NTT ANNUAL REPORT 2020

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ANNUAL REPORT 2020

Printed in Japan

https://www.ntt.co.jp/index_e.html

NTT ANNUAL REPORT 2020

CONTENTS

2 Message from the CEO

72 Operations in Review
		
72 Mobile Communications Business

10 N
 TT Group’s Response to the COVID-19
Pandemic		
74 Regional Communications Business		
76 Long Distance and International Communications Business		
77 Data Communications Business

12 Message from the CFO

		78 Other Businesses		
80 NTT Group Topics

16 About NTT Group18 Value Creation Process

82 Data Section
		
82 Financial Summary		
100 Consolidated Financial Statements

20 Medium-Term Management Strategy

		
104 Operating and Financial Review		
20 Promote the B2B2X Model		
107 Consolidated Subsidiaries		
22 Roll Out 5th-Generation Wireless Systems		108	Career Summaries of Members of theBoard and Audit & Supervisory Board Members

		
23 Enhance Competitiveness in Global Business		
24 Research and Development

		110 Stock Information		
31 New Business and Regional Revitalization Initiatives

32	Initiatives Aimed at Promoting
ESG Management
		34 Material ESG Issue 1 Reduction of Environmental Impact		
40 Material ESG Issue 2 Strengthening of Security		
48 Material ESG Issue 3 Strengthening of Disaster Countermeasures		
50 Material ESG Issue 4 Utilization of Diverse Human Resources		
56 Material ESG Issue 5 R einforcement of Governance for
Sustained Growth		
70 Stakeholder Engagement

Forward-Looking Statements

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, thetelecommunications 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 pricingof services, the effects of competition, the performance of new products, services, and new businesses, changes tolaws and regulations affecting the telecommunications industry in Japan and elsewhere, and other changes in circumstances that could cause actual results to differ materially from the forecasts contained or referred to in this report.

Editorial Policy

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

Report Scope

Other Materials

Directly Affiliated Companies (8 Companies)	NTT, NTT DOCOMO, NTT East, NTT West, NTT Communications, NTT DATA, NTT FACILITIES, NTT COMWAREu Presentation Materials●

Their Affiliated Companies (18 Companies)	Six NTT East Group Companies (NTT EAST-HOKKAIDO, NTT EAST-TOHOKU, NTT EAST-KANSHINETSU,NTT EAST-MINAMI KANTO, NTT EAST SERVICE, NTT-ME), five NTT West Group Companies (NTT NEOMEIT,
NTT MARKETING ACT, NTT Business Solutions, NTT Field Techno, NTT BUSINESS ASSOCIE WEST), andseven NTT FACILITIES Group Companies (NTT FACILITIES CHUO, NTT FACILITIES HOKKAIDO,NTT FACILITIES TOHOKU, NTT FACILITIES TOKAI, NTT FACILITIES KANSAI, NTT FACILITIES CHUGOKU,NTT FACILITIES KYUSHU)• In this Annual Report, “NTT DOCOMO” refers to NTT DOCOMO, INC., “NTT East” refers to Nippon Telegraphand Telephone East Corporation, “NTT West” refers to Nippon Telegraph and Telephone West Corporation,“NTT Communications” refers to NTT Communications Corporation, “NTT DATA” refers to
NTT DATA CORPORATION, “NTT Urban Solutions” refers to NTT Urban Solutions, Inc., “NTT Anode Energy”
refers to NTT Anode Energy Corporation, “NTT NEOMATE” refers to NTT NEOMATE CORPORATION.

●

https://www.ntt.co.jp/ir/library_e/presentation/u Shareholders’ Meeting Materials

https://www.ntt.co.jp/ir/shares_e/shareholders_meetings.html
u Securities Reporthttps:/www.ntt.co.jp/ir/library_e/yuho/u Sustainability Reporthttps://www.ntt.co.jp/csr_e/report.html

ANNUAL REPORT 20201

Message from the CEO

Mission of NTT Group after the COVID-19 Pandemic

Jun Sawada
President and Chief Executive Officer,
Member of the Board

To resolve social issues through its business
operations, NTT Group works together with its
partners as “Your Value Partner.”

