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Integrated
ReportC

INTEGRATED REPORT 2023

ONTENTS

Forward-looking Statements

2

Philosophy

2 NTT Group’s Roots
4 NTT Group’s History
6 10 Years of Sustainability Conferences

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 management of 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 state of the economy in Japan and abroad, possible fluctuations in the
securities markets, the pricing of services, the effects of competition, the performance of new products,
services, and new businesses, changes to laws and regulations affecting the telecommunications industry

10

Message from the CEO

in Japan and elsewhere, and other changes in circumstances that could cause actual results to differ

18

NTT Group Sustainability

Editorial Policy

18 NTT’s Vision for a Sustainable Society
20 Key Sustainability Issues and Topics forshareholders and investors, to better comprehend the NTT Group's growth strategy. This strategy aims to

Fiscal Year 2023

22 Climate Change
30 Human Capital
42 New Value Creation
46 Resilience

50

Growth Strategy

50 Medium-Term Management Strategy
52 Message from the CFO
56 Message from the CTO
58 IOWN
62 Intellectual Property Strategy
64 Operations in Review

68materially from the forecasts contained or referred to in this report.

This report has been compiled with the primary objective of helping our diverse stakeholders, including
create new value for our customers and society at large, and to transition towards a sustainable society
through our business activities. Starting from fiscal 2023, we have merged the previously independent
Annual Report and Sustainability Report into a single Integrated Report. This allows us to communicate
more comprehensively to all our stakeholders about the NTT Group’s mid- to long-term corporate valueenhancement efforts and initiatives. With regard to sustainability information, this report provides details on
our materiality (key issues) and their relevance to our medium-term management strategy. Further details
on our initiatives can be found on the Sustainability page of our corporate website. We sincerely hope thisIntegrated Report will assist all stakeholders in deepening their understanding of the NTT Group.

Note about Abbreviations
In this Annual Report, “NTT DOCOMO” refers to NTT DOCOMO, INC., “NTT Communications” refers
to NTT Communications Corporation, “NTT East” refers to Nippon Telegraph and Telephone East
Corporation, “NTT West” refers to Nippon Telegraph and Telephone West Corporation, “NTT DATAGroup” refers to NTT DATA Group Corporation, “NTT DATA Japan” refers to “NTT DATA Japan Corporation,”“NTT Urban Solutions” refers to NTT Urban Solutions, Inc., and “NTT Anode Energy” refers to NTT AnodeEnergy Corporation.

Other Materials
Financial and Non-Financial Data
https://group.ntt/en/csr/data/financial_nofinancial
NTT Group Sustainability
https://group.ntt/en/csr/

Corporate Governance

Securities Reporthttps://group.ntt/en/ir/library/yuho/

82

Data Section

For detailed financial and non-financial data, please refer to "Financial and Non-Financial Data" onour corporate website at https://group.ntt/en/csr/data/financial_nofinancial.

Shareholders’ Meeting Materials
https://group.ntt/en/ir/shares/shareholders_meeting/Corporate Governance Reporthttps://group.ntt/en/ir/mgt/governance/
Presentation Materials
https://group.ntt/en/ir/library/presentation/index.html

INTEGRATED REPORT 2023

1

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

NTT Group’s Roots

Privatized in 1985.

NTT Group has
continued to develop a range of solutions as a partnerthat enables society and industry to move ahead.

The single continuous curve represen t s
the d ynamism and our com mi t men t forcontinuous innovation and del i veri n gvalue to p eop le and society.

Our Dynamic Loop – The Heart of NTT

It was some 70 years ago that the telephone and telegraph services provided by the
Ministry of Communications and Ministry of Telecommunications were handed over to
Nippon Telegraph and Telephone Public Corporation. With economic growth booming
following the country’s post-war recovery, the company began exploring a range ofavenues to meet growing public demand for telephone services that connect in an
instant. The company was privatized as Nippon Telegraph and Telephone Corporation(NTT) in 1985. We have expanded our business into regional communications (telephone
and FTTH, etc.), integrated ICT (mobile and internet), global solutions, real estate, energy,
and others based on our corporate activities to respond to customers’ voices andindustrial and social challenges.

A small inner loop at the top of the mark ensures that the voiceof customers and society is always heard.
This symbol represents NTT’s vision and its commitment todeveloping a harmonious society through both business andcooperation.

Going forward, NTT will continue to take on challenges for new value creation and global
sustainability.

2

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Philosophy

NTT Group
Sustainability

Message from the CEO

Corporate
Governance

Growth Strategy

Data Section

NTT G ro u p ’s H isto r y

We are NTT.

MISSION
Contributing to society
through our business operations

NTT will continue to innovate throughimagination and by challenging ourselves.
We always listen to our clients, employees,
and the world at large. NTT’s culture isbased on our core belief of responding
to the needs of our clients and society tohelp achieve their best future possible.
This is NTT’s vision and its commitment todeveloping a harmonious society throughboth business and co-operation.

2019

VISIONNTT Urban Solutions established
NTT Anode Energy establishedYour Value Partner

2023

VALUES

Others (Real Estate,
Energy and Others)

Connect, Trust, Integrity

Global Solutions
Business

1987

OCN internet connection
services launched
NTT Mobile Communications
Planning Co., Ltd. (currently
1999
NTT DOCOMO) established“i-mode” launched

1991

Mobile telephoneservices launched

Acquired Dell Services(currently NTT DATA, Inc.)2010

FY2022overseas sales
2.6 trillion yen

Acquired Dimension Data

FY2012overseas sales
0.95 trillion yen

2018
Mobile payment service“d Payments” launched

Integrated ICT business(mobile and internet)

NTT DATA Communications Systems Corporation
NTT Urban Development (currently NTT DATA Group) established
Corporation established1996

FY1985 sales
5.1 trillion
yen

2016

Transition to a holding company structure
under which there is the domestic(Japanese) operating company NTT DATAJapan and NTT DATA Inc., which manages
overseas business

Acquired Keane(currently NTT DATA, Inc.)

1988

1986

FY2022 sales
13.1 trillion
yen

2004
Osaifu-Keitai (Mobile Wallet) launched2008“Hikari TV” launched

Android OS
smartphones launched
Cloud services launched

1985

2020

2009
2010
LTE (Xi) services
launched

2015“docomo Hikari” launched

5G services
launched
NTT DOCOMO becomesa wholly owned subsidiary

2004

Nippon Telegraph andTelephone Corporation (NTT)established“Hikari Denwa” launched

1988

2000
ISDN flat-rate services launched2015

Regional communications
business(telephone and FTTH, etc.)“Hikari Collaboration Model” launchedWorld’s first ISDN service launched

2001

Telephone

FTTH (Fiber To The Home) services
launched*The background design on this page is intended to symbolize the evolution of our business expansion.

4

FTTH, etc.

1999

2019

2021

2023

Transitioned to holding company structure

IOWN concept
announced

Green Innovation toward2040 announced
NTT Group Global
Sustainability Charter
revisedMedium-term management strategy titled“New Value Creation & Sustainability 2027
Powered by IOWN” announced
APN IOWN 1.0 launched1985 - 1990s

2000s

2010s

2020s

Expansion of telephone services

Shift to broadband

Expansion of global business

New structural transformation

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

5

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

10 Years of Sustainability Conferences
Transitioning from CSR to sustainability as a pillar of business strategy-Initiatives launched from these conferences aim to achieve significant growth in a decade

1st February 19, 2014

2nd February 5, 2015

First-time hosting at the training institute:
70 entries, 9 nominations, 1 winner

85 entries, 9 nominations, 2 winners

Grand Prize

Grand Prize

Grand Prize

Excellence Award

Cloud-based system to curb passing the buck

Collaboration with the Vatican Library on a

Introducing "Move&Flick,"

everis foundationin emergency medicine (NTT DATA Japan)

digital archive project for preserving

a new text input app for

activities

valuable human heritage (NTT DATA Japan)

smartphones⇒ Expanded across the nation after a

3rd February 16, 2016
Guest participants from around the world⇒ Converted to 3D after a decade, expanded todecade5th February 16, 2018

Excellent initiatives: official overseas nominations
37 entries, 7 nominations (1 from overseas), 7 winners

First Grand Prize won by overseas entrant
45 entries, 7 nominations (2 from overseas), 7 winners

Grand Prize

Grand Prize

Grand Prize

Development of "Communication Engine

QHUBEKA:

Leading the Japanese RPA market through'COTOHA,'" an AI capable of natural Japanese

an educational and environmental conservation

WinActor/Windirector deployment (NTT DATA Japan)

conversations (NTT Communications)project through bicycles (Dimension Data)

7th February 7, 2020
Olympic and Paralympic exhibition (hands-on wheelchair and boccia experience):
44 entries, 6 nominations (2 from overseas), 6 winners

8th March 1, 2021

6th February 15, 2019

⇒ Contributing to solving labor shortages
and work style reforms

First web-based ceremony (to be continued) due to the COVID pandemic:
69 entries, 8 nominations (5 from overseas), 9 winners

Inaugural awards ceremony at the Palace Hotel Tokyo:
98 entries, 46 nominations (27 from overseas), 6 winners

Excellence AwardGrand Prize

Promoting food recycling through theTake on challenge of contributing
to regional revitalization andcultivating new normal in cultural
appreciation through local culture
and art (NTT East)

Health ticket and the first smart

Addressing community transportation issues

bus station (NTT Data Romania)

through AI operations (NTT DOCOMO)⇒ Advancing recycling-oriented businessmodelsNIPPON TELEGRAPH AND TELEPHONE CORPORATION

Using AI to Improve Recycle Park Convenience (UX)NTT Ltd Belgium (Belgium)
NTT Ltd Belgium has optimized the replacement of containers for recycle by combininga camera developed in collaboration with Cisco and NTT's AI technology for container
detection and monitoring. The AI equipped in the camera reads the amount of garbage
in real time and analyzes it together with historical data, making it possible to predict the
optimal timing of container replacement. By solving the problem of collection containers
being full, NTT Ltd Belgium contributed to reducing the stress on the people of the city,
as well as reducing illegal dumping.

9th June 15, 2022

Grand Prizesolutions (NTT FIELDTECHNO CORPORATION)In Malawi, Africa, NTT DATA Business Solutions is addressing medical supply chain
issues using high-performance drones by Wingcopter Inc. In Malawi, it took a full day
or more to transport medical supplies from medical centers to rural clinics due to poorroad infrastructure. In this initiative, the strong delivery capabilities of Wingcopterswere extended through a new digital logistics platform provided by SAP S/4HANA
cloud, enabling local procurement of more than 100 types of medical supplies by
delivery drone in just 20 minutes. Wingcopter's drone-based delivery networks also
create new hightech job opportunities by training local youth to become Wingcopter
drone pilots and technicians, helping to solve social issues in two dimensions: saving
and improving lives.

Incorporating work style reforms as a theme:
36 entries, 6 nominations (1 from overseas), 6 winners

Grand Prize
deployment of local food resource recycling

6

NTT DATA Business Solutions (Germany)

4th February 23, 2017

⇒ Fusing sports and social contribution

First public awards ceremony open to the media:
118 entries, 58 nominations (34 from overseas), 12 winners
Building a Supply Chain for Medical Supplies Using Drones(NTT DOCOMO)

include the manuscripts from Mount Koya

⇒ Progressing toward AI development

Introducing Our 10th Conference MVPs June 12, 2023

60 entries, 9 nominations, 2 winners⇒ Creating a new form ofregional development⇒ Contributing to society via AI and mobile
technology

Achieving a Carbon-Neutral Society Through Forestry DX
NTT West
As part of its Forestry DX initiative, NTT WEST is providing a Forest Cloud applicationthat uses satellite and drone measurements as well as AI analysis to collect forest
information such as the number of trees, types, and height, calculate and data the asset
value of the forest and the amount of CO2 absorbed, which can be viewed on
smartphones and tablets. As a result, forest research operations will be reduced to 1/30of the previous level, and timber supply and demand matching using the cloud will resultin transactions at prices 2% higher than those in the general timber market (empiricalresults). In addition, carbon credit revenues, a new value added to forests, will be
returned to affluent forest development, thereby contributing to the carbon neutrality of
the region and companies (approximately 300 million yen worth of credits are expected
to be generated*). *Target forest: Approximately 180ha, 16-year project

INTEGRATED REPORT 2023

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Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

New Medium-Term Management Strategy
New Value Creation & Sustainability 2027
Powered by IOWN

Medium-Term Financial Targets
EBITDA

Innovating a Sustainable Future

Company-wide
Targetsfor People and Planet+20% increase*4 (approx. ¥4.0 trillion) (FY2027)
EBITDA+40 % increase *4 (FY2027)
Growth Areas *1

Overseas Operating Income Margin*2

10 % (FY2025)
1 NTT as a Creator of New Value and Accelerator of a Global Sustainable Society■❶ IOWN-Driven Creation of New Value(from concept to commercialization)i. Establishment of manufacturing company forphotonic-electronic convergence devices
ii. Acceleration of IOWN research and development/commercialization❷ Data-Driven Creation of New Valuei. Strengthening the personal businessii. Strengthening the use of DX/data in society and industryiii. Expansion and upgrade of data center infrastructure

EBITDA chievement of a Circular❸A
Economy Societyi. Develop sustainability solutions forcustomersii. Creating Circular Economy
businessesiii. Progression towards Net-Zero+10 % increase *4 (FY2027)
Existing Areas *3

Return on Invested Capital (ROIC)

9 % *5 (FY2027)

 urther Strengthening of❹F
Business Foundations

Sustainability-Related Targets
New Female Manager Promotion Rate

2 Upgrading the Customer■
Experience (CX)

3 Improving the Employee■
Experience (EX)❺ Fusion of Research and Developmentwith a Market-Focused Strategy
 trengthening of Services that❻S
Emphasize Customer Experience (CX)

❼ Open and Innovative Corporate
Culture❽ Support Career Growth lobal Benefits for Employees and❾Gtheir Families

at least 30% each year
Greenhouse Gas Emissions

targeting carbon neutrality in 2040, as well as Net-Zero
Engagement Rate

To be improved*1 IOWN, digital/data centers, power/energy, Smart Life, real estate, AI/robots, etc.
*2 NTT DATA Group consolidated. Excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets.
*3 NTT DOCOMO’s consumer telecommunications businesses, NTT East and NTT West
*4 Compared to FY2022*5 FY2022 results: 8.2%

8

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

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Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from the CEO

CEO

Message■ Seizing the Age of Change as an Opportunity
The NTT Group has been taking proactive steps to transforming itself, evolving its businesswhile consistently addressing social issues. Roughly 40 years ago, when NTT was privatized,
it primarily generated revenue from its telephone business. However, nowadays, revenue fromvoice-related services accounts for only 15% of our total operating revenues. We have rapidly
adapted to changes in technology and societal trends, reallocating our existing resources
and incorporating new ones while keeping a close eye on the evolution of technologies anddevices such as telephones, pagers, PCs, mobile devices, and smartphones, as well as otherchanges across the globe. Looking ahead to the years 2040 and 2050, there is no doubt thatthe world will differ significantly from what it is today. NTT views these impending changes asopportunities and is committed to its ongoing transformation. To that end, it is imperative for us tocontinuously evolve our business portfolio. However, this is not as simple as suddenly deciding toventure into entirely new business domains. It is crucial for the NTT Group to leverage its existing
technologies and expertise, consolidate its personnel, collaborate with partners across various
sectors, and work tirelessly to solve the issues facing society. To continue to be people’s companyof choice, one that supports the sustainability of society, we will place emphasis on dialogue with
our investors and with all other stakeholders as we continue to meet their expectations.

■ Connect, Trust, Integrity
One of NTT’s core strengths is its ongoing commitment to integrity, earning trust, and continuing
to build on its efforts step by step. Delivering reliable products naturally leads to a greater degreeof trust, and a consistent foundation of integrity is essential for this cycle to function. We define“Connect,” “Trust,” and “Integrity” as the Shared Values constituting the foundation that unites
our employees—our DNA, as it were. These key terms have been established through extensive
global discussions. and must be preserved moving forward. Given that NTT’s origins lie in
telecommunications, the concept of "Connect" also encapsulates the critical element of humanconnection. Trust is indispensable when it comes to forming meaningful human connections,and establishing Trust requires a foundation of Integrity. With these three cornerstone values inplace, customers can forge lasting relationships with NTT. This “DNA” also plays a pivotal role incontributing to the achievement of a sustainable society. For instance, NTT DATA Japan launched
an emergency medical service in 2012 in which patients are loaded into ambulances and crucial
data is quickly entered on a tablet in the ambulance to be sent to the receiving hospital. This

Akira Shimada
President and Chief Executive Officer
Representative Member of the Board

10

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

solution was first provided in Takamatsu City. A decade later, it has expanded across Kagawa
Prefecture and has been adopted in other prefectures as well.

INTEGRATED REPORT 2023

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Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from the CEO

Another example is a project that began 10 years ago to digitize ancient books in the Vatican

front lines and be there for every single employee. To put this into practice, I have been hosting

Library. This project involves creating digital archives with funding in the form of donations from all

dialog sessions with employees both in Japan and overseas. I have organized these sessions notover the world. Nowadays, this initiative has been extended to include efforts in Japan, such as

only within Japan, but also in North America, South America, Asia, and Europe. In terms of within

digitizing texts from Mount Koya and the Kobo Daishi era from more than a thousand years ago.

Japan, there have been discussions with employees in solutions, urban development, smart

Additionally, NTT ArtTechnology Corporation, established in 2021, focuses on leaving a legacy

agriculture, XR, and digital comics. I believe that by being present with employees who are making

for future generations. For example, the company is creating a business that digitizes Hokusai's

daily efforts on the front lines in a wide variety of sectors, understanding their perspectives,

paintings and examines how to display them to future generations, as well as how to display otherand integrating them into our managerial decisions, we can further enhance the NTT Group's

delicate items such as paintings created around the world. In this manner, we aim to achieve

corporate value.

growth in our business and advancements in sustainability initiatives at the same time while
also capitalizing on the DNA of the NTT Group. We remain committed to consistently delivering
services that enhance our customers’ businesses and lifestyles.

■ Recent Performance and Human Capital Initiatives
Since taking office as CEO in June 2022, I've focused on a significant theme: transforming the
NTT Group into an entity that delivers new experiences and excitement to our customers. This has
been our concerted effort over the past year. We have become increasingly diligent in questioning
whether the products and services we offer are genuinely satisfying our customers. In today'scompetitive environment, any stagnation, however minor, can ultimately impact the organization
as a whole. We must continue to strive to satisfy our customers. Fueled by this sense of urgency,
and as a result of the reforms we have implemented, the NTT Group's consolidated results forfiscal 2022 has set new records, with increases in operating revenues, operating profit, and net
income. This achievement partly reflects the gradual impact of our Group-wide reorganization,

Dialogue with members of NTT Asia Pacific Pte. Ltd and the Singapore subsidiary (Singapore)and it is also the result of our unwavering commitment to cost-efficiency and successfully meeting
our customers' digitization and other needs on the front lines of each company.
Despite escalating global tensions, rising electricity costs, increased interest rates, inflation, andsemiconductor shortages, our fiscal 2023 performance forecast plans for new record highs in■ NTT as a Creator of New Value and Accelerator of a Global Sustainable Society

operating profit and net income. We believe that by harnessing the collective strength of the NTT
Group's 340,000 personnel, we can navigate this uncertain landscape and achieve our goals.
To this end, it is crucial to establish an environment where a diverse array of talented individuals
can fully exercise their abilities. The NTT Group in Japan introduced a job-based personnel
system for all managers in October 2021, and in April 2023, we revised the personnel system forgeneral employees with a focus on specialization. Our aim is to support the autonomous careerdevelopment of each and every employee and enhance their engagement by providing a systemthat encourages growth. We aim to continue transforming our company into one where eachindividual feels a sense of growth, fulfillment, and excitement in their work.
In addition, a conviction I have held since the beginning of my tenure is to always focus on theThis past May, we announced our new Medium-Term Management Strategy, “New Value
Creation & Sustainability 2027 Powered by IOWN.” As our Basic Policy, we have declared that
“Innovating a Sustainable Future for People and Planet.”
Based on this guiding philosophy, we have identified three major pillars for our specific initiatives.
The first pillar is “NTT as a Creator of New Value and Accelerator of a Global Sustainable Society.”
Sustainability and business do not conflict with one another. Our vision for a sustainable society
is to realize both, rather than having to choose only one. We aim to resolve a variety of social
issues, contributing to a world where Earth and humanity can sustainably coexist—striving for a
resource-recycling future, not a resource-consuming one. This message is embedded within our
medium-term strategy. The second and third pillars serve as mechanisms to support the first,

12

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

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Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from the CEO■ Initiatives for Shareholder Returns/Expanding the Investor BaseContributing to the creation of a sustainable society through our business and delivering
the resulting benefits to our shareholders remains a key management issue. Our approach ofensuring consistent dividend growth and flexible share buybacks remains unchanged within our
new medium-term management strategy.
For fiscal 2023, we plan a 13th consecutive year of dividend growth, which will result in a 10fold increase in the dividend per share compared to 20 years ago. Regarding share buybacks forfiscal 2023, a resolution was made in August to buy back up to 200 billion yen of our own shares.
Additionally, in July, we dramatically reduced the investment unit through a 1:25 stock split.
In anticipation of the new NISA system starting in 2024, we aim to facilitate investment in NTT
shares and broaden our individual investor base across a diverse range of generations who share
our belief in the NTT Group's sustained growth.
Dialogue with NTT DATA Business Solutions members (Germany)

To meet the expectations of our many stakeholders, our mission is to continue to contributeto the realization of a better society by placing sustainability at the core of our management.
We will continue to take on the challenge of making NTT an organization that supports a global

with the second being "Upgrading the Customer Experience (CX)" and the third "Improving the
Employee Experience (EX)." Everything new comes from people. To achieve our goal, we needsustainable society through the creation of new value.
We sincerely hope for your continued support in the years ahead.

our employees to be lively, feel job satisfaction, and take on challenges. Creating excitement ineach employee (namely, EX), will form a small ring in NTT’s Dynamic Loop logo, generating CX
that will lead to greater customer satisfaction, which is the big ring. We will only be able to makeour customers feel excitement if our employees feel excitement and joy. Moreover, the “thankyous” from customers increase our motivation. This virtuous cycle of CX and EX will deliver value
to the world, and be the driving force in creating a sustainable society.
To that end, we will expand our investments in growth areas, with plans to invest eight trillion
yen over the next five years, a 50% increase over prior investments. Including existing areas, thetotal investment amount comes to 12 trillion yen. Moreover, we are looking to expand our cash
generation capacity for the future. EBITDA (Earnings Before Interest, Taxes, Depreciation, andAmortization), an indicator that shows how much cash flow a company has generated through its
core business, has been flat thus far. However, through expanding investments in growth areas,
we aim to achieve a 20% increase in EBITDA, with a target of four trillion yen by fiscal 2027. We
intend to generate new cash flows through these growth investments and channel them into
further growth initiatives.
We will strive to continually transform the NTT Group's business portfolio by consistently staying
abreast of global trends and shifts, focusing on regions and sectors where we can leverage ourstrengths through a comprehensive market-in approach that centers customer needs.

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NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

NT T a t a g l a n c e
Operating
Profit*(FY2022)(FY2022)¥13,136.2 billion¥1,829.0 billion

Services and Main Companies

Business

Integrated ICT Business

Operating
Revenues*

Financial Highlights (International Financial Reporting Standards (IFRS))
FY202012,156.4

13,136.2

Operating profit

1,671.4

1,768.6

1,829.0

916.2

1,181.1

1,213.1

Total assets

22,965.5

23,862.2

25,308.9

NTT shareholders’ equity *1

7,562.7

8,282.5

8,561.4

Capital Investment

1,728.3

1,687.6

1,862.4

3,111.6

3,247.1

3,290.2

9.9

13.2

13.9

248

329

348

ROE (%)

11.0

14.9

14.4

ROIC (%)

7.2

7.5

7.4

Cash flows from operating activities *43,009.1

3,010.3

2,261.0

Cash flows from investing activities(1,424.5)(1,699.2)(1,736.9)

Free cash flows (Cash flows from operating activities + Cash flows
from investing activities)

1,584.5

1,311.1

524.1

Cash flows from financing activities(1,689.5)(1,438.1)(590.2)

3

EPS (Yen) after stock split *EPS (Yen) before stock split

59.2%(¥1,093.9 billion)

Regional Communications Business
The principal services in the Regional Communications Business are domestic intraprefecturalcommunications services and related ancillary services.

*1 NTT shareholders’ equity does not include the portion attributable to non-controlling interests.
*2 EBITDA = Operating income + Depreciation and amortization + Loss on sales of property, plant and equipment + Impairment loss
NTT Group has excluded all depreciation expenses related to right-of-use assets from EBITDA and depreciation, as a component of EBITDA.
*3 NTT conducted a 25-for-1 stock split of its common stock with an effective date of July 1, 2023. The figures reflect the impact of this stock split.
*4 If the closing date falls on a holiday, the effects of that (such as the postponement of accounts receivable payment deadlines from the end of the month to the beginning of the following month) are excluded.

21.0%(¥3,177.6 billion)

Non-financial Highlights
FY2020

FY2021

FY2022

Scope 1, 2

3.99 million tons

2.90 million tons

2.53 million tons

Scope 3 *6

22.23 million tons

20.82 million tons 19.49 million tons

Indicator*5

Climate change

GlobalSolutions Business
The principal services in the Global Solutions
Business are system integration services, network
system services, cloud services, global data center services, and related services.

27.0%(¥4,091.7 billion)

FY2022

11,944.0

Profit attributable to NTT

40.0%(¥6,059.0 billion)

FY2021

Operating revenues

EBITDA*2

The principal services in the Integrated ICT
Business are mobile phone services, domestic
inter-prefectural communications services, international communications services, solutions services,and system development services and related services.

Unit: Billions of yen

22.8%(¥420.5 billion)

Human capitalGreenhouse Gas Emissions

Employee Engagement Rate

—

57%

57%

New Female Manager Promotion Rate

—

29.1%

29.7%

Male Childcare Leave Rate——

114.1%——

100%

Amount of B2B2X Revenues—¥544.1 billion¥815.4 billion

Number of Serious Incidents *7

2

1

3

Number of Telecommunications Service Interruptions due to External Cyberattacks

0

0

0

Direct Dialogue Rate with Key Suppliers—

Creating new value
Resilience

14.4%(¥265.6 billion)

Others(Real Estate, Energy andOthers)Other Group companies

Others include the real estate business,energy business and others.

11.9%(¥1,807.0 billion)

3.6%(¥67.2 billion)*Percentage of simple sum of each segment(including intersegment transactions)16

NIPPON TELEGRAPH AND TELEPHONE CORPORATION*5 The scope of the above indicators is as follows.
Greenhouse Gas Emissions: our company and its consolidated subsidiaries
Employee Engagement Rate: about 100 domestic Group companies (we plan to extend this to our overseas Group companies in the future)
New Female Manager Promotion Rate/Male Childcare Leave Rate: six major domestic companies (NTT, NTT DOCOMO, NTT Communications, NTT East, NTT West, and NTT DATA Japan)
Direct Dialogue Rate with Key Suppliers: 40 companies chosen each year from among the key suppliers who account for more than 90% of the total procurement expenditures of the NTT Group (as of fiscal 2022, this includes 126 companies)
Amount of B2B2X Revenues: the Integrated ICT Business Segment, the Regional Communications Business Segment, and the Global Solutions Business Segment
Number of Serious Incidents/Number of Telecommunications Service Interruptions due to External Cyberattacks: four specified public institutions (NTT East, NTT West, NTT Communications, and NTT DOCOMO)*6: Estimated based on the Ministry of the Environment’s “Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain.”*7: A "significant incident" is defined as an event meeting the following conditions that disrupt or degrade the quality of telecommunications services:- Voice services that handle emergency calls (110, 119, etc.): Lasting more than 1 hour and impacting over 30,000 people- Voice services that do not handle emergency calls: Lasting more than 2 hours and impacting over 30,000 people, or more than 1 hour and impacting over 100,000 people- Internet-related services (free): Lasting more than 12 hours and impacting over 1 million people, or more than 24 hours and impacting over 100,000 people- Other services: Lasting more than 2 hours and impacting over 30,000 people, or more than 1 hour and impacting over 1 million people

INTEGRATED REPORT 2023

17

Philosophy

NTT Group Sustainability

NTT’s Vision for a Sustainable Society―NTT Group Global Sustainability Charter―
In today's society, there exist conflicting phenomena that cannot be understood in a black-and-white manner,
whether it be global versus local, environmental versus economic, or human rights issues. It is also true that asingle phenomenon can have a different meaning and significance based on the perceiver.
NTT believes that realizing a paraconsistent society, in which these opposing concepts and phenomenon are
included and diverse values are accepted, will contribute to the realization of a 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 find themselves within the “We” and to realize that we aresupported by the connections between diverse people, things, and technologies. We look to implement various
initiatives founded on the principles of altruistic co-existence through which people will seek to increase their
the realization of a sustainable society through initiatives for ensuring the positive coexisting of nature andhumanity, improving prosperity for all people and cultures, and maximizing well-being for all.

NTT’s Vision of a Sustainable Society
Conflicting phenomena exist in society

Events differ depending on the actor

Cannot be understood with traditional dualistic thinking

Different reality or meaning depending on perspective

Paraconsistent(concepts achieved inclusively)

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Process for Selecting Important Issues (Comprehensiveness and Priority of the 30 Activities)
The 16 activities plotted in areas I, II, and III are classified into four more
important categories (climate change, human capital, new value creation,and resilience). We disclosed our strategies, indicators, and targets foreach of the more important items in our 38th Annual Securities Report,"Sustainability-Related Principles and Initiatives."

Material issues (materiality) are selected
as 30 activities using the following
steps based on the GRI materiality
standards and processes.

STEP1 Identifying material issues
Using evaluation organizations like third party
institutions, ISO 26000 and GRI Standards, global
trends, internal workshops, and materiality at othercompanies as a guide, we identify material issues
through comprehensive review of new problems
related to sustainability, in order to discuss andselect important issues that the NTT Group should
address on a global scale.

Resilience

Ⅲ

STEP2 Setting priorities
NTT assesses the priorities to be addressed basedon their impact on two aspects, “Growth as acompany” and “Solving social issues.” To achieve
management that simultaneously helps resolve
social issues and achieve business growth, NTT
assesses priorities by incorporating the opinions ofoutside experts.

Human capital

Climate changeⅠ

Solving social issues

happiness along with the happiness of others. The “Self as We” concept casts light on the need to contribute to

Message from the CEO

New Value
CreationⅡ

STEP3 Confirming validity & approval
NTT also incorporates the opinions of third parties froma global perspective, which are then deliberated by the
Sustainability Committee and approved by the Boardof Directors.

Growth as a company* These are reviewed regularly (once per year) and revised when necessary.

Organization for Implementation

Vision for a “Sustainable Society”
Basic Philosophy

Promoting “Self as We”

NTT Group Global Sustainability Charter
NTT Group Global Sustainability Charter
Ensuring the positive
coexisting of nature andhumanity
Improving Prosperity for
All People and Cultures
Maximizing Well-being
for All18

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Addressing Environmental
Challenges
Addressing Social Issues
Addressing Human Rights,
Diversity & Inclusion

Complementary Policies, etc.
Environment andEnergy Vision
New Management Style

Human Rights Policy

The NTT Group regards the promotion of sustainability as animportant management issue, and items of particular importance,such as creating environmental targets for the entire Group,are decided based on discussions held with directors. Under
the governance structure overseen by the Directors, we haveestablished a Sustainability Committee (chaired by the President
and Chief Executive Officer) directly reporting to the Board. This
committee is responsible for managing the policy direction andprogress of sustainability initiatives across the entire Group.
Policies related to sustainability (the Charter and creating andabolishing accompanying policies, particularly deciding critical● Sustainability Initiatives

In fiscal 2022, the Sustainability Committee
convened on one occasion, while the Group
Sustainability Committee convened twice.
These meetings focused on discussing
strategies towards achieving net-zeroemissions, as well as the incorporation ofsustainability metrics into performance-based
bonuses, specifically employee engagement
rates. The findings were subsequently
reported to the Board of Directors.

indicators) will be decided by the Board of Directors via the
Sustainability Committee. In addition, the Sustainability Committee
includes the Corporate Ethics Committee, Human Rights
Committee, and Green Innovation Committee to handle theindividual topics relevant to each sub-committee. Furthermore,Group Sustainability Committee meetings (with senior executive
vice presidents and others from major Group companies) are held
to share common challenges and successful examples from eachGroup company, as well as to monitor progress on sustainability
implementation with respect to PDCA cycles and further
promoting a sense of unity throughout the Group.

