other

—

1,455

(1,061)

—

—

394

577

971

—

(2,252,672)(2,045,585)—(12,885)(12,308)

Income taxes

458,795

524,719

Decrease (increase) in trade and other receivables

210,566

24,097

Decrease (increase) in inventories

59,880(64,263)

Decrease (increase) in other current assets

17,266(48,086)

Increase (decrease) in trade and other payables / accrued payroll

22,736

270,146

Increase (decrease) in other current liabilities

18,922

50,690

Increase (decrease) in defined benefit liabilities

2,470(17,727)

Increase (decrease) in other non-current liabilities

11,37039,408Other(7,427)(2,413)3,444,718

3,504,615

SubtotalInterest and dividends received

88,632

70,636

Interest paid

(49,829)(41,856)

Income taxes paid
Net cash provided by (used in) operating activities(348,115)(51,424)(121,399)(2,773,610)¥7,068,008¥(704,793)¥ 261,542¥ 7,562,707 ¥

640,336(488,310)(524,331)

2,995,211

3,009,064

Cash flows from investing activities(1,856,351)(1,795,164)

Purchase of investments

Purchase of property, plant and equipment, intangible assets, and investment property(202,410)(375,161)

Proceeds from sale or redemption of investments

294,153

41,974

Proceeds from loss of control of subsidiaries

Other

—

57,127(126,915)(30,755)—

672,683

38,796

4,764(1,852,727)(1,424,532)

Net increase (decrease) in short-term borrowings

707,276

1,165,623

Proceeds from increases in long-term borrowings

315,549

2,674,593

Repayments of long-term borrowings(512,882)(524,880)

Repayment of lease liabilities(184,384)(195,783)

Payments for acquisition of interests in subsidiaries from non-controlling interests(364,643)(4,249,407)

Dividends paid

(354,827)(358,470)

Dividends paid to non-controlling interests(151,058)(152,275)

Payments for purchase of treasury stock(501,446)(250,244)15

200,026

Net cash provided by (used in) investing activities
Cash flows from financing activities

Proceeds from sale of treasury stock
Other
Net cash provided by (used in) financing activities

5,139

1,269

(1,041,261)(1,689,548)

Effect of exchange rate changes on cash and cash equivalents(13,783)

7,169

Net increase (decrease) in cash and cash equivalents

87,440(97,847)

Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

946,134¥ 1,033,574

1,033,574¥

935,727(4,819,195)

Operations in Review¥937,950 ¥Gain on sale of property, plant and equipment and intangible assets

NTT Group's
SustainabilityChanges in ownership interest in
subsidiaries without loss of control

As of March 31, 2021

79,873

Research & Development¥937,950

Total transactions with owners andother transactions

80,971

Net decrease (increase) in loan receivables
Non-controllinginterests

Comprehensive income

Total comprehensive income(229)

Loss on retirement of property, plant and equipment and intangible assets

Refinement of MediumTerm Management Strategy

As of March 31, 2020

Retainedearnings(11,257)

Expenses due to acquisition of control of subsidiaries

NTT shareholders' equity
Additional
Common stock paid-in capital

25,699

Share of loss (profit) of entities accounted for using the equity method

Value Creation Process—

As of March 31, 2020

16,655

NTT at a Glance

Transfer to retained earnings
Purchase and disposal of treasury stockTotal transactions with owners andother transactions

1,507,153

Impairment losses

Depreciation and amortization

Message from the CFO—

Other comprehensive income—¥ 1,127,856

1,465,310

ProfitTotal

ProfitDividends of surplus¥ 1,111,346

Cash flows from operating activities

Comprehensive income

Total comprehensive income

2021

Message from the CEO

NTT shareholders' equity

2020¥ 8,203,043

Data Section

92

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

93

Operating and Financial Review
Operating and Financial Review

0.4%(64.1)(6.4)%

Mobile voice-related services
IP/Packet communications services
Sales of telecommunications equipment

NTT Group’s system integration services include its data communications business segment and a portion of the services it provides
in the long distance and international communications businesssegment and the regional communications business segment.
In the fiscal year ended March 31, 2021, revenues from system
integration increased 1.9% from the previous fiscal year to ¥3,801.6
billion, accounting for 31.8% of total operating revenues. This
increase was mainly due to factors such as the NTT’s expansion ofits scope of business in Japan in the data communications businesssegment and the regional communications business segment.
■ Other
Other services principally comprise building maintenance, realestate rentals, systems development and the Smart Life area in themobile communications business segment.
In the fiscal year ended March 31, 2021, revenues from otherservices increased 2.0% from the previous fiscal year to ¥1,929.3
billion, accounting for 16.2% of total operating revenues. This
increase was mainly due to an increase in revenues in the smart life
area as a result of the expansion of financial and settlement services
and accounting system factors in the mobile communications
business segment.