Social and Economic Changes Resulted from the Global
COVID-19 Pandemic

Since its launch through the privatization of Nippon Telegraph and Telephone Public Corporation in 1985, NTT has
been required to fulfill the missions of both a public utility and a private company. These missions will not change,no matter how significantly the COVID-19 pandemic changes the economy and society. Communications services
are an important part of social infrastructure. Our mission of providing reliable, uninterrupted communications
services as a public institution as designated by the Basic Act on Disaster Control Measures is becoming increasingly more important amid the current conditions. At the same time, we are pressed with our mission of generating
ongoing profits as a private company. Our commitment to fulfilling the missions of both a public utility and a private company will continue to be our core emphasis going forward. At the same time, NTT Group will transform
itself in response to social and economic changes in its quest to resolve social issues through its business operations together with its partners as “Your Value Partner.”
After the conclusion of the COVID-19 pandemic, we will likely see substantial changes to the work styles andlifestyles seen thus far, creating strong demand for remote solutions that deliver high levels of value, without faceto-face interaction, in areas ranging from teleworking to entertainment. To contribute to the impending society
characterized by remote interactions, we are accelerating solutions business initiatives that combine the transition
to cloud services for corporate activities with digitization. In addition, we are working to deliver new services thatfacilitate reforms to work styles and processes and improve productivity through support for the spread andentrenchment of teleworking and remote work and through digital transformations. As the first phase of our new
service strategy, we announced NeWork, an online work space and WindowTalk, a service for contact-free conversations in August 2020. We intend to continue our proactive attempts to create revolutionary new Japan-originatedtechnologies, products, and services going forward.
The arise of the new form of glocalism can be expected to prompt reforms in various industries as companies
return certain parts of operations to Japan from overseas and develop trusted supply chains comprised only of
countries and companies that have been deemed reliable. Against this backdrop, NTT will promote industry- andprocess-specific digital transformations and offer support for improving productivity across value chains spanningfrom raw material procurement to the manufacture and sales of products. We will also accelerate initiatives forachieving self-sufficiency with regard to energy from the perspective of sustainability and resilience.

I would like to begin by extending our heartfelt thoughts and prayers to everyone who has fallen victim to COVID-19
or who has been otherwise impacted by the pandemic.
The restrictions on movement and production activities imposed to limit the spread of the virus have brought
the flow of people and commodities that seemed so normal before to a sudden halt. The resulting deterioration of
corporate performance and slowdown in consumer spending have dealt a heavy blow to the global economy.
Looking ahead, we project that there will be two major changes to our society and our lives. The first will be theentrenchment of remote interactions for the purpose of social distancing. The second is a transformation in theessence of globalism as maintaining social distancing limits the movement of people, commodities, and money.
These changes will drive a trend toward transitioning from supply chains developed on a regional basis across theglobe to more locally installed supply chains, giving rise to a new approach toward glocalization. Furthermore, we
anticipate that the need for independence and self-sufficiency with regard to energy and food will increase amid
attempts to better safeguard the economy against global-scale risks such as the pandemic.

NeWork online work space

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NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 20203