● Sustainability Promotion System

Board of Directors

Sustainability Committee
Chairperson:
Representative Member of the Board and President

Members
Representative Member of the Board and Senior Executive Vice
President, Head of Corporate Strategy Planning, Head ofTechnology Planning, Head of Research and Development
Market Strategy, Head of Market Planning & Analysis, Head of
Research and Development Planning, Head of Alliances, Headof Global Business, Head of Finance and Accounting, Head of
Public Relations, Head of General Affairs, Head of Internal Audit

Group Sustainability Committee
Members: Senior executive vicepresidents of major group companies

Corporate Ethics Committee
Human Rights Education Committee
Green Innovation Committee

INTEGRATED REPORT 2023

19

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Key Sustainability Issues and Topics for Fiscal Year 2023
Out of the 30 activities outlined in NTT Group Global Sustainability Charter, 16 have been selected as key sustainability
issues for this year. These issues are organized under the four main categories of Climate Change, Human Capital, New
Value Creation, and Resilience, and key indicators have been established for each.
3 Themes

9 Challenges

Moving toward adecarbonized society

Ensuring
the positive
coexisting of
nature andhumanity

Improving
Prosperity for
All People andCultures30 Activities

1) Promoting energy conservation
2) Reducing power consumption by introducing IOWN technologies
3) Developing and expanding the use of renewable energy
4) Providing new services that contribute to carbon neutrality
5) Creation of innovative environment and energy technology

Four Key Categories

Principal Indicators

Climate change

・Greenhouse Gas Emissions

Human capital・Employee Engagement Rate
・New Female Manager
Promotion Rate・Male Childcare Leave Rate・Direct Dialogue Rate with Key
Suppliers

Newvalue creation

・Amount of B2B2X Revenues

Resilience

・Number of Serious Incidents
・Number of Telecommunications
Service Interruptions due toExternal Cyberattacks

1) Promoting energy conservation2) R educing power consumption by introducing
IOWN technologies3) Developing and expanding the use of renewable

A commitment toa resource-recycling
future6) Increasing the reuse and recycling of communications equipment, mobile
terminals, and other technologies
7) Reduction in plastics use and promotion of recycling
8) Proper treatment, storage, and management of hazardous waste
9) Appropriate and efficient management of water resources

A future where people
and nature are inharmony10) Thoroughly implementing environmental assessments11) Contributing to natural ecosystem conservation

Establish shared
ethical standards

12) Establishing and thoroughly complying with ethical standards13) Appropriately managing conduct risk
14) Thoroughly reinforcing corporate governance and compliance15) Sharing high ethical standards with business partners

Prepare for a new
future with the powerof digital technologies

16) Promoting the B2B2X model
17) Protection and respect for intellectual property18) Contribution to the revitalization of local communities and economies19) Ensuring the stability and reliability of services

Moving toward a safe,
secure, and resilient
society20) Strengthening information security and personal information protection21) Promoting a decentralized society based on remote work

Maximizing
Well-being
for All

Selection of Material Issues (16 Items)

Respect for humanrights22) Compliance with the NTT Group Global Human Rights Policy23) Encouraging society as a whole to respect human rights

Diversity & Inclusion24) Promoting recruitment, training, and education of diverse human resources
and women’s advancement in the workplace25) Encouraging of understanding of LGBTQ and promoting the advancementof disabled people
26) Support for balancing work and life such as childcare and nursing care

Creating new work
styles and workplaces

energy4) Providing new services that contribute to carbon
neutrality
5) Creation of innovative environment and energy
technology22) Compliance with the NTT Group Global Human
Rights Policy23) E ncouraging society as a whole to respecthuman rights24) Promoting recruitment, training, and educationof diverse human resources and women’s
advancement in the workplace25) Encouraging of understanding of LGBTQ andpromoting the advancement of disabled people26) S upport for balancing work and life such as
childcare and nursing care28) A chieving zero fatal accidents as well as
maintaining and promoting employee health29) Supporting autonomous capacity development

16) Promoting the B2B2X model18) C ontribution to the revitalization of local
communities and economies

27) Promoting remote work and other workplace models

19) Ensuring the stability and reliability of services28) A chieving zero fatal accidents as well as maintaining and promoting
employee health20) Strengthening information security and personal29) Supporting autonomous capacity development

information protection30) Promoting paperless operations

20

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

21

NTT Group Sustainability

Philosophy

Related New Medium-Term Management Strategy Initiatives

Climate Change

NTT Group
Sustainability

Message from the CEO

Corporate
Governance

Growth Strategy

1 NTT as a Creator of New Value and Accelerator of a Global Sustainable Society■❶ IOWN-Driven Creation of New Value (from concept to commercialization)❸ Achievement of a Circular Economy Society❷ Data-Driven Creation of New Value❹ Further Strengthening of Business
Foundations

2 Upgrading the Customer■

3 Improving the Employee■i. Establishment of manufacturing company forphotonic-electronic convergence devices
ii. Acceleration of IOWN research and development/ commercialization

Initiatives Related to Climate Change in the New Medium-Term Management Strategy (Progression towards Net-Zero)i. Develop sustainability solutions for customers
ii. Creating Circular Economy businessesiii. Progression towards Net-Zeroi. Strengthening the personal businessii. Strengthening the use of DX/data in society and industryiii. Expansion and upgrade of data center infrastructure

Experience (CX)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 accordance withthe “NTT Green Innovation toward 2040” that NTT Group announced in September 2021, with the aim of achieving
zero environmental impact, we aim to include Scope 3 emissions in addition to our Scope 1 and 2 initiatives.

Experience (EX)❺ Fusion of Research and Development with aMarket-Focused Strategy❻ S trengthening of Services that Emphasize
Customer Experience (CX)NTT Green Innovation toward 2040*1

 pen and Innovative Corporate Culture❼O upport Career Growth❽S lobal Benefits for Employees and their Families❾G● Illustration of NTT Group Greenhouse Gas

Expansion to Scope 3

2030

Emission Reductions (Domestic + Overseas)

Scope 322.23 million tons

Further Strengthening of
Collaborations with Suppliers

80 % Reduction in Greenhouse Gas

Results 19.49 million tons

Emissions (compared to FY2013)

Mobile(NTT DOCOMO)

Strategies Related to Climate Change

Scope 1,2
4.65 million tons
During product manufacturing, etc.

CarbonNeutral

Data Centers4.00 million tons
PlannedCustomers’ Contributions
to Decarbonization

3.075 million tons

Results

Given the widespread acknowledgement of climate change as a significant global risk, insufficient

2040

measures or disclosures on NTT Group's part for climate change and resource circulation could

Risks

Data Section

Carbon-Neutral

potentially undermine the understanding and support of our stakeholders, including customers, partners,

During Customer usage, etc.

FY2013

2.53 million tons

0.95 million tons

FY2020 FY2022

FY2030FY2040shareholders, employees, and communities, thereby affecting our business operations. Additionally, theintroduction of new laws and regulations, or the tightening thereof, could increase our costs, impacting
the NTT Group’s business performance and financial conditions.

*1 GHG protocol: Scope 1 (own direct emissions of GHG) and Scope 2 (indirect emissions from using electricity, heat and steam supplied by other companies)

To address these risks, NTT Group formulated its NTT "Green Innovation toward 2040" environment
and energy vision and is advancing initiatives to reduce its environmental impact to achieve carbon

Addressing

neutrality by 2040. Besides promoting renewable energy usage as part of its own efforts to promote

Risks

green power, the company is also working to enhance its environmental energy initiatives and information

Reduction of greenhouse gas emissions for Scope 1, 2Illustration of NTT Group Greenhouse Gas Emission *2
Reductions (Domestic + Overseas)

disclosure by promoting IOWN research and development aimed at achieving extremely low power

Overview of Shifts in NTT Group’s
Energy Consumption (Domestic + Overseas)

consumption, introducing an internal carbon pricing system, and utilizing green bonds.
・Increased use of renewable energy: Reduce greenhouse

With regard to opportunities, we are focusing on expanding renewable energy options at data centers,

Opportunities

Energy consumption outcome: will be approximately doubled by FY2040

gas emissionsby 45%*3 ■1・Approximately half of energy consumption will be reduced
by introducing IOWN ■1・Lower energy consumption with IOWN technologies:

aiding in the development of processes for visualizing greenhouse gas emissions, and broadening theReduce greenhouse gas emissions by 45%

sale of green energy to both corporate and individual clients.

*4

2
■

・Renewable energies will be introduced for the otherapproximate half*5 ■2(860)
Outcome(10,000 tons)

Indicators and Targets Related to Climate Change

Greenhouse
Gas Emissions[Scope 1, 2]
FY2030: 80% reduction (compared to FY2013)
FY2040: Carbon neutrality[Scope3]
FY2040: Net zero

Results[Scope 1, 2]
FY2022: 2.53 million tons, 45% reduction (compared to
FY2013)[Scope3]
FY022: 19.49 million tons, 18% reduction (compared to
FY2018)(Notes) 1. The scope of the greenhouse gas emission calculations includes our company and its consolidated subsidiaries.
2. Scope 1 and 2 are in line with the Plan for Global Warming Countermeasures,which is outlined by the Japanese government, using fiscal 2013 as the base year. For
Scope 3, the base year was set to fiscal 2018, the year calculations began under the same calculation scope currently being used, including our overseas Group
companies.

IOWN
465

(Reduction in
EnergyConsumption)

Energy Savings

▲45%

400
▲45%

▲
Greenhousegas emissions

95

2020
Introduction of internalcarbon pricing system(Introductionof renewableenergy, etc.)

1

2030
Mobile, Data Centers
to be Carbon Neutral

2040[Fiscal year]
NTT Group to be
Carbon Neutral*2 GHG Protocol: for Scope 1 and 2*3 Estimated Introduction of Renewable Energy (including actual renewable energy
through Non-Fossil Fuel Certificates) FY2020: 1.0 billion kWh; FY2030 to FY2040:
approx. 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 and other factors.
Approximately half of the domestic renewable energy usage is anticipated to be fromenergy sources owned by NTT (FY2030).
*4 Estimated reduction of energy consumption through the introduction of IOWN
(comparison to outcome) →FY2030 target: Reduce by 2.0 billion kWh (15% reduction) FY2040 target: Reduce by 7.0
billion kWh (45% reduction)
Percentage of introduction of IOWN (photonics-electronics convergence technologies, etc.)
out of total energy volume → FY2030: 15%; FY2040, 45%

22

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

IOWN

1

Renewable
Energy2

8.3 billion kWh

From Fossil Fuels
Electricity Derived

Offsets2022
2013

Renewable
Energies[Reduction of Energy Consumption]

2
Energy Consumption

Target▲55%

Greenhouse gas emissions

Indicator

Approx. 2x (compared to FY2013)
Outcome▲Energy Savings

2013

2020

2030
Mobile, Data Centers
to be Carbon Neutral

2040[Fiscal year]
NTT Group to be
Carbon Neutral*5 Estimated Introduction of Renewable Energy (including actual renewable energy
through Non-Fossil Fuel Certificates) FY2020: 1.0 billion kWh; FY2030 to FY2040:
approx. 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 and other factors.
Approximately half of the domestic renewable energy usage is anticipated to be fromenergy sources owned by NTT (FY2030).

INTEGRATED REPORT 2023

23

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Climate Change

Expansion of Renewable Energy Generation Business

Examples of Business Opportunities Resulting from Climate Change

Acquisition of Green Power Investment Corporation and Other Renewable Energy Operators

Contributions to Reducing Society’s Environmental Impact (1): ~NTT DATA Japan's Greenhouse Gas Emission Visualization Platform C-Turtle®~

On August 3, 2023, NTT Anode Energy and JERA Co., Inc.
(JERA) completed the acquisition of shares in Green PowerInvestment Corporation (GPI), owned by U.S. renewableenergy operator Pattern Energy Group LP, based on thestock purchase agreement concluded on May 18, 2023.
Moving forward, NTT Anode Energy, JERA, and GPI will

NTT DATA Japan provides the greenhouse gas emissions
visualization platform C-Turtle® to aid in the achievementof carbon neutrality for society as a whole. Recently, there
has been a growing demand for companies to maketheir greenhouse gas emissions transparent. However,there are numerous options for calculation methods,
making it challenging to select the most appropriate one.
Typically, a company's emissions are calculated using
the formula "Activity Level (purchased amount/numberof procured products)" × "Emission Coefficient (a fixedemission level determined for each product, based on
industry averages)." One problem with using industry
averages is that it does not reflect any emission reductions
made by individual suppliers in the company's indirectemissions (Scope 3 Categories 1 and 2). An alternativeis the "Total Emissions Allocation Method," which uses
the formula "Activity Level (amount of transactions per
supplier)" × "Emission Coefficient per Supplier (emissions
per unit revenue for each supplier)" instead of industry
averages. A unique feature of C-Turtle ® is its adoption ofthe "Total Emission Allocation Method," which not only
calculates emissions but also incorporates actions taken

synergize their respective expertise, insights, and strengths
in renewable energy operations, with the goal of contributing
to Japan's goal of becoming carbon neutral by 2050
through further initiatives, thereby promoting the adoption ofrenewable energy within Japan.

● Assets Acquired Through the Acquisition (Including

portions owned by other companies)
Phase

Operational
Under
construction
In development

Type

Total power generation
capacity (10,000 kW)

Solar

5.6

Onshore wind28.1

Onshore wind

8.0

Offshore wind

11.2

Onshore wind

Approx. 150*

Offshore wind

(Before Public Announcement)* Applicable only to FIT-certified projects

Wind Farm Tsugaru (Provider: GPI)In the NTT Group, as declared in our Environment
and Energy Vision "NTT Green Innovation toward 2040",
announced in September 2021, we are working towards thedevelopment of renewable energy power plants to achieve
our target of an 80% reduction in greenhouse gas emissions
by 2030. We have set a goal of introducing about 8 billion
kWh of renewable energy by 2030, and this acquisition has
brought us much closer to achieving this goal.

NTT Anode Energy is actively expanding its renewableenergy generation business and promoting eco-friendly
economic activities through the stable supply of locally
produced, locally consumed, optimized, efficient electricity.
This is in alignment with the NTT Group’s new medium-term
management strategy, "New value creation & Sustainability
2027 powered by IOWN," which aims for a resourcerecycling future.

Initiatives Related to Climate Change in the New Medium-Term Management Strategy(Develop Sustainability Solutions for Customers)
We are looking to promote green solutions achieved through the combination of green energy and ICT,
with an investment of approximately one trillion yen over the next five years.
We plan to expand renewable energy generation projects while ensuring stable power supply optimized at the
local level, utilizing technologies like storage batteries and EMS*1.

Renewable Energy Generation

Stable Supply of Energy Directed towards Local Production for Local Consumption
Data gathering andAI-based analysis/predictions

Wind
Power

EMS
Decentralized Data Centers

Solar
Power

HydroelectricPower
BiomassPower

Storage
Batteries

Green Energy

Local Grid Networks

EnergyStorage

Factories

24

NIPPON TELEGRAPH AND TELEPHONE CORPORATION*1 CDP is an NGO run by a British charitable organization that operates a global
information disclosure system that allows investors, companies, nations, regions,and cities to manage their environmental impacts.     https://www.cdp.net/en

Emission reductions

Emissions tied to thetransaction amountBecause emission reduction efforts are integrated into downstream
companies via transaction amounts, this will not only have an impact on
the company itself, but lead to the decarbonization of society as a whole

Helping Reduce Society’s Environmental Impact (2): Introducing N.mobi, an EV Adoption and Operational Support Solution for Municipalities and Corporations
NTT Business Solutions Corporation (NTT Business
Solutions) has teamed up with NTT Anode Energy Groupto launch N.mobi, a comprehensive solution to assist
municipalities and corporate clients in adopting EVs andoptimizing electricity use through both EVs and EV batteries.
Amid a growing call for carbon neutrality initiatives, there
is an increasing demand for using EVs as commercial
vehicles. However, the higher vehicle costs of EVs comparedto gasoline cars, as well as issues such as the rise inelectricity bills due to increased peak demand from EV
charging and limitations on driving range due to a lackof charging infrastructure, pose significant challenges formunicipalities and corporations looking to adopt EVs. Against
this backdrop, we offer visibility into the use of commercial
vehicles by municipalities and corporations in an effort to
optimize fleet sizes. We also assist in devising plans fora cost-effective transition to EVs. In addition to offering acharge control platform to manage electricity costs during
EV operation and address the inconveniences related to
mid-journey charging, we provide a one-stop solution for
introducing EV vehicles, charging/discharging equipment,(1) Planning
Forecast report of implementation results
Facility survey*1 Energy Management System

by suppliers to reduce emissions, enabling collaborative
efforts.
In August 2022, we became the first Japanese company
to sign a usage license agreement for greenhouse gas
emissions data and other data on global companies heldby the international NGO CDP *1. This allows C-Turtle ® tocombine data collected by NTT DATA Japan with data
held by CDP, enabling accurate emission calculations
consistent with each company's actual emissions.

(2) Efficiency
Vehicle management DX

and the design and construction of solar power generation
facilities for PPA*1). This allows us to offer ongoing support forour customers' transition to EVs for their commercial fleets.
Going forward, NTT Business Solutions and NTT AnodeEnergy Group aim to further enhance the utility of EVs
by developing new features such as EV sharing between
municipalities and corporations, and VPP *2 services thatutilize numerous EVs within a community as virtual batteries.
Together with municipalities and corporations, we willcontribute to the creation of prosperous and sustainable local
communities through optimal EV utilization.
*1 Power Purchase Agreement*2 Virtual Power Plant(3) EV adoption(4) EV operation

EV provision

EV vehicle management DX

Subsidy application support
Charging/discharging facilities construction and provision(5) EV utilization
EV sharing

Smart charging

Subsidy application support

Peak control

Solar energy/batteries construction and provision

Post-implementation analysis report
INTEGRATED REPORT 2023

25

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Climate Change

TCFD

STEP 1

Scenario

Governance
The NTT Group regards the promotion of sustainability
as an important management issue, and items of particularimportance, such as creating environmental targets for theentire Group, are decided based on discussions held withdirectors.
Under the governance structure overseen by the Directors,
we have established a Sustainability Committee (chaired by
the President and Chief Executive Officer) directly reportingto the Board. This committee is responsible for managing
the policy direction and progress of sustainability initiatives
across the entire Group. Policies related to sustainability (theCharter and creating and abolishing accompanying policies,
particularly deciding critical indicators) will be decided by the
Board of Directors via the Sustainability Committee.
In FY2021, for the processes selected as key issues andactivities to be addressed from among the sustainabilityrelated issues, we used evaluation organizations likethird party institutions, ISO 26000 and GRI Standards,
global trends, internal workshops, and materiality atother companies as a guide to identify material issues
through comprehensive review of new problems related tosustainability, in order to discuss and select issues that the
NTT Group should address on a global scale. In addition,
NTT assessed the priorities to be addressed based on theirimpact on two aspects, “Growth as a company” and “Solvingsocial issues.” To achieve management that simultaneously
helps resolve social issues and achieve business growth, NTT
assesses priorities by incorporating the opinions of outside
experts.
The validity of the specific issues we have identified
and their level of priority is subject to an annual review by
the Board of Directors, following discussions within the
Sustainability Committee. During the Board of Directors heldon April 20, 2023, we determined four key categories forsustainability in fiscal 2023 based on the reviewed priorities:
1) Climate Change, 2) Human Capital, 3) New Value Creation,and 4) Resilience.
In relation to climate change, we are managing progresson greenhouse gas emissions and other factors through theGreen Innovation Committee, a subcommittee under the
Sustainability Committee, and the Group Green Innovation
Board of Directors

Nomination Committee
Compensation Committee
Sustainability Committee

President (Executive Officers Meeting)

Scenario Definitions

Green Innovation Committee

Business Risk Management Promotion Committee

Committee, which includes all companies within the NTT
Group.

Transition Risk

Risk Management

Physical Risk

The NTT Group discusses risks and opportunities related
to key sustainability issues at Sustainability Committee
meetings and reports these to the Board of Directors.
Additionally, as part of the NTT Group's risk management
process, the Business Risk Management Promotion
Committee—headed by the senior executive vice president—
along with the Group Business Risk Management Promotion
Committee are central to establishing and operating a PDCA
cycle for risk management, with the aim of anticipating andpreventing the occurrence of the potential risks close at handand minimizing losses in the event that risks do materialize.
The processes concerning the identification, evaluation, andmanagement of sustainability-related risks are integrated into
the NTT Group’s overall risk management framework.
Climate change is treated as one of the businessenvironment and strategy-related risks within the Business
Risk Management Promotion Committee.

Strategy
The NTT Group formulated its Environment and Energy
Vision "NTT Green Innovation toward 2040" and is advancing
initiatives to reduce its environmental impact to achievecarbon neutrality by 2040. Besides promoting renewableenergy usage as part of its own efforts to promote green
power, the company is also working to enhance its
environmental energy initiatives and information disclosure
by promoting IOWN research and development aimed atachieving extremely low power consumption, introducing aninternal carbon pricing system, and utilizing green bonds.
With regard to opportunities, we are focusing on expanding
renewable energy options at data centers, aiding in thedevelopment of processes for visualizing greenhouse gas
emissions, and broadening the sale of green energy to both
corporate and individual clients.
Also, in alignment with our new medium-term management
strategy announced in May 2023, the NTT Group iscommitted to achieving a Circular Economy Society. This
includes promoting green solutions through the combinationof Green Energy and ICT, expanding our renewable energy
generation business, optimizing and efficiently securing astable supply of locally produced, locally consumed electricity,
recycling resources among various industries, and further
accelerating regional development, all with the aim of creatinga sustainable society. At the same time, we aim to extend
the scope of "NTT Green Innovation toward 2040" to include
Scope 3, as part of our efforts to achieve net-zero emissions.

Scenario

Scenario

STEP 2

Overview

Reference Methodology for Scenario

Scenario in which the decarbonization of society is achieved rapidly………………a future in which the target increase of 1.5°C has been attained

IEA World Energy Outlook 2022

Scenario in which physical risks materialize

IPCC Sixth Assessment Report, Climate Change 2022: Summary……………… a future in which the average temperature has risen by 4°C

for Policymakers (SPM) Based on Natural Science

Risks and Opportunities Identified with Scenario Analysis (Overview)
Scenario *1
1.5°C
4°C

Overview

Type

Timeframe*2

Response

Increase in costs for decarbonization,
renewable energy charges, andrenewable energy implementation

Loss
▼

—

Transition risk
(policy/regulations)Long-term• Initiatives for realizing the IOWN concept• Introducing and expanding the use of renewable energy•P romotion of energy conservation, high-efficiency data
centers

Social criticism related to fewer efforts
toward ESG (drop in market share)

▼

Minor

Transition risk
(market/criticism)

Long-term• Proactive disclosure of information on environmental
initiatives

Expanding sales of services that help
reduce society’s environmental impact▲▲▲
ProfitOpportunity (products andLong-term
services, energy)• Creating new services that contribute to carbon neutrality• Increase in green electricity retailAchieve the IOWN concept▲▲▲

Opportunity (investment
Long-term
toward R&D)

• Acceleration of DX and promotion of remote world• Reduction of greenhouse gases across the supply chain

Disasters caused by heavy rain
and typhoons—▼

Physical risk (acute)

Short-term• Provide disaster response and disaster prevention
training

Increased air-conditioning costs
due to increasing temperatures—▼

Physical risk (chronic)

Long-term• Promoting energy conservation*1 Degree of impact with 1.5°C scenario and 4°C scenario in FY2030 *2 Timeframes refer to Short-term (less than 3 years), Medium-Term (3 to less than 6 years), Long-term (6 years ormore). Degree of impact expressed in 3 levels (▲, Low; ▲▲, Medium; ▲▲▲, High)*Estimated impact on annual profits:[Assumptions and basis for calculations]

1) If carbon pricing introduced (approx. -¥17 billion)1) Carbon pricing ($140 USD/t-CO₂) x fiscal 2030 emission goals(Aim for 80% reduction by fiscal 2030 with a baseline of 4.65 million tons of Scope 1+ 2 emissions from fiscal 2013)<Carbon pricing: Estimated unit price for FY2030 on IEA World Energy Outlook 2022,
Advanced economies: 140USD>2) Increased cost of renewable energy charges and implementation of renewable energy(approx. -¥10 billion yen)3) Repairs for damage caused by heavy rainfall and typhoons(FY2020: approx. -¥5 billion, FY2021: approx. -¥0.2 billion, FY2022: approx. -¥3 billion)4) Higher air conditioning costs as temperatures rise (-¥0.6 billion if outdoor temperaturesrise 1 degree)2) Renewable energy charges in FY2030: ¥4.1/kWh, FY2022: ¥3.45/kWh
Estimate assumes certificates cost ¥1.0/kWh3) Estimated impact from repairs to damage caused by heavy rainfall and typhoons fromFY2020 to FY2022
4) Estimated air conditioning costs increase based on domestic electricity consumption
in FY2022

Indicators and Targets
Climate Change Indicators and Targets
Indicator

TargetGreenhouse Gas
Emissions[Scope 1, 2]
FY2030: 80% reduction (compared to FY2013)
FY2040: Carbon neutrality[Scope3]
FY2040: Net zero

Results[Scope 1, 2]
FY2022: 2.53 million tons, 45% reduction (compared to FY2013)[Scope3]2022: 19.49 million tons, 18% reduction (compared to FY2018)(Notes) 1. T he scope of the greenhouse gas emission calculations includes our company and its consolidated subsidiaries.
2. Scope 1 and 2 are in line with the Plan for Global Warming Countermeasures, which is outlined by the Japanese government, using fiscal 2013 as the base year. For
Scope 3, the base is fiscal 2018, the year calculations began under the same calculation scope currently being used, including our overseas Group companies.

High Performance Energy Use Promotion Committee

26

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

27

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Climate change

Co l um n

C olumn
Initiatives to reduce greenhouse gas emissions for Scope 3

To reduce greenhouse gas emissions under Scope 3, we
will further strengthen cooperation with suppliers to reduce
emissions during product manufacturing, and contribute tocustomers' decarbonization efforts by reducing emissions
during product use.
As for our initiatives for suppliers, we are deepening
understanding of decarbonization initiatives through briefingsand direct dialogues on the NTT Group’s initiatives toward net
zero emissions, as well as providing support for visualizationof suppliers’ greenhouse gas emissions and formulationof emission reduction targets. In addition, we promote theintroduction of renewable energy and energy-saving equipment
to our customers.
In fiscal 2022, we became the first telecommunications
carrier in Asia to join Joint Audit Co-Operation (JAC), a joint
audit consortium of global telecommunications carriers.
Discussions are underway within the JAC through participationin the WorkStream toward reducing greenhouse gas emissions,and the entire telecommunications industry, beyond just ourown companies, is working to reduce Scope 3 emissions.

Contributing to Biodiversity Preservation and Transitioning to a Circular Economy
In our core business of telecommunications, the NTT
Group is somewhat reliant on certain natural capitalwhen conducting business activities.
With regard to our impact on natural capital, weinvestigated our impact on ecosystems with respect tothe impact of mining on ecosystems and water resources
resulting from use of metals in smartphones, and effects on
the ecosystem with regard to the creation and operation ofcommunication buildings, cables, wireless base stations, data

centers, and renewable energy facilities. We acknowledge
that we have a limited impact on natural capital.
That being said, we believe the increasing focus on biodiversity
and a recycling-oriented society opens up new business
opportunities. We will continue to contribute to the achievementof a sustainable society through our business activities.
We will continue to verify and disclose risks andopportunities related to biodiversity and resource
circulation for the NTT Group.

TOPIC 1
Biodiversity

Approx. 11%
Scopes 1 and 2● Company’s own direct emissions, as well as indirectemissions from using electricity, heat and steam
supplied by other companies● FY2022:

NTT Group
Greenhouse
Gas Emissions(FY2022)22.02 million t-CO₂

2.53 million t-CO
45% reduction
2● Compared to FY2013:

Approx. 89%
Scope 3
● Indirect emissions other than Scope 1 and Scope 2(emissions in the supply chain including upstream(products’ manufacturing, procurement, transportation, etc.) and downstream (products’ use, disposal,
leasing, etc.) of business activities)● FY2022:

19.49 million t-CO
18% reduction

We at the NTT Group are committed to carrying out environmental
assessments for our facilities, including data centers and solar power
installations. Guided by our unique Green Building Design Guidelines,
we make an effort to understand the historical, social, geographical, andbiological aspects of the environmental characteristics of building sites andtheir surrounding regions, incorporating them into our designs as necessary.
Additionally, we are engaged in supporting coral ecologicalsurveys utilizing underwater drones to assist in the preservation of
biodiversity in society.

2

Provider: Okinawa Institute of Science and Technology (OIST)● Compared to FY2018:

TOPIC 2
Appropriate management of water resources

Co l um n
Procurement Through NTT Group Green Finance
NTT Group has formulated the NTT Group Green
Finance Framework with the goal of strengthening
its commitment to Group-wide efforts to achieve asustainable society and promoting them vigorously,
including from a financial perspective. Since its
establishment in June 2020 as the NTT Group
Green Bond Framework, this framework has beenrevised in accordance with the Group's initiatives formaking a sustainable society a reality. NTT FINANCECORPORATION (NTT FINANCE), the Group's corefinancial company, will issue green bonds or procure
funds through green loans in accordance with the Green
Finance Framework. The funds raised will be invested inprojects that contribute to solving environmental issues
at Group companies.
When raising funds, NTT FINANCE will evaluate
and select investment projects based on conformity
with the NTT Group Global Sustainability Charter. It
will also centrally manage procured funds and confirm
their appropriation for projects. The Group will reportannually on the allocation of funds and the project’s
environmental impact.
The Green Finance Framework as well as Fund
Allocation Reporting and Impact Reporting are available
on the NTT FINANCE website.

(https://www.ntt-finance.co.jp/ir/greenbond/index.html?link_id=g41l)● Green Bond Issuance Status

28

June 2020¥40 billion total

October 2021

¥300 billion total

December 2021

EUR 1.5 billion total

July 2022

USD 1.5 billion total

July 2023¥380 billion total

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Target project: Green buildings
Eligible projects:
5G-related investments, FTTH-related investments, R&D for achieving the IOWN
concept, is considered equivalent

In the context of NTT Group's business operations, we consume almost no water resources. According tostatistics from the Ministry of Land, Infrastructure, Transport and Tourism, the annual water usage in Japan* stands
at approximately 25.2 billion cubic meters, comprising both residential and industrial consumption. By contrast, theNTT Group's water withdrawal amount is about 4.63 million cubic meters, accounting for less than 0.02% of Japan's
total. Additionally, our water usage is dispersed across Japan, leading
us to believe that there are no water sources significantly affected by
our activities. Furthermore, the NTT Group has reduced its reliance on
tap water by utilizing reclaimed water and rainwater.
At NTT DATA Italia, we offer cloud solutions optimized for water
management operations to Acea, an Italian utility company involved inwater and electricity services.
*Based on data from the Ministry of Land, Infrastructure, Transport and Tourism website.
Water usage statistics for 2019 indicated an annual consumption of approximately
78.5 billion cubic meters—approx. 14.8 billion for residential use, approx. 10.3 billion for industrial use, and approx. 53.3 billion for agricultural use.