Operating Expenses
Operating expenses in the fiscal year ended March 31, 2021 decreased 0.6% from the previous fiscal year to ¥10,272.6 billion. The
reasons for the decrease are discussed below.
■ Personnel Expenses

Personnel expenses in the fiscal year ended March 31, 2021 increased 1.4% from the previous fiscal year to ¥2,461.4 billion. This
increase was mainly due to the increase in personnel expenses as aresult of the expansion of overseas businesses in the data communications business segment, despite a decrease in personnel
expenses due to restructurings in the long-distance and international communications business segment.
for Purchase of Goods and Services and Other
ExpensesIn the fiscal year ended March 31, 2021, expenses for purchase ofgoods and services and other expenses decreased 2.2% from the

1,115.8

149.3

15.4%

3,488.0(131.3)(3.6)%

691.8

674.1

(17.8)(2.6)%

System integration

3,731.4

3,801.6

70.2

1.9%

Other

1,891.0

1,929.3

38.3

2.0%

Operating expenses

10,337.3

10,272.6(64.7)(0.6)%

Operating profit

1,562.2

1,671.4

109.2

7.0%

Finance income and costs(3.3)(19.0)(15.8)(483.0)%Share of profit (loss) of entities accounted for using the equity method

11.3

0.2

(11.0)(98.0)%

1,570.1

1,652.6

82.4

5.3%

458.8

524.7

65.9

14.4%

Profit before taxes
Income taxes
Profit■ System Integration

966.5
3,619.3

1,111.3

1,127.9

16.5

1.5%

Less—Profit attributable to non-controlling interests

256.0

211.7

(44.4)(17.3)%

Profit attributable to NTT

855.3

916.2

60.9

7.1%

previous fiscal year to ¥5,875.3 billion. This decrease was mainly
due to a decrease in revenue-linked device costs in the mobile communications business segment and the revision of revenue recognition method in the long-distance and international communications
business segment, partially offset by an increase in revenue-linked
costs in the regional communications business segment.

rates for the fiscal year ended March 31, 2020 and for the fiscal year
ended March 31, 2021 were 29.22% and 31.75%, respectively.

■ Depreciation and Amortization Expenses
Depreciation and amortization expenses in the fiscal year ended
March 31, 2021 increased 2.9% from the previous fiscal year to¥1,507.2 billion. This increase was mainly due to an increase in 5Grelated equipment in the mobile communications business segment.

Operating Profit
As a result of the foregoing, operating profit for the fiscal year ended
March 31, 2021 increased 7.0% from the previous fiscal year to¥1,671.4 billion.

Finance Income and Costs
Finance income and costs for the fiscal year ended March 31, 2021
was ¥(19.0) billion compared to ¥(3.3) billion for the previous fiscal
year.

Share of Profit (Loss) of Entities Accounted for Using
Equity Method
Share of profit (loss) of entities accounted for using equity method
for the fiscal year ended March 31, 2021 was ¥0.2 billion comparedto ¥11.3 billion for the previous fiscal year.

Profit before Taxes
As a result of the foregoing, profit before taxes for the fiscal year
ended March 31, 2021 increased 5.3% from the previous fiscal yearto ¥1,652.6 billion.

■	
Expenses

Income Taxes
In the fiscal year ended March 31, 2021, income taxes increased
14.4% from the previous fiscal year to ¥524.7 billion. Effective tax

Profit Attributable to NTT
As a result, profit for the fiscal year ended March 31, 2021 increased
1.5% from the previous fiscal year to ¥1,127.9 billion. Profit attributable to NTT (excluding the profit attributable to non-controlling interests) for the fiscal year ended March 31, 2021 increased 7.1% fromthe previous fiscal year to ¥916.2 billion.

Liquidity and Capital Resources
Financing, Capital Resources and Use of Funds
Cash flows provided by operating activities during the fiscal year
ended March 31, 2021 amounted to ¥3,009.1 billion, an increase of¥237.5 billion from ¥2,771.5 billion in the fiscal year ended March
31, 2020. This increase was due to, among other factors, an increasein profit and improvement of working capital.
NTT Group used the cash flows provided by operating activities
mainly to acquire property, plant and equipment, pay dividends andcomplete stock repurchases.
Cash flows used in investing activities during the fiscal year
ended March 31, 2021 amounted to ¥1,424.5 billion, a decrease inpayments of ¥428.2 billion from ¥1,852.7 billion in the fiscal year
ended March 31, 2020. This decrease was due to, among otherfactors, a decrease of ¥61.2 billion in investments for property, plantand equipment, intangibles and investment property on a cash
basis, and an increase of ¥672.7 billion in proceeds from collectionsof loan receivables, despite a decrease of ¥252.2 billion in proceedsfrom sale of investments.
The decrease in investments for property, plant and equipment,
intangibles and investment property for the fiscal year ended March
31, 2021 resulted from, among other factors, a decrease in capital
expenditures due to improved efficiency in investing in LTE in themobile communications business and a decrease in capital expenditures due to urban solutions business in the other business. For