Message from the CEO

Digital Transformations and Smart City Business
The number of B2B2X model projects being developed by NTT Group has risen from 39 on March 31, 2019, to 74
on June 30, 2020. The B2B2X model entails supporting digital transformation (DX) for service providers (the centerB) and offering even more value for end users. NTT Group will further expand the application of this model throughthe utilization of 5G technologies.
Infrastructure for the commercial 5G services launched in the fiscal year ended March 31, 2020, had been
installed in 92 cities across Japan as of June 30, 2020. By March 2021, we aim to install infrastructure in 500 cities,
including all ordinance-designated cities in Japan. We will then move on to install 20,000 base stations throughout
Japan by March 2022. In this manner, we look to actively promote 5G, a new transmission frequency that can offer
high-speed, high-capacity communications. Using 5G technologies, NTT Group will supply services that support
the shift to online and remote work in healthcare, education, manufacturing, and other fields while facilitating digital transformations in the agriculture and construction industries, which are currently highly dependent on humanlabor. We also intend to accelerate the provision of various forms of value in conjunction with the spread of 5G
services through means such as offering new video viewing experiences, including multi-angle viewing and virtual
reality, augmented reality, mixed reality, and substitutional reality viewing.
In December 2019, we formed a business alliance with
Mitsubishi Corporation to promote industrial digital transformation aimed at reforming industry value chains and creating newvalue. This alliance marks the first time that Mitsubishi
Corporation has partnered with a cross-industry ICT company
as well as the first time NTT has formed an alliance with awide-ranging comprehensive trading company in the field of
B2B2X businesses. Under this alliance, we will promote efficiency and optimization in the distribution of food throughdigital transformations in the food distribution industry, an area
Mitsubishi Corporation has shaped over the course of years.
This task will be accomplished by integrating information and
Formulation of business alliance with Mitsubishi Corporation tobusiness processes currently split among food retailers, manupromote industrial digital transformation
facturers, and wholesalers to eliminate unnecessary and redundant tasks across the entire food value chain.
Furthermore, Mitsubishi Corporation and NTT have acquired a 30% stake in HERE Technologies, a global provider of location information services, through a holding company (50-50 ownership) based in the Netherlands,
where HERE is located. This company’s technological foundation will be utilized as a core technology for promoting digital transformations in industry.
Later, in March 2020, we reached an agreement with Toyota Motor Corporation regarding collaboration for thecommercialization of smart city businesses. As core partners sharing the same values and contributing to thedevelopment of society, we will seek to create smart cities that constantly evolve in response to the needs of residents. A major factor behind this alliance was the agreement between Toyota and NTT that ownership of the datacollected from smart cities should rest with the respective municipalities and should be provided as open data for
free use.
Based on the precedent established by the redevelopment projects in the Higashi-Fuji area of Susono City,
Shizuoka Prefecture (Woven City) and in the Shinagawa area in Minato-ku, Tokyo (a part of the NTT block in frontof Shinagawa Station), we plan to develop a series of smart city businesses in Japan and abroad. This alliance will

4

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

entail a capital tie-up to the tune of ¥200.0 billion tounderscore our long-term partnership. Through thisinvestment, we hope to forge a long-term, ongoing
relationship between Toyota and NTT; drive efforts toresearch and develop, plan, design, construct, implement, and jointly operate smart city platforms; andotherwise promote the joint operation of constantly
evolving smart cities by the two companies.

Conclusion of business and capital alliance with Toyota regarding
smart cities

Enhancement of Global Business CompetitivenessTo enhance its global business competitiveness, NTT Group has been leveraging the strength of its capacity for
one-stop supply of everything spanning from solutions to communications infrastructure to support the evolutionof customer businesses and promote innovation. We have also implemented various reforms to build platforms forconcerted efforts as a united “One NTT.” These reforms have included the integration of operations into global
operating company NTT Ltd. and the opening of overseas research laboratory NTT Research, Inc. We have also
been strengthening the NTT brand through global sporting events. For example, we have concluded a technology
partnership agreement with Major League Baseball in the United States, and NTT is the entitlement sponsor of the
IndyCar Series while NTT Ltd. is an official technology partner of the Tour de France. Meanwhile, in our smart citybusiness, in which we have undertaken the verification and commercialization of a smart city project in Las Vegas,
Nevada in the United States, we have commenced our first verification test in Asia. Collaborating with local stakeholders, this test is taking place in Cyberjaya, Malaysia. We are also developing smart city projects in Austin, Texas
and at the University of California, Berkeley in the United States as part of our efforts to grow this business on a
global scale.
The fiscal year ended March 31, 2020, also saw the rapid advancement of operation consolidation and otherstructural reforms. The benefits of these efforts are gradually emerging, as can be seen in the fact that NTT Ltd. ispoised to achieve profitability in the fiscal year ending March 31, 2021, despite the difficult operating environment
created by the global COVID-19 pandemic. Going forward, we will continue to advance structural reforms whiletransitioning to structures for delivering high-value-added services in order to achieve further growth.