TOPIC 3
Increasing the reuse and recycling of communications equipment, mobile terminals, and other technologies
For fiscal 2030, the NTT Group has set the goal of achieving a recycling
rate exceeding 99% for waste generated within the Group. Given that weoffer a broad range of services, including telecommunications, significant
resources are essential for maintaining business continuity. For thisreason, we have established this objective to both mitigate business
continuity risks and facilitate resource circulation. In fiscal 2022, ourwaste recycling rate stood at 98.2%. We are committed to furthering ourrecycling efforts to meet or surpass our target of 99%.

INTEGRATED REPORT 2023

29

Related New Medium-Term Management Strategy Initiatives

NTT Group Sustainability

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

1 NTT as a Creator of New Value and Accelerator of a Global Sustainable Society■

Human Capital❶ IOWN-Driven Creation of New Value (from concept to commercialization)❸ Achievement of a Circular Economy Society❷ Data-Driven Creation of New Value❹ Further Strengthening of Business
Foundations

i. Establishment of manufacturing company forphotonic-electronic convergence devices
ii. Acceleration of IOWN research and development/ commercializationi. Strengthening the personal businessii. Strengthening the use of DX/data in society and industryiii. Expansion and upgrade of data center infrastructurei. Develop sustainability solutions for customers
ii. Creating Circular Economy businessesiii. Progression towards Net-Zero

Gro u p H u ma n R e s o u rc e s St r a t e g y

2 Upgrading the Customer■

3 Improving the Employee■❺ Fusion of Research and Development with aMarket-Focused Strategy❻ S trengthening of Services that Emphasize
Customer Experience (CX)

 pen and Innovative Corporate Culture❼O upport Career Growth❽S lobal Benefits for Employees and their Families❾G

Experience (CX)

Experience (EX)

People are the driving force behind creating a sustainable society by delivering value to the world.
We place a strong emphasis on Employee Experience (EX) and are committed to creating a positive cycle where people
are the key drivers of value.
Within the NTT Group, we believe that the key to improving EX lies in a diverse group of employees taking charge ofcharting their career paths from the moment they are hired, gaining work experience, supplementing skills throughtraining, and taking on new challenges after reflection and self-assessment.
To enable each employee to independently shape their career, as shown in the below diagram, we provide anenvironment of implementing various HR policies from both perspectives of Supporting Growth and Developing

Human Capital Strategy 1 <Strengthening Employee Engagement>

Risks

Addressing
Risks

Opportunities

In both the telecommunications and information services markets, various players, both domestic
and international, are rapidly joining the fray. With services and equipment diversifying and becoming
increasingly sophisticated, we anticipate that this landscape will continue to evolve at an accelerating
pace, especially around cloud services. Given the situation, enhancing employee engagement is pivotal
for improving productivity, sparking creativity, and retaining top-tier talent. Decreased engagement could
adversely affect areas such as the development of new technologies, the introduction of new services,
the refinement of existing services, and the execution of growth strategies, potentially impacting the NTT
Group’s financial performance.
To address such risks, the NTT Group conducts employee engagement surveys and is intensifying
efforts to tackle the challenges identified. We introduced a new personnel and salary system in April 2023
that is grounded in specialization. This system aims to cultivate an environment where each employee
can acquire and exhibit higher degrees of expertise and skill. At the same time, through the expansion ofopen recruitment, we are providing more opportunities for our employees to challenge themselves andexcel. In terms of managerial positions, we have adopted a job-based personnel system that facilitates
optimal staff assignments irrespective of age or tenure. Additionally, we are establishing forums for bidirectional communication between management and employees to ensure that our corporate strategy
is communicated and understood. Also, given that creating an environment where diverse talent can
thrive serves as a foundation for improving employee engagement, we will continue our efforts to realize
a balanced work-life environment.

Diverse Work Styles and Work Environments. We strive to create an environment where each individual employee
takes the initiative to act, thereby generating a sense of growth, job satisfaction, and excitement, and ultimately improving
their EX.

Initiatives Related to Human Capital in the New Medium-Term Management Strategy(Support Career Growth)
We will expand our human capital investments to assist employees in autonomously shaping their careers,
thereby supporting the growth of our business.
In line with the specialized personnel system introduced this past April, we will enhance support for obtaining
external qualifications and enrich training programs across 18 specializations. We will also expand career
consulting functions to offer career design advice. Additionally, we will offer comprehensive career development
support that includes life events like childbirth, childcare, and nursing care.

In terms of opportunities, we anticipate that boosting employees' willingness to take on challenges
and acquire specialized skills will enhance their job satisfaction and sense of fulfillment. This, in turn, is
expected to elevate employee engagement, thereby improving labor productivity and creativity acrossthe NTT Group.

Supporting Growth
Improve Expertise by Repeating the Cycle

Indicators and Targets Related to Strengthening Employee Engagement and Ensuring Diversity of Human Resources
Indicator

TargetResults

Employee Engagement Rate

To be improved (year-over-year)

FY2022: 57%

New Female Manager Promotion Rate

Each year: 30%

FY2022: 29.7%

Male Childcare Leave Rate

FY2023: 100%

FY2022: 114.1%(Note) 1. The scope of the employee engagement rate calculation includes about 100 domestic Group companies (we plan to extend this to our overseas Group companies in the future).
2. The scope for the rate of newly appointed female managers and male employees taking paternity leave includes six major domestic companies: NTT, NTT DOCOMO, NTT
Communications, NTT East, NTT West, and NTT DATA Japan.

Joining theCompany

Onboarding

CareerDesignWork
Experience

Training/
Skill
Improvements

Review/
Stock-Taking

New
Challenges/
Transfers

EX
Improvement• Growth opportunity• Work satisfaction• Excitement

Developing Diverse Work Styles and Work Environments● (Reference) Other Indicators and Targets Related to Diversity

Indicator

Women

External Hires

TargetResults

Hiring Ratio

Every year: 30%

FY2022: 35.8%

Management Ratio

FY2025: 15%

FY2022: 10.4%

Executive Officer Ratio

FY2025: 25-30%

June 2023: 21.0%

Ratio of Mid-Career Hires

FY2023: 30%

FY2022: 40.7%*The scope of implementation of initiatives related to human capital described on page 32-38 applies to the main domestic group companies.

(Note) 1. The scope for the above indicators includes six major domestic companies: NTT, NTT DOCOMO, NTT Communications, NTT East, NTT West, and NTT DATA Japan.
2. As of the date of this report, the percentage of female board members at our company is as follows: 30.0% for directors, 40.0% for Audit & Supervisory Board Members,
and 40.0% for executive officers.

30

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

31

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Human Capital

Supporting Growth: Reviewing the Human Resources System

Supporting Growth: Training Options and Career Consulting

As we shift our business structure and new value creation becomes a necessity, it is crucial to heighten the synergy

To enhance the effectiveness of skill acquisition in the 18 specialized areas attuned to external markets, we have expanded
our training programs. These now include roughly 650 courses structured around three main frameworks: (1) Training to

between our business strategy and human resources more than ever.
The job-type personnel salary system we introduced for all management positions in October 2021 aims to break away fromannual and seniority-based systems. It shifts the focus from placing the right person in the right job to finding the right job for theright person. This system more closely aligns compensation with both company and individual performance, thus enabling thepositioning of talent where it is most needed to achieve strategies and creating expanded opportunities for employees to take onchallenges.

support acquiring external certifications tailored to each area of specialization, (2) Training to improve unique specializedskills not solely obtained through certifications, and (3) Training to gain common skills necessary in various fields, such as
facilitating meetings. Employees can select from these training programs based on their own career plans and skill development
goals, and proceed with their learning accordingly.
However, we recognize that employees may find it challenging to choose the most suitable training program from themultitude of options available. To address this issue, we plan to introduce recommendation features into our Group-wide● Job-Grade Systemtalent management system that are tailored to each employee's specialized field and rank.

Post-focused
JG1
Upgrade

JG2

Job description

In the context of our new personnel and salary system, it is essential that employees take an active and autonomous
approach to designing their careers, leveraging their high levels of specialized expertise. However, a variety of factors,

Each post’s
duties clarified

Job description

including the field in which they wish to work, desired roles and positions, specialized skills, strengths and weaknesses,
and life events, can impact career planning. As such, some employees may require targeted support. To meet this need, we
deployed Group-specific career consultants starting in July 2023. These consultants, who hold national certifications and are richin experience, will provide individualized career advice to each employee.
A d d i t i o n a l l y, w e p l a n t o e d u c a t e…

JG3

Job Grade System Features

Downgrade

JG4
JG5
UpgradeJG6

Benefits determined by the job grade of
the assigned post
➡ B e n e fi t s v a r y d e p e n d i n g o n a s s i g n e d p o s t

Break away from annual and seniority-based elements➡ Promotions based on merit and aptitude are available➡ Benefits may be reduced depending on placement

supervisors (primarily department heads;
about 10,000 target individuals in fiscal
2023), who are considered the consultants
most accessible to regular employees,
on career consulting methodologies. By
elevating the career consulting abilities ofour supervisors, we aim to offer day-to-day
and periodic interview-based support toemployees as they shape their autonomous
career paths.

For regular employees, we introduced a new personnel and salary system this April aimed at nurturing them into true
professionals with high levels of expertise and skills who can carve out their own careers.
Specifically, we have established 18 specialized areas with an awareness of external markets, including sales (sales, SE,etc.), development (services, product development, etc.), IT (IT architects, IT specialists, etc.), infrastructure engineers,
corporate (general affairs, human resources, finance, etc.), real estate and construction, smart energy, and research andC olumndevelopment. We have also established “grading standards” that clarify the required expertise and level of action for each

NTT University

area. In addition, based on these “grading standards,” we have implemented an absolute evaluation system that allows

In an ever-changing business environment, we operate NTT University as an initiative for developing ahigh-performing employees to be duly recognized, abolished the minimum years of service required for promotions, anddiverse range of management personnel who possess broad perspectives and experience and are filled withestablished a system in which employees are promoted and paid according to the degree of expertise they have acquired

the ambition to lead the world. In addition to the Next Executive Course (Next EC) aimed at those striving toand demonstrated.

be promoted to executive officers within five years, in July 2023, we launched the Future Executive Course

Moving forward, in every phase—from recruitment and development to placement—we aim to shift towards operations
that emphasize specialization, thereby facilitating the autonomous career development of our employees.

(Future EC) aimed at potential future executives.
We select personnel regardless of their years of service or age who are committed to becoming executives
based on meritocratic principles, and we support their growth as management-level personnel. Centered

In addition, coinciding with the introduction of our new personnel and salary system for regular employees focusing onaround difficult assignments that entail solving critical and challenging management issues, we provide a

specialized expertise, we have also established a Specialist Grade. This grade offers higher compensation to employees

mentoring program that offers opportunities for learning and insights through dialogue with current executives,

who possess particularly marketable skills and deliver exceptional performance.

as well as external conferences, seminars, training, and other selective support programs.

By implementing a framework that allows for treatment on par with management roles based solely on high levels of
specialization—without the need to become a manager—we intend to broaden career options for our employees, thereby

A total of approximately 180 students (30% women) spanning the first through third years in Next EC, aswell as 130 first-year students in Future EC, are committed to becoming the next generation of leaders.

boosting motivation and performance even further.

32

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

33

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Human Capital

Supporting Growth: Diverse Career Paths (Diversified Hiring and Employment) and Side Jobs
We conduct a wide range of recruitment activities, andwe do not limit ourselves to hiring new graduates, but also
actively recruit experienced professionals. While we set atarget of 30% for fiscal 2023, our performance for fiscal 2022
significantly exceeded this, reaching 40.7%.
Additionally, for both new graduates and experienced hires,we avoid uniform grading at the time of recruitment. Instead,to assign appropriate grades, we assess employee expertiseand skills.
In terms of career planning after employees join thecompany, we have introduced a Specialist Grade anda Professional Employee System to better reward highperforming staff. Our employees are excelling across various
industries and sectors.
Moreover, we offer titles such as Fellow, Senior Special
Researcher, and Special Researcher to individuals who
have demonstrated high expertise in specific fields and arerecognized globally as truly exceptional, top-class researcherswith significant achievements.

● Systems & Benefits with High Specialization

Specialist GradeA structure that enables highly specialized skills and experience in specific industries and fields to be fully leveraged, offering higher levels of compensation<Examples> ・As a foremost authority in the financial payment sector, manage the entire wallet service business and actively pursue partnerships with strategic partners
・As a specialist in networking and IoT, also holds a position as a guest researcher at universities and makes appearances at numerous international
conferences

A special title given to emblematic researchers who have exceptional research achievements that are recognized worldwide

Senior Special Researcher A title given to exceptionally talented researchers from among the Special Researchers who are expected to provide long-term contributions
Special Researcher

A title given to innovative researchers recognized for their excellence around the world

Further, at NTT Group, to foster skill development andtheir current skills, but also offers the opportunity to acquire

independent career growth, we encourage side jobs. This

new skills and higher levels of specialization that may not

system allows employees to allocate a portion of their work

be achievable in their existing roles. This system has been

hours to tasks in other departments while maintaining theirmaking headway in some Group companies, including NTT

responsibilities in their current roles.

East, NTT West, and NTT DOCOMO.

Specifically, up to 20% of an employee's work hours

Going forward, we plan to further expand the scope andcan be devoted to tasks in another department for training

create an environment that fosters proactivity and self-growth

purposes. This not only facilitates the practical application offor employees within the NTT Group.

workforce thrives. We also believe that we can contribute to
the realization of work-life balance and a sustainable societysociety. We believe that in order to be a company thatby improving the wellbeing of our employees, providing fair

flexibly adapts to changes in the external environment andopportunities, and creating an environment in which diverse

continues to create innovation, we must transform ourselves

human resources can play an active role.

from a homogeneous organization to one in which a diverse

Developing Diverse Work Styles and Work Environments: Women’s advancement in the workplace
In the NTT Group, we have established numerical targets
for female board members, female managers, and newlyappointed female managers to ensure that a diverse range
of opinions is represented in decision-making processes. In
June 2023, the percentage of female directors was 21.0%(+3.3 points year-on-year). With regard to fiscal 2022 results,
the percentage of new female managers was 29.7% (+0.6
points year-on-year), and the percentage of female managers
was 10.4% (+1.7 points year-on-year).
In terms of ensuring diversity, we aim for a continuous
promotion of female employees into key managerial roles.
At NTT University, we have maintained a female ratio of over
30% among the targeted participants. We carry out various
training programs targeted at female employees across alllayers of the organization, as well as for those returning frommaternity leave and their superiors.
Also, in addition to off-the-job training, we provide onthe-job training, including putting employees in toughassignments, with the intention of training female employeeswith the skills, mindsets and experiences necessary forpromotions.

Employee skills and mindsets

Officers

Human
networks

Department
heads

Diversity
management
seminarIn our human resources and salary system, there is no

To enable each employee to take ownership of their careersand develop them autonomously, we have introduced amechanism that supports personnel transfers for those whowish to take on challenges called the "NTT Group Job Board,"
which facilitates constant and timely application opportunities. ​Careerdevelopmenttraining

D&I
seminars

Understandingof people withdisabilities
Understanding of
LGBTQ people

NTT Group announced the Plan to Double the Numberof Female Managers in December 2013, setting a target of

The main factors for the wage disparity between men

NTT Group Job Board (Open Recruitment)(NTT University Next)

Managers
seminarsDeveloping Diverse Work Styles and Work Environments: Gender pay gap (indicator)

wage gap based on gender.

Co l um n(officers)

SectionchiefsRegular
Employees

Foster understanding of surroundings

Female executive
1-on-1 sessions

Fellow<Examples> ・Have achieved exceptional research outcomes as data scientists and are actively engaged in external activities
・Security engineers with advanced skills who handle complex cases and have an extensive network through written contributions and group activities

We promote diversity and inclusion for the sustainablegrowth of NTT Group and the realization of a sustainable

Female executive roundtable

Professional Employee
System

A new track that allows employees with high levels of specialization to receive benefits on par with managerial roles.

Developing Diverse Work Styles and Work Environments: Diversity & Inclusion

30% women in new graduate hires. Since fiscal 2013, weand women are as follows:

have been actively hiring women, leading to a younger age(1) For regular employees:

demographic among female employees, and currently, mostthe ratio of women in managerial positions is lower thanare in non-managerial roles.

that of men

In September 2021, as part of the Transformation to a
New Management Style, we set a target for 30% of newly(2) For non-regular employees:
men occupy a larger percentage of high-paying

appointed managers to be women. The numbers have been

specialized posts

making steady gains, increasing to 29.1% in fiscal 2021 and29.7% in fiscal 2022.

Since the initiation of this program on July 1, 2023, 602 job
postings were listed by August. ​​We aim to continue transforming our company into one where
employees are more active and each individual can experience
growth, job satisfaction, and excitement.

● Female employee wage ratio when male employee wages are set to 100 (Fiscal 2022)

All employees

Regular employment(Repost) Managers(Repost) Non-managers

Non-regular employment

76.8%

77.0%

91.5%

82.2%

79.3%

(Note) The data covers six major domestic companies (our company, NTT DOCOMO, NTT Communications, NTT East, NTT West, and NTT DATA Japan).

34

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

35

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Human Capital

Developing Diverse Work Styles and Work Environments: Empowering Those with Disabilities
The NTT Group has an employment rate of people withdisabilities of 2.51% (+0.04 points over the previous year),and employs approximately 4,000 people with disabilities.
Among them, about 1,000 are working in our special
subsidiary companies*. In addition to direct employment at
workplaces, at our special subsidiaries, examples of workthat are performed by people with disabilities include web
accessibility diagnosis, production of hand-made paper

Initiatives Related to Human Capital in the New Medium-Term Management Strategy (Open and Innovative Corporate Culture)from recycled paper, office massages, and agricultural andcleaning projects in cooperation with local communities. As
a part of the initiative to promote the active participation ofpeople with disabilities, we have been pushing forward with
the NTT Art Contest and various initiatives using the remotecontrolled robot OriHime.

Trial & Error

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.
24 NTT Group companies were awarded gold ratings in the
PRIDE Index 2022, an evaluation index for LGBTQ initiatives
in the workplace developed by the organization work with
Pride, which indicates achievement in all five indicators of thecertification criteria.

NTT Group encourages active participation in childcare toenhance the work-in-life of employees. In accordance withChildcare leave

the revision of the Act on Childcare Leave, Caregiver Leave,

28.4%

and Other Measures for the Welfare of Workers Caring forChildren or Other Family Members, NTT Group revised its
childcare leave system on April 1, 2022, prior to the revisionof the Act, and enhanced the leave system for the period up
Since fiscal 2021, we have been conducting seminars toencourage employees to actively participate in childcare, andTaking time off
for childrearing 71.6%

are also working to foster such a workplace culture.

Ratio of Male Employees Taking Time Off Work for Childcare

Balancing Work and Nursing Care

The rate of paternal leave for childcare is calculated basedon the Kurumin certification formula*. Following amendments
to the Act on Childcare Leave, Caregiver Leave, and Other
Measures for the Welfare of Workers Caring for Children
or Other Family Members, we actively encouraged our
employees to take advantage of the available leave systems
through individual meetings and other channels. We managed
to achieve a result of 114.1%, exceeding our fiscal 2022
target of 100%. However, the uptake is mostly for short-term
leave at 71.6%, while long-term childcare leave is at 28.4%.
To forge an environment in which it is easy to take long-termchildcare leave, we will continue to not only promote uptake
among individuals, but also actively encourage organizations
and supervisors to support this.

In anticipation of an era of intensive nursing care, weare holding nursing care study sessions across Group
companies to create an environment in which employees canbalance work and nursing care. There is high interest among
employees, and many have taken part. We plan to continue
holding these sessions going forward.

* Percentage of male workers using paternity leave or other leave for childcare
purposes (number of male employees with children up to the beginning ofelementary school enrollment in fiscal 2022 who took time off work for childcare /number of employees whose partners gave birth in fiscal 2022)

36

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Openness• Open discussions• Transparency• Healthy debate• Psychological safety

DATA DAICHI Corporation, and DOCOMO PlusHearty, Inc.

Developing Diverse Work Styles and Work Environments: Balancing Work and Childcare/Nursing Care/Medical Treatment

to eight weeks after childbirth.

collaboration, and trial and error. At the same time, we will continue to enhance our diversity and inclusion efforts.

* Special subsidiary companies: NTT Claruty Corp., NTT West Lucent Corp., NTT

Developing Diverse Work Styles and Work Environments: LGBTQ Initiatives
The NTT Group conducts training for managers and holds
ally meetings across the Group to foster understanding of
LGBTQ people. In addition, the NTT Group actively supports
various events, and participates in Tokyo Rainbow Pride,
one of the largest such events in Japan, and the DIVERSITYCAREER FORUM, one of the largest career forums inJapan related to diversity. Moreover, with respect to theapproximately 200,000 employees of NTT Group companies

We will continue to prioritize our focus on customers while advancing a culture that values openness,

Balancing Work and Medical Treatment
To create a comfortable work environment for employees
who have constraints due to medical treatment, we are
implementing training to build human networks and toeducate those around them (especially superiors) to foster
better understanding and a transformed mindset andcorporate culture.
We have established systems for balancing work withtaking leave for medical treatment and are working to create
an environment in which it is easy to take leave. Optionalseminars to foster understanding are being planned.

• Overcome fear of failure
and move forward• Learn from failures byfailing small and fast

CustomerFirst

Collaboration• Collaborate globally• Value differences

diversity and inclusion

Connect

Shared Values
Trust

Integrity

Developing Diverse Work Styles and Work Environments: Remote Standard, Hybrid WorkAt NTT Group, to further the “work as a part of life”
concept, we are creating a flexible work environment throughenhancements such as a remote work system, remote work
allowances, flexible hours, split shifts, and expanded satellite
offices. In July 2022, we introduced the Remote Standard,aiming to eliminate the traditional work style that assumes
relocations or temporary solo assignments away from family.

Home

Travel expenses

・Any residence in Japan is acceptable
・Any reasonable transportation method to and from workthat can be considered travel expenses (lodging expenses
provided as well) is acceptable
・No need to relocate to a remote location if the new location
is an organization that accepts the Remote Standard

Since the introduction of the remote standard system,
we have been enhancing work-life balance, including thedecrease in the number of employees given solo transfer
assignments by about 800, and the increase in the number of
employees who work while residing in remote locations. The
remote work implementation rate for fiscal 2022 was 74%.
We also increased the number of satellite office locations
to 580 by the end of FY2022, with the goal of 260 or moreby the end of FY2022, in order to establish places to workoutside of the home and office.
Due to the introduction of the Remote Standard and othermeasures, there is greater freedom in terms of working hours,
locations, and places of residence, thereby expanding theTravel expenses

OfficeRelocation allowance
Return destination

Returning from working away from homeHome

options for work styles suited to individual lifestyles.
However, depending on the state of the team and the work
situation, sometimes it is necessary to focus autonomously
on work through remote work, while other times call for
coming in to the office and working on-site to experience thework firsthand or to enhance teamwork. We believe that there
is a need to devise further ways of working according to our
objectives.
Moving forward, we will aim to implement an optimal work
style (hybrid work) that combines the strengths of both faceto-face and remote interactions, aiming for both flexibility inthe way employees work and increased organization andteam productivity.

INTEGRATED REPORT 2023

37

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Human Capital

Employee Engagement Survey

Human Capital Strategy 2 <Health and Safety>
At NTT Group, we commenced employee engagement
surveys in fiscal 2021. Four indicators for measuring
engagement have been established as NTT Group Key
Performance Indicators (KPIs).
We have rolled out a Group-wide experience platform,
Qualtrics, to approximately 100 Group companies in Japan.
This has enabled us to measure engagement scores andpinpoint areas that require improvement. By performing
analyses for the purpose of improving engagement, we hope
to increase the number of highly engaged employees who

identify with the company's and organization's policies andstrategies, as well as feel pride and take initiative in theirwork.
Additionally, with the aim of improving employee
engagement as a company, we have incorporated it as anindicator for executive compensation and also set it as acriterion for the performance bonuses of all management
staff. As a company and as an organization, we arecommitted to elevating employee engagement.

Risks

Addressing
Risks● FY2022 Survey Results● NTT Group’s Four KPIs(%)
80

—The willingness to make voluntary contributions—(1) I am motivated to contribute more than is required to
get the job done at the company—Attachment to and pride in the company—(2) I am proud to work at this company(3) I would recommend our company as a great place towork to those I know
—Job satisfaction—(4) I gain a sense of personal accomplishment through my
work

60

The positive response rate for the four KPIs was 57%, a zero pointchange YoY and 7 points lower than the Japan average.
64
57

Promotion of Health Management
20

0

2021

2022

Japan average (Fiscal year)

We have conducted correlation analyses with engagement (four KPIs) and have identified the elements that have an impact, andAreas Needing Improvement Initiatives

Correlation Coefficient

Awarenessof strategy
Growthopportunities

Caution
Low

Low

MaintainComfortable work
environment
Acceptanceof diversity
Wait and See

Percentage of Positive Responses

High

Maintenance Area Initiatives
The items showing a strong correlation and receiving
positive evaluations with engagement were “Comfortable work
environment and culture” and “Acceptance of diversity (proper
recognition and respect as an individual).”At NTT, we have been advocating for various work styles suchas remote work, flexible hours, and the Remote Standard systemthat do not impose restrictions based on time, location, or placeof residence. We believe that these efforts are reflected in theenrichment of the work-life balance. (For specific measures,
please refer to “Developing Diverse Work Styles and Work
Environments: Remote Standard, Hybrid Work (P. 37)”)

38

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONIn response to the opportunity, we are pursuing health management as a key corporate strategy withthe understanding that initiatives for maintaining and improving employee health also enhance motivationand productivity and ultimately lead to higher corporate earnings. Specific measures include initiatives
such as using a smartphone app (dHealthcare) to encourage employees to improve their health andconducting regular Pulse Surveys to monitor employee health conditions and detect any imbalances.

40

we prioritize our strategies accordingly.

Needs Improvement

To address such risks, we at NTT Group not only comply with Labor Standards Act and otherrelated laws, but have also established safety and health management policies. We continue to takea variety of measures and enhance safety awareness throughout the entire NTT Group to prevent
accidents and create a safe working environment in the construction of the telecommunications
facilities that support NTT Group's business, which includes our subcontractors.

57

Specific Initiatives

High

Opportunities

Failing to adequately secure employee health and safety could result in decreased laborproductivity and potentially impact the NTT Group's business performance and financial stability.

The items with a strong correlation to engagement but lower
positive evaluations were “Opportunities for growth (ability
to achieve career goals)” and “Strategy penetration (having
confidence in the future of the company)/change management(receiving support for organizational changes).”
To support growth, in April 2023, we revised the system to allow
for salary hikes and promotions depending on the acquisition anddemonstration of expertise. We have also enriched the career
consulting function, which allows employees across the Groupto discuss their career plans. Additionally, we have establishedthe NTT Group Job Board as a framework for supporting those
who want to try to transfer jobs through public recruitment. Thishas made it possible for each employee to take ownership of
their careers and act accordingly. Furthermore, we have preparedaround 650 training courses both for specialized fields and ascommon training. Through NTT Group's internal newsletters, weare also actively introducing a variety of role models. (For specificmeasures, please refer to "Supporting Growth (P. 32-34)")
For strategic penetration/change management, we arebroadening the scope of management outreach. We are also
holding discussions regarding survey results within each company
and organization, consistently deliberating over organizationalspecific issues. We also implement initiatives that get leaders at
each level to commit to their respective actions.

Health management is pursued as a key corporate strategy with the understanding that initiatives for maintaining and improving
employee health also enhance motivation and productivity and ultimately lead to higher corporate earnings. We also believe thatgiving due consideration for the health of our employees as well as their families will motivate and invigorate each of them (improveEX) and lead to the growth and development of the Group as a whole. Below, we introduce key initiatives being undertaken in NTT
Group on various fronts to help employees maintain and improve their health while collecting and analyzing various types of data
(PHR, work information, etc.).

Promoting health activities and behavioral changes with "d Healthcare" at the core(healthcare portal)
We are working to implement effective measures through central management and analysis of various
information on health promotion measures that have been individually developed. As part of these efforts,
we implemented initiatives to make d Healthcare into a portal for an array of healthcare services.
(1) “Pulse Survey” for promoting self-care and line care <Improving convenience>(2) V i e w i n g t h e re s u l t s o f p e r i o d i c h e a l t h c h e c k u p s ( i n c l u d i n g p h y s i c a l e x a m i n a t i o n s ) , e t c .
<Promoting health activities and behavioral change>(3) Stress checks <Improving convenience and promoting health activities and behavior change>

2023 Certified Health & Productivity Management Outstanding
Organization (Large Enterprise Category [White 500])

Healthcare Portal
Concept Image

We were chosen as a 2023 Certified Health & Productivity Management Outstanding
Organization (Large Enterprise Category [White 500]) by the Ministry of Economy, Tradeand Industry and the Nippon Kenko Kaigi. We will continue to strengthen our efforts tofurther encourage health management.
* Certified Health & Productivity Management Outstanding Organizations Recognition Program: A program that recognizes
corporations, including both large and small-to-medium-sized corporations, that practice particularly excellent healthand productivity management based on initiatives that address local health issues and the health promotion initiatives
supported by the Nippon Kenko Kaigi.

Initiatives Related to Human Capital in the New Medium-Term Management Strategy(Global Benefits for Employees and their Families)
As a way to strengthen and enhance our support programs, including for the families of our employees
worldwide, we will enhance our program to partially support the educational expenses of employees’ children up tocollege graduation in the event of an employee’s death.

INTEGRATED REPORT 2023

39

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Human Capital

Value Chain Management

Human Capital Strategy 3 <Human Rights>
Policy and Approach
Risks

Addressing
Risks

Opportunities

Should forced labor, child labor, or other forms of human rights violations occur within our Groupor supply chain, there is a risk that it could erode the NTT Group's credibility and corporate image,as well as potentially affect our financial performance and business results.

To address such risks, we at the NTT Group are engaged in various initiatives aimed at enhancing
awareness and management of human rights across the entire Group. These include conducting
human rights due diligence by leveraging external assessment agencies, providing training on
human rights issues, and establishing and operating consultation services focused on human rights.
Regarding opportunities, we believe that actively engaging in direct dialogue with key suppliers aspart of our human rights due diligence, as well as disclosing these processes and their outcomesin a transparent manner, will improve our brand image and help us earn the trust of all of our
stakeholders.

In recent years, companies find themselves required to

Basic Procurement Policy" *1.

monitor the ESG risks and impact on sustainability, including

For our suppliers, we have published the NTT Groupconsideration of human rights and mitigation of environmental

Supply Chain Sustainability Promotion Guidelines*2, which

impacts, of not only their own Group companies, but also

contain detailed requirement items in the seven areas

throughout the entire value chain, from raw materials andof human rights/labor, health/safety, the environment,

supplies procurement to disposal and recycling. The NTT

fair trade/ethics, quality/safety, information security, andGroup is committed to deepening mutual understanding andbusiness continuity plans. We ask suppliers to comply withbuilding a trustful relationship with all the suppliers that makethese guidelines by including them in contracts and otherup our supply chain. By dedicating ourselves to creating andagreements. In addition, we have also published the NTT

sustaining a safe and reliable supply chain with everyone

Group Green Procurement Standards*3 as a supplement tounder high ethical standards, we aspire to proactively andour environmental guidelines and are advancing efforts toenthusiastically contribute to a sustainable society. To

reduce greenhouse gas emissions throughout the supply

implement this vision, we have established the "NTT Group

chain.