ANNUAL REPORT 2021

Data Section

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

44.6

935.3

Operations in Review

94¥11,944.0

999.4

NTT Group's
Sustainability

NTT Group’s IP/packet communications services include a portion of
the services it provides in the regional communications businesssegment, such as FLET’S Hikari, a portion of the services it provides
in the long distance and international communications businesssegment, such as Arcstar Universal One, IP-VPN, and OCN, as well as
a portion of the services it provides in the mobile communications
business segment, such as LTE (Xi) packet communications services.
In the fiscal year ended March 31, 2021, revenues from IP/packet
communications services decreased 3.6% from the previous fiscal
year to ¥3,488.0 billion, accounting for 29.2% of total operating
revenues. This decrease was due to a decrease in revenues in themobile communications business segment due to the introduction¥11,899.4

Fixed voice-related services

Percent Change

Research & Development■ IP/Packet Communications Services

Operating revenues

ChangeRefinement of MediumTerm Management Strategy

Mobile voice related services include a portion of the services NTT
Group provides in the mobile communications business segment,such as LTE (Xi).
Mobile voice related revenues for the fiscal year ended March 31,
2021 increased 15.4% from the previous fiscal year to ¥1,115.8
billion, accounting for 9.3% of total operating revenues. This increase
was due to, mainly to the revenue boosting effect associated withthe termination of Monthly Support discounts.

2021

Value Creation Process■ Mobile Voice Related Services

This category includes a portion of the services NTT Group provides
in the mobile communications business segment and the regional
communications business segment.
In the fiscal year ended March 31, 2021, revenues from telecommunications equipment sales decreased 2.6% from the previous
fiscal year to ¥674.1 billion, accounting for 5.6% of total operating
revenues. This decrease was mainly due to a decrease in thenumber of equipment units sold in the mobile communications
business segment as a result of the spread of the COVID-19 andother factors.

2020

NTT at a Glance■ Fixed Voice Related Services
NTT Group’s fixed voice related services include a portion of theservices it provides in the regional communications businesssegment and long distance and international communications
business segment, such as telephone subscriber lines, INS-Net,conventional leased circuits and high speed digital.
Fixed voice related revenues for the fiscal year ended March 31,
2021 decreased 6.4% from the previous fiscal year to ¥935.3 billion,
accounting for 7.8% of total operating revenues. This decrease wasdue to a continued decline in the number of subscriptions for telephone subscriber lines and INS-Net caused by the increased popularization of mobile phones and optical IP telephones, and anincrease in free or low-priced communications services offered by
OTT operators.

■ Sales of Telecommunications Equipment

Billions of yen

Fiscal years ended March 31

Message from the CFO

NTT Group’s operating revenues are divided into six service categories, comprising fixed voice related services, mobile voice related
services, IP/packet communications services, sales of telecommunications equipment, system integration and other.
Operating revenues in the fiscal year ended March 31, 2021 increased 0.4% from the previous fiscal year to ¥11,944.0 billion. This
increase was due to such factors as an increase in revenues in thesmart life area in the mobile communications business segment
and an increase in revenues in system integration services in Japan,
despite a decrease in revenues from sales of telecommunications
equipment in the mobile communication business segment and adecrease in revenues from system integration services overseas
due to the spread of COVID-19 and other factors, and the change in
the accounting treatment of certain revenues for the global operating company, NTT Ltd.
Operating revenues for each service category for the fiscal year
ended March 31, 2021 are summarized as follows:

The Fiscal Year Ended March 31, 2021, Compared with the Fiscal Year Ended March 31, 2020

Message from the CEO

Operating Revenuesof new billing plans, despite the continued increase in the number ofdocomo Hikari subscriptions and the revenue increasing effect associated with the termination of “Monthly Support” discounts in themobile communications business segment.

95

Consolidated Subsidiaries

Operating and Financial Review

Liquidity
As of March 31, 2021, NTT Group had cash and cash equivalentsbalance at the end of the fiscal year of ¥935.7 billion, a decrease of¥97.8 billion compared to the balance of ¥1,033.6 billion as ofMarch 31, 2020. Cash equivalents represent a temporary cash
surplus used to repay debts and make capital investments, among
other factors, and are used as working capital. Accordingly, thebalance of cash equivalents fluctuates each fiscal year dependingon particular financing and working capital requirements.

Company
Consolidated subsidiaries

CapitalVotingrights ratio

Millions of yen%

Main line(s) of business

MOBILE COMMUNICATIONS BUSINESS SEGMENTNTT DOCOMO, INC.
NTT Plala Inc.

949,680

100.00

Provision of mobile communications services and smart life area services

12,321100.00

Provision of internet connection and video distribution services

Message from the CEO

REGIONAL COMMUNICATIONS BUSINESS SEGMENT
Nippon Telegraph and Telephone
East Corporation

335,000

100.00

Provision of intra-prefectural communications services in the eastern part of Japan

Nippon Telegraph and Telephone
West Corporation

312,000

100.00

Provision of intra-prefectural communications services in the western part of Japan

Message from the CFO

LONG DISTANCE AND INTERNATIONAL COMMUNICATIONS BUSINESS/DATA COMMUNICATIONS BUSINESS SEGMENT
NTT, Inc.

754,712100.00Governance and strategy formulation, and promotion of measures in the global business of NTT GroupLONG DISTANCE AND INTERNATIONAL COMMUNICATIONS BUSINESS SEGMENT
NTT Communications Corporation

230,979

100.00

Provision of inter-prefectural communications services, international communications services,
and internet-related services

NTT Ltd.