ANNUAL REPORT 20205

Message from the CEO

Strengthening and Globalization of Research andDevelopment
NTT is advocating the Innovative Optical and Wireless Network (IOWN) network concept aimed at using opticaland other cutting-edge technologies to realize networks and information processing platforms characterized byultrahigh capacity, ultralow latency, and ultralow electricity consumption. IOWN comprises three main technology
components: all-photonic networks that use photonic-based technologies for everything from networks to terminals, the Cognitive Foundation® service for linking and controlling various different articles, and digital twin computing for projecting future trends by comparing the physical world with digital models. Optical technologies are at theheart of this network concept. This is an area in which NTT has continued to create world-first and world-leading
results. Moreover, there is significant potential for Japanese communications and IT companies to grow in the fieldof optical technologies. We therefore aim to act as a game changer in this field.
Collaboration with companies and organizations on the leading edge of their fields from around the world isimperative in making the IOWN concept a reality. Based on this recognition, we established the IOWN Global Forum,
a forum for open discussion, together with Intel Corporation of the United States and Sony Corporation of Japan in
January 2020. By coordinating with various partners to standardize next-generation infrastructure, we aim to contribute to the creation of new services and markets.
In addition, NTT Group is moving
forward with research and development
on cutting-edge environmental andenergy technologies as one initiative
eying the application of optical technologies in relation to the IOWN concept. With this regard, we have formed
a comprehensive cooperation agreement with the ITER International Fusion
Energy Organization, which has theobjective of building the world’s firstexperimental hydrogen fusion reactor.
This was the first time for a Japanesecompany to form such an agreement
Interview from Bloomberg at CES 2020
with ITER. Through this cooperation,
NTT is examining the possibility ofutilizing IOWN technologies to support
the ITER project goal. Areas in whichthese technologies may be utilized
include the development of network
technologies for realizing ultrahighspeed, ultralow-latency connections
between the fusion reactor and control
centers. The technologies may also be
used for developing the sophisticatedcalculation technologies required for
performing the cyberspace calculations
using digital twin computing needed for
ITER experimental hydrogen fusion reactor
reactor control simulations entailing

6

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

massive amounts of computational processing. NTT Group looks forward to offering technical support for information distribution and control platforms as part of the effort to create a revolutionary form of clean energy
through nuclear fusion.
NTT Group has commenced research and development of a 4D digital platform to support digital twin computing. This platform will be able to weave sensing data from people, objects, and occurrences into highly precise
spatial information in real time in order to integrate data with various industry platforms and make future predictions.
We are also collaborating with ZENRIN CO., LTD., a company that boasts significant map data collection and management capabilities and a wealth of map production expertise. Through this collaboration, we will jointly develop
a sophisticated geographical space database with a wealth of highly accurate semantic information by capitalizing
on NTT Group’s high-precision positioning technologies and high-accuracy map development and infrastructure
maintenance management know-how. We anticipate that the utilization of this 4D digital platform for various
industry platforms will contribute to the growth of new businesses.
NTT Group also announced an alliance with NEC Corporation in June 2020. This alliance is aimed at the joint
research and development and the global rollout of ICT products utilizing innovative optical and wireless technologies. There are two major goals for this alliance. The first is to make the IOWN concept a reality. Through joint
development with NEC, we will first seek to endow digital signal processing circuits, microprocessors designed
specifically for digital signal processing, with high performance and low electricity consumption so that we candevelop and sell information communications equipment embedded with these processors. Then, over the mediumto long-term, we will coordinate efforts to increase the capacity of optical and wireless devices and optical transmission systems. The second goal is topromote the O-RAN (Open Radio AccessNetwork) open architecture together with NEC.
Through development and global rollout of
products boasting international competitiveness together with NEC, we aim to install
infrastructure that will allow communications
companies to flexibly construct 5G and othernetworks. We intend to conduct joint researchand development in a myriad of fields throughour alliance, and research and development
will therefore need to be carried out from a
medium- to long-term perspective. For thisreason, NTT paid ¥64.5 billion to acquire 4.8%
of NEC’s stock with the aim of building aConclusion of business and capital alliance with NEC
healthy collaborative relationship that will bebeneficial over the long term.