Indicators and Targets Related to Human Rights
Indicator

TargetPercentage of direct dialogue with important suppliers

Results

FY2023: 100%

Policy and Approach

Due Diligence
Based on the UN Guiding Principles on Business and

NTT is committed to respecting global human rights andHuman Rights, we will use the human rights due diligence

believes it is an important corporate social responsibility. NTTprocess to identify, prevent, mitigate, and correct humanGroup will strive to correctly understand and recognize eachrights issues globally. And we will strive to improve humancountry and region's laws, cultures, religions, and values.

rights awareness and human rights management throughout

We aim to create a safe, secure, prosperous and sustainable

NTT Group. In addition, due diligence will be conductedsociety by fulfilling this responsibility. We included the existing

among the stakeholders in the entire business value chain,

NTT Group
Supply Chain Sustainability
Promotion Guidelines

Requests to suppliers regarding social issues establishedbased on the Basic Procurement Policy

NTT Group Green Procurement
Standards

NTT Group's environmental energy policies, target figures,
specific laws and standards suppliers must reference, procurement evaluation items, etc.

NTT Group Global Human Rights Charter in the NTT Group
Global Sustainability Charter and established the new NTT

Supplier Engagement Initiatives
Building upon the aforementioned NTT Group Supply

Additionally, in July 2022, our company joined Joint Audit

Chain Sustainability Promotion Guidelines, we are conducting

and direct dialogue will be the basis of our efforts, especially

Co-Operation (JAC)*5, a joint audit consortium consisting ofactivities aimed at establishing a reliable partnership with ourglobal telecommunications carriers, and we became the firstwith major suppliers. The status of these initiatives will be

suppliers. While NTT Group previously conducted an NTT-

telecommunications provider from Asia to do so. Starting inGroup Global Human Rights Policy in November 2021. Whiledisclosed on our website in an effort to continuously

specific Supply Chain Sustainability Survey for the Group’s

fiscal 2023, we are planning to conduct sustainability audits

supporting international covenants and treaties as a company

evaluate and improve the process.

key suppliers, beginning in fiscal 2022, we initiated new ESG

at the factories of NTT Group suppliers based on JAC's audit

risk assessments carried out by Ecovadis *4, a third-party

standards.

with global operations, NTT Group internally and externallyevaluation organization.

Through these activities, NTT Group will help make adiscloses its global human rights policy. This policy applies

Based on the results of these surveys, we are promoting

to all employees and board members of NTT Group, and wethe enhancement of supplier engagement activities, including

safe and secure supply chain.

direct dialogue with suppliers.

*1 https://group.ntt/en/procurement/policy/index.html

ask all of our suppliers and business partners to support thispolicy and respect human rights.

Risk
identification Penetration
and assessment into the business
Human Rights Due
Diligence Process

NTT Group Global Human Rights Policy

https://group.ntt/en/newsrelease/2021/11/10/211110c.html

40

Basic procurement activity policy for achieving a sustainable society

FY2022: 100%

(Note) The scope for gauging the rate of direct dialogue with key suppliers is based on 40 companies per year chosen from among the key suppliers who account for more than
90% of the total procurement expenditures of the NTT Group. As of fiscal 2022, this includes 126 companies.

Background of NTT Group Global Human Rights

NTT Group Basic Procurement
PolicyNIPPON TELEGRAPH AND TELEPHONE CORPORATION

Web

Confirmation ofDisclosure and viability andevaluation effectivenesssustainable society a reality by building and maintaining a*2 h ttps://group.ntt/en/procurement/supplier/pdf/NTT_Group_Guidelines_for_
Sustainability_in_Supply_Chain.pdf*3 https://group.ntt/en/procurement/supplier/pdf/NTT_Group_Green_Procurement_
Standards.pdf*4 https://ecovadis.com/*5 https://jac-initiative.com/

INTEGRATED REPORT 2023

41

NTT Group Sustainability

Related New Medium-Term Management Strategy Initiatives

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Data Section

1 NTT as a Creator of New Value and Accelerator of a Global Sustainable Society■

New
Value Creation❶ IOWN-Driven Creation of New Value (from concept to commercialization)❸ Achievement of a Circular Economy Society❷ Data-Driven Creation of New Value❹ Further Strengthening of Business
Foundations

i. Establishment of manufacturing company forphotonic-electronic convergence devices
ii. Acceleration of IOWN research and development/ commercializationi. Strengthening the personal businessii. Strengthening the use of DX/data in society and industryiii. Expansion and upgrade of data center infrastructurei. Develop sustainability solutions for customers
ii. Creating Circular Economy businessesiii. Progression towards Net-Zero

Initiatives Related to New Value Creation in the New Medium-Term Management Strategy

2 Upgrading the Customer■

3 Improving the Employee■❺ Fusion of Research and Development with aMarket-Focused Strategy❻ S trengthening of Services that Emphasize
Customer Experience (CX)

 pen and Innovative Corporate Culture❼O upport Career Growth❽S lobal Benefits for Employees and their Families❾G

Experience (CX)

Experience (EX)(Strengthening the personal business, Strengthening the Use of DX/Data in Society and Industry, Expansion and Upgrade of Data Centers)
To strengthen our personal business centered around individual customers, we will boost NTT DOCOMO's Smart
Life business and actively invest more than one trillion yen over the next five years.
For instance, we will focus on expanding and enhancing services in various sectors like finance and healthcare/
medical. Through the analysis of diverse data obtained via these services, we aim to deliver highly personalized andoptimal services.

Customers

Strategy for Creating New Value

Various Service
Offerings

Financial Services

Healthcare/Medical Services

Variety of services offered througha shared one-stop app

Receiving advanced medical
services that leverage data

Account

Gathering/Analysis/
Application of Data

Approach

The NTT Group is committed to the B2B2X business model, which aims to create new value andsolve social issues in collaboration with various partners to enhance the customer experience. Should
the progress of the B2B2X model not proceed as expected, it could adversely affect our market
competitiveness, thereby potentially impacting NTT Group’s financial standing and business performance.

Risks

Corporate
Governance

Settlement

Proposal and offering of optimal
personalized services

Investment

Feedback...

Insurance

Lending

Bio-Digital Twin

Accumulating Customer Information of Company/Partners
AI-Driven Analysis

Addressing
Risks

Opportunities

To mitigate such risks, we have established a Marketing Strategy Committee, chaired by the President,
to facilitate project expansion while ensuring alignment within the NTT Group. Additionally, we strive togrow our B2B2X business through intra-Group conferences, which serve to share best practices among
our various companies.
With regard to opportunities, we believe that combining the expertise and customer bases that ourpartners possess with the NTT Group’s digital services and data management technologies will allow
us to offer new value to our partners' customers (users). Specifically, we are implementing initiatives
across the full breadth of the NTT Group in areas such as 1) the evolution of industrial value chains,
2) advancements in customer relations, 3) the utilization of mobile data, and 4) the development ofcommunity-rooted services and urban planning.

Data Platform
DOCOMO Customer Base

For our corporate clients, we will leverage technologies such as AI, robotics, IOWN, digital twins, and security tooffer solution and platform services on a global scale, thereby transforming industries that underpin daily life andsociety.
Over the next five years, we intend to invest more than three trillion yen in this area.

IOWN Digital Twin
Finance/Insurance
Manufacturing Industry

Indicators and Targets Related to New Value Creation
Indicator

Amount of B2B2X Revenues

TargetFY2023: ¥870.0 billion(Note) The scope of B2B2X earnings includes the Integrated ICT Business Segment, the Regional Communications Business Segment, and the Global Solutions Business Segment.

Medical/Healthcare

Manufacturing
Industry

Joint
Development

Enhancement of
AI/Robots

Results

FY2022: ¥815.4 billion

Government
Urban Development
Services(Smart Cities)
Culture/Education

Initiatives Related to New Value Creation in the New Medium-Term Management Strategy

In light of the increased energy consumption accompanying the widespread adoption of AI, we established
NTT Innovative Devices Corporation in June 2023 to expedite the commercialization of photonics-electronics
convergence devices that achieve low energy consumption. The company was launched with an initial investmentof 30 billion yen, and we are considering subsequent capital increases.
Our aim is to broadly provide photonics-electronics convergence products to hyperscalers and IT/communicationequipment vendors. In addition to recruiting external talent and gathering the necessary resources for development,
we will integrate NTT Electronics Corporation, which possesses hardware manufacturing capabilities, to accelerate
the development of products and services.
For the accelerated R&D and practical application of IOWN, including 6G, we plan to invest approximately 100
billion yen in fiscal 2023. We will continue to invest funds and accelerate the practical application of servers anddigital twin computing, among other technologies.
(Please see page 58-61 for more details on IOWN.)42NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Finance/Insurance

Medical/Healthcare

Enhancement of
AI/Robots

Urban Development(Smart Cities) Streaming/MediaAdvancement of DX and Data
Utilization in Domestic Industries(Establishment of manufacturing company for photonic-electronic convergence devices, Acceleration of IOWN research and development/commercialization)

Partners’ Customer Bases

Government
Services

Global Digital Business
Innovation

We are actively expanding the data center infrastructure of the NTT Group, which currently ranks as the thirdlargest in the world*1. Additionally, we plan to further expand this infrastructure and enhance its capabilities throughthe introduction of IOWN technologies. Toward this goal, we will invest over 1.5 trillion yen in the next five years*2,
doubling the current data center capacity of 1,100 MW.
Additionally, we will continue our efforts to achieve carbon neutrality for our data centers by fiscal 2030*3.

Americas

EMEA

India

Germany, England,
the Netherlands, Switzerland, etc.

300 MW*4400 MW*4

APAC
Japan, Indonesia, Malaysia,
Singapore, etc.

150 MW*4250 MW*4*1 Recalculated from the Structure
Research 2022 Report while
excluding Chinese operators*2 Investments in facilities using
third-party capital are not included*3 Reduction targets: GHG protocol
Scope 1 (own direct emissions ofGHG) and Scope 2 (indirectemissions from using electricity,heat and steam supplied by othercompanies) emissions at data
centers*4 As of March 2023, power capacity
in specialized data centerbuildings owned by the NTT
Communications Group and NTT
Ltd. Group (including JVs withthird parties)

INTEGRATED REPORT 2023

43

Philosophy

NTT Group Sustainability

Initiatives Related to New Value Creation in the New Medium-Term Management Strategy (Creating Circular Economy-Oriented Businesses)

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Initiatives Related to New Value Creation in the New Medium-Term Management Strategy(Fusion of Research and Development with a Market-Focused Strategy, Strengthening of Services that Emphasize CX)

We will also work towards a sustainable society by promoting the reuse of waste across various industries
and enabling resource circulation.
With the application of technologies like IOWN, 5G/IoT, and AI/Robotics, we will improve the efficiency and valueadded attributes of primary industries, thereby contributing to industrial development and regional revitalization.

Achievement of a circular
economy society acrossvarious industries, with energy
as the starting point

Smart Aquaculture• IoT and digitalizationof forestry, etc.

• Aquaculture utilizing ICT• Utilization of genome-editing technologies, etc.

Smart Livestock Farming• Operation that combines the livestock farming industry and ICT, etc.

Alliances Department(New)(Alliance Capabilities)

Product Offerings(Based on Market
Needs)

Customers

NTT Business Solutions Corporation (NTT Business Solutions) provides a local food waste recycling solutionin which it recycles food waste from food-related businesses for composting and channeling this into new crop
production. In August 2022, companies from both The Norinchukin Bank Group and NTT Group* began a businesscollaboration aimed at achieving a recycling-oriented society and the SDGs. This collaboration involves offering thissolution to customers deeply involved in the food processing and retail industries, among others, to effectively utilize
food waste and reduce food loss. Measures include supplying compost generated from food waste to producers.
Going forward, we will contribute to solving local issues such as food loss and the creation of a recycling-oriented
society through our local food waste recycling solution. This entails linking various data from waste generated bybusinesses, the process leading up to composting, and the compost required by producers, as well as creatinga sustainable social system in which we assist
businesses in reducing their waste and improving their
Primary fermentation residuals
recycling rates while also supplying the necessarycompost to producers.
In this manner, B2B2X businesses become
initiatives that improve customer value and solve
Secondary
Tertiary
Local foodfermentation fermentation
Food residue
Four Stars
societal issues through the use of data. We strive
resource recycling
Food-related businesses
Recycling centers
to cultivate a culture where we all understand eachsolutionsother's projects and take on new challenges basedon new concepts. To this end, we held an internal
Compostconference aimed at sharing useful example cases
across the Group on February 22, 2023, to advanceDistribution
initiatives across the entire NTT Group.

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Capabilities)(Individuals, businesses, local governments,
government organizations, etc.)

NTT Group and The Norinchukin Bank Group Business Collaboration to Achieve a Recycling-oriented Society and the SDGs

44

Development(Technology-Oriented)

We will consider all stakeholders to be customers and partners and prioritize customer experiences.
By constantly improving and updating our services in an agile manner, we aim to exceed customer expectations
and provide new experiences and excitement in an effort to be the NTT Group that continues to be people’s choice.

Co l um n* Biostock Corporation, NTT Communications, NTT Business Solutions(Research andProduct
Offerings

Global Customers(Including Japan)

Smart Forestry

Allianceswith partners(Market Research Capabilities)

Research andDevelopment
Planning
Department

Each Group Company/ Partners

IOWN, 5G/IoT, AI/Robots

Market Planning&
Analysis Department(New)

Feedback

Improved efficiency, value-addition and industrial
development in primary industries

Understanding
CustomerNeeds

NTT Laboratories

Garbage Recycling/
Biomass Plants

Research and Development Market
StrategyDivision (New)Global Customers(Including Japan)• Water/wind/solar power, etc.

Leftover Food
(Food Loss)
Each Group Company

Renewable Energy

We established a new Research and Development Market Strategy Division by integrating and strengthening ourresearch, marketing, and alliance functions as an R&D organization with marketing capabilities.
In addition to strengthening product-out R&D, we will collaborate with customers and partners globally to carry out
everything from R&D to product delivery, promoting alliances with a variety of partners.

Set/Implement KPIs that
Track the Customer Journey
Each NTT Group Company/Partners

CustomerExperience
First
With a Market-in Approach,Achieve Both Customer
Satisfaction andBusiness Growth at
the Same Time

Offer New Experiences andImpressions that Exceed
Customer Expectations
Each NTT Group Company/ Partners

Further Improve and Update Services by Being Agile
NTT Holdco Market Planning&AnalysisDepartment → Researchand Planning Division/InstituteEach NTT Group Company/Partnersof crops

Contracted local farmers

INTEGRATED REPORT 2023

45

NTT Group Sustainability

Philosophy

Related New Medium-Term Management Strategy Initiatives

Message from the CEO

NTT Group
Sustainability❶ IOWN-Driven Creation of New Value (from concept to commercialization)❸ Achievement of a Circular Economy Society❷ D ata-Driven Creation of New Value❹ Further Strengthening of Business
Foundations

i. Establishment of manufacturing company forphotonic-electronic convergence devices
ii. Acceleration of IOWN research and development/ commercialization

i. Develop sustainability solutions for customers
ii. Creating Circular Economy businessesiii. Progression towards Net-Zeroi. Strengthening the personal businessii. Strengthening the use of DX/data in society and industryiii. Expansion and upgrade of data center infrastructure

Disaster Countermeasure Initiatives

2 Upgrading the Customer■

3 Improving the Employee■❺ Fusion of Research and Development with aMarket-Focused Strategy❻ S trengthening of Services that Emphasize
Customer Experience (CX)

❼ Open and Innovative Corporate Culture❽ Support Career Growth❾ Global Benefits for Employees and their Families

Experience (CX)

Experience (EX)As a designated public organization, the NTT Group is making a daily effort to ensure emergency and critical communication channels. Furthermore,in recent years, there is an escalating risk of physical attacks, such as armed assaults and acts of terrorism, on top of the increasing frequency of largescale, expansive, and long-lasting natural disasters. Recognizing the potential for natural disasters to have greater impacts on telecommunications
facilities and services and for recovery efforts to be prolonged, NTT is increasing the resilience of its facilities and taking steps to expedite recovery efforts.

Securing critical communications

Improving communications network reliability

Building facilities resistant to disasters such as
earthquakes, fires, and wind and flood damage,as well as different transmission routes.
Network monitoring and control 24 hours a day, 365 days a year.

Resilience Strategies (1) <Natural Disasters, Large-Scale Failures and Other Similar Events>
The NTT Group is active around the globe, providing a myriad of services that sustain both socialand economic activities as well as safeguarding daily life. These include communications networks,
information systems, and other essential life-supporting services such as finance and payment solutions.
There is a risk that the provision of these services could be compromised due to natural disasters likeearthquakes, tsunamis, typhoons, and floods, as well as physical attacks including military invasions andterrorism, delays in development or glitches in vital systems, or the occurrence of significant network
malfunctions. Such events have the potential to negatively impact the trustworthiness and corporate
image of the NTT Group.

Addressing
Risks

Opportunities

To address such risks, the NTT Group has implemented a variety of strategies to ensure that thesystems and networks necessary for service delivery operate safely and reliably. These strategies include
fortifying the seismic and flood-resistant capabilities of communication buildings, diversifying transmission
routes, and enhancing emergency power supplies for communication buildings and base stations duringextended power outages. Particularly for large-scale failures, our concrete measures involve not only
swift and accurate service restoration, but also rapid identification of the root causes. We will continue
to enact cross-Group initiatives aimed at 1) comprehensive assessments and recurrence prevention
for apparent risks, and 2) building a more resilient network based on an inventory of cross-Group risks,considering that unforeseen incidents are inevitable.
In terms of seizing opportunities, we believe that improvements in network resilience and fasterrecovery capabilities will boost the reliability of our communication networks and information systems.
This, in turn, will elevate customer satisfaction and enhance our brand image. For customers demanding
even higher reliability, we will offer new value by expanding our range of solutions designed to reinforce
their Business Continuity Plans.

Indicators and Targets Related to Natural Disasters, Large-Scale Failures and Other Similar Events
Indicator

Number of Serious Incidents

Data Section

1 NTT as a Creator of New Value and Accelerator of a Global Sustainable Society■

Resilience

Risks

Corporate
Governance

Growth Strategy

TargetFY2023: 0

Results

FY2022: 3(Note) 1. The scope for counting significant incidents is limited to the four designated public telecommunications companies (NTT East, NTT West, NTT Communications, and NTT
DOCOMO).
2. A "significant incident" is defined as an event meeting the following conditions that disrupt or degrade the quality of telecommunications services:
・Voice services that handle emergency calls (110, 119, etc.): Lasting more than 1 hour and impacting over 30,000 people
・Voice services that do not handle emergency calls: Lasting more than 2 hours and impacting over 30,000 people, or more than 1 hour and impacting over 100,000 people
・Internet-related services (free): Lasting more than 12 hours and impacting over 1 million people, or more than 24 hours and impacting over 100,000 people
・Other services: Lasting more than 2 hours and impacting over 30,000 people, or more than 1 hour and impacting over 1 million people

DisasterCountermeasures: arthquake-resistant design of communicationEbuildings to withstand magnitude 7 tremors● Implementing non-combustible and fire-resistantbuilding features, including fire shutters and fire
doors in telecom equipment rooms● Tsunami and flood countermeasures withwater barriers and reinforcement materials● Installation of backup power supplies
such as batteries and engines● Geographical dispersion of key communicationbuildings to avoid simultaneous impact from disasters● Training and education for personnel
engaged in maintenance and operationsetc.
●

3 Key Themes

Early restoration of services by utilizing disastercountermeasure equipment, procurement of materials,
equipment, and manpower for restoration purposes.

 nhancement of organization forE
disaster countermeasure operations● 
Development and deployment of crisis
management talent and skills
etc.
●Consideration of our disaster response based on unexpected scenarios for possible future catastrophic disasters●●●

Faster: Predictive support for complex troubleshooting that exceeds human judgment through DX, such as AI and data utilization
Stronger: Utilizing self-supplied energy, such as battery-equipped electric vehicles and on-site renewable energy generation
Safer: Implement BCP measures such as diversifying supply chains and dispersing business locations and employee residences
Initiatives Related to Resilience in the New Medium-Term Management Strategy (Further Strengthening of Business Foundations)Learning from past experiences and lessons in telecommunications failures, we will create a robust network/
system that takes into account the occurrence of major malfunctions and cyber-attacks, thereby strengthening social
infrastructure. In addition, we will strengthen measures to cope with natural disasters, which are becoming increasingly
severe. Looking toward this goal, we will invest around 160 billion yen*1 by fiscal 2025.
To build a resilient network system, we will proceed based on the assumption that unexpected events will inevitably
occur, implementing preventive measures against human errors and malfunctions while minimizing the impact if a
failure does occur.
Furthermore, we will enhance disaster preparedness and globally standardized cybersecurity measures, with a view
toward safe and secure service delivery.

Development of Resilient NW/Systems

To achieve swift public relations responses whenissues such as system malfunctions, network failures,or service glitches occur, the NTT Group has beenworking on establishing a framework in compliancewith the guidelines set by the Ministry of Internal
Affairs and Communications for public notification

Simulation

Failure Prediction/
Switching

IOWN technology

and communication. By sharing best practices for
emergency public relations throughout our Group
companies, we are committed to improving the qualityof our public relations response. We believe that driving
these initiatives forward will lead to higher levels ofcustomer satisfaction and a stronger brand image.

Data
Lake

Digital Twin
ComputingCognitive
Foundation

Prevention of Failures
System Redundancy
NW
Equipment

Extension

Resource Expansion

NW
Equipment

Area Separations
Expansion

Regulate the inflow of irregular traffic
NTT Equipment

Detect and Cancel
High-Volume Calls

SenderHigh-Volume
Transmission

Network

Mitigation of Failures
Separated System Installations
A-Area B-Area
Equipment Equipment C-Area
Equipment

Service Separation
General Voice

IoT

Further Strengthening of Disaster Countermeasures
Proactive response and support leveraging AI and data, etc.

Power supply from EVs and on-site PPAs

Distribution of supply chain risk, regional distribution of offices, etc.

Strengthening of disaster-specific risk scenarios

World-class Cybersecurity practices

Prevention of Human Error/ Operational Support

Initiatives for Rapid Public Announcement Responses during Large-Scale Failures

Prompt restoration of telecommunications services

Further Enhancing Our Ability to Respond to Severe Disasters

Visualizationof NW status

Co l um n

Securing emergency service communications,e.g. 110 and 119, and critical communications.
● I nstallation of special public
telephones in disaster-affected areas●P rovision of safety confirmation
services during disasters●E arly resolution of communications
blackouts, etc.

Disaster!

*1 Including other reliability enhancement measures

46

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

47

Philosophy

NTT Group Sustainability

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Resilience
TOPIC
Enhancing Security 1)    Global Collaboration

Resilience Strategies (2) <Security>
Should we experience security incidents such as cyber-terrorism that lead to service outages,
degradation in service quality, or the leakage, alteration, or loss of information, there is a risk that the NTT
Group's reputation and corporate image could suffer. This, in turn, could potentially impact our businessperformance and financial stability.

Risks

To mitigate such risks, the NTT Group is actively engaged in risk-based information security initiatives.
These are grounded in the belief that cyber incidents are inevitable and that minimizing damage is crucial.
Measures include the implementation of a “3 lines of defense” principle, performing a fundamental review
of Group-wide regulations to achieve a secure remote work environment and transitioning to Zero Trust
IT systems, collecting and utilizing global threat information, adopting the latest technologies for early
detection and quick response, verifying security measures from an attacker's perspective, practicing
incident response for potential scenarios, and delivering basic operational training to all employees.

Addressing
Risks

Opportunities

As for capitalizing on opportunities, we are committed to nurturing security specialists endowed withstate-of-the-art technology and deep expertise. Furthermore, we are actively offering risk management
support services to businesses and communities outside the Group by leveraging the knowledge andinsights accumulated through our risk-mitigation efforts.

Indicators and Targets Related to Security
Indicator

TargetSuspension of telecommunications services due to external cyberattacks

FY2023: 0

Results

FY2022: 0(Note) The scope of tallying the number of telecommunications service interruptions due to external cyberattacks includes four specified public institutions: NTT East, NTT West, NTT
Communications, and NTT DOCOMO.

Collection and Utilization of Global Threat Information
NTT has joined the Joint Cyber Defense Collaborative

intelligence gained from the JCDC, NTT can offer more

(JCDC), a U.S. government cybersecurity and resilience

effective protection of vital information networks andinitiative, as its first Asian member.

improved responses to cyber incidents. Additionally,

Established by the U.S. Cybersecurity andsharing information with other JCDC members enables

Infrastructure Security Agency (CISA) in 2021, theNTT to further advance its own cybersecurity initiatives.

JCDC is spearheading the collaborative development

Building on our existing foundation of trust andof cyber defense plans, information sharing on

collaboration with CISA and the U.S. government, wecybersecurity, and the dissemination of cyber defense

will contribute a unique Asian perspective to the JCDC

guidance to reduce risks to critical infrastructure andwhile sharing NTT’s leadership along with its expansive

essential national functions. Private sector members

global experience and specialized expertise in security.

include major telecommunication companies,

In an era of continued global uncertainty surrounding

technology giants, and major security companies, suchcybersecurity, we firmly believe that a collaborative

as AT&T, Verizon, Lumen, Microsoft, Google, Cisco,

approach between the public and private sectors in

Mandiant, and Palo Alto Networks. Moreover, U.S.

cybersecurity is essential, not just in the United States

government intelligence agencies and cybersecurity-

but also globally, to defend against cyberattacks that

related departments from countries allied with thethreaten the critical social infrastructure upon which our

U.S. are also participating. By leveraging the global

daily lives depend.

Enhancing Security 2)    Defense from an Attacker’s Perspective

Red Team● Organization for Implementation

Group CISO Committee
Board of Directors

President (Executive
Officers Meeting)Committee chairperson: Group CISOMembers: Group CIO, Head of Technology Planning, Head of
Research and Development Planning, Head of General
Affairs, Head of Internal Audit Department, Group CISO
Information Security Liaison Meeting
NTT-CERTInternal Audit Department

SupportGroup companies

NTT DOCOMONTT East
NTT West
NTT DATA GroupNTT formed a Red Team in 2019. A Red Team

from the attacker's viewpoint. The ultimate goal is toconducts simulated cyberattacks from the perspective

improve defensive capabilities; the activities are notof external attackers. In the realm of cybersecurity, it islimited to just conducting simulated attacks. The Red

a never-ending game of cat and mouse, with new types

Team’s activities also include analyzing and reportingof attacks emerging no matter how much one defends.

vulnerabilities and organizational challenges in the

Moreover, while attackers only need to succeed once

targeted systems after the simulated attack and evenwith any variety of assaults, defenders must blockproviding actionable advice for improvement. In someevery single one, creating an imbalance that favors

cases, the team may assist with implementing these

NTT Urban Solutions

the attackers. To address this challenge, NTT's Red

improvements.

NTT Security Holdings

Team was established to formulate countermeasures

Audit

Bug Bounty Program● NTT Group's Security Governance Goals

Holding company

Workplaces (First Line)

Secure execution of duties

Secure execution of duties

Securitypromoting organization(Second Line)・Company-wide rules provided
・Shared security assurance measures
・Verification of important matters, etc.

・Rules established for individual companies
・Measures for ensuring security
at each workplace・Compliance inspections, etc.

Audit organization (Third Line)

48

Group companies, business divisions

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Verification

NTT began a Bug Bounty Program on a trial
basis in 2022 and fully launched it in 2023. A bug
bounty is a reward given to individuals who discoversecurity loopholes in an information system. NTT has
implemented this program with two specific aims.
1) To identify and rectify vulnerabilities before they
can be exploited by malicious third parties, thereby
enhancing the overall security posture of the NTT
Group.
2) To offer employees who participate an avenue
to refine their security skills from an attacker's

viewpoint, thereby nurturing the development of
security talent.
The trial phase demonstrated that the program not
only contributed to enhancing corporate security, butalso helped in discovering undiscovered security talentand further honing their skills. Although fully operational
only since 2023, the program will be continuallyrefined, and we aim to broaden the understanding that
improving security is a collaborative effort involving all
employees.

Verification

INTEGRATED REPORT 2023

49

Philosophy

Medium-Term Management Strategy― Our New Medium-term Management Strategy ―NTT Group
Sustainability

Message from the CEO

for People and Planet

Data Section

Expansion of Investment for Further Growth
We plan to allocate approximately
8 trillion yen toward investments andcapital contributions in growth sectors
over the next five years, representing
a 50% increase over previous levels.
Overall, we are planning investments
totaling about 12 trillion yen. Although
the larger scale of investment for further
growth will increase our need for capital,
we aim to maintain or reduce the levelof interest-bearing debt at around twice
the level of EBITDA, with attention given
to capital efficiency.

Innovating a Sustainable Future

Corporate
Governance

Growth Strategy

Growth Investments(Capital Expenditures + Investments)

Debt-to-EBITDA Ratio~¥8.0 trillion in five years
50%UP
GrowthAreas

2.5x¥0.6tn/year¥1.0tn/year~2x¥1.5tn /year

Existing
Areas~¥12.0tn¥1.0tn/year

Total

FY2022FY2015

FY2027

FY2022

FY2027

Medium-Term Financial Targets
Target Indicators

Company-Wide Targets
Growth Areas *1

Existing Areas *3

Target Levels (FY2027)

Establishing Sustainability Indicators

EBITDA+20% increase (compared to FY2022)

EBITDA+40% increase (compared to FY2022)

Overseas Operating
Income Margin*2● Changes in Revenue and EBITDA■■ Operating Revenues (100 million yen)

New Female Manager
Promotion Rate:●at least 30% each year

Greenhouse Gas Emissions:targeting carbon neutrality in
2040, as well as Net-Zero●E
 ngagement Rate:●

10% (FY2025)

EBITDA+10% increase (compared to FY2022)

ROIC

9% (FY2022 Results: 8.2%)

EBITDA (100 million yen)

131,362

130,600

118,994

119,440

121,564
32,47133,90031,11632,902

29,686

2021

2022

2023E

To be improved*1 IOWN, digital/data centers, power/energy, Smart Life, real estate, AI/robots, etc.
*2 NTT DATA Group consolidated. Excludes temporary expenses, such as M&A-related depreciation costs of intangible fixed assets. *3 NTT DOCOMO’s consumer telecommunications businesses, NTT East and NTT West.

NTT
Consolidated
Targets+20%
increase

2019

2020

Growth Areas~¥4.0tn+40%
increase~¥1.9tn~¥3.3tn

Fundamental Policy on Shareholder Returns
Dividend Policy

Share Buybacks

Our basic policy is to implement steady increases in dividends

We will flexibly conduct share buybacks to improve capital efficiency

Regarding our fundamental policy on shareholder returns, we will continue to principally aim for a steady increase individends, while flexibly conducting share buybacks to improve capital efficiency.

~¥1.3tn

C olumn
FY2022

FY2027Regarding our Medium-term financial goals, we will
use EBITDA as the primary indicator and target a 20%
increase compared to fiscal 2022.
In growth sectors, which will be the drivers of thisincrease, we aim for a 40% rise in EBITDA comparedto fiscal 2022. Furthermore, in global businesses withinthese growth sectors, we have set a target overseas
operating profit margin of 10% for fiscal 2025.
We hope to continue generating profits in existing
sectors as well, with our goal being a 10% EBITDA
increase compared to fiscal 2022, and we have set a

50

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

FY2022

Stock Split

FY2027

ROIC target of 9% to improve capital efficiency. ​We also aim to attain both sustainable growth andshareholder return and maintain EPS growth at levels
similar to those seen previously.
Additionally, we are setting targets for threesustainability-related non-financial indicators based on
our Sustainability Charter and NEW Environment andEnergy Vision: New Female Manager Promotion Rate,
Greenhouse Gas Emissions, Engagement Rate.

On July 1, 2023, NTT executed a stock split in which each share held as of June 30, 2023 would be split into 25
shares. As a result, the investment unit for NTT shares was significantly reduced, becoming a level comparable tothat of blue-chip stocks in the U.S. stock market.
We expect that this initiative will expand the individual investor base for NTT stock to a wide range of generations,
including younger investors with less capacity for investment.