USD8,401.57
million100.00

Provision of IT services and communications and internet-related services for corporations

Dimension Data Holdings

USD1,076.85
million100.00

Provision of IT system building and maintenance support for corporations

NTT Security Corporation
NTT America

100.00

Provision of professional security services

100.00

Provision of ICT services in North America

100.00

Provision of ICT services in Europe

EUR403.21
million100.00

Provision of data center-related services in Europe

NTT Cloud Communications
International Holdings

EUR177.24
million100.00

Provision of teleconference, web conference, and video conference services

NTT Global Data Centers Americas

USD424.29
million100.00

Provision of data center-related services in North America

NTT Global Networks

USD513.53
million100.00

Provision of network services

NETMAGIC SOLUTIONSINR16,610.93
million100.00

Provision of data center-related services in India

NTT Global Data Centers EMEA UK

GBP93.00
million100.00

Provision of data center-related services in the U.K.

NTT Managed Services Americas
Intermediate Holdings

USD714.27
million100.00

Provision of managed services in North America

EUR5.86
million

80.70

Provision of mobile connectivity services for IoT

Transatel

USD0.1 million

100.00

Provision of security services

Symmetry Holding

USD216.45
million100.00

Provision of managed services in North America

Spectrum Holdings

USD4,101.93
million100.00Management of subsidiaries of Dimension Data Holdings plc in Europe and North America

Research & Development

NTT Security AppSec Solutions

Refinement of MediumTerm Management Strategy

GBP100NTT Global Data Centers EMEA

Value Creation Process

NTT EUROPE

25,250USD3,328.57
millionNTT at a Glance

DATA COMMUNICATIONS BUSINESS SEGMENTNTT DATA CORPORATION

142,520

54.22

Provision of data communications system services and network system services

NTT DATA

USD5,183.49
million100.00Consulting, system design, and development in North America

NTT DATA Services

USD2,114.29
million100.00Consulting, system design, and development in North America

EVERIS PARTICIPACIONESEUR304.82
million100.00Consulting, system design, and development

USD5,205.42
million100.00Management of subsidiaries of NTT DATA CORPORATION in North America

NTT Urban Solutions, Inc

108,372

100.00

Contact point for urban solutions business, and integrated management of urban solutions-related
information

NTT URBAN DEVELOPMENT CORPORATION

48,760100.00Real estate acquisition, development, construction, leasing, and management

NTT FACILITIES, INC.

12,400100.00Design, management, and maintenance of buildings, equipment, and electric power facilities

NTT FINANCE CORPORATION

16,771100.00

Provision of billing and collection of charges for communications and other services, and credit cardtransaction settlement services

NTT Anode Energy Corporation

7,924

100.00Development of smart energy solutions and energy management system

NTT COMWARE CORPORATION

20,000100.00Development, production, operation, and maintenance of information communications systems and software

NTT Advance Technology Corporation

5,000

100.00Technology transfer, technical consulting, and design and development of systems

NTT Data International

NTT Group's
Sustainability

the fiscal year ended March 31, 2021, capital investments amounted
to ¥1,728.3 billion on an accrual basis, of which ¥569.1 billion wasinvested in the mobile communications business and ¥527.4 billion
was invested in the regional communications business.
Cash flows used in financing activities during the fiscal year
ended March 31, 2021, amounted to ¥1,689.5 billion, an increase inpayments of ¥648.3 billion from ¥1,041.3 billion in the fiscal year
ended March 31, 2020. This increase was due to, among otherfactors, an increase of ¥3,884.8 billion in payments for acquisitionof interests in subsidiaries from non-controlling interests, despite anincrease of ¥2,805.4 billion in proceeds in debt. The capital raised
from the issuance of long-term debt in the fiscal year ended March
31, 2021 includes ¥2,146.9 billion in net proceeds from corporatebond offerings and an aggregate of ¥511.6 billion in loans from financial institutions.
As of March 31, 2021, the total balance of the interest-bearing
debt of NTT Group was ¥7,624.3 billion, an increase of ¥2,924.4
billion from the balance of ¥4,699.9 billion as of March 31, 2020. The
ratio of interest-bearing debt to shareholders’ equity stood at 100.8%
as of March 31, 2021 (from 51.9% as of March 31, 2020).
NTT Group believes that the net cash it expects to generate fromoperating activities, financing from banks and other financial institutions and/or offerings of equity or debt securities in the capital
markets will provide the requisite financial resources to meet NTT
Group’s currently anticipated capital investment and other expenditure needs and payment of debt.
For the fiscal year ending March 31, 2022, NTT Group expects tomake capital investments totaling ¥1,750.0 billion on an accrualbasis, due to, among other factors, an increase in capital investments due to the promotion of new businesses for the urban solutions business and energy business in the other business, despite adecrease in capital investments related to improved efficiency inexisting network investments in the mobile communications
business and the regional communications business. The total
amount of expected capital investments includes ¥550.0 billion in
the mobile communications business and ¥510.0 billion in theregional communications business.
The actual amount of capital investments may be different fromexpected one, since capital investments may be influenced bytrends in demand, the competitive environment and other factors. In
addition, the actual amount of NTT Group’s financing will depend on
its future performance, market conditions and other factors, and istherefore difficult to predict.