Pursuit of Ongoing Improvements in Corporate Value
NTT is required to fulfill the functions of both a private company and a public utility. To a greater degree than othercompanies, we are considered to be a public institution. In other words, our contribution to society is equivalent toincreasing our corporate value. Promoting management based on environmental, social, and governance (ESG)
factors has been and will continue to be NTT’s mission. We aim to anticipate changes in the world and take steps
to address them ahead of time through various measures.
Looking at the E, or environmental initiatives, in May 2020, we announced our environment and energy vision;
zero environmental impact. Based on this vision, we will contribute to reducing the environmental impacts of customers, companies, and society. NTT is a major consumer of electricity, accounting for close to 1% of Japan’s
electricity consumption. To address this consumption, we have set the goal of sourcing more than 30% of our
ANNUAL REPORT 20207

Message from the CEO

electricity from renewable energy by thefiscal year ending March 31, 2031, and theuse of green energy is being promoted
accordingly. We also want to provide renewable energy to other companies. If thenumber of companies that share our ambitions increases, it will raise the rate of renewable energy usage of Japan as a wholealong with the country’s self-sufficiency interms of energy. Our renewable energy initiatives are shaped by an ESG perspective as
well as by our desire to contribute to theInternational Women’s Day event
sustainability of society and the economy.
NTT Group is also engaged in a variety ofother environmental activities, including
participating in climate change-related
initiatives, endorsing the recommendationsof the Task Force on Climate-related
Financial Disclosures, and issuing green
bonds. Furthermore, the Space Environment
and Energy Laboratories was established inJuly 2020 to spur the creation of revolutionary environmental and energy technologies.
NTT Group is pursuing innovation that surpasses current limitations in fields such as
smart energy to help regenerate the global
OriHime-D a remote avatar robot
environment and realize a sustainable andinclusive society.
In S, the social aspect, we consider our business of providing uninterrupted ICT services itself to be our social
responsibility. Large-scale natural disasters, such as typhoons and heavy rains, have become increasingly frequent
in recent years. Such disasters can have a massive impact on communications equipment and services, resulting
in increasingly long downtimes. Accordingly, there is a need to improve the resilience of facilities, through countermeasures against blackouts and other provisions, and to expedite recovery efforts through AI-powered damage
prediction. In September 2020, NTT formed a social contribution coordination agreement with KDDI
CORPORATION. Under this agreement, we will promote mutual utilization of ships for transporting the necessary
supplies in the event of a large-scale disaster. In addition, we have begun joint disaster preparedness drills andawareness-raising activities. By coordinating in areas where there are significant benefits to be had through themutual use of our assets, we aim to contribute to the resolution of various social issues.
Turning to threats other than natural disasters, security will be more important than ever to business continuity
after the COVID-19 pandemic. As the trend toward teleworking and remote work spreads rapidly, we will need toprotect against cyberattacks and various other threats to ensure business continuity for NTT Group as well as for
its customers. Accordingly, we will be deploying various services to offer even greater levels of support on this front.
We also recognize that the utilization of a diverse range of human resources will be crucial for the evolution of
NTT Group. With this regard, we joined The Valuable 500, an international initiative promoting the employment ofpeople with disabilities, in December 2019 as part of our ongoing efforts to promote diversity and inclusion. As oneof these efforts, we use the OriHime-D a remote avatar robot to greet visitors at the reception desk of NTT. People
who face difficulties going outside can remotely control this robot to guide visitors to meeting rooms and answer