Split ratio

25 -for- 1

Record date of the split: June 30, 2023 (Friday)
Effective date: July 1, 2023 (Saturday)

Example: If 100 shares of NTT shares were held before the split (share price: 4,500 yen)
100 shares held before the split:

100 shares: 450,000 yen

After
split

100 multiplied by 25 is 2,500 shares

2,500 shares: 450,000 yen

INTEGRATED REPORT 2023

51

Philosophy

NTT Group
Sustainability

Message from the CEO

Growth Strategy

Corporate
Governance

Data Section

Message from the CFO

Enhancing Sustainable
Corporate Value by
Achieving Both Business
Growth and Strengtheningof Sustainability

and our stock price has also risen in tandem. However,
EBITDA has been hovering around 3 trillion yen, and webelieve it is critical to enhance corporate value by increasing
our cash-generating ability and achieving profit growth forthe sake of sustainable growth going forward. Based on thisbelief, in our new Medium-term management strategy, we

have set EBITDA as a key indicator and aim to expand it
through increased investments in growth areas. At the sametime, enhancing shareholder returns remains one of our mostcritical management issues, and we will work to accomplish
this while simultaneously expanding investments in growthareas.

● EPS Growth and Share Price● EBITDA■■ EPS (yen)Share price (yen)

20.0

200

■■ EBITDA (100 million yen)

End of March 2023 158.5

13.9

32,358

14.8

10.0

100

Approx. ¥4 trillion

40,00033,90020,00037.4
3.7

Representative Member of the Board
Senior Executive Vice President
CFO   CCO   CHRO

0

Takashi Hiroi

52

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

02011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E

2027E (Fiscal year)

Investments in Growth Areas

investment projects and so on. On the non-financial side, we
set goals such as achieving carbon neutrality and promoting
the appointment of women to managerial positions for fiscal
2021. In fiscal 2022, we added sustainability indicators to the
KPIs for executive compensation. We have been developing
a base for non-financial management that aligns with ourbusiness strategy and expanding it within the Group.
In May 2023, we announced a new medium-term
management strategy that declared our new basic approachas follows: "Innovating a Sustainable Future for People andPlanet." We aim to deepen our existing initiatives and further
improve corporate value by tackling the enhancement ofbusiness growth and sustainability simultaneously. To thisend, we have set financial targets for growth areas andexisting areas, and we have also set sustainability-related
indicators such as the achievement of net-zero by 2040,
among other efforts.

■ Capital Allocation in the New Medium-Term Management Strategy
Since fiscal 2012, NTT Group has set EPS as a key
performance indicator, and it has achieved EPS growththrough steady implementation of its Medium-term(Fiscal year)

Note: EPS and stock prices are adjusted for stock splits.

■ Business Strategy and Sustainability
As society and the economy undergo significant
transformations, NTT has been proactive in self-reforming
and contributing to the achievement of a sustainable society
by addressing various social issues via its business activities.
For continued medium- to long-term growth, it has become
important to comprehensively promote management strategy
and sustainability.
In recent years, we have shifted our style to place
importance not only on financial management but, nonfinancial management as well. On the financial side, we
integrated ROIC into our medium-term goals alongside thetraditional EPS goal, starting in fiscal 2018. By adopting amanagement strategy that prioritizes capital productivity
within the Group, we have managed to instill a mindset
that looks not just at the amount of returns, but also at
the efficiency of invested capital. This has been instilled
throughout the organization to a significant degree, and it
has been particularly noticeable when discussing various

02011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E

management strategy for profit growth coupled with sharebuybacks. During this period, EPS increased approximately
fourfold from 3.7 yen in fiscal 2011 to 13.9 yen in fiscal 2022,

As expectations for digitalization, cloud services, andAI increase in the market, we recognize that increased
investment in growth areas is essential for the NTT Group’s
sustainable growth in the future.
The main sectors where we will expand our investments
include DX business, data centers, smart life, green solutions,and the IOWN sector.
Among these, the sectors where significant investment
amounts are expected and short-term growth is likely are
our DX business (approximately 3 trillion yen over 5 years)
and data centers (approximately 1.5 trillion yen over 5 years).
Given the robust market demand, we have already been
investing, but will scale up our investment for further growth.
For our Smart Life business (approximately 1 trillion yen
over 5 years), we plan to expand our business, mainly
focusing on financial and payment services like "d payment"
and credit cards. We aim to grow our revenue by leveraging
our "d Point Club," which has about 96 million members,
and offering various services. Beyond financial and payment
services, we will invest in video services and healthcare/
medical sectors to further enrich our existing services.
In our Green Solutions business (approximately 1 trillion
yen over 5 years), we will expand our renewable energy
generation projects such as solar and wind power, andinvest in storage batteries and energy management systems.

We aim to achieve net-zero emissions by fiscal 2040 anddevelop solution services that combine green energy with
ICT. In August 2023, we acquired Green Power Investment
Corporation, which has expertise and experience in wind
power generation, with the goal being long-term, stable
returns based on the FIT system, in addition to securing
renewable energy sources for achieving net-zero by fiscal
2040.
As for IOWN, which is a next-generation communications
infrastructure initiative we are promoting, it has
now transitioned from the conceptual phrase to theimplementation phase. In March 2023, we launched APN
IOWN 1.0, which leverages one of IOWN's key features,
low latency. In June 2023, we established NTT Innovative
Devices Corporation to commercialize photonics-electronics
convergence devices. We anticipate investing around 100
billion yen in fiscal 2023, including a 30-billion yen investment
in NTT Innovative Devices Corporation, and will decide on
further investment expansion based on the progress ofphotonics-electronics convergence devices.

INTEGRATED REPORT 2023

53

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from the CFO

Improving Return on Invested Capital■ Key Issues in Sustainability

As previously mentioned, in our new medium-term
management strategy, we plan to actively invest in
growth areas. For existing areas, however, we aim to
maintain service quality while promoting efficiency, thereby
adequately controlling the total investment amount.
Moreover, when executing investments in growth areas,
we will hold discussions from various perspectives with
the Directors and Audit & Supervisory Board Members,

and make implementation decisions using hurdle rates
such as ROIC in pursuit of appropriate returns. We haveaccumulated know-how and experience in line with the
expansion of our business, such as DX business and data
centers, and have begun to achieve steady growth. After
carrying out investments, we will monitor them regularly tocheck for any deviations between initial plans and actual
performance and promptly take corrective measures.

Enhancing Shareholder Returns
Our core philosophy regarding shareholder returns
continues to prioritize steady dividend growth and aims to
improve capital efficiency through flexible share buybacks.
This stance remains unchanged in our new Medium-term
management strategy.
Regarding dividends, we have planned for a 0.2 yen per
share increase in fiscal 2023, marking our 13th consecutive
year of dividend growth. This means that compared to fiscal
2003, the per-share dividend is expected to have increased

tenfold, reaching 5 yen.
For share buybacks, as of fiscal 2022, we have executed
approximately 5.3 trillion yen’s worth and have set a cap of
200 billion yen for fiscal 2023.
The Company’s total shareholder return, which accounts
for dividends and stock price fluctuations, was 464% overthe past 10 years, outperforming the TOPXDVNET index,
which is calculated post-tax and including dividends.

● Per-Share Dividend and Dividend Payout Ratio● TSR■■ Dividends per share (yen)Dividend payout ratio (%)

(%)

NTT
TOPXDVNET

13 consecutive terms of increasing dividends planned

¥5.0

464%

e

s
rea

nc
xi

10

33.8%

242%

¥0.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

2023E

(Fiscal year)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 (Year)In fiscal 2022, we conducted regular reviews while checking
the progress of activities and indicators set forth in the NTT
Group Global Sustainability Charter, and we conducted are-evaluation of our materiality. Discussions were held in
the Sustainability Committee, which reports directly to theBoard of Directors, and decisions were made regarding theselection of key issues, setting of key performance indicators,
and establishment of KPIs for executive compensation.
The method for selecting material issues incorporates
a variety of perspectives, including disclosure ordinances,
corporate governance codes, opinions from investors
obtained during dialogue concerning ESG, inquiries fromsustainability research institutions, and exchanges of opinionswith experts, all based on two axes: “Growth as a company”
and “Solving social issues.” The Global Sustainability Charterstipulates that regular reviews will be conducted annually, andfor fiscal 2022, four key sustainability categories have been
selected.
The first category is addressing climate change. With thegoal of achieving Scope 1 and 2 carbon neutrality by 2040,
we have been promoting energy conservation, expanding
the use of renewable energy, and implementing IOWN. Our
greenhouse gas emissions for fiscal 2022 stood at 2.53
million tons, a 45% reduction compared to 2013, so we aremaking steady progress. We also aim to achieve net-zeroemissions by 2040, including Scope 3, in our new mediumterm management strategy. From upstream suppliers todownstream customers throughout our supply chain, we
aim to expand decarbonization initiatives through dialogue
and engagement. We intend to apply the expertise gained
from being an early adopter in emerging markets suchas emissions visualization and green solutions to convert
business opportunities into reliable sources of revenue.
The second category is human capital. In fiscal 2022,
we introduced the Remote Standard system and havedeveloped diverse work styles and environments. In April
2023, we introduced a new personnel salary system focusedon expertise, enrich mechanisms for employee growth, andcreate an environment where employees can fully utilize theircapabilities. We believe that increasing employee engagement
by enhancing job satisfaction and the desire for challenges
will contribute to productivity and innovation. Although
efforts are being made to introduce the system, various
issues need to be addressed for the system’s operation andimplementation, and it is important to better link management
and human resource strategies in order to resolve issues
in these operations. We will continue to work on visualizing
human capital by identifying talent that aligns with businessstrategies, devising acquisition and development tactics, andsetting monitoring indicators and objectives.
The third category is creating new value. We hope toprovide new experiences and emotional engagementthat exceed our customers’ expectations. Under our new
medium-term management strategy, in addition to global
co-creation, NTT’s R&D will focus on enhancing customer
experience (CX) more than ever thanks to the establishmentof a new R&D organization that includes marketing functions.
The fourth category is resilience. As a company providing
communication services, we see this materiality as our duty.
In addition to dealing with large-scale outages caused bynatural disasters, our response to cybersecurity is backed
by specialists with advanced technology and expertise. We
strive for further strengthening of our business foundation tocontinuously achieve NTT's values of Connect, Trust, andIntegrity in the future.

Interest-Bearing Debt
We believe that the stable cash flows generated by ourbusiness activities will be sufficient to cover the increased
cash outflow arising from both expansion of investments
into growth areas and enhancements in shareholder returns.
While investments in growth areas may include projects
that generate returns over the long term, causing them to
be viewed as initial investments, we do anticipate that theinterest-bearing debt/EBITDA ratio could temporarily rise.
However, we will maintain our financial health. In the medium
term, we plan to bring down the interest-bearing debt/
EBITDA ratio to around two by fiscal 2027 by expanding
EBITDA in growth areas through investments.

● V isualization of Interest-Bearing Debt, EBITDA, and the

EBITDA Ratio

2.5x~¥8.2tn(Interest-bearing
debt balance)〔EBITDA〕~¥4.0tn~¥3.3tn

2022

54

NIPPON TELEGRAPH AND TELEPHONE CORPORATION~2x

Interest-bearing
debt/EBITDA ratio■ Strengthening Engagement and Dialogue with Stakeholders
To support the NTT Group's business growth andsustainability enhancement, we are looking to enhance
our information disclosures. We will also accelerate the
PDCA cycle in order to incorporate feedback that has
further enriched dialogue with all of our stakeholders into
our business strategies and develop new initiatives asappropriate, which will lead to enhanced corporate value.
Specifically, regarding the goals and measures of our new
Medium-term management strategy, we intend to keep
everyone updated on our performance while also enriching
our disclosures and providing comprehensive explanations.

Additionally, we will respect the perspectives of a diverse
range of stakeholders—not just shareholders and investors,
but also business partners across our supply chain andalliances, as we strive to transition toward an open andinnovative corporate culture. We also intend to instill a culturethat emphasizes trial and error among our employees throughongoing town meetings and similar forums.
As we continue to shoot for sustainable growth in the NTT
Group, we look forward to engaging in meaningful dialogue
with everyone as we strive to stay ahead in a rapidly changing
society.

2027

INTEGRATED REPORT 2023

55

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from the CTO■ Technology for Achieving Sustainability and Creating New Value

We Will Achieve A Worldof Well-Being ThroughNTT's Technology
Representative Member of the Board
Senior Executive Vice President
CTO   CIO   CDO

Katsuhiko Kawazoe■ Steady Progress Towards Practical Applications of the IOWN Concept
With regard to NTT’s R&D, our endeavors are aimed
at ushering in a new smart society, and we are making
concerted efforts to achieve the groundbreaking IOWN
initiative as the innovation necessary for this vision. In
March 2023, we launched our first IOWN commercial
service (IOWN 1.0), the low-latency network part of thisinitiative. When we first introduced the IOWN initiative in
2019, our goal was to offer a package that included low
latency, high bandwidth, and low power consumption,
targeting a 10-year timeline. However, the spike incommunication traffic amid the pandemic reaffirmed
the necessity for IOWN, prompting us to accelerate its
deployment.
Numerous use cases have already emerged.
For example, in the realm of telemedicine, we haveconnected the remote surgical support robot "hinotori"
from Medicaroid Corporation to its operators via the AllPhotonics Network (APN), achieving low-latency andstable data transmission, which in turn enables stablerobotic operations. In the field of financial transactions,when accessing the processing system in Tokyo from
Sapporo or Osaka within the Japan Exchange Group,
latency occurred due to transmission distance. However,with the introduction of APN, it is possible not only tosuppress overall latency, but also to adjust the latency
difference due to distance using the latency adjustment
function. This ensures the fairness of the entire system
regardless of transmission distance.

56

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONIOWN is the cornerstone of the strategy in our new
Medium-term Management Strategy “New Value Creation& Sustainability 2027 Powered by IOWN,” which wasannounced in May 2023. As mentioned above, NTT Eastand NTT West have already started commercial provisionof APN IOWN 1.0. In addition to progress in introduction
by a variety of private companies, its use is also spreading
to the national government and local governments. For
example, Shibuya city agreed on collaboration for new
urban development utilizing IOWN in June 2023. In
recognition of these efforts to realize the IOWN initiative, I
received the special award “2023 CTO of the Year Chosen
by Nikkei xTECH.” As the CTO, I will continue to provide
steady management.
Furthermore, it is indispensable to involve global
partners and solidify specifications and standards topromote the spread of IOWN. The IOWN Global Forum,
for which I have served as President and Chairperson
since its establishment in January 2020, has more than
130 member organizations and is working to establish
de facto standards. De jure standards set by internationalorganizations are also important for standardization. Since
January 2023, Mr. Seizo Onoe, originally from NTT, hasbeen serving as the Director of the Telecommunication
Standardization Bureau of the International
Telecommunication Union (ITU). We believe this will provide
a significant breakthrough for future IOWN deployment.

ChatGPT and other forms of generative AI have been thefocus of much attention recently, but while AI is extremely
useful, it requires large amounts of data processing andpower consumption. In order to meet the ever-increasingneeds of society, NTT Laboratories is advancing efforts
to form an AI community where there is connection andcollaboration of sustainable forms of AI.
By connecting multiple forms of small, low power
consumption AI developed by NTT Laboratories in real time
via IOWN, highly accurate answers and future predictions
can be realized in a sustainable manner. Furthermore,by linking multiple highly specialized forms of AI through
IOWN, an AI community can be formed that contributes to
AI governance. As an organization that connects people,
NTT aims to create new value by connecting AI as well.
To create and provide this kind of new value, it isessential to secure personnel with higher expertise andskills than ever before and to generate added value invarious fields. We will continue to expand human capital
investments so that we can secure excellent external talentand support employee growth.
In June 2023, we newly established the Researchand Development Market Strategy Division, an R&D
organization that includes marketing functions.
While growing together globally with our customers
and partners, we will consistently provide research anddevelopment and products that contribute to solving social
issues, and promote our alliances with various partners.
Of course, we must also fulfill our mission of supportingsocial infrastructure. We are working on building resilient
network systems in anticipation of large-scale failures andcyberattacks, and advancing efforts across the entire NTT
Group to prevent recurrence of failures.
I also serve in roles including CIO and CDO. As CIO, I
had the core systems of approximately 100 NTT Group
companies simultaneously updated in April 2023. The
different systems for each company were unified as ourGroup-wide IT, standardizing the processes and data ofeach company. As a result, the utilization of data and thestandardization of business processes intermediated by
the core system (common system) have been dramatically
improved. This would not have been possible without thecooperation of everyone on the frontlines. Furthermore, as
CDO, I am promoting the standardization and streamliningof operations through the use of digital technology. For
example, we are not only promoting operational efficiency
by effectively utilizing large amounts of information anddata that had been lying dormant in each Group company
through the introduction of the aforementioned Groupwide IT, but also through guidelines on purpose andconduct via internal DX promotion events as well as further
fostering a culture of DX. We will leverage the elevationof employee experience (EX) gained in the process ofreform to also elevate customer experience (CX). There isno other example of such success in the world, and wewere selected as a finalist for the PM Award 2023, which
recognizes outstanding projects in Japan.
Going forward, under the title of “aggressive DX,” wewill continue to promote further measures to tackle reformthemes centering on customers, led by DX promotion
leaders (Change Agents) appointed by the CDOs of eachcompany.

■ NTT’s Ideal WorldAs CTO, I must always be looking 10 steps ahead.
What we ultimately aim for is a world characterized byboth physical and mental well-being. "Well-being" does
not refer to momentary gladness or pleasure—commonly
known as "happiness"—but rather the cumulative total ofthese things for society as a whole over time. By breaking
through the current limitations of technology by utilizing
NTT’s technology, including IOWN, we will achieve both
value creation for a world where human beings can live
happily and sustainability of the Earth. In addition, by
promoting collaboration not only in Japan but also on a

global scale, NTT itself will play a major role in the worldand expand the business of the entire Group.
For NTT to lead the world in technology and continually
improve its corporate value while turning its ideal future
into reality, investments in intellectual property and humancapital are essential. We will continue to generate returns
that justify those investments and apply them toward
additional future-oriented investments, ensuring that thecycle continues. The NTT Group will move forward asa single united entity to meet the expectations of ourshareholders and investors.

INTEGRATED REPORT 2023

57

Philosophy

NTT Group
Sustainability

Message from the CEO

Corporate
Governance

Growth Strategy

Data Section

Innovative Optical and Wireless Network

IOWN

What is the IOWN (Innovative Optical and Wireless Network) Concept?

APN-G

APN-G

(Gateway)(Gateway)

is called the All-Photonics Network (APN). APN provides

Wavelength path

an optical-wavelength-exclusive service across the entire

APN-T

communications network. By implementing OTU4*1, which(Transceiver)For optical
wavelengths only

APN terminal
equipment

Latencyadjustment
function

uses optical wavelengths exclusively in all sections of thecommunications network and enables multi-accommodation
within the optical transmission network at the interface level,
we have achieved a latency that is an astounding 1/200th ofWith conventional IP/Ethernet services, the way latency

wide range of applications. Furthermore, adjustments andvisualization of latency make it possible to synchronize timing
between remote locations.

APN terminal
equipment

User device

User device*1 A standardized optical transmission network protocol recognized by ITU-T.
Provided as an interface for high-speed broadband access services

Progress is being made in collaboration
with "hinotori" and others

We plan to incrementally expand APN services between major cities
with the goal of enhancing the value proposition for our users andexpanding our business operations.

Device

Agent

API

Ctrl

All-photonics network

Public network

Private

8K video●M inimization of latency and fluctuations allows forremote operations that are as intricate as human touch
IOWN APN

Conventional IP/Ethernet

Challenges in doing work online

Promoting shift to online work

e-Sports

Data center interconnectivity●E ven in e-Sports, where slight latency can affect the outcome,● Interconnecting data centers via APN makes it possible

fair competitions between remote venues is enabled

for functional distribution and increases availability● The use of renewable energy is encouraged through the

Latencyutilization of small- and medium-sized regional data centers

Threshold at which
Conventional elite players feellatency(Based on our
research)

Distributed data centers

IOWN
APN

Hyperscale data
centers

Regional
Regional data
data centers
centers

IOWN APN
Regional data
centers

IOWN
services

User data
centers

Collaboration with Partners

Expo Osaka, Kansai, Japan venue

Sendai

Hiroshima
Fukuoka

Yokohama
KansaiWide-areafederation

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Remote support sites

Two-way, high capacity,
low latency, stable

Milliseconds

Tokyo

58

Ctrl

IOWN APN

16.7

Numerous conversions between light signals and electrical signals

Business C
Ctrl

Latency*3 Suppression of latency and packet loss due to traffic conditions by adopting
time-division multiplexing (sending signals at fixed times to distinguishinformation)● Expansion of APN services

Including within the device chips
Revolutionizing the direct path of light signals

Business B*2 Latency within the same prefecture where no video compression is required● Features of APN

APNBusiness A

Smart factories● Complex surgeries can now be performed remotely thanks toSurgery sites

by converting all signals into optical signals, thereby creatinga network with higher capacity, lower latency, and more
reduced energy consumption than now.

Thus far

Ctrl

Optical processor(Photon fusion type)high-capacity, low-latency, and zero-fluctuation communications

Current networks consume a significant amount of energy
by repeatedly converting between optical and electricalsignals. Moreover, latency issues arise due to communication
traffic management. APNs seek to overcome these limitations
Electrical signals: Blue

Network services
API

Telemedicine(in μSec)

What is APN?

Optical signals: Yellow and rainbow-colored

Combining ICT resources for end-to-end collaboration

APN IOWN 1.0 Applications

thereby complicating intricate remote tasks. With APN, thehave made it possible to predict delays, thereby enabling a

Edge

APN-T

occurred was inconsistent, making it difficult to predict andabsence of signal fluctuations and a consistent latency level

Ctrl(Transceiver)Userconventional latency*2, as well as zero signal fluctuation*3.

Cloud

API

high-speed broadband access service, powered by IOWN,

Ctrl

API

first commercial service under the IOWN framework. This

Networks

Digital twin computing
API

Multi-orchestrator

In March 2023, NTT East and NTT West initiated the

Cognitive Foundation
Achieve rapid ICT resource deployment and calibration optimization

Launch of APN IOWN 1.0

IOWN is a framework involving devices, networks
and information processing infrastructure built on
optical and other innovative technologies, to deliver
high-speed and high-capacity communications, andvast computing resources. IOWN consists of three
key areas of technology: the All Photonics Network(APN), which applies optical technology; Digital
Twin Computing (DTC), which enables advanced,
real-time interaction between objects and people
in cyberspace; and the Cognitive Foundation (CF),which deploys various ICT resources efficiently,
including the aforementioned.

Nagoya* This diagram is for illustrative purposes, and APN deployment to the areas mentioned is undecided at this point.

We are in discussions with various potential partners,
including companies and organizations that are considering
using APN IOWN 1.0 on a paid basis (as shown in the figureon the right). We aim to promote business demonstrations andnew business creation using APN IOWN 1.0 together with ourpartners.

Oracle Corporation

Shibuya Ward

Amazon Web Services Japan LLC

Tokyu Land Corporation

NVIDIA Japan LLC

Japan Exchange Group, Inc.

Google Cloud Japan LLC

Mitsubishi Corporation

RIKEN, Institute of Physical and Chemical Research

Medicaroid Corporation

National Institute of Informatics

Yoshimoto Kogyo Co., Ltd.

INTEGRATED REPORT 2023

59

Philosophy

NTT Group
Sustainability

Message from the CEO

Corporate
Governance

Growth Strategy

Data Section

Innovative Optical and Wireless Network

IOWN
Future Developments of Photonics-Electronics Convergence Devices
APN IOWN 1.0, which we launched in March 2023,
offers ultra-low latency as a significant value. Still, the mostdistinctive feature of APN is its improved energy efficiency,
the key to which is photonics-electronics convergencedevices. Photonics-electronics convergence means fusing
optical and electrical circuits to achieve various performance
improvements, including miniaturization and economization
as well as high speed and low power consumption. We aim
to apply this not just to networks, but also to the computing
realm to significantly reduce power consumption.
For photonics-electronics convergence devices, we plan
to start by commercializing low-power devices for network
applications in fiscal 2023. This involves integrating multiple

devices that used to be separate into a single package,thereby significantly reducing the size and achieving lower
power consumption.
Next, we plan to commercialize photonics-electronics
convergence devices for board connections in fiscal 2025,
enabling optical connections between boards and between
boards and external interfaces. This will allow for the use oflight not only in networks, but also in computing.
Subsequently, with an eye toward fiscal 2029, we plan
to make chip-to-chip connections within boards possibleusing photonics-electronics convergence technology, andbeyond fiscal 2030, we aim for connections within the chips
themselves to be optical.

IOWN Performance Targets
In addition to photonics-electronics convergencedevices, we are considering improvements in wavelength
technology and optical fiber technology. Starting in fiscal
2025 with IOWN 2.0, we expect a 13-fold improvementin power efficiency in the APN section and an 8-foldimprovement in the server section, with a more than 6-foldincrease in capacity.
Moreover, in fiscal 2029 with IOWN 3.0, we aim forfurther performance improvements, reaching up to 125-

fold in terms of capacity.
The power efficiency depends on the deployment of thedevice, but its performance will exceed that of IOWN 2.0,
and it is expected to improve performance about 20-foldin the server section compared to existing solutions.
Furthermore, we aim to achieve a 100-fold improvementin overall power efficiency, 125-fold in capacity, and
1/200th of the latency with IOWN 4.0 looking toward fiscal
2030 and beyond.

100x*

Power efficiency
APN Section

13x

8x

1.0x
FY2023 onward

FY2025 onward

FY2029 onward

Board connection
devices

Chip-to-chip
devicesCompact/low-powerdevices for networks

FY2030 onward
Intra-chip photonics

100x*

Power efficiency
Server Section

Conventional

IOWN1.0

1.0x
IOWN2.0

IOWN3.0

IOWN4.0

Conventional

IOWN1.0

IOWN2.0

IOWN3.0

IOWN4.0* Power efficiency values for the entire photonics-applied section, including APNs, servers, etc.

High-capacity

125x

Low Latency

125x

6x or above
1.2x
For Networks

From Networks to Computing

We aim to refine IOWN by applying the aforementioned
photonics-electronics convergence devices to both APN
services and servers.
First, in fiscal 2023, we plan to reduce the power
consumption of network-oriented small devices and apply
them to APN services to improve their power efficiency.
Next, for IOWN 2.0 starting in fiscal 2025, we will expand
the application scope by using the devices for board
connections in not only APN services, but also the server

IOWN1.0
FY2022

APN
services
Photonicselectronics
convergencedevices

FY2023Ultra-Low Latency Services

Compact/low-powerdevices for networks

Server(SWB*)

Conventional

sector.
According to the current schedule, our goal is tocommercialize low-power servers using these photonicselectronics convergence devices in fiscal 2026.
Further, for IOWN 3.0 starting in fiscal 2029, we aim todevelop devices for chip-to-chip connections and, for IOWN
4.0 in fiscal 2030 and beyond, to make the chip interiors
themselves optical to drastically reduce power consumption.

IOWN2.0

IOWN3.0(Board-connected optics)(Chip-to-chip photonics)

FY2025

FY2029Services offering ultra-low
Services offering ultra-low
latency, high capacity, and low latency, ultra-high capacity, andpower consumption
ultra-low power consumption

Board connection devices

Low power consumption
servers

Chip-to-chip devices

Ultra-low power
consumption servers

IOWN4.0(Intra-chip photonics)

FY2030 onward

Services offering
further Electricity
services

Intra-chip
photonics

Services offering
further reduced power
consumption

IOWN1.0

IOWN2.0

IOWN3.0

IOWN4.0

Conventional

1/200

・・・

IOWN1.0

IOWN2.0

1/200
IOWN3.0

IOWN4.0

C olumn● 1 29 organizations and groups from Asia, America, and Europe

IOWN Global Forum Initiative

participating

To make the IOWN concept a reality, we have beenpromoting it around the world with partners through the IOWN
Global Forum (IOWN GF), and 129 organizations and groups
are taking part (as of August 2023).
In April 2023, we held the first annual meeting in Osaka inthe post-COVID-19 period, with 396 participants attendingin person and 174 attending remotely, mainly from Europe
and Asia. Discussions about future developments are steadily
evolving, and we have received a message from Prime
Minister Kishida as well.

129* As of August 2023

88

Sponsor
GeneralAcademicResearch

39
32020 2021 2022 2023
January January January August

IOWN GF Sponsor Members (34)
Chunghwa Telecom
Ciena
Cisco Systems
Dell Technologies
Delta Electronics
EricssonIntel
Microsoft
NICT

General Members (77)Nokia
Oracle Japan
ORANGEPwC Japan
Red HatSamsung Electronics
SK hynix
SK Telecom
VMwareAccenture Co., Ltd.
Kioxia Corporation
KDDI Corporation
Sumitomo Electric Industries, Ltd.
Sony Group Corporation
Deloitte Touche Tohmatsu LLC
Toyota Motor Corporation
NEC Corporation

NIPPON TELEGRAPH AND
TELEPHONE CORPORATION
Hakuhodo Inc.
Fujitsu Limited
Furukawa Electric Co., Ltd.
Mizuho Bank, Ltd.
Mitsubishi Electric Corporation
MUFG Bank, Ltd.
Rakuten Mobile, Inc.

Academic or Research Members (18)* Super White Box

60

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

61

Philosophy

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Providing security and safety for NTT Group's businesses and supporting their growthIntellectual Property Strategy
The NTT Intellectual Property Center takes appropriate action to protect the results of intellectual property investment for
new value creation and the sustainability of the planet, promoting its use while respecting the intellectual property of others.

NTT Intellectual Property Center Activity Policy
NTT Group, which engages in R&D, from basic toapplied, in a wide range of technological fields, has
accumulated intellectual property investments (R&D
investments) over the years as a telecommunications
operator that are unparalleled around the globe.
The NTT Intellectual Property Center has establishedan Activity Policy to provide security and safety andsupport the growth of the NTT Group's businesses as
they continue to take on the challenge of creating newvalue and contributing to the sustainability of the planet.
It promotes the formulation of an intellectual property
strategy and appropriate protections for the intellectual

property gained from our investments, all while respecting
the intellectual property of others.
For example, in the transition from the conceptual
phase of IOWN to the implementation phase, welaunched NTT Innovative Devices Corporation and are
facilitating further investments in R&D. However, this is
not an endeavor that can be accomplished by the NTT
Group alone. The NTT Intellectual Property Center willcontinue to contribute to the creation of new value by
supporting collaborations with our partners around theglobe through various activities aligned with our policy
objectives.

Formulating and Advancing Our Intellectual Property Strategy
As NTT Group’s core organization for managing intellectual
property, we aim to secure competitive advantages byproactively and appropriately protecting and managing
intellectual property rights (i.e., patents), or internal expertise,
gained from the results of R&D, the source of our businessactivities.
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
1) Strengthening ourcompetitiveness with strategicrights creation (build an
intellectual property portfolio)

operations, each company in NTT Group respects theintellectual property rights of other companies.
With our intellectual property strategy as the basis of these
activities, we take a three-pronged approach to formulating
and advancing our business strategies and R&D strategy
for the sake of creating new value and contributing to thesustainability of the planet: (1) develop strategic intellectual
property rights, (2) manage risks, and (3) deploy theintellectual property we own.