(As of March 31, 2021)

Operations in Review

OTHER BUSINESS

Data Section

Other 930 companies

96

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2021

97

Career Summaries of Members of the Board andAudit & Supervisory Board Members(As of June 30, 2021)

Takao Maezawa

Kanae Takahashi

Takashi Iida

Senior Executive Vice President
In charge of business strategy
Chief Financial Officer (CFO)
Chief Compliance Officer (CCO)
Chief Human Resource Officer (CHRO)
Member of the Board
Years Served as Member of the Board: 9
Shares Owned: 24,508
Background and Experience
Apr. 1981:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2007:	Vice President of Corporate Strategy Planning of
the Company
Jul. 2007:	General Manager of the Accounts and Finance
Department of Nippon Telegraph andTelephone West Corporation
Jul. 2009:	General Manager of the General Affairs and Personnel
Department of Nippon Telegraph andTelephone East Corporation
Jun. 2011:	Senior Vice President		General Manager of the General Affairs and Personnel
Department
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2012:	Senior Vice President		
Head of General Affairs		Member of the Board of the Company
Jun. 2012:	Member of the Board of Nippon Telegraph andTelephone West Corporation
Jun. 2015:	Executive Vice President		
Head of General Affairs		Member of the Board of the Company
Jun. 2018:	Senior Executive Vice President		Member of the Board of the Company (present post)
Aug. 2018:	Member of the Board of NTT, Inc.
Oct. 2018:	Senior Executive Vice President of NTT, Inc.
(present post)

Full-time Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 5
Shares Owned: 20,508
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2006:	Executive Manager of the Human Resources
Management Department, General Manager of theTraining Institute		Executive Manager of General Affairs of
NTT Communications Corporation
Jun. 2008: Senior Vice President		Deputy General Manager of the Enterprise Business
Division		Member of the Board of NTT Communications
Corporation
Jun. 2011:	Executive Vice President		Deputy General Manager of the Enterprise Business
Division		Member of the Board of NTT Communications
Corporation
Aug. 2011:	Executive Vice President		
Head of the Second Sales Division		Member of the Board of NTT Communications
Corporation
Jun. 2012:	President and CEO of NTT PC Communications
Incorporated
Jun. 2016:	Full-Time Audit & Supervisory Board Member of theCompany (present post)
Aug. 2018:	Audit & Supervisory Board Member of NTT, Inc.
(present post)

Full-time Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 1
Shares Owned: 5,600
Background and Experience
Apr. 1987: Joined the Company
Jul. 2013:	Deputy Head of the Internal Control Office of the General
Affairs Department of the Company
Jun. 2014:	Head of the Internal Control Office of the General Affairs
Department of the Company
Jun. 2016:	Executive Manager of the Kanagawa Division andManager of the Kanagawa Branch of the
Kanagawa Division		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2016:	Executive Manager of the Kanagawa Division andManager of the Kanagawa Branch of the
Kanagawa Division		Member of the Board of NTT EAST-MINAMI KANTOCORPORATION
Jun. 2019:	Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department and the NW Facilities Business Department
		Member of the Board of NTT InfraNet Co., Ltd.
Jun. 2020:	Full-Time Audit & Supervisory Board Member of theCompany (present post)

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 7
Shares Owned: 7,300
Background and Experience
Apr. 1974:	Registered as Attorney-at-Law(Daini Tokyo Bar Association) (registration up-to-date)		Joined Mori Sogo Law Offices(currently Mori Hamada & Matsumoto)Apr. 1991:	Deputy Chairman of the Daini Tokyo Bar Association
Apr. 1997:	Executive Governor of the Japan Federation of
Bar Associations
Apr. 2006:	Chairman of the Daini Tokyo Bar Association
Apr. 2006:	Vice President of the Japan Federation of
Bar Associations
Jan. 2012:	Established Kowa Law Office (present post)
Jun. 2012:	Corporate Auditor (Part-Time) for Shimadzu Corporation(present post)
Jun. 2013:	Corporate Auditor of JAFCO Co., Ltd.
Jun. 2013:	Outside Director of Alps Electric Co., Ltd.
(currently registered as Alps Alpine Co., Ltd.)(present post)
Jun. 2014:	Outside Audit & Supervisory Board Member of theCompany (present post)