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

2) Risk management that protects
our intellectual property rights
and respects the rights of others• W hen Group companies deploy the results of R&D in their operations, we examine theintellectual property rights of others inside and outside Japan up until the stage where R&D
results are applied in order to avoid infringing on the rights of third parties• 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

3) Develop business and partners
through broad deployment ofintellectual property rights• Deploy intellectual property in business to help our customers and society, and to securecompetitive advantages in business• Proactively engage in activities to standardize intellectual property

Intellectual Property Portfolio Related to AI Business
The results of R&D, which plays a major role in the creationof intellectual property for NTT Group, has translated into
ownership of approximately 18,000 patents around theworld.
In the NTT Group, we have long conducted R&D on AI
technology, which is attracting significant public attention.
This includes foundational technologies such as learningtechniques, as well as applied inventions for a wide range ofindustries for which patents have also been obtained.
● Percentage of NTT Group's AI Patent Applications by Business Area

11) Other30%10) Energy
1%9) Supply Chain/
Logistics
1%8) Agriculture/
Livestock2%7) Manufacturing
3%6) Construction/
Infrastructure Management
7%5) Insurance & Finance
7%1) Disaster Prevention
23%2) Retail9%3) Medical/Healthcare
9%4) Mobility
8%

Categories

Description

Disaster prediction and forecasting, pre-disaster1) Disasterawareness through hazard maps, 3D mapping, XR,
Prevention
remote real-time monitoring

2) RetailOptimal staffing, store layout, resource allocation,
estimations and simulations of purchase andexecution trends, optimization of promotional
activities in e-commerce and physical stores,
demand forecasting based on purchase data3) M edical/
Healthcare

Telemedicine, modeling & simulation of publichealth, optimal allocation of healthcare resources,
data-driven extension of healthy lifespan4) Mobility

Traffic flow simulation, congestion alleviation, traffic
optimization, sensing around vehicles, autonomous driving5) Insurance& Finance

Credit, fraud detection, demand forecasting, stock
price prediction, financing, credit rating

3D surveying, structural replication, detection or onstruction/
6) C
diagnosis of degradation, failure, abnormalities inInfrastructurebuildings and infrastructure, remote monitoring inManagementbuildings and infrastructure, maintenance efficiency
7) Manufacturing

Monitoring of production facilities, maintenance,
simulation-driven design, development, quality
inspections8) A griculture/
Livestock

Smart farming, remote operation & automatic
control of agricultural machinery and agricultural &livestock facilities, yield & quality prediction9) Supply
Chain/
Logistics

Logistics optimization, optimal dispatching
and allocation of vehicles, demand and supply
prediction, risk analysis

10) Energy

Stable operation of power generation facilities, energy
demand and supply forecasting and optimization

11) Other—

IPR*-DAY (initiative for raising interest in intellectual property across the Group)
The NTT Intellectual Property Center has been holding across-Group comprehensive event known as IPR-DAY sincelast fiscal year, with the aim of elevating the level of interest
in intellectual property among Group employees and helping
them integrate this knowledge into their daily work.
IPR-DAY 2022, conducted last November, saw theparticipation of 242 individuals from 55 Group companies,
covering a diverse range of professions. During the event,lively discussions took place on timely topics provided
not only by the NTT Intellectual Property Center, but also
by intellectual property managers from various Group
companies. Feedback from participants included comments
saying that the content was overall refreshing and useful,leading to a significant rise in interest and understanding ofintellectual property across the NTT Group.
* Intellectual Property Right

IPR-DAY 2022 Program
Business Strategy
Intellectual Property Strategy
1) Strategic rights creation(build an intellectual property portfolio)

2) Risk management
3) Deploying intellectual property

R&D Strategy

62

NIPPON TELEGRAPH AND TELEPHONE CORPORATION● Creating new value● Sustainability for theplanet• C urrent Intellectual Property Trends from the
Perspective of Industry Buzzwords• Creating and Utilizing Patents that Contribute toBusiness• Bridging Business and R&D Strategies through IP
Landscaping• Intellectual Property Considerations in a CoCreation Environment• Intellectual Property Risk Management Focus Areas• Protecting and Respecting Copyrighted Material• The Metaverse and Intellectual Property

INTEGRATED REPORT 2023

63

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Operations in Review

Operations in Review

Integrated ICT Business

Regional Communications BusinessIn the Integrated ICT Business, with the start of a new structure as the newly formed DOCOMO Group, we advanced

In the Regional Communications Business, in addition to strengthening our solutions business which supports thedigital transformation of companies, local governments, and societies to resolve regional social issues, we offered
our "Hikari Collaboration Model," which provides wholesale fiber-optic access services, among other things, tovarious service providers.

initiatives to create the three major synergies of expansion of the enterprise business, more competitive network, andstrengthening the power of service creation and development and promoting DX, while also promoting sales of 5G services.

Results for the Fiscal Year Ended March 31, 2023

Results for the Fiscal Year Ended March 31, 2023

Operating revenues

Operating profit

Capital Investment

Operating revenues

Operating profit

Capital Investment(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

¥6,059 billion¥1,093.9 billion

5,870.2 6,059.0 6,110.0

FY2021

FY2022

1,164.0
1,072.5 1,093.9

FY2023(Outlook)

FY2021

FY2023(Outlook)

FY2022¥706.3 billion

698.6

FY2021

706.3

FY2022728.0

FY2023(Outlook)¥3,177.6 billion¥420.5 billion

3,207.6 3,177.6 3,190.0

FY2021

FY2022

FY2023(Outlook)

Key Initiatives■ The Next Stage of Innovation: Transform our business portfolio to become an integrated ICT company and achieve sustainable growthEnterprise Business
Smart Life Business
ConsumerCommunications Business●●Resolving social and industrial challenges through the improvement of our integrated solutions
Supporting business efficiency through the fusion of mobile and fixed-line services

Achieving both organic and disruptive growth● Achieving both immediate business expansion and long-term growth initiatives●Implementing channel reforms in both real and online environments to create new, hybrid
customer experiences● Continuing efforts to improve network quality and reliability●

TOPIC
NTT Com, Takenaka and Shimizu to collaborate on
digital transformation of construction sites
NTT Communications Corporation (NTT Com), Takenaka
Corporation, and Shimizu Corporation began theircollaboration on the digital transformation of construction
sites in July 2023. Through collaboration and joint study, thethree companies aim to improve the productivity of the entire
construction management operations that occur atconstruction sites daily by digitalizing and linking information
used for process management, material logistics, work
instructions, etc., in process charts and daily work reports.

Launch of "d Smart Bank" Digital Account Service
NTT DOCOMO, in collaboration with MUFG Bank, Ltd.,launched the digital account service "d Smart Bank" inDecember 2022. This digital account service allows
customers to accumulate "d Point" when using it for
automatic payments, such as for "d Card" usage or mobile
phone bills, as well as for receiving wages and otherpayments exceeding a certain amount. Through this service,
we will continue to expand our range of financial services
that can be securely and conveniently used in various
scenarios as part of our commitment to individually
supporting each customer's approach to managing theirfinances.

Introduction of the new services "eximo" and "irumo"
In July 2023, NTT DOCOMO began offering new priceplans, "eximo" and "irumo." The "eximo" plan is designed tocater to a wide array of customer needs, from those who
use little data to those who wish to use data without any
restrictions* when watching videos on the go, for instance.
Conversely, "irumo" is aimed at customers who not only
require less data, but are also looking for a more economicalrate. Along with the existing "ahamo" plan, we will continue
to offer a mix of attractive services that include financial andpayment solutions as well as video and other services, withthe aim of maximizing the value provided to our customers.
* Data usage may be restricted during times of network congestion or heavy data

440.0

420.5

448.0

FY2021

FY2022

FY2023(Outlook)¥498.1billion

501.1

498.1

493.0

FY2021

FY2022

FY2023(Outlook)

Key Initiatives■ NTT East - Intensifying efforts to support a recycling-oriented economy in local communities -Evolution of access networks to support
a digital society● xpanding the functions of Regional Edge and adapting to remote needs,Eamong others

Offering integrated managed services that
support on-premise environments for customers●

 roviding centralized solutions for monitoring, maintenance, and operationPof intra-building and in-office LAN environments, among others●

 onsolidating facility construction and operational tasks at NTT-ME,
C
centralizing technical expertise and know-how for building and managing
communication infrastructure●Increasing overall reliability through cross-sector collaborations andenhancing maintenance and operations using AI, among others

Engineering that strengthens theresilience of local communities
Further enhancing the reliability of the
networks supporting Japanese infrastructure■ NTT West - Contributing to the Resolution of Social Issues Through Businesses in Growing Sectors -Offering comprehensive solutions to customers, including the promotion of community revitalization through cloudservices targeted at municipalities and the advancement of DX in university education● Utilizing QUINTBRIDGE for joint business development pitches and the Future Co-Creation Program to promotebusiness co-creation with our partners●●

Exploring new use cases enabled by IOWN, such as new entertainment experiences leveraging low-latency networks●

Ensuring the reliable and stable provision of telecommunications services, which serve as critical social infrastructure,through upgraded operations and the strengthening of communication facilities

TOPIC
Launch of APN IOWN 1.0
NTT East and NTT West have launched the AllPhotonics Network (APN) IOWN 1.0 as the firstcommercial service aimed at achieving the IOWN
concept, in which all sections of a communications
network use optical wavelengths exclusively. APN IOWN
1.0 ensures high speed, high capacity and low latency, andzero fluctuation. Additionally, integrating OTN Anywhere,launched concurrently, enables the visualization andadjustment of latency. We will continue to work with ourcustomers to expand use cases, including remoteperformances, remote lessons, e-sports, remote equipment
operation, and tight integration between data centers.
Moreover, we are advancing our R&D efforts to enhance
APN-related technologies, with the goal of offering afirsthand IOWN experience at the 2025 World Exposition(Osaka-Kansai Expo).

traffic.

64

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

65

Philosophy

NTT Group
Sustainability

Message from the CEO

Growth Strategy

Corporate
Governance

Data Section

Operations in Review

Operations in Review

Global Solutions Business

Others (Real Estate, Energy and Others)

In the Global Solutions Business, NTT DATA Group worked to extend and consistently provide a range of IT services,

In the Real Estate Business, NTT Urban Solutions has taken the lead in utilizing a wide range of resources—
including ICT, real estate, energy, and environmental technology—to spearhead the development of vibrant andunique communities. In the Energy Business, our focus has been on NTT Anode Energy. We have pushed forwardwith the development of renewable energy power plants, local production and local consumption of energy using
energy management systems, and rolled out solutions aimed at decarbonization.

such as offerings of digitalization and system integration, that are responsive to the changes in the market, as well as
to strengthen its ability to provide services in growth areas such as the data center business and managed services.

Results for the Fiscal Year Ended March 31, 2023
Operating revenues

Operating profit(Billions of yen)(Billions of yen)

¥4,091.7 billion
3,615.2

FY2021¥265.6 billion

4,091.7 4,100.0

FY2022

292.0

265.6

210.5

FY2023(Outlook)

FY2021Results for the Fiscal Year Ended March 31, 2023

Capital Investment¥500.4 billion(Billions of yen)

500.4

590.0

FY2023(Outlook)

FY2021

FY2022

Operating profit

Capital Investment(Billions of yen)(Billions of yen)(Billions of yen)

¥1,807 billion
1,807.0

1,396.0

347.2

FY2022

Operating revenues

FY2023(Outlook)

FY2021

FY2022¥67.2 billion

1,610.0

72.5

FY2023(Outlook)

FY2021Key Initiatives■ Strategy in the Medium-term Management Plan of the NTT DATA GroupAs a Trusted Global Innovator, NTT DATA Group aims to create value for the future and achieve a sustainable society along with its
customers by forging connections between various people and technology.
●

Overall Strategy

Strengthen consulting with foresight●Evolve to an asset-based business model●Enhance advanced & development technology●

Be the best place to work

70.0

FY2022

FY2023(Outlook)

140.7

FY2021157.7

FY2022189.0

FY2023(Outlook)

Key Initiatives■ Urban Solutions to Realize a City Full of Energy and Individuality

Under the slogan "Connecting People, Cities, and the Future.", NTT Urban Solutions Group combines the consulting prowess
to solve local challenges, a proven track record in real estate development both in Japan and abroad, design and engineeringexpertise across all facility-related domains, and management capabilities that leverage extensive know-how to enhance asset
value. We are committed to contributing to the sustained growth and progress of local communities.

Capitalize on the convergence IT & Connectivity

●

67.2

¥157.7 billion

Leveraging the collective strengthsof the NTT Group to advancea unique approach to "Urban
Solutions" onsulting, data collection, research, and analysis of basic information related toCurban solutions● Real estate development and management●●

Design, engineering, and facility solutions●

Property management, ICT management, and energy management■ Smart Energy Business

NTT Anode Energy contributes to the realization of a decarbonized society through its smart energy business.

TOPIC

66

Generative AI service launched capable of crafting
evidence-based responses by securely integrating
various types of data

Collaboration with Mitsubishi Heavy Industries tobuild a rack-type liquid immersion cooling systemfor existing data centers

In June 2023, NTT DATA Japan launched the LITRON
Generative Assistant, a service that produces evidencebacked responses by securely linking a variety of data—
including internal regulations, business documents, andpublic data—through generative AI. NTT DATA Japan
already introduced the text-interpretation AI tool LITRON,
which uses large-scale language models, to the market awhile ago, and it has continued to engage in research anddevelopment. This new service benefits from those efforts.
Additionally, by leveraging NTT DATA Japan's data analysis
platform, we alleviate customer security concerns while
accelerating the adoption of cutting-edge technologies.

NTT DATA Japan, in partnership with Mitsubishi Heavy
Industries, Ltd., has developed a rack-type liquid immersion
cooling system that allows for the direct cooling of servers
and other IT equipment in liquid and can be applied toexisting data centers. This system submerges IT equipment
in a specialized insulating liquid for efficient cooling.
Following real-world testing at Mitaka Data Center EAST, we
confirmed a 92% reduction in cooling energy consumption
based on our internal building standards, as well as a 173%
improvement in operational efficiency compared toconventional systems. Building on these findings, NTT DATAJapan aims to apply this cooling system to its own data
centers and provide services to contribute to both the NTT
Group’s decarbonization targets and customer efforts
toward decarbonization and energy efficiency while
endeavoring to offer eco-friendly system services.

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONGreen Power Generation Business
Local Grid Business
Consumer Energy Business
Construction/MaintenanceOperation Business evelopment of renewable energy to realize the NTT Group's Environment and Energy Vision
DProvision of local energy production for local consumption as well as carbon-neutral
services to companies using energy management systems● Provision of electricity for customers and the NTT Group●●●Provision of construction, maintenance, and monitoring services of electricity facilities forcustomers and the NTT Group

TOPIC
Achieved Level 4 ISO 37106 Certification, theinternational standard for smart cities, the second
such instance in the world
The Higashi-Sakura 1-chome Area in Higashi Ward,
Nagoya City, managed by NTT Urban Solutions, hasachieved Level 4 certification, currently the highest level ofthe ISO 37106 international standard for smart city operation
models. This is only the second such certification worldwide.
Going forward, the NTT Group will continue to expand its
support for sustainable urban solutions focused on wellbeing, run by and for local residents, with the goal of
maximizing community and individual well-being.

Acquisition of Green Power Investment Corporationand other renewable energy operators
NTT Anode Energy, in collaboration with JERA Co., Inc.
(JERA), has completed acquisition of shares of Green PowerInvestment Corporation (GPI), which is owned by Pattern
Energy Group LP, a U.S.-based renewable energy operator.
Moving forward, NTT Anode Energy, JERA, and GPI willsynergize their respective expertise, insights, and strengths
in renewable energy operations, with the goal of contributing
to Japan's goal of becoming carbon neutral by 2050
through further initiatives, thereby promoting the adoption ofrenewable energy within Japan. (See page 24 for details)
INTEGRATED REPORT 2023

67

Philosophy

Corporate Governance

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section*As of the end of June 2023

Members of our Board― Reinforcement of Governance for Sustained Growth ―Basic Views of Corporate GovernanceWe believe that strengthening the system of corporate governance in accordance with the purposesof each principle of the “Corporate Governance Code” of the Tokyo Stock Exchange is an importantmanagement issue for maximizing corporate value while meeting the expectations of various stakeholders,
including shareholders and other investors, as well as customers, business partners, and employees.
Therefore, we are working to strengthen corporate governance based on our fundamental policies of
ensuring sound management, executing appropriate decision-making and business activities, clarifying
accountability, and maintaining thorough compliance.

Jun Sawada

Akira Shimada

Katsuhiko Kawazoe

Takashi Hiroi

Akiko Kudo

Chairperson andExecutive Director

President and Chief
Executive Officer

Senior Executive Vice
President

Senior Executive Vice
President

Member of the Board

Ken Sakamura

Yukako Uchinaga

Ryoji Chubachi

Koichiro Watanabe

Noriko Endo

Outside Member of theBoard

Outside Member of theBoard

Outside Member of theBoard

Outside Member of theBoard

Outside Member of the
Board

Overview of Corporate Governance Structure
NTT believes that an auditing system based on Audit & Supervisory Board Members, including outside
independent Audit & Supervisory Board Members, is an effective means of supervising management.
Accordingly, we have adopted the model of being a company with an Audit & Supervisory Board. In
addition, through the election of outside independent Members of the Board, NTT has
strengthened the function of appropriately supervising business execution. Furthermore, through its
adoption of an executive officer system, NTT intends to clearly separate management-related
decision-making and supervisory functions from business execution functions and improve its
management flexibility. Additionally, NTT has voluntarily established a “Nomination Committee” and a“Compensation Committee,” each of which consists of five directors, including three outside
independent Members of the Board, to further increase the objectivity and transparency of decisions
relating to appointment and compensation. NTT has determined that governance functions based onan Audit & Supervisory Board are sufficiently effective to achieve this purpose.

*As of the end of June 2023

Members of the Audit & Supervisory Board

Keiichiro Yanagi

Kanae Takahashi

Kensuke Koshiyama

Hideki Kanda

Kaoru Kashima

Full-Time Audit &Supervisory Board
MemberFull-Time Audit &Supervisory Board
MemberFull-Time & Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberSkill Matrix

Governance Chart

Field

General Meeting of Shareholders
Election/removal

Decision-making/supervisory functions

Audit & Supervisory Board

Board of Directors
Audit

Compensation Committee

Supervision

Director

Sustainability Committee

Election/removal
and supervision

ReportingBusiness execution functions

President (Executive Officers Meeting)
Proposal/reporting onimportant matters

Executive Officers
Business Sections

Instruction/supervision ofdelegation of executive
authority
Instruction/
Reporting

ReportingNTT(holding
company)

Internal audit

Outside independent Members of the Board and outside independent Audit & Supervisory Board Members

68

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Support
Office of Audit &Supervisory
Cooperation Evaluation
Board Members

Supervision
Coordination

Accounting audit

Business Administration

Marketing/Global Business

IT/DX/R&D

Jun Sawada

●

●

●

Akira Shimada●●

Katsuhiko Kawazoe●●

Takashi Hiroi●●

Akiko Kudo

●

●

●

Ken Sakamura

●

●

●

Yukako Uchinaga

●

●

●

Ryoji Chubachi

●

●

●

Koichiro Watanabe●●

Noriko Endo

●

Name

Group companies

Nomination Committee

Election/removal Election/removal

Audit & Supervisory
Board Members
Cooperation Cooperation

Internal Audit
Department

In-house directors and in-house Audit & Supervisory Board Members

HR

Finance

●

●

●

●

●

●

●

●

●

●

●
●

●
●

●

●

●

●

●

●

Kensuke Koshiyama

●

●

●

Hideki Kanda

●

●

●

Kaoru Kashima

●

●

●

Keiichiro Yanagi
Audit &
Supervisory
Board
Member

●Law/Risk Management/
Public Policy

Kanae Takahashi●(For background information and other details about the Directors and Audit & Supervisory Board Members, please see page 78.)

INTEGRATED REPORT 2023

69

Philosophy

Bo ard o f D i re c tor s
We believe that the outside independent Members of theBoard will help strengthen the supervisory function forbusiness execution and expect to incorporate the opinion they
provide from their wide-ranging managerial perspective.
W ith the objective of further strengthening theindependence, objectivity, and accountability in decisions withrespect to appointments and compensation of officers andrelated matters made by the Board of Directors, the Company
has voluntarily established a Nomination Committee andCompensation Committee, each consisting of five directors,of which a majority (three) are outside independent Membersof the Board, as preliminary review institutions of the Board of
Directors, thereby increasing the effectiveness of governance.
Moreover, in recognition of the fact that response tosustainability issues is an important management issue,
the Company has voluntarily established a Sustainability
Committee that reports directly to the Board of Directors.
The committee will work to further promote initiatives after
important issues and indicators have been decided byresolution of the Board of Directors.

● Details on Board of Directors Resolutions and Reporting Items

GovernanceManagement Strategy

52%

42%

General Meeting of Shareholders-related●

Evaluation of the effectiveness of internal control systems●

Operational status of internal whistleblowing system●

Human resources●

Policy on even stronger governance, etc.

Number of Board of
Directors’ Meetings
held in thefiscal year ended
March 31, 2023: 14

Capital Policy

6%●

Returns to shareholders (share buybacks and dividends)●

Financing and loans, etc.

●

NTT Group operations●

Review of NTT Group operational structure●

Global strategy●

M&A matters●

Report on the status of execution of duties●

Approval of Annual Reports and financial statements●

Research and development plans, etc.

Evaluation of the Effectiveness of the Board of Directors
Overview of Evaluation
Participants

All 10 Directors and all 6 Audit & Supervisory Board Members

PeriodMarch 2023

Questionnaire Format
Major Subjects
Results Aggregation andAnalysis Method

Anonymous surveys comprised 27 questions involving 4-level rankings as well as openended questions
Roles and responsibilities of Directors and of the Board of Directors itself, composition of
the Board of Directors, operation of the Board of Directors, support systems for outside
Members of the Board
After aggregation by third-party organization and analysis by Board of Directors’ organizing
office, the results are shared and issues and improvement measures are discussed at Boardof Directors’ meeting

Evaluation Results
NTT implements an evaluation of the effectivenessof the Board of Directors annually for the purpose ofstrengthening the governance of the top management
through continuous improvement of effectiveness of
the Board of Directors. The FY2022 evaluation results
confirmed that the Board of Directors was sufficiently
fulfilling its important role and responsibilities, with amajority of positive opinions for all of the questions.

70

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Audit & Supervisory Board

The Board of Directors comprises ten directors, including
five outside independent Members of the Board (including
two women) and five internal directors (including one
woman), and accordingly, the ratio of outside independent
Members of the Board is 50%. In addition, the introductionof an executive officer system that clearly separates the
management decision-making and oversight functions fromthe business execution function ensures closer supervision of
execution and enhanced management flexibility. In principle,
the ordinary meetings of the Board of Directors are held once
per month, and extraordinary meetings are held as needed.
The Board of Directors discusses the group management
strategies and makes decisions on matters stipulated by laws
and regulations and on important matters related to company
management and group management. Moreover, throughsuch means as periodic reports from Directors and Executive
Officers on the status of business execution, the Board of
Directors supervises the business execution of the Directors
and Executive Officers.
Each outside independent Member of the Board has
extensive experience and a high level of integrity and insight.

●

Message from the CEONIPPON TELEGRAPH AND TELEPHONE CORPORATION

In addition, through feedback sessions implemented
to invigorate strategic discussions and to enhance
discussions on important issues such as important mattersrelated to corporate and Group management, including
restructuring to strengthen our global business, andformulation of policies to further strengthen governance, allmembers expressed positive feedback. Therefore, we haveevaluated that the effectiveness of the Board of Directors is
being ensured.

The Audit & Supervisory Board comprises three outside
independent Audit & Supervisory Board Members (including
one female member), who have experience and knowledge
in a range of fields—as a university professor, and Certified
Public Accountant—and two internal Audit & Supervisory
Board Members (including one female member) for a total of
five members. NTT conducts effective audits by combining
the independence of outside Audit & Supervisory Board
Members with the superior information collection capabilities

of internal Audit & Supervisory Board Members. Among the
Audit & Supervisory Board Members, Auditor Keiichiro Yanagi
is a certified member of the Securities Analysts Associationof Japan, while Auditor Kensuke Koshiyama has experiencedeveloped through his work at the Board of Audit of Japan,and Auditor Kaoru Kashima is a Certified Public Accountant,
all of whom have considerable knowledge in the areas offinance and accounting.

Activities of the Audit & Supervisory Board
For the fiscal year ended March 31, 2023, amid continued
significant changes in management such as the restructuringof our global business, the Audit & Supervisory Board
conducted an efficient and effective audit in collaboration
with the Internal Audit Department, Accounting Auditors andGroup company corporate auditors on both audit mattersrequired by law and on other matters such as the progressof the Medium-Term Management Strategy and initiatives
to maintain and improve corporate governance, the statusof compliance, and stable provision of telecommunication
services on the basis of the audit plan.
Audit & Supervisory Board Members, including outside
independent Audit & Supervisory Board Members, attend
meetings of the Board of Directors and other important
meetings. In addition, Audit & Supervisory Board Members
meet with Representative Members of the Board and outside
independent Members of the Board to exchange ideas andopinions, as well as hold meetings to exchange ideas andopinions for certain topics with representative Membersof the Board and Audit & Supervisory Board Members ofGroup companies, including overseas subsidiaries, in orderto maintain an understanding of the status of the executionof duties by Directors and Executive Officers, and to provide
their opinions as needed.
In the fiscal year ended March 31, 2023, Audit &Supervisory Board Members met to exchange ideas andopinions with Representative Members of the Board, Outside
independent Members of the Board and others 40 times
about management issues and responses. In fiscal 2022, we
held 26 Audit & Supervisory Board meetings (Kanae Takahashi
and Takashi Iida both attended all 26 meetings, Hideki Kanda
and Kaoru Kashima both attended 25 out of 26 meetings,
Keiichiro Yanagi and Kensuke Koshiyama both attended all 17of their respective meetings, and Takao Maezawa attended all
9 of his respective meetings).
Moreover, separate from meetings of the Audit &Supervisory Board, the Audit & Supervisory Board Members
Preliminary Deliberation Meeting was held 36 times. Thesemeetings provide a venue for the sharing of information.
For example, at these meetings Audit & Supervisory Board
Members receive explanations from corporate officers ofmatters to be discussed at the Executive Officers Meeting.
Furthermore, the Audit & Supervisory Board Members work
closely with the Accounting Auditors and the Internal Audit
Department. The Audit & Supervisory Board Members
exchanged opinions with Accounting Auditors 11 times andwith the Internal Audit Department 13 times, and received
explanations of audit plans and reports on the status ofinternal control systems and provided advice as needed.
In initiatives related to Group companies, in order toimprove the Group audit structure and on the basis ofmateriality and risk approach, NTT aligned risk awarenessbetween the Audit & Supervisory Board Members of majorGroup companies and then conducted audits throughthe Audit & Supervisory Board Members of major Group
companies. In the fiscal year ended March 31, 2023, theAudit & Supervisory Board Members held meetings to
exchange opinions with the Representative Members of theBoard and Audit & Supervisory Board Members of Group
companies 65 times to inquire about and hold discussions
on the status of progress on the Medium-Term Management
Strategy, the status of corporate governance and initiatives
to maintain and improve it, the status of compliance, andstable provision of telecommunication services, among othertopics. In addition, the Audit & Supervisory Board Membersof each Group company received reports and held meetings
to exchange opinions on audit results for audit mattersbased on their unified risk awareness. In addition, the Audit &Supervisory Board is implementing initiatives that contributeto enhancing the auditing activities of the Audit & Supervisory
Board Members of major Group companies, including holding
liaison conferences for major Group companies and between
the Audit & Supervisory Board Members of major Group
companies to share risk awareness.
Through these activities, the Audit & Supervisory Board
Members support the sound, steady growth of NTT andGroup companies from an independent perspective thatdiffers from that of executives. In addition, Audit & Supervisory
Board Members contribute to the strengthening of corporate
governance systems and the fostering of awareness ofcompliance matters.
Additionally, with regard to coordination with related audit
organizations and inspections, we have been handling mattersthrough a combination of web conferencing systems and site
visits to enhance the effectiveness of audits.
● Opinion Exchange Meetings Held

Opinion exchanges with Representative Membersof the Board

40 times

Audit & Supervisory Board

26 times

Audit & Supervisory Board Member Preliminary
Deliberation Meeting

36 times

Opinion exchange meetings with Accounting
Auditors

11 times

Opinion exchange meetings with Internal Audit
Department

13 times

Opinion exchange meetings with Representative
Members of the Board and Audit & Supervisory
Board Members from Group companies

65 times

INTEGRATED REPORT 2023

71

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Message from an Outside Member of the Board

Outside Independent
Member of the Board

Ryoji Chubachi

Outside Independent
Member of the Board

Ken Sakamura
Assumed the position of
Outside Member of theBoard of the Company inJune 2019

I have been involved in research and development and standardization activities for over 40 years
on a computer system responsible for controlling various machines named TRON (The Real-time
Operating system Nucleus), and have contributed to the realization of ubiquitous computing and IoTby openly and freely disseminating its achievements worldwide. Based on this experience, I have madesuggestions primarily in the field of technology, including research and development, DX promotion, andsocial implementation of technology, at NTT's Board of Directors meetings.
The new medium-term management strategy, which has been publicized after discussions that
also involved Outside Members of the Board, is well-balanced, incorporating growth areas like IOWN,
AI, and robotics, as well as the public sectors unique to NTT, which supports the communications
infrastructure that is the foundation of society. With regard to AI, I have recommended that the NTT
Group comprehensively consider both the risks involved in using generative AI in operations and therisks that may affect the Group's performance and services if the utilization of generative AI does notprogress. From the perspective of Japan's national security, I believe it is important to promote andstrengthen the domestic development infrastructure for AI, and I think NTT is best suited to be theleading entity in this regard.
On the Nomination Committee and Compensation Committee, I have been supervising strategy
formulation and execution by the management team by giving suggestions regarding the appointment
of officers, succession planning, and remuneration systems, while also conducting appropriate
evaluations. Going forward, by offering advice and oversight from a neutral position as an outside
independent Member of the Board, I aim to contribute to NTT Group's sustainable growth as it takeson the challenge of new technologies like IOWN and continues to create value.

Assumed the position of
Outside Member of theBoard of the Company inJune 2022

Outside Independent
Member of the Board

Koichiro Watanabe
Assumed the position of
Outside Member of theBoard of the Company inJune 2022

Outside Independent
Member of the Board

Yukako Uchinaga
Assumed the position of
Outside Member of theBoard of the Company inJune 2022

72

Due to advancements in technology, business models are undergoing rapid changes. To thrivein such an environment, it is insufficient to run a company solely with individuals who share thesame values. Rather, it is essential to incorporate fresh perspectives and value systems through thepromotion of diversity, thereby driving innovation forward. I became the first female Board Member at
IBM Japan. While there, I established the NPO Japan Women's Innovative Network and have worked
hard to promote diversity management at companies.
Within NTT's Board of Directors, I contribute to informed decision-making by offering insights
and recommendations that cover not just a human resources strategy inclusive of diversity, but also
global business development with a conscious regard for our relationships and positioning vis-a-vis
competitors worldwide, as well as assured responses to risks associated with global governance.
Given that Japan stands at 125th out of 146 countries in the World Economic Forum’s (WEF) “Gender
Gap Index” for 2023, it appears that many Japanese companies have yet to fully grasp the coreessence of promoting diversity. Given the context, I commend the various initiatives that the NTT Grouphas undertaken, including the promotion of active roles for women, foreign nationals, and externaltalent, as well as the implementation of a remote work standard system to enhance flexibility in living
location. For fiscal 2022, the percentage of women newly promoted to management positions narrowly
missed the 30% target. I sincerely hope that this goal will be achieved in fiscal 2023.
As an outside Member of the Board, it is equally crucial for me to support the company in taking
calculated risks. Going forward, I aim to leverage my past experience and continue to contribute to theproper business operations of the NTT Group and medium- to long-term corporate value enhancement
through vigilant oversight of decision-making and business execution from an independent, objective
standpoint.

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Outside Independent
Member of the Board

N or i k o E nd oAssumed the position of
Outside Member of theBoard of the Company inJune 2022

After joining Sony as an engineer and subsequently leading the company as a manager, I took thehelm of a national research institute as the Chairman of the National Institute of Advanced Industrial
Science and Technology. Drawing on this experience, I have been conducting management oversight at
NTT through Board of Directors and exchanges with the representative directors, offering opinions on
research and development and competition policies, as well as giving advice on timely and appropriate
responses during major telecommunications failures and monitoring executive performance, all with thegoal of achieving sustainable growth.
NTT Group is engaged in a wide range of research and development activities, from basic research topractical applications. IOWN, which is also the title of our new medium-term management strategy, is agroundbreaking next-generation network that is not only eco-friendly, but also crucial for strengthening
Japan's industrial competitiveness. I greatly appreciate the direction given for continued investment toaccelerate the manufacturing and practical application of photonics-electronics convergence devices
as part of the IOWN initiative under the slogan from concept to implementation.
I also commend the bold 1:25 stock split announced concurrently with the new medium-term
management strategy as a progressive initiative. This reduces the investment per unit and makes
it easier for people across various age groups to purchase shares. I look forward to NTT leadingchanges in the Japanese stock market. I plan to continue to encourage the realization of mediumterm management strategies by leveraging my experience in corporate management to make proactive
suggestions and monitor management from a medium- to long term perspective.