Naoki Shibutani

Katsuhiko Shirai

Sadayuki Sakakibara

Hideki Kanda

Kaoru Kashima

Senior Executive Vice President
In charge of technical strategy
Chief Technology Officer (CTO)
Chief Information Officer (CIO)
Chief Digital Officer (CDO)
Member of the Board
Years Served as Member of the Board: 1
Shares Owned: 11,600
Background and Experience
Apr. 1985: Joined the Company
Jul. 2013:	Executive Manager of the Medium-term Management
Strategies Promotion Office of the Corporate Strategy
Planning Department of Nippon Telegraph andTelephone East Corporation
Jun. 2014:	Senior Vice President
		Executive Manager of the Plant Planning Department of
the Network Business Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jul. 2017:	Senior Vice President
		Executive Manager of the Plant Planning Department of
the Network Business		Headquarters and Tokyo Olympic & Paralympic
Promotion Office		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2018:	Senior Executive Vice President		Senior Executive Manager of the New Business
Development Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jul. 2019:	Senior Executive Vice President		Senior Executive Manager of the New Business
Development Headquarters and the Digital
Transformation Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2020:	Senior Executive Vice President
Member of the Board of the Company (present post)

Outside Independent Member of the Board
Years Served as Member of the Board: 9
Shares Owned: 10,800
Background and Experience
Apr. 1965:	Assistant of the First Faculty of Science andEngineering of Waseda University
Apr. 1968:	Full-Time Lecturer of the Faculty of Science andEngineering of Waseda University
Apr. 1970:	Assistant Professor of the Faculty of Science andEngineering of Waseda University
Apr. 1975:	Professor of the Faculty of Science andEngineering of Waseda University
Nov. 1994:	Director of Academic Affairs and Director of theInternational Exchange Center of Waseda University
Nov. 1998:	Executive Director of Waseda University
Nov. 2002:	President of Waseda University
Nov. 2010:	Educational Advisor of Waseda University
Apr. 2011:	Chairperson of the Foundation for the Open Universityof Japan (resigned on March 31, 2017)
Jun. 2012:	Member of the Board of the Company (present post)
Jun. 2012:	Director of Japan Display, Inc.
(resigned on June 18, 2019)Nov. 2016:	Honorary Advisor of Waseda University (present post)

Outside Independent Member of the Board
Years Served as Member of the Board: 9
Shares Owned: 21,900
Background and Experience
Apr. 1967:	Joined Toyo Rayon Co., Ltd.
(currently registered as Toray Industries, Inc.)
Jun. 2002:	President of Toray Industries, Inc.
Jun. 2010:	Chairman and Representative Member of the Board of
Toray Industries, Inc.
Jun. 2010:	Director of Mitsui O.S.K. Lines, Ltd.
(resigned on June 24, 2014)
Jun. 2012:	Member of the Board of the Company (present post)
Jun. 2013:	Director of Hitachi, Ltd. (resigned on June 20, 2018)
Jun. 2014:	Chairman of the Japan Business Federation (Keidanren)(resigned on May 31, 2018)
Jun. 2014:	Chairman of the Board of Directors of
Toray Industries, Inc.
Jun. 2015:	Chief Senior Adviser and Chief Senior Counselor of
Toray Industries, Inc.
Jun. 2017:	Senior Adviser of Toray Industries, Inc.
Jun. 2018:	Special Adviser of Toray Industries, Inc.
(resigned on June 25, 2019)
Jun. 2018:	Honorary Chairman of the Japan Business Federation(present post)
Mar. 2019:	Director of SHIMANO INC. (present post)
May 2019:	Director of Nitori Holdings Co., Ltd. (present post)
Dec. 2019:	Director and Chairperson of the Board of Japan
Investment Corporation (present post)
Jun. 2020:	Chairman of the Board of the Kansai Electric Power
Co., Inc. (present post)

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 2
Shares Owned: 0
Background and Experience
Apr. 1977:	Research Assistant of the Faculty of
Law of the University of Tokyo
Apr. 1980:	Lecturer of the Faculty of Law of Gakushuin University
Apr. 1982:	Associate Professor of the Faculty of Law of
Gakushuin University
Apr. 1988:	Associate Professor of the Faculty of
Law of the University of Tokyo
Apr. 1991:	Associate Professor of the Graduate Schools for
Law and Politics of the University of Tokyo
May 1993:	Professor of the Graduate Schools for Law and Politics
of the University of Tokyo
Apr. 2016:	Professor of the Professional School of Law(Law School) of Gakushuin University (present post)
Jun. 2016:	Emeritus Professor of the University of Tokyo(present post)
Jun. 2017:	Director of Sumitomo Mitsui Trust Bank, Limited(present post)
Jun. 2019:	Outside Audit & Supervisory Board Member of theCompany (present post)

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 2
Shares Owned: 0
Background and Experience
Nov. 1981:	Joined Showa Audit Corporation(currently Ernst & Young ShinNihon LLC)
Apr. 1985:	Registered as a Certified Public Accountant(registration up-to-date)Jun. 1996:	Partner of Showa Ota & Co.
(currently Ernst & Young ShinNihon LLC)
Jun. 2002:	Senior Partner of ShinNihon & Co.
(currently Ernst & Young ShinNihon LLC)
Jul. 2006:	In charge of personnel of HR Development
Headquarters of ShinNihon & Co.
Sep. 2010:	Managing Director of Ernst & Young ShinNihon LLC		In charge of the Corporate Culture Promotion Office		
In charge of the Public Relations Office
Jul. 2012:	General Manager of Knowledge Headquarters		Managing Director of Ernst & Young ShinNihon LLC
Jul. 2013:	Representative Director of Ernst & Young InstituteCo., Ltd.
Jun. 2019:	Outside Audit & Supervisory Board Member of theCompany (present post)
Jun. 2019:	Director of Sumitomo Mitsui Trust Bank, Limited
Jun. 2020:	Audit & Supervisory Board Member of Kirin Holdings
Company, Limited (present post)
Jun. 2021:	Director of Sumitomo Mitsui Trust Holdings, Inc.
(present post)