Drawing on my experience in corporate management at Dai-ichi Life Insurance and as the Chairmanof the Central Council for Education under the Ministry of Education, Culture, Sports, Science andTechnology, I have been making suggestions to management while actively participating in decisionmaking as needed, particularly with regard to the effects of investments and the risks of new funding
projects, confirming the appropriateness of capital policies, and strengthening human capital, all in aneffort to strengthen the competitiveness of the NTT Group.
The prolonged COVID-19 crisis and Russia's invasion of Ukraine have highlighted various issues
in Japan, such as food and energy self-sufficiency problems and the slow social implementation of
DX. To cope with these changes to the social structure, human resources are indispensable, andhuman resource development is becoming ever more important. Given the circumstances, I think
it is very commendable that NTT has clearly stated in its new medium-term management strategy
its commitment to enhancing support for autonomous career development and expanding humaninvestment to support business growth.
This past July, as an outside Member of the Board of NTT, I had meetings with institutional investors
and discussed the current understanding of IOWN, the aim of the newly launched growth strategy
focusing on EBITDA, and initiatives aimed at improving employee engagement scores, among otherthings. I will continue to contribute to the sustainable growth and improvement of corporate value of the
NTT Group through proactive suggestions based on my independence as an outside Member of theBoard and experience in corporate management, always keeping in mind the voices of shareholders
and investors at Board of Directors meetings and other forums.

After contributing to economic journals in the electronics and IT sectors, as well as engaging inresearch activities at the University of Tokyo, I am now focusing on research projects about energy
policy and economic security at Keio University. Energy and environmental policies are not merely
important national issues that influence the macroeconomy through fuel resource trading; theyalso significantly impact industrial and corporate competitiveness, further reverberating back to themacroeconomy.
The NTT Group has publicly announced in its new medium-term management strategy, “NTT Green
Innovation Toward 2040,” its aim to achieve carbon neutrality by the year 2040. This goal includes
efforts for Scope 1 and 2 emissions, with the intention of expanding into Scope 3. To promote the useof renewable energy, the NTT Group is proactively investing in companies specializing in renewableenergy development. In the Board of Directors meetings, I thoroughly scrutinize each investment
opportunity's scale, the appropriateness of the investment amount, and the associated risks before
offering my endorsement, thus fulfilling my role as an outside Member of the Board.
I believe that the technological and R&D capabilities of the NTT Group are not only at an exceptionallyhigh level in Japan, but also globally. I am convinced that, if harnessed effectively, these strengths will offer
competitive advantages as we develop our services and business activities. Leveraging my insights asa researcher in industrial policy and science and technology policy, I intend to offer my feedback andadvice while also properly overseeing the execution of business operations, thereby contributing to thesustainable growth of the NTT Group.

INTEGRATED REPORT 2023

73

Philosophy

Nomination Committee and Compensation Committee Composition and Activities
With the objective of further strengthening independence,
objectivity, and accountability in decisions made by the Boardof Directors with respect to appointments and compensationof the Members of the Board and officers, the Company
has voluntarily established a Nomination Committee and aCompensation Committee, each consisting of five Directors,of which a majority (three) are Outside Independent Membersof the Board, as preliminary review institutions of theBoard of Directors, thereby increasing the effectiveness ofgovernance. As of the end of fiscal 2022, the membership ofeach committee consisted of Akira Shimada (Representative
Member of the Board, President), Takashi Hiroi (Representative
Member of the Board, Senior Executive Vice President),
Ken Sakamura (Outside Member of the Board), Yukako
Uchinaga (Outside Member of the Board) and Koichiro
Watanabe (Outside Member of the Board), with Akira Shimada(Representative Member of the Board, President) serving aschairperson to oversee the proceedings of each committee.
As of the submission date of this report, there have been nochanges in the members or chairpersons of both committees

who oversee meeting operations and agenda setting. In eachcommittee, resolutions are made with the approval of the
majority of the attendance of more than half of the committee
members.
During fiscal 2022, the Nomination Committee convened
five times, and the Compensation Committee once, engaging
in robust discussions on matters such as the appointment ofofficers, succession planning, and the nature of the executive
compensation system (all committee members were present
at all meetings).
● N omination Committee and Compensation Committee

Composition

2

InsideMembersof the Board

5

3

Message from the CEO

NTT Group
Sustainability

Corporate
Governance

Growth Strategy

Data Section

Board Member Compensation
Board Member Compensation Determination Policy and Process
Regarding the composition and level of compensation
for directors of NTT under the Determination Policy, in order
to secure objectivity and transparency, NTT established
the Compensation Committee, comprising five directors,
including three outside independent members of the Board.
Moreover, decisions on the ratios and calculation methods
for compensation for Members of the Board, and amountsof compensation for individual Members, are delegated fromthe Board of Directors to the Compensation Committee. The
reason for delegating these authorities to the Compensation
Committee is that such committee is composed of two
Representative Members of the Board and three Outside
Members of the Board, and we believe that it is able to makethe appropriate judgements from an outside perspective

while also taking a bird’s-eye view of the Company’s overall
performance.
Compensation of individual directors (excluding outside
Members of the Board) consists of a monthly salary (basesalary) and a bonus (compensation related to performanceover the short term), NTT stock purchase through Board
Members Shareholding Association and performance-linked
stock compensation (compensation related to performanceover the medium to long term). The composition ratio ofcompensation in a case where standard business results areachieved is roughly as follows: Fixed compensation: Shortterm performance-linked compensation: Medium- to longterm performance-linked compensation = 50%: 30%: 20%.

OutsideIndependent
Members of the Board● Monthly salary (base compensation): The base salary is a fixed compensation paid monthly on the basis of the scopeof each Member of the Board’s roles and responsibilities.

● B onus (short-term performance-linked compensation): The bonus is paid in June each year, taking into accountNomination
Committee

Preliminary
Deliberation
Items

1. Policies with respect to the appointment and dismissal of directors and executive
officers of the whole group, and the nomination of candidates
2. Matters related to the appointment and dismissal of Directors
3. Matters related to the selection and dismissal of representative Members of the Boardof major group companies
4. Selection and dismissal of representative Members of the Board and other named rolesof Directors
5. Selection and dismissal of the Chairman
6. The order of Directors 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 Directors and assignment of
employee duties

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.
●
S tock buybacks and performance-linked stock compensation (medium- to long-term performance-linked
compensation): NTT shares shall be purchased through the Board Members Shareholding Association by means ofmonthly stock acquisition compensation. Purchased shares are to be held by the Members of the Board throughout
their terms of office.
For the performance-linked stock compensation, a trust, established by NTT is used. The Members of the Board are
granted points corresponding to their role in June each year and a performance-linked coefficient corresponding to
the level of achievement of the performance indicator is determined in June of the year following the final fiscal yearof the Medium-Term Management Strategy, and 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 points that has been accumulated. The
granted shares are delivered to the Member of the Board upon retirement.
Regarding performance-linked stock compensation, given that the target year for the medium-term management
strategy announced in November 2018 is fiscal 2023, Earnings Per Share (EPS) will continue to serve as theperformance indicator.

8. Appointment and dismissal of executive officers and assignment of duties
9. In addition to the foregoing matters, other nomination-related matters regarding
directors, executive officers and others, for which the committee receives requests fordeliberation from the Board of Directors

Compensation
Committee

SpecificallyDelegated
Items

Nomination-related matters regarding directors, executive officers and others, for which
the committee receives requests for deliberation from the Board of Directors

Preliminary
Deliberation
Items

1. P olicies for determining compensation of directors and executive officers, andcomposition and levels of compensation

SpecificallyDelegated
Items

74

2. In addition to the foregoing matters, other compensation-related matters regarding
directors and executive officers, for which the committee receives requests fordeliberation from the Board of Directors
1. Ratios, calculation methods and amounts of compensation for each individual directors
and executive officers

In order to maintain a high level of independence, compensation of outside Members of the Board consists of a 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 and consists of a monthly salary only, for the same reasons as those cited above withrespect to outside Members of the Board.

Fixed compensation: Approx. 50%

5Monthly salary(base compensation)

Performance-linked compensation: Approx. 50%

:

3
Bonus
(short-term performance-linked
compensation):

2Compensation for stockacquisition Performance-linked
stock compensation(medium- to long-term
performance-linked
compensation)

2. Other matters that are specifically delegated by the Board of Directors regarding thedetermination of compensation-related decisions of directors and executive officers

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

75

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section● Bonus Performance Indicators

Category

Performance Indicators

Financial indicators

EPS (earnings per share)

Category

Performance Indicators

Financial
indicators
Sustainability
indicators

Evaluation Weight

Evaluation method

FY2021 Results

FY2022 Results

35%

Year-on-year improvement

¥329

¥348

Evaluation Weight

Evaluation method

FY2022 Targets

FY2022 Results¥1.82 trillion
7.0%
7.6%
3.075 million tons or less¥600.0 billion¥1.829 trillion
7.2%
7.4%
2.534 million tons
¥815.4 billion

30%

29.7%

Operating profit
Overseas operating profit margin
ROIC (return on invested capital)
Greenhouse Gas Emissions
Amount of B2B2X Revenues
New Female Manager
Promotion Rate

35%
10%
5%
5%
5%

Achievement of targets

5%(Notes) 1. T he Earnings Per Share (EPS) figures are presented based on amounts before taking into account the impact of the 25-for-1 stock split of common stock, effective as of July 1, 2023.
2. The scope of aggregation for the overseas operating profit margin is subsidiaries of NTT, Inc. at the time the medium-term management strategy was established (NTT DATA
Corporation's overseas operations, NTT Ltd., NTT Communications' overseas operations, etc.). In addition, operating profit is calculated while excluding temporary expenses,
such as M&A-related depreciation costs of intangible assets.
3. The target for GHG emissions is GHG protocol Scope 1 + 2.
4. The scope of B2B2X earnings includes the Integrated ICT Business Segment, the Regional Communications Business Segment, and the Global Solutions Business Segment.
5. The scope for the percentage of women newly promoted to management positions includes six major domestic companies: NTT, NTT DOCOMO, NTT Communications, NTT
East, NTT West, and NTT DATA Japan.

Additionally, starting from fiscal 2023, for the performance indicators associated with bonuses, we plan to introduce EBITDA aspart of the financial indicators. This shift aligns with our new medium-term management strategy, which places greater emphasison growth and cash generation capabilities than before. As for sustainability indicators, we incorporated Engagement Rate, aimed
at fostering an environment where employees, the source of revenue generation, can elevate their expertise and experience both
growth and job satisfaction.
Category

Performance Indicators

Sustainability indicators

EBITDAEPS (earnings per share)
Engagement rate

Category

Performance Indicators

Financial indicators

Financial indicators

Sustainability indicators

EBITDA
Operating profit
Overseas operating profit margin
ROIC for existing areas
Greenhouse Gas Emissions
New Female Manager Promotion Rate
Amount of B2B2X Revenues

Evaluation Weight

Evaluation method

FY2022 Results

25%
10%
2.5%

Year-on-year
improvement¥3.2902 trillion
¥348
57%

Evaluation Weight

Evaluation method

FY2023 Targets

Achievement oftargets¥3.39 trillion¥1.95 trillion
8.3%
8.3%
2.466 million tons
30%
¥870 billion

25%
10%
10%
5%
5%
5%
2.5%

(Notes)1. The Earnings Per Share (EPS) figures are presented based on amounts before taking into account the impact of the 25-for-1 stock split of common stock, effective as of July 1, 2023.
2. The scope of aggregation for engagement rate is approximately 100 domestic Group companies (in the future, we plan to expand the scope to include overseas Group companies).
3. T he scope of aggregation for overseas operating profit margin is NTT DATA Group consolidated. Calculation excludes temporary expenses, such as M&A-related amortization of intangible fixed assets.
4. Existing areas refer to NTT DOCOMO’s consumer telecommunications businesses, NTT East and NTT West.
5. G
 HG emissions are for GHG protocol Scope 1 + 2.
6. T
 he scope of aggregation for new female manager promotion rate is six major domestic Group companies (NTT, NTT DOCOMO, NTT Communications, NTT East, NTT West, and NTT DATA Japan).
7. The scope of aggregation for B2B2X revenues is the Integrated ICT Business Segment, the Regional Communications Business Segment, and the Global Solutions Business Segment.

76

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

77

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Career Summaries of Members of the Board and Audit & Supervisory Board Members (As of the end of June 2023)*Number of shares held after taking into account the stock split effective July 1, 2023

Audit & Supervisory Board Member

Member of the Board
Jun Sawada

Akira Shimada

Katsuhiko Kawazoe

Noriko Endo

Keiichiro Yanagi

Kanae Takahashi

Chairman of the Board

Representative Member of the Board
President
Chief Executive Officer (CEO)

Representative Member of the Board
Senior Executive Vice President
In charge of technical strategy
Chief Technology Officer (CTO)
Chief Information Officer (CIO)
Chief Digital Officer (CDO)

Outside Member of the Board

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Years Served as Audit & Supervisory Board Member
1
Shares Owned
200(5,000*)Years Served as Audit & Supervisory Board Member
3
Shares Owned
7,300(182,500*)

Brief Career Summary

Brief Career Summary

Brief Career Summary

June 1994: Joined DIAMOND Inc.
April 2004: Concurrently served as Director of Kyushu University andHead of Tokyo Office
March 2006: Deputy Editor-in-Chief of Diamond Weekly of DIAMOND Inc.
September 2013: Visiting Researcher at Policy Alternatives Research Institute of
the University of Tokyo
April 2015: Project Professor of Graduate School of Media andGovernance of Keio University
June 2016: Director, NTT DOCOMO, INC.
July 2018: Director of AIN HOLDINGS INC. (present post)
June 2019: Director of Hankyu Hanshin Holdings, Inc. (present post)
April 2020: Project Professor of Keio University Global Research Institute(present post)
March 2021: Director of Techpoint, Inc. (present post)
June 2021: Director of Japan Elevator Service Holdings Co., Ltd.
(present post)
June 2022: Member of the Board of the Company (present post)

April 1984: Joined Nippon Telegraph and Telephone Public Corporation
April 2009: President and Representative Director of NTT DATA
Getronics Corporation (currently NTT DATA Luweave
Corporation)
June 2012: Head of General Affairs Department of NTT DATA Corporation
July 2013: Senior Vice President, Head of Second Financial Sector of
NTT DATA Corporation
June 2016: Director and Executive Vice President, Head of General Affairs
Department, concurrently serving as Head of Human Resources
Department of NTT DATA Corporation
July 2017: Director and Executive Vice President, Head of HR
Headquarters, concurrently serving as Head of General Affairs
Department of NTT DATA Corporation
June 2018: Representative Director and Senior Executive Vice President,
concurrently serving as Head of HR Headquarters of
NTT DATA Corporation
June 2020: Executive Advisor of NTT DATA Corporation
June 2020: CEO and President of NTT DATA INSTITUTE OFMANAGEMENT CONSULTING, Inc.
June 2022: Audit & Supervisory Board Member of the Company(present post)

April 1987: Joined the Company
July 2013: Deputy Head of the Internal Control Office of the General
Affairs
Department of the Company
June 2014: Head of the Internal Control Office of the General Affairs
Department of the Company
June 2016: Executive Manager of the Kanagawa Division and Manager ofthe Kanagawa Branch of the Kanagawa Division
Member of the Board of Nippon Telegraph and Telephone
East Corporation
June 2016: Executive Manager of the Kanagawa Division and Manager ofthe Kanagawa Branch of the Kanagawa Division
Member of the Board of NTT EAST-MINAMI
KANTO CORPORATION
June 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.
June 2020: Full Time Audit & Supervisory Board Member of the Company(present post)
June 2020: Auditor, NTT, Inc. (now NTT DATA,Inc.) (present post)

Kensuke Koshiyama

Hideki Kanda

Kaoru Kashima

Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Years Served as Member of the Board
9
Shares Owned
43,300(1,082,500*)

Years Served as Member of the Board
Shares Owned

Brief Career Summary

Brief Career Summary

April 1978: Joined Nippon Telegraph and Telephone Public Corporation
June 2008: Senior Vice President
Executive Manager of Corporate Strategy Planning Department
Member of the Board of NTT Communications Corporation
June 2011: Executive Vice President
Executive Manager of Corporate Strategy Planning Department
Member of the Board of NTT Communications Corporation
June 2012: Senior Executive Vice President
Executive Manager of Corporate Strategy Planning Department
Representative Member of the Board of NTT Communications
Corporation
June 2013: Senior Executive Vice President
Representative Member of the Board of NTT Communications
Corporation
June 2014: Senior Executive Vice President
Representative Member of the Board of the Company
June 2016: Director and President, Chief Executive Officer of NTT Security
Corporation
June 2018: President and Chief Executive Officer
Representative Member of the Board of the Company
August 2018: President and Chief Executive Officer
Representative Member of the Board of NTT, Inc.
June 2020: President and Chief Executive Officer
Representative Member of the Board of the Company
June 2022: Chairman and Representative Member of the Board of theCompany (present post)

April 1981: Joined Nippon Telegraph and Telephone Public Corporation
June 2007: Vice President of Corporate Strategy Planning of the Company
July 2007: General Manager of the Accounts and Finance Department of
Nippon Telegraph and Telephone West Corporation
July 2009: General Manager of the General Affairs and Personnel
Department of Nippon Telegraph and Telephone East Corporation
June 2011: Senior Vice President
General Manager of the General Affairs and Personnel
Department
Member of the Board of Nippon Telegraph and Telephone East
Corporation
June 2012: Senior Vice President
Head of the General Affairs
Member of the Board of the Company
June 2012: Member of the Board of Nippon Telegraph and Telephone West
Corporation
June 2015: Executive Vice President
Head of General Affairs
Member of the Board of the Company
June 2018: Senior Executive Vice President
Representative Member of the Board of the Company
August 2018: Member of the Board of NTT, Inc.
October 2018: Senior Executive Vice President of NTT, Inc.
June 2020: Senior Executive Vice President
Representative Member of the Board of the Company
June 2022: President and Chief Executive Officer
Representative Member of the Board of the Company(present post)
June 2022: President and Chief Executive Officer
Representative Member of the Board of NTT, Inc.

Years Served as Member of the Board (Excluding
past tenure as a Director)
1
Shares Owned
15,000(375,000*)

Takashi Hiroi

Akiko Kudo

Ken Sakamura

Representative Member of the Board
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
Senior Vice President

Outside Member of the Board

Years Served as Member of the Board
Shares Owned

Years Served as Member of the Board (Excluding
past tenure as a Director)
1
Shares Owned
13,300(332,500*)
Brief Career Summary
April 1986: Joined the Company
May 2005: Vice President of Medium-Term Corporate Business Strategyof the Company
June 2008: Vice President of Strategic Business Development of theCompany
July 2009: Vice President of Corporate Strategy Planning of the Company
June 2014: Head of Finance and Accounting of the Company
June 2015: Senior Vice President; Head of Finance and Accounting,Member of the Board of the Company
June 2020: Executive Vice President; General Manager of Accounts andFinance Department; Member of the Board of Directorsof NTT DOCOMO, INC.
December 2020: Senior Executive Vice President; Representative Member ofthe Board of Directors of NTT DOCOMO, INC.
June 2022: Representative Member of the Board, Senior Executive
Vice President of the Company (present post)

1
3,800(95,000*)

Brief Career Summary
April 1987: Joined the Company
August 2003: Senior Research Engineer of the Cyberspace Laboratories of
the Cyber Communications Laboratory Group of the Company
October 2007: Senior Research Engineer of the Cyber Solutions Laboratoriesof the Cyber Communications Laboratory Group of theCompany
July 2008: Vice President of Research and Development Planning of theCompany
July 2014: Head of the Service Innovation Laboratory Group of theCompany,
Service Evolution Research Laboratory of the Company
July 2016: Head of the Service Innovation Laboratory Group of theCompany
June 2018: Senior Vice President, head of Research and Development
Planning,and Member of the Board of the Company
June 2020: Executive Vice President, Head of Research and Development
Planning of the Company
June 2022: Senior Executive Vice President, Representative Member ofthe Board of the Company (present post)

Years Served as Member of the Board
Shares Owned

4
2,000(50,000*)

Brief Career Summary

April 1990: Joined the Company
June 2014: Head of Public Relations of Corporate Planning of
NTT Communications Corporation
July 2016: Director of Tokai Branch of West Japan Sales Division of
NTT Communications Corporation
June 2019: Senior Vice President, Head of Fifth Sales Division of
NTT Communications Corporation
April 2020: Deputy Senior Vice President of Fourth Business Solutions
Department of Business Solution Division of
NTT Communications Corporation
June 2020: Senior Vice President, Head of Public Relations,
Deputy Head of Business Strategy of the Company
June 2022: Senior Vice President, Executive Manager of the New Business
Promotion Department, Member of the Board of the Company
June 2022: Executive Officer, Smart City LLC (present post)
June 2023: Senior Vice President, Head of Alliance Department, Researchand Development Market Strategy Division, Member of the Boardof the Company (present post)

April 2000: Professor of the Interfaculty Initiative in Information Studies andthe Graduate School of Interdisciplinary Information Studiesof the University of Tokyo
January 2002: Director of YRP Ubiquitous Networking Laboratory (present post)
April 2009: Director of Institute of Infrastructure Application of
Ubiquitous Computing of the Interfaculty Initiative inInformation Studies of the University of Tokyo
October 2014: President of Vitalizing Local Economy Organization by
Open Data & Big Data (now the Organization for Vitalization of
Local Economy by Digital transformation) (present post)
April 2017: Professor and Dean of Faculty of Information Networking forInnovation and Design of Toyo University
Head of Collaboration Hub for University and Business of
Toyo University (present post)
June 2017: Emeritus Professor of the University of Tokyo (present post)
June 2019: Member of the Board of the Company (present post)
August 2019: President of Association for IoT Services Coordination(present post)

November 1981: Joined Showa Audit Corporation(currently Ernst & Young ShinNihon LLC)
April 1985: Registered as a certified public accountant (registration
up-to-date)June 1996: Partner of Showa Ota & Co.
(currently Ernst & Young ShinNihon LLC)
June 2002: Senior Partner of ShinNihon & Co.
(currently Ernst & Young ShinNihon LLC)
July 2006: In charge of personnel of HR Development Headquarters of
ShinNihon & Co.
September 2010: Managing Director of Ernst & Young ShinNihon LLC In charge ofCorporate Culture Promotion Office In charge of
Public Relations Office
July 2012: General Manager of Knowledge Headquarters Managing
Director ofErnst & Young ShinNihon LLC
July 2013: Representative Director of Ernst & Young Institute Co., Ltd.
June 2019: Outside Audit & Supervisory Board Member of the Company(present post)
June 2019: Director of Sumitomo Mitsui Trust Bank, Limited
March 2020: Audit & Supervisory Board Member of Kirin Holdings
Company, Limited (present post)
June 2021: Director of Sumitomo Mitsui Trust Holdings, Inc. (present post)

May 1993:

June 2016:
June 2017:
June 2019:

Koichiro Watanabe
Outside Member of the Board

Katsuhiko Kawazoe

Years Served as Member of the Board
Shares Owned

1600(15,000*)

Brief Career Summary

Brief Career Summary

Brief Career Summary

July 1971:
April 2004:
April 2007:
April 2007:

April 1977: Joined Sony Corporation (now the Sony Group Corporation)
June 2005: President, Representative Corporate Executive Officer andMember of the Board of Sony Corporation
April 2009: Vice Chairman, Representative Corporate Executive Officer
and Member of the Board, Sony Corporation
April 2013: President of National Institute of Advanced Industrial Scienceand Technology (incorporated administrative agency;
currently the National Research and Development Agency)
June 2018: Director, JAPAN POST BANK Co., Ltd.
April 2020: Grand Emeritus Advisor of National Institute ofAdvanced Industrial Science and Technology (present post)
June 2022: Member of the Board of the Company (present post)

April 1976: Joined The Dai-ichi Mutual Life Insurance Company
April 2010: Representative Director and President of
The Dai-ichi Mutual Life Insurance Company, Limited
October 2016: Representative Director and President of
The Dai-ichi Life Holdings, Inc.
October 2016: Representative Director and President of The Dai-ichi Life
Insurance Company, Limited (a new company that took overthe domestic life insurance business)
April 2017: Chairman of the Board and Representative Director of
The Dai-ichi Life Holdings, Inc.
April 2017: Chairman of the Board and Representative Director of
The Dai-ichi Life Insurance Company, Limited
March 2018: Member of the Board, Japan Tobacco Inc.
June 2020: Director, Chairman of the Board of Dai-ichi Life Holdings, Inc.
June 2020: Director, Chairman of the Board of The Dai-ichi Life
Insurance Company, Limited
June 2022: Member of the Board of Company (present post)
April 2023: Director of Dai-ichi Life Holdings, Inc.
April 2023: Special Advisor of The Dai-ichi Life Insurance Company,
Limited (present post)

Research Assistant of Faculty of Law of the University of Tokyo
Lecturer of Faculty of Law of Gakushuin University
Associate Professor of Faculty of Law of Gakushuin University
Associate Professor of Faculty of Law of the University of Tokyo
Associate Professor of Graduate Schools for Law and Politics of
the University of Tokyo
Professor of Graduate Schools for Law and Politics of
the University of Tokyo
Professor of Professional School of Law (Law School) of
Gakushuin University (present post)
Emeritus Professor of the University of Tokyo (present post)
Director of Sumitomo Mitsui Trust Bank, Limited (present post)
Outside Audit & Supervisory Board Member of the Company(present post)

Executive Officers

Outside Member of the Board
1
1,200(30,000*)

40

Brief Career Summary

Akira Shimada

Years Served as Member of the Board
Shares Owned

Years Served as Audit & Supervisory Board Member
Shares Owned

April 1977:
April 1980:
April 1982:
April 1988:
April 1991:

April 2016:

Brief Career Summary

Outside Audit & Supervisory Board Member
40Brief Career Summary

Ryoji Chubachi

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Years Served as Audit & Supervisory Board Member
Shares Owned

April 1984: Joined Board of Audit of Japan
December 2016: Senior ASG of Secretariat of Board of Audit of Japan
April 2017: Director-General of 2nd Bureau of Board of Audit of Japan
April 2018: Deputy Secretary-General of Board of Audit of Japan
December 2018: Secretary-General of Board of Audit of Japan
June 2022: Full-Time Audit & Supervisory Board Member of the Company(present post)

Outside Member of the Board

Joined IBM Japan, Ltd.
Director and Senior Executive Officer, IBM Japan, Ltd.
Technical Advisor of IBM Japan, Ltd.
Board Chair, Japan Women’s Innovative Network,a non-profit organization
April 2008: Representative Director, Chairman of the Board,
President & CEO of Berlitz Corporation
June 2008: Director, Sony Corporation (now the Sony Group Corporation)
October 2009: Director and Executive Vice President, Benesse Holdings, Inc.
April 2013: Honorary Chairman, Berlitz Corporation
May 2013: Director, AEON, Co., Ltd.
June 2013: Director, HOYA CORPORATION(Chairperson of the Audit Committee)
September 2013: President and CEO, Globalization Research Institute, Inc.
(present post)
March 2014: Director, DIC Corporation
June 2018: Director, Teijin Limited
Member of the Advisory Board, Teijin Limited
June 2021: Director, SINTOKOGIO, LTD. (present post)
June 2022: Member of the Board of the Company (present post)
July 2022: Chairperson and Representative Director, Japan Women’s
Innovative Network, a non-profit organization (present post)

10

Brief Career Summary

Yukako Uchinaga
1200(5,000*)1
1,300(32,500*)

Years Served as Audit & Supervisory Board Member
Shares Owned

Representative Member of the Board
President
Chief Executive Officer (CEO)Years Served as Member of the Board
Shares Owned

78

1128,908(722,700*)

Years Served as Member of the Board
Shares Owned

Representative Member of the Board
Senior Executive Vice President
In charge of technical strategy
Chief Technology Officer (CTO)
Chief Information Officer (CIO)
Chief Digital Officer (CDO)

Takashi Hiroi

Representative Member of the Board
Senior Executive Vice President
In charge of business strategy
Chief Financial Officer (CFO)
Chief Compliance Officer (CCO)
Chief Human Resource Officer (CHRO)

Tadao Yanase

Senior Executive Vice President
Head of Business Strategy
In charge of Economic security
Chief Business Development Officer (CBDO)

Sachiko Oonishi

Executive Vice President
Head of Research and Development Market Strategy Division

Akiko Kudo

Shingo Kinoshita

Senior Vice President
Head of Research and Development Planning, Researchand Development Market Strategy Division

Member of the Board
Senior Vice President
Head of Alliances, Research and Development Market Strategy Division

Toshihiko Nakamura

Kei Ikeda

Akitoshi Hattori

Kyoko Yamamoto

Minako Tsumenaga

Makiko Sekine

Ken Katsuyama

Senior Vice President
Head of Technology Planning
Senior Vice President
Head of General Affairs
Senior Vice President
Head of Public Relations

Senior Vice President
Head of Finance and Accounting
Senior Vice President
Head of Corporate Strategy Planning
Senior Vice President
Head of Market Planning & Analysis
Senior Vice President
Head of Global Business

Natsuko Fujiki

Senior Vice President
Head of Internal Audit

INTEGRATED REPORT 2023

79

Philosophy

NTT Group
Sustainability

Message from the CEO

Corporate
Governance

Growth Strategy

Data Section

Stakeholder Engagement

NTT Group delivers products and services to a diverse set of stakeholders worldwide, and its value chain is expanding ona global scale and becoming increasingly complex each year. Given these developments, there is also a diversification in what
our stakeholders expect and require from our business. It is crucial to accurately grasp and incorporate these demands andexpectations into our operations through stakeholder engagement.

Customers (Corporations and Individuals)

Business Partners

All individuals and corporations making use of NTT Group's services

All the business partners who provide various forms of cooperation in delivering NTT Group's services
NTT Group's Approach

Methods of Engagement (Examples)

Reasons for Engagement

 stablishment of a point of contact
E
for customer inquiriesImplementation of customer
satisfaction surveys

We strive to collaboratively create anddevelop services aimed at resolving
various social issues.

▲

 tilization of websites and social
U
media

The objective is to understand ourcustomers' needs and positions todeliver higher-quality services andproducts. This will not only improvecustomer satisfaction, but also
position NTT Group as "Your Value
Partner."

Setting up an inquiry form
 isclosure of procurement policies
Dand guidelines
Implementation of supplierfocused questionnaires
Hosting of supplier briefing
sessions

Our aim is to procure products that areconsiderate of the environment and humanrights, and to build fair partnerships. By
doing so, we fulfill our corporate social
responsibilities and aim for sustained
growth together with our business partners.

▲▲

Shareholders and Investors

Competitors and Industry Associations

All individual and institutional investors, including shareholders and creditors of the NTT GroupAll those engaged in ICT services like the NTT Group, and industry associations dedicated to the advancement of information and communication technology

Reasons for Engagement

NTT Group's Approach

Methods of Engagement (Examples)

We are committed to maintaining
a sound financial structure while
enhancing corporate value andproviding returns to our shareholders.
Additionally, we are dedicated to thetimely, accurate, and fair disclosure of
all information related to the Group.

 hareholder Meetings andSfinancial results announcements
Hosting individual investor
seminarsHosting institutional investor
seminarsIssuance of annual reports

The purpose is to provide information
essential for investment decisions
through communication with ourshareholders and investors, receive
appropriate evaluations, and also
consider your opinions as referencesin our group management.