Value Creation Process
Refinement of MediumTerm Management Strategy
Research & Development
NTT Group's
Sustainability

Executive Officers

Outside Independent Member of the Board
Years Served as Member of the Board: 2
Shares Owned: 1,500
Background and Experience
Jul. 2008:	Director-General for Policies on Cohesive Society and
Minister’s Secretariat of the Cabinet Office
Jul. 2009:	Director-General for the Gender Equality Bureau of the
Cabinet Office
Dec. 2012:	Director-General of the Public Relations Office of the
Cabinet Office
Jul. 2014:	Director of the Gender Equality Bureau of the Cabinet
OfficeApr. 2019:	Professor of Showa Women’s University (present post)
Jun. 2019:	Member of the Board of the Company (present post)
Jun. 2019:	Audit & Supervisory Board Member of MITSUI MINING &SMELTING CO., LTD.
Apr. 2020:	Professor and Dean of Faculty of Global Business of
Showa Women’s University
Apr. 2021:	Specially Appointed Professor and Dean of Faculty of
Global Business and Director of the Institute of Women's
Culture of Showa Women's University (present post)
Apr. 2021: Director of Sekisui House, Ltd. (present post)
Jun. 2021:	Director of MITSUI MINING & SMELTING CO., LTD.
(present post)

Ryota Kitamura

Representative Member of the Board
President
CEO (Chief Executive Officer)

Senior Vice President
Head of General Affairs

Senior Vice President
Head of Finance and Accounting

Atsuko Oka

Katsuichi Sonoda

Akira Shimada
Representative Member of the Board
Senior Executive Vice President
CFO (Chief Financial Officer)
CCO (Chief Compliance Officer)
CHRO (Chief Human Resource Officer)

Senior Vice President
Head of Technology Planning

Senior Vice President
Head of Strategic Business Development

Tadao Yanase

Akiko Kudo

Senior Vice President
Head of Business Strategy

Naoki Shibutani

Shinichi Yokohama

Representative Member of the Board
Senior Executive Vice President
CTO (Chief Technology Officer)
CIO (Chief Information Officer)
CDO (Chief Digital Officer)

Senior Vice President
Head of Security and Trust
CISO (Chief Information Security Officer)

Katsuhiko Kawazoe
Executive Vice President
Head of Research and Development Planning

Kazuhiko Nakayama

Hideaki Ozaki
Senior Vice President
Head of Global Business

Senior Vice President
Head of Public Relations
Deputy Head of Business Strategy

Takashi Taniyama
Senior Vice President
Head of Corporate Strategy Planning

Data Section

Keiko Takegawa

Outside Independent Member of the Board
Years Served as Member of the Board: 2
Shares Owned: 1,300
Background and Experience
Apr. 2000:	Professor of the Interfaculty Initiative in Information
Studies and the Graduate School of Interdisciplinary
Information Studies of the University of Tokyo
Jan. 2002:	Director of YRP Ubiquitous Networking Laboratory(present post)
Apr. 2009:	Director of the Institute of Infrastructure Application of
Ubiquitous Computing of the Interfaculty Initiative inInformation Studies of the University of Tokyo
Oct. 2014:	President of Vitalizing Local Economy Organization by
Open Data & Big Data (present post)
Apr. 2017:	Professor and Dean of Faculty of Information
Networking for Innovation and Design of Toyo University(present post)		Head of Collaboration Hub for University and Businessof Toyo University
Jun. 2017:	Emeritus Professor of the University of Tokyo(present post)
Jun. 2019:	Member of the Board of the Company (present post)
Aug. 2019:	President of Association for IoT Services Coordination(present post)

Jun Sawada

Operations in Review

Ken Sakamura

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

NTT at a Glance

Akira Shimada

President and Chief Executive Officer (CEO)Member of the Board
Years Served as Member of the Board: 7
Shares Owned: 38,300
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2008:	Senior Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2011: Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2012: Senior Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2013: Senior Executive Vice President
		Member of the Board of NTT Communications
Corporation
Jun. 2014: Senior Executive Vice President		Member of the Board of the Company
Jun. 2016:	Director and President, Chief Executive Officer of
NTT Security Corporation
Jun. 2018: President and Chief Executive Officer
		Member of the Board of the Company (present post)
Aug. 2018: President and Chief Executive Officer
		Member of the Board of NTT, Inc. (present post)

Message from the CFO

Jun Sawada

Chairman of the Board
Years Served as Member of the Board: 12
Shares Owned: 49,300
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2009: Senior Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2011: Senior Vice President		
Head of Research and Development Planning		
Head of the Information Sharing Laboratory Group		
Member of the Board of the Company
Oct. 2011: Senior Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2012: Executive Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2014: Senior Executive Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2018: Chairman of the Board of the Company (present post)
Jun. 2021:	Member of the Board of Yamaha Corporation(present post)