We include a global market
perspective in deepening ourcollective discussions about the stateand strategies of the information andcommunication industry. We work
to address various societal issues
through these discussions.

▲

 articipation in industry
P
organizations and initiatives▲

Methods of Engagement (Examples)▲

NTT Group's Approach▲▲▲

Attendance at conferences, etc.

Reasons for Engagement
Our aim is both to promote overall
vitality within the industry and tocontribute to society through thedevelopment and advancement of
information and communications
technology.

Employees (Employees, Families, Retirees)

National and Government Agencies

Employees working in the NTT Group and their families, as well as retirees who support the NTT Group’s sustainability

Agencies governing policies in fields like information and communications, employment, economy, and environment at the national, administrative, and local government levels

Reasons for Engagement

NTT Group's Approach

We are committed to creating aworkplace where a diverse range of
employees can work with peace ofmind, and we engage in a variety ofmeasures to allow them to maximize
their capabilities and find fulfillment inboth work and life. Communication
with retirees is also highly valued.

Implementation of employee
satisfaction surveys
Regular one-on-one meetings
Dialogue between labor andmanagement
Establishment of the Corporate
Ethics Help Line
Hosting of sustainability conferences

We aim to provide a supportive work
environment and support for the
livelihood of our employees so thateach employee can fully utilize theirskills and approach their work with ahigh awareness of CSR.

In line with the policies ofnational, administrative, and local
governments, we will fulfill our
responsibilities as a key player in theinformation and communicationsindustry.

Methods of Engagement (Examples)▲ ▲▲ ompliance with laws andC
regulations▲ ▲Methods of Engagement (Examples)▲

NTT Group's Approach▲▲Policy recommendations
 articipation in public-privateP
partnership projects

Reasons for Engagement
We aim to properly comply with thepolicies, laws, and regulations set
forth by national, administrative,
and local governments and conduct
appropriate business activities, andcontribute to solving the societal
issues these governments andcitizens face.

Local Communities

NGOs, NPOs/Experts

Local communities engaged with the NTT Group through our business activities

NGOs, NPOs, and experts focused on the domains where the NTT Group operates, including sustainability

We are committed to moving
forward with local communities
by contributing to society andengaging in disaster management
through our business activities.

Conducting supportive andcollaborative activities throughsocial contributions
Negotiations with local residents
regarding construction andinfrastructure projects
Support through donations andsponsorships▲▲

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Reasons for Engagement
Our objective is to contribute toprosperous local communities
through our business by
understanding and tackling thechallenges they face.

NTT Group's Approach

Methods of Engagement (Examples)

Reasons for Engagement

We aim to leverage the specialized
knowledge and experience of NGOs,
NPOs, and experts in the informationand communications industry,
contributing to the creation of asustainable society.

Participation and collaborationin study groups and activities
conducted by variousorganizations
Conducting dialogue
Carrying out collaborative projects

The goal is to carry out appropriate
and effective business activities by
gaining specialized insights from
NGOs, NPOs, and experts, as theservices provided by the NTT Groupextend beyond just information andcommunications to broader fields.

▲ ▲Methods of Engagement (Examples)▲

NTT Group's Approach

▲

80

▲ ▲

Reasons for Engagement▲

In our aspiration to be "Your Value
Partner," every employee upholds
a high level of awareness towardsustainability and is committed todelivering high-quality, convenient,and secure services from acustomer's perspective.

Methods of Engagement (Examples)▲

NTT Group's Approach

INTEGRATED REPORT 2023

81

Philosophy

Consolidated Statement of Financial Position

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
GovernanceConsolidated Statement of Profit or Loss
Unit: Millions of yen

Unit: Millions of yen

End of FY2021

End of FY2022

FY2021

FY2022(As of March 31, 2022)(As of March 31, 2023)(Fiscal year ended
March 31, 2022)(Fiscal year ended
March 31, 2023)

ASSETS
Current assets

Operating revenues

Cash and cash equivalents

834,564

793,920

Operating expenses

Trade and other receivables

3,604,959

4,186,375

Other financial assets

88,441

98,653Inventories

408,362

517,409

Other current assets

574,922919,016

5,511,248

6,515,373

Sub Total
Assets held for sale

205,344

139,495

Total current assets

5,716,592

6,654,868

Non-current assets
Property, plant and equipment
Right-of-use asset

Data Section

9,326,888

9,717,103

12,156,447

13,136,194

Personnel expenses

2,566,127

2,768,711

Expenses for purchase of goods and services and other expenses

5,839,441

6,563,282

Depreciation and amortization

1,561,183

1,582,625

132,073

118,620Goodwill

228

6,164

Other

37,824

9,803

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

Taxes and dues

250,978

258,003

Total operating expenses

10,387,854

11,307,208

694,612718,531

Goodwill

1,213,009

1,283,448

Operating profit

1,768,593

1,828,986

Intangible assets

1,951,824

2,122,874

Finance income

63,471

54,105Investment property

1,236,490

1,242,591

429,806

446,569

Finance costs

56,25079,424

Other financial assets

1,426,157

1,241,331

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

19,711

14,012

Deferred tax assets

970,432

940,196

Profit before taxes

1,795,525

1,817,679

Income taxes

539,531524,923

1,255,994

1,292,756

1,181,083

1,213,116

74,91179,640

13.17

13.92

Investments accounted for using equity method

Other non-current assets

896,431

941,340

Total non-current assets

18,145,649

18,653,983

Total assets

23,862,241

25,308,851

ProfitProfit attributable to NTT
Profit attributable to Non-controlling interests

LIABILITIES AND EQUITYCurrent liabilities
Short-term borrowings

1,646,806

1,840,381

Trade and other payables

2,500,341

2,807,286

189,495

205,074

Lease liabilities
Other financial liabilities

29,56630,200Accrued payroll

544,455

567,166

Income taxes payable

210,964

243,306

Other current liabilities

1,129,851

1,143,518

Sub Total

6,251,478

6,836,931

7,161

3,055

6,258,639

6,839,986

Liabilities directly associated with assets held for sale
Total current liabilities

5,717,465

6,390,155

Lease liabilities

655,729

714,923

Other financial liabilities

135,686

148,431

Defined benefit liabilities

1,561,049

1,362,262

Deferred tax liabilities

137,474

143,326

Other non-current liabilities

378,067

359,141

Consolidated Statement of Comprehensive Income
Unit: Millions of yen(25,482)(83,650)(2)(1,135)Remeasurements of the defined benefit plans

131,032

112,672

105,548

27,887

Cash flow hedges(50,748)(33,249)

Hedges cost

14,434(8,645)

Foreign currency translation adjustments

167,688

119,360

(835)

7,875

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
Share of other comprehensive income of entities accounted for using the equity method

8,585,470

9,118,238

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

15,958,224

Items that may be reclassified to profit or loss

937,950

937,950

Retained earnings

7,293,915

8,150,117

Treasury stock(226,459)(737,290)

Other components of equity

277,050

210,576

Total NTT shareholders’ equity

8,282,456

8,561,353

735,676

789,274

Total equity

9,018,132

9,350,627

Total liabilities and equity

23,862,241

25,308,851

Non-controlling interests

NIPPON TELEGRAPH AND TELEPHONE CORPORATION(Fiscal year ended
March 31, 2023)

Other comprehensive income (net of taxes)

14,844,109

Common stock

FY2022(Fiscal year ended
March 31, 2022)

1,292,756

Total non-current liabilities

Nippon Telegraph and Telephone Corporation ("NTT") shareholders’ equity

FY2021

1,255,994

Total liabilities
Equity82

Basic earnings per share (yen)**Amounts reflect the 25-for-one stock split with an effective date of July 1, 2023.

ProfitNon-current liabilities
Long-term borrowings

Earnings per share attributable to NTT

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

130,539

85,341

236,087

113,228

Total comprehensive income

1,492,081

1,405,984

Comprehensive income attributable to NTT

1,373,364

1,270,639

118,717

135,345

Total other comprehensive income (net of taxes)

Comprehensive income attributable to Non-controlling interests

INTEGRATED REPORT 2023

83

Philosophy

Consolidated Statement of Changes in Equity

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Consolidated Statement of Cash Flows
Unit: Millions of yen

FY2021 (Fiscal year ended March 31, 2022)
Unit: Millionsof yenNTT Shareholders’ Equity
Additional
paid-in
capitalCommonstock

March 31, 2021

937,950–

Other
componentsof equity

Retainedearnings

Treasurystock

7,068,008(704,793)

261,542

Noncontrollinginterests

Total
7,562,707

Total equity

640,336

8,203,043

Comprehensive income
Profit––1,181,083––

1,181,083

74,911

1,255,994

Other comprehensive income

–

–

–

–

192,281

192,281

43,806

236,087

Total comprehensive income––

1,181,083–

192,281

1,373,364

118,717

1,492,081

Transactions with owners and other transactions
Dividends of surplus––(396,963)––(396,963)(17,580)(414,543)

Transfer to retained earnings

–

4,370

172,403–(176,773)–––

Purchase and disposal of treasury stock

–

8

–

(253,581)–(253,573)–(253,573)

Cancellation of treasury stock–(1,299)(730,616)

731,915

–

–

–

–

Changes in ownership interest in
subsidiaries without loss of control–(1,754)–––(1,754)(4,729)(6,483)

Share-based compensation transactions

–

235

–

–

–

235

48

283

Put options granted to non-controlling interests

–

(943)

–

–

–

(943)

(595)

Other

–

(617)

–

–

–

(617)

Total transactions with owners and other transactions––(955,176)

478,334(176,773)

937,950–

7,293,915(226,459)

277,050

March 31, 2022

Profit1,255,994

1,292,756

Depreciation and amortization

1,561,183

1,582,625

Impairment losses

38,052

15,967

Share of loss (profit) of entities accounted for using the equity method(19,711)(14,012)

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

60,936

48,518Gain on sales of property, plant and equipment and intangible assets(30,208)(46,259)

Income taxes

539,531524,923

Decrease (increase) in trade and other receivables

828(525,313)

Decrease (increase) in inventories(86,559)(140,858)

Decrease (increase) in other current assets(10,421)(33,609)

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

137,551

252,070

Increase (decrease) in other current liabilities

37,198

6,301

Increase (decrease) in defined benefit liabilities(15,936)(63,644)

Increase (decrease) in other non-current liabilities

5,304(21,286)

Other, net(61,066)

93,393Sub-total

3,412,676

2,971,572

Interest and dividends received

79,703

95,023(1,538)Interest paid

(47,858)(67,224)(521)(1,138)

Income taxes paid

(434,264)(738,358)(653,615)(23,377)(676,992)

Net cash provided by (used in) operating activities

3,010,257

2,261,013

8,282,456

735,676

9,018,132(1,758,045)(1,851,879)

38,11017,888Purchase of investments(125,838)(76,504)

Proceeds from sale or redemption of investments

187,198

109,153

Proceeds from loss of control of subsidiaries

15,93653,628Cash flows from investing activities

Proceeds from government grants

FY2022 (Fiscal year ended March 31, 2023)
Unit: Millionsof yenNTT Shareholders’ Equity
Commonstock

March 31, 2022

937,950–

Other
componentsof equity

Retainedearnings

Treasurystock

7,293,915(226,459)

277,050

FY2022(Fiscal year ended
March 31, 2023)

Cash flows from operating activities

Purchase of property, plant and equipment, intangible assets and investment property

Additional
paid-in
capitalFY2021(Fiscal year ended
March 31, 2022)

Noncontrollinginterests

Total
8,282,456

Acquisition of subsidiaries, net of cash acquired(121,747)(81,645)

Net increase (decrease) loan receivable

26,343

17,337

9,018,132

Other, net

38,891

75,110(1,699,152)(1,736,912)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(1,860,107)

295,564

Proceeds from increases in long-term borrowings

1,716,162

1,090,877

Repayments of long-term borrowings(401,905)(693,427)

Repayment of lease liabilities(208,232)(223,907)

Payments for acquisition of interests in subsidiaries from non-controlling interests(16,791)(109,932)

Dividends paid

(396,963)(419,525)

Total equity

735,676

Net cash provided by (used in) investing activities

Comprehensive income
Profit

––1,213,116––

1,213,116

79,6401,292,756

Other comprehensive income

–

–

–

–

57,52357,52355,705113,228

Total comprehensive income––

1,213,116–

57,523

1,270,639

135,345

1,405,984

Transactions with owners and other transactions
Dividends of surplus––(419,525)––(419,525)(20,087)(439,612)

Transfer to retained earnings–

54,926

69,071–(123,997)–––

Purchase and disposal of treasury stock

–

6

–

(510,831)–(510,825)–(510,825)

Dividends paid to non-controlling interests(17,485)(20,197)

Purchase and sale of treasury stock(253,627)(510,968)

818

1,318

(1,438,130)(590,197)

25,86225,452

Net increase (decrease) in cash and cash equivalents(101,163)(40,644)

Cash and cash equivalents as of April 1

935,727

834,564

Cash and cash equivalents as of March 31

834,564

793,920

Changes in ownership interest in
subsidiaries without loss of control–(50,284)–––(50,284)(59,752)(110,036)

Share-based compensation transactions–(2,751)–––(2,751)

1,313(1,438)

Put options granted to non-controlling interests–(4,805)–––(4,805)(4,129)(8,934)

Other

–

2,908

(6,460)––(3,552)908(2,644)

Total transactions with owners and other transactions––(356,914)(510,831)(123,997)(991,742)(81,747)(1,073,489)

937,950–

8,150,117(737,290)

210,576

8,561,353

789,274

9,350,627

March 31, 2023

Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents(For detailed financial and non-financial data, please refer to "Financial and Non-Financial Data" on our
corporate website at https://group.ntt/en/csr/data/financial_nofinancial.)

84

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONINTEGRATED REPORT 2023

85

Philosophy

Message from the CEO

NTT Group
Sustainability

Growth Strategy

Corporate
Governance

Data Section

Management’s Analysis of Financial Condition, Results of Operations and Cash Flows
Results of Operations
Operating Revenues
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 oftelecommunications equipment, system integration and other.
Operating revenues in the fiscal year ended March 31, 2023
increased 8.1% from the fiscal year ended March 31, 2022 to¥13,136.2 billion. This increase was due to such factors as anincrease in system integration revenues and other revenues,
partially offset by a decrease in fixed voice-related revenues andmobile voice-related revenues.
Operating revenues for each service category for the fiscal
year ended March 31, 2023 are summarized as follows:■ Fixed Voice Related Services

NTT Group’s fixed voice related services include a portion of
the services it provides in the regional communications businesssegment and Integrated ICT 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,
2023 decreased 4.9% from the fiscal year ended March 31, 2022 to¥871.2 billion. This decrease was due to a continued decline in thenumber of subscriptions for telephone subscriber lines and INS-Net
caused by the increased popularization of mobile phones and IP
telephones, and an increase in free or low-priced communications
services offered by providers of over-the-top content (“OTT” a content
distribution service utilizing other companies’ communications
infrastructure, allowing a service provider to distribute services without
owning its own communications infrastructure).
■ Mobile Voice Related Services
Mobile voice related services include a portion of theservices NTT Group provides in the Integrated ICT Business
Segment, such as 5G, LTE (Xi) and other services.
Mobile voice related revenues for the fiscal year ended
March 31, 2023 decreased 5.1% from the fiscal year ended
March 31, 2022 to ¥1,046.4 billion. This decrease wasprimarily due to a decrease in revenues resulting from theenhancement of customer returns through the introduction of
ahamo and other billing plans.
■ IP/Packet Communications Services
NTT Group’s IP/packet communications services include a
portion of the services it provides in the Regional Communications
Business Segment, such as FLET’S Hikari, and a portion of theservices it provides in the Integrated ICT Business Segment, suchas Arcstar Universal One, IP-VPN, OCN, and 5G, LTE (Xi) andother packet communications services.
In the fiscal year ended March 31, 2023, revenues from IP/
packet communications services decreased 0.0% from the fiscal
year ended March 31, 2022 to ¥3,444.0 billion.
■ Sales of Telecommunications Equipment
This category includes a portion of the services NTT Group
provides in the Integrated ICT Business Segment and the Regional
Communications Business Segment.
In the fiscal year ended March 31, 2023, revenues fromtelecommunications equipment sales increased 8.9% from the fiscal
year ended March 31, 2022 to ¥756.2 billion. This increase wasmainly due to an increase in revenues in the Integrated ICT Business
Segment due to an increase in the unit sale prices of devices.

86

NIPPON TELEGRAPH AND TELEPHONE CORPORATION■ System Integration

NTT Group’s system integration services include a portion of
the services it provides in the Global Solutions Business
Segment, the Integrated ICT Business Segment and theRegional Communications Business Segment.
In the fiscal year ended March 31, 2023, revenues fromsystem integration increased 13.4% from the fiscal year ended
March 31, 2022 to ¥4,546.5 billion. This increase was mainly
due to factors such capturing increased demand for
digitalization both domestically and abroad in the Global
Solutions Business Segment.
■ Other Operating Revenues
Other services principally comprise building maintenance,
real estate rentals, sales of electricity and the Smart Lifebusinesses in the Integrated ICT Business Segment.
In the fiscal year ended March 31, 2023, revenues fromother services increased 24.2% from the fiscal year ended
March 31, 2022 to ¥2,472.0 billion. This increase was due toan increase in electricity revenues in the energy business,among other factors.

Operating Expenses
Operating expenses in the fiscal year ended March 31, 2023
increased 8.9% from the fiscal year ended March 31, 2022 to¥11,307.2 billion. The reasons for the increase are discussed
below.
■ Personnel Expenses

Personnel expenses in the fiscal year ended March 31,
2023 increased 7.9% from the fiscal year ended March 31,
2022 to ¥2,768.7 billion. This increase was mainly due to theincrease in personnel expenses as a result of the expansion ofbusinesses in the Global Solutions Business Segment.
■ Expenses for Purchase of Goods and Services and Other Expenses
In the fiscal year ended March 31, 2023, expenses for purchaseof goods and services and other expenses increased 12.4% from thefiscal year ended March 31, 2022 to ¥6,563.3 billion. This increase
was mainly due to an increase in sales-related costs resulting fromthe increase in electricity revenues, among other factors.
■ Depreciation and Amortization Expenses
Depreciation and amortization expenses in the fiscal year
ended March 31, 2023 increased 1.4% from the fiscal year
ended March 31, 2022 to ¥1,582.6 billion.

Operating Profit
As a result of the foregoing, operating profit for the fiscal
year ended March 31, 2023 increased 3.4% from the fiscal
year ended March 31, 2022 to ¥1,829.0 billion.

Finance Income and Costs
Finance income and costs for the fiscal year ended March
31, 2023 were ¥(25.3) billion compared to ¥7.2 billion for the
fiscal year ended March 31, 2022. This increase was mainly
due to an increase in interest expenses resulting from a rise ininterest rates, among other factors.

Share of Profit of Entities Accounted for
Using Equity Method
Share of profit of entities accounted for using the equity
method for the fiscal year ended March 31, 2023 decreased
28.9% from the fiscal year ended March 31, 2022 to ¥14.0 billion.

Profit Before Taxes
As a result of the foregoing, profit before taxes for the fiscal
year ended March 31, 2023 increased 1.2% from the fiscal
year ended March 31, 2022 to ¥1,817.7 billion.

Income Taxes
In the fiscal year ended March 31, 2023, income taxes
decreased 2.7% from the fiscal year ended March 31, 2022 to¥524.9 billion. Effective tax rates for the fiscal year ended March
31, 2022 and for the fiscal year ended March 31, 2023 were
30.05% and 28.88%, respectively.

Profit Attributable to NTT
As a result of the foregoing, profit for the fiscal year ended
March 31, 2023 increased 2.9% from the fiscal year ended
March 31, 2022 to ¥1,292.8 billion. Profit attributable to NTT(excluding the profit attributable to non-controlling interests) for
the fiscal year ended March 31, 2023, increased 2.7% from thefiscal year ended March 31, 2022 to ¥1,213.1 billion.

¥693.0 billion. Expenditures for shareholder returns consisted of¥439.7 billion of dividend payments and expenditures of ¥511.1
billion for acquisitions of treasury stock. Net income fromborrowings consisted of ¥295.6 billion of income from an increasein short-term borrowings, ¥1,090.9 billion of income from anincrease in long-term borrowings and ¥693.4 billion of expenditures
for repayments of long-term borrowings. The increase in long-termborrowings included the incurrence of ¥667.7 billion of green
financings during the fiscal year ended March 31, 2023. The
proceeds from these financings were allocated to projects that
contribute to the resolution of environmental issues (5G-related
investments, FTTH-related investments, research and development
for achieving the IOWN concept and renewable energy).
Furthermore, cash flows used in finance activities
represented a decrease in payments of ¥847.9 billion from
¥1,438.1 billion in the fiscal year ended March 31, 2022. Thisdecrease was due to, among other factors, an increase of¥1,238.9 billion in proceeds from borrowings, partially offset by
an increase of ¥257.4 billion in payments for acquisitions oftreasury stock in comparison to the prior fiscal year.

Cash Flows and Financial Position

Financial Position

Cash Flows

Assets as of the end of the fiscal year ended March 31, 2023
increased by ¥1,446.6 billion from the end of the fiscal year
ended March 31, 2022 to ¥25,308.9 billion, due to among otherfactors, increases in trade receivables and other current assets.
Liabilities as of the end of the fiscal year ended March 31,
2023 increased by ¥1,114.1 billion from the end of the fiscal
year ended March 31, 2022 to ¥15,958.2 billion, due to,among other factors, an increase in borrowings for theacquisition of treasury stock and payment of taxes, and anincrease in liabilities due to the continued depreciation of theyen. The balance of interest-bearing debt was ¥8,230.5 billion,
an increase of ¥866.3 billion from ¥7,364.3 billion as of the endof the fiscal year ended March 31, 2022.
Shareholders’ equity as of the end of the fiscal year ended
March 31, 2023 increased by ¥278.9 billion from the end of the
fiscal year ended March 31, 2022 to ¥8,561.4 billion, due to anincrease in profit. The ratio of interest-bearing debt toshareholders’ equity was 96.1% (compared to 88.9% at theend of the fiscal year ended March 31, 2022). In addition,
equity, which consists of the sum of shareholders’ equity andnon-controlling interests, increased by ¥332.5 billion from theend of the fiscal year ended March 31, 2022 to ¥9,350.6 billion.

At NTT Group, the stable cash flows generated by its
business cover the expenditures necessary for recurringinvestment activities, such as capital investments, and provide
the main source of funds for shareholder returns (dividends
and share buy-backs) and repayments of borrowings.
■ Operating Cash Flows

Cash flows provided by operating activities during the fiscal
year ended March 31, 2023 amounted to ¥2,261.0 billion.
This was primarily due to profit (loss) as adjusted for noncash items (profit for the period, plus non-cash items such as
depreciation and losses on retirement of property, plant andequipment) reaching ¥2,925.9 billion.
Furthermore, cash flows provided by operating activities
represented a decrease of ¥749.2 billion from ¥3,010.3 billion
in the fiscal year ended March 31, 2022. This decrease wasdue to, in comparison to the prior fiscal year, profit (loss) as
adjusted for non-cash items increasing by ¥29.4 billion while
cash outflows increased by ¥778.6 billion, primarily due toincreases in working capital and corporate taxes.
■ Investment Cash Flows
Cash flows used in investment activities during the fiscal
year ended March 31, 2023 amounted to ¥1,736.9 billion.
This was primarily due to payments for purchase of property,
plant and equipment, intangible assets and investment
property reaching ¥1,851.9 billion.
Furthermore, cash flows used in investment activities represented
an increase of net payments by ¥37.8 billion from ¥1,699.2 billion in
the fiscal year ended March 31, 2022. This increase was due to,among other factors, an increase of ¥93.8 billion of payments forpurchase of property, plant and equipment, intangible assets andinvestment property in the fiscal year ended March 31, 2023
compared to the fiscal year ended March 31, 2022.
■ Financing Cash Flows
Cash flows used in financing activities during the fiscal year
ended March 31, 2023 amounted to ¥590.2 billion.
This was primarily due to expenditures for shareholder returns
reaching ¥950.8 billion while net income from borrowings was■ Liquidity and Capital Resources

In addition to its cash and cash equivalents, NTT Group hasentered into agreements with its banks to provide for overdraft
accounts and committed financing lines to ensure that it
maintains the liquidity necessary for its business activities. As ofthe end of the fiscal year ended March 31, 2023, NTT Group hada cash and cash equivalents balance of ¥793.9 billion, adecrease of ¥40.6 billion compared to the balance of ¥834.6
billion as of the end of the fiscal year ended March 31, 2022.
Cash and cash equivalents represent a temporary cash surplus
used to repay debts and make capital investments, among otherfactors, and are used as working capital. Accordingly, thebalance of cash equivalents fluctuates each fiscal year dependingon particular financing and working capital requirements.
In addition, as of the end of the fiscal year ended March 31,
2023, NTT Group had undrawn committed lines of credit of¥318.2 billion.

INTEGRATED REPORT 2023

87

Philosophy

Stock Information (As of March 31, 2023)●●

Otemachi First Square, East Tower, 5-1,

The Minister of Finance

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

1,167,975

34.25

The Master Trust Bank of Japan, Ltd. (Trust Account)391,152

11.47

Custody Bank of Japan, Ltd. (Trust Account)

172,314

5.05

Toyota Motor Corporation

80,775

2.37

JPMorgan Chase Bank 385632

55,872

1.64

Moxley & Co. LLC

39,392

1.16

Total number of shares issued

Nippon Life Insurance Company

25,9210.76

State Street Bank West Client – Treaty 505234

25,454

0.75

NTT Employee Share-Holding Association

24,922

0.73

JPMorgan Chase Bank 380072

21,8480.64

3,622,012,656 shares
34,058,629

Number of shareholders (including holders of only fractional shares)

918,858

Stock Exchange on Which the Company Is Listed

Investor Relations
NIPPON TELEGRAPH AND TELEPHONE CORPORATION,●

https://group.ntt/en/ir/contact/index.html
Shareholder Registry Administrator/Special Account Administrator
1-4-1 Marunouchi, Chiyoda-ku, Tokyo
Inquiries
Stock Transfer Agency■ Individuals, etc.

582,601■ Foreign Corporations, etc.

FTSE Blossom Japan Index
The company has been selected as a constituent of the FTSE
Blossom Japan Index, an index created by FTSE Russell that reflects
the performance of Japanese companies that excel in ESG response.

MSCI Japan Empowering Women Index(17.08)740,574(21.71)■ National and Local Governments 1,168,017(34.25)■ Financial Institutions(20.48)698,464■ Financial Instruments Business Operators 91,661(2.69)■ Other Corporations(3.79)

129,168

2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Toll free number: 0120-584-400 (For NTT shareholders)

JPMorgan Chase Bank, N.A.

(Notes) 1. The composition ratio is calculated based on the ratio to the total
number of issued shares, excluding treasury shares. Note that shares
held by the Board Incentive Plan (BIP) trust for executive compensation
are not included.
2. The “Other Corporations” noted above include 57,000 shares registeredunder the name of the Japan Securities Depository Center, Inc.

383 Madison Avenue, Floor 11●

0120-782-031 (Main number)
Depositary for NTT American Depositary Receipts (ADRs)

New York, NY10179, U.S.A.

Restrictions under the NTT Act
The NTT Act requires the government to own at least one-thirdof the total number of issued shares.* Pursuant to the NTT Act,the proportion of voting rights of foreign nationals and foreign
corporations is limited to less than one-third of the total 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 inexcess of such limit.
As of the end of March 2023, 7,405,421 of the voting rights
were owned by foreign nationals and foreign corporations.

Inquiries
JPMorgan Service Center
P.O. Box 64504
St. Paul, MN 55164-0504, U.S.A.
TEL： 1
 -800-990-1135 (General)
1-651-453-2128 (From outside the U.S.A.)* For the time being, pursuant to Article 13 of the NTT Act, any increase in thenumber of shares 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.

●

(Points) 4,500
3,000

100

1,500
0

0

The Company has been selected as a constituent of the MSCIJapan Empowering Women Index, which selects companies that
promote gender diversity among their employees and lead theirindustries in the participation and job promotions of women as wellas promotion of diversity.

Best IR Award
NTT won the IR Grand Prix given by the Japan Investor Relations
Association in its 2022 IR Awards, which aim to select and honor
companies that deeply understand the purpose of IR, are actively
involved, and have achieved outstanding results, such as earninghigh support from market participants.

Awards for Excellence in Corporate Disclosure
In the 28th (FY2022) Awards for Excellence in Corporate Disclosure by
The Securities Analysts Association of Japan, we were selected as theno. 1 excellent company in the Telecommunication / Internet category.

Eruboshi (Rank 3)
Eruboshi is a certification system based on the Act on Promotion of
Female Participation and Advancement in the Workplace, and isissued to companies that meet certain criteria and have an excellent
status regarding the promotion of women’s active engagement in
professional life. The company has obtained Eruboshi (Rank 3)
certification, which means that it meets all five criteria.

Platinum Kurumin

NTT’s Share Price on the Tokyo Stock Exchange

200 (Yen)

Dow Jones Sustainability Index (DJSI)The Company has been selected as a constituent of the FTSE4Good
Index, a global ESG index developed by FTSE Russell in the United
Kingdom.

Breakdown of Shares by Shareholder

Sumitomo Mitsui Trust Bank, Limited●

Data Section

FTSE4Good Index Series

The number of shares is rounded down to the nearest thousand. The figures inparentheses represent the percentage of total shares owned for each categoryof shareholder.

Finance and Accounting Department, IR Office●

Corporate
Governance

DJSI is a stock index jointly developed by S&P Dow Jones Indices in
the United States and RobecoSAM in Switzerland. It conducts
annual evaluations of companies’ sustainability from an ESG
perspective and selects the best companies overall while taking into
account their market capitalization. The Company has been selected
as a constituent of the Asia/Pacific Index.

(Notes) 1. Number of Shares Held is rounded down to the nearest thousand.
2. NTT’s holdings of treasury stock (211,524,308 shares) are not includedin the above table.
3. Equity ownership percentages do not include treasury stock.
Furthermore, treasury stock does not include 1,033,466 shares of theCompany held by the officer compensation BIP trust.

Tokyo (Stock Code: 9432)●

Ratio of the numberof shares held tothe total number ofshares issued (%)(Total number of issuable shares after the stock split effective as of July 1, 2023: 154,823,022,500 shares)(Total number of issued shares after the stock split effective as of July 1, 2023: 90,550,316,400 shares)●

Number ofshares held(Thousands)

Name

Aggregate voting rights

Growth Strategy

Principal Shareholders

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Date of establishment April 1, 1985
Head office

NTT Group
Sustainability

External Evaluations (As of September 30, 2023)

Corporate Information
Company nameMessage from the CEO(Millions of shares)
8,000

Issued by the Ministry of Health, Labour and Welfare based on the Act
on Advancement of Measures to Support Raising Next-Generation
Children, Platinum Kurumin is issued to companies that have formulated
an action plan for business owners, have achieved the goals set forth in
the plan, and meet certain criteria. Among Kurumin certified companies,
Platinum Kurumin certification is given to excellent companies that are
working to support child rearing with higher standards.

6,000PRIDE Index Gold status

4,000
2,000
0

2014

2015

NTT’s share price (left scale)(Notes)88

2016
TOPIX (right scale)

2017

2018

2019

2020

2021

2022

2023

NTT’s trading volume (lower left scale)

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 2-for-1 stock split of its common stock with an effective date of July 1, 2015, a 2-for-1 stock split of its common stock with an effective date of January 1,
2020, and a 25-for-1 stock split of its common stock with an effective date of July 1, 2023. NTT share prices have been adjusted to reflect the impact of these stock splits.

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

For the seventh year in a row, we have received the PRIDE Index
Gold status, which recognizes outstanding companies in the PRIDE
Index, an index developed by the private organization "work with
Pride" to evaluate LGBTQ-related efforts in the workplace.

INTEGRATED REPORT 2023

89