Message from the CEO

98

Hiromichi Shinohara

Hiroki Kuriyama
Senior Vice President (part time)
In charge of Business Collaboration

ANNUAL REPORT 2021

99

Stock Information(As of March 31, 2021)

Corporate Information

Principal Shareholders

Company name	NIPPON TELEGRAPH AND
TELEPHONE CORPORATION
Date of establishment April 1, 1985
Head office
Otemachi First Square, East Tower, 5-1,		Otemachi 1-Chome, Chiyoda-ku, Tokyo		
100-8116, Japan
Common stock¥937,950,000,000
Total number of shares authorized
to be issued by NTT
6,192,920,900 shares
Total number of shares issued
3,900,788,940 shares*
36,174,027
Aggregate voting rights
Number of shareholders(including holders of fractional shares)
890,450* In November 2021 the Company canceled 278,776,284 shares of treasury stock. Total
number of shares issued after cancellation is 3,622,012,656 shares.

Stock Exchange on Which the Company Is Listed
Tokyo (Stock Code: 9432)

Name

Number ofshares held(Thousands)

Ratio of the number ofshares held to thetotal number ofshares issued (%)

The Minister of Finance
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)Toyota Motor Corporation
Custody Bank of Japan, Ltd. (Trust Account 7)
Custody Bank of Japan, Ltd. (Trust Account 5)
Moxley & Co. LLC
Custody Bank of Japan, Ltd. (Trust Account 6)
Custody Bank of Japan, Ltd. (Trust Account 1)
JPMorgan Chase Bank 385632

1,260,902
211,111
158,769
80,77538,00835,18634,032
31,19728,001
27,525

34.81
5.83
4.38
2.23
1.05
0.97
0.94
0.86
0.77
0.76

Notes: 1. Number of Shares Held is rounded down to the nearest thousand.
					 2. NTT’s holdings of treasury stock (278,776,284 shares) are not included in theabove table.
					 3. Equity ownership percentages do not include treasury stock.
					 4. Japan Trustee Services Bank, Ltd. merged with JTC Holdings, Ltd. and Trust &Custody Services Bank, Ltd. on July 27, 2020, to form Custody Bank of Japan,
Ltd.

Breakdown of Shares by Shareholder

Investor Relations

The number of shares is rounded down to the nearest thousand.
The figures in parentheses represent the percentage of total shares owned for each categoryof shareholder.

https://group.ntt/en/ir/contact/

Depositary for NTT American Depositary Receipts (ADRs)

National and Local Governments 1,260,943 (34.81)

JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, NY 10179, U.S.A.

Financial Institutions

Inquiries 
JPMorgan Service Center
P.O. Box 64504
St. Paul, MN 55164-0504, U.S.A.
Telephone: 1-800-990-1135 (General)
1-651-453-2128 (From outside the U.S.A.)

710,126 (19.61)

Financial Instruments Business
Operators

95,420 (2.63)

Other Corporations

130,330 (3.60)

Foreign Corporations, etc.

822,770 (22.72)

Individuals, etc.

602,421 (16.63)

Notes: 1. The percentages represent the ratio of shareholders’ shares to the total number
of issued shares excluding treasury stock.
					 2. “Other Corporations” above includes 57 thousand shares in the name of Japan
Securities Depository Center.

Restrictions under the NTT Act
The NTT Act requires the government to own at least one-third of the total number of issued shares.* Pursuant to the NTT Act, the proportion of voting rights offoreign nationals and foreign corporations is limited to less than one-third of thetotal voting rights.
If the proportion of voting rights of foreign nationals and foreign corporations
should exceed one-third, pursuant to the NTT Act, NTT is prohibited from registering ownership of shareholders in excess of such limit.
As of the end of March 2021, 8,227,424 of the voting rights were owned byforeign nationals and foreign corporations.
* For the time being, pursuant to Article 13 of the NTT Act, any increase in the number ofshares attributable to the issuance of new shares is not included in calculating the total
number of issued shares for the purposes of the NTT Act.

NTT’s Share Price on the Tokyo Stock Exchange(Yen)(Points)
3,000

3,000

2,000

2,000

1,000

1,000

0

0

(Thousands of shares)
400,000
300,000
200,000
100,000
0

2012

2013

N
 TT’s share price (upper left scale)

2014

2015

TOPIX index (right scale)

2016

2017

2018

2019

2020

2021

‌NTT’s trading volume (lower left scale)Notes: 1. NTT’s share price and TOPIX index are the simple average closing prices on the last trading day every month.
					 2. NTT’s trading volume refers to the number of NTT shares traded every month.
					 3. NTT conducted a 100-for-1 stock split of its common stock, with an effective date of July 1, 2015, and a 2-for-1 stock split of its common stock, with an effective date of January
1, 2020. NTT share prices have been adjusted to reflect the impact of these stock splits.

100

NIPPON TELEGRAPH AND TELEPHONE CORPORATION