8

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

questions. NTT Group looks to develop such new work styles suited to a society characterized by remote interactions by reinventing work processes through digital transformations. Furthermore, we will entrench and promoteteleworking as a new standard work style on a Groupwide basis.
In terms of the G, or governance, the Company continues to strengthen governance systems to improve corporate value. Specifically, we have revised the operating procedures, scale, and composition of the Board of Directors
to invigorate strategic discussion at Board meetings. These revisions have resulted in the ratio of outside independent Members of the Board rising to 50%. In addition, an executive officer system was introduced to clearly separate
the management decision-making and oversight function from the operational execution function. The reinforcement of corporate governance is being pursued to enhance management flexibility.
In the midst of the global COVID-19 pandemic, we took steps to ensure our communications services could be
reliably accessed while exercising consideration for our various stakeholders through a variety of measures, including providing leeway in regard to payment dates and offering certain services for free. As for shareholder returns,
our basic policy for dividends is to continuously increase dividend payments. The planned dividend for the fiscal year
ending March 31, 2021, is ¥100 per share, an increase of ¥5 per share from the previous fiscal year, making for the
10th consecutive year of dividend increases.
NTT Group will accelerate its transformation as “Your Value Partner,” aiming to continue being a reliable partner
to its stakeholders, including customers, shareholders, and local communities. In doing so, we will focus all of ourefforts on sustainably increasing our corporate value and contributing to the realization of a smart world.
I ask all of our shareholders and investors to continue supporting our efforts.
September 2020

ANNUAL REPORT 2020

9

NTT Group’s Response to the COVID-19 Pandemic

In response to the global COVID-19 pandemic, in addition to ensuring the health and safety of all stakeholders, including customers,
partners, and employees, we have endeavored to ensure stable availability of information and communication services, as they are
crucial for people's lives and corporate activity.

Ensuring Stable Provision of Telecommunication Services as a DesignatedPublic Institution
NTT and its major subsidiaries operating in the telecommunications business have established business plans designed to help
prevent the spread of COVID-19 in the interest of fulfilling their responsibilities as designated public institutions and protecting
human life.

Data Traffic Volume
The outbreak of COVID-19 has driven up Internet usage and demand for teleworking, leading to a spike in data traffic (telecommunications load) largely on landline communications, and weekday daytime traffic in particular. NTT Group companies typically design their networks to accommodate peak traffic volumes, and at present they are able to ensure sufficient capacity
across the network. We will continue to expand facilities as may be required to provide stable communication services.

Telecommunications Network Operation

In the post-COVID-19 era, there may be dramatic changes in the way people conduct their daily lives and in corporate activities. NTT
Group aims to solve social issues in this era by helping to establish new social systems that use digital technologies and throughother innovations such as technology development.
Also, there has been a rapid increase in working from home, remote healthcare, remote education, and other measures that lookto ensure social distancing. NTT Group will accelerate provision of services that promote a remote-type society and will drive theadvancement of technologies such as authentication control technology. By introducing digital technology and AI into work that relies
on manpower, such as agriculture, manufacturing, and construction, we aim to expand smart operations and contribute to solving
the social issue of labor shortages. In addition, by building connected value chains in various fields, such as logistics, we will work to
make industry more efficient, leading to optimizing the movement of people and things and the provision of energy.
NTT Group will contribute to the realization of a smart society along with our partners all over the world by leading innovation,such as the development of technology that looks toward a data-driven society which may be possible in the post-infection period.

New Services for Realization of Remote World• Online work space NeWork(Available from NTT Communications free of charge*1 sinceAugust 2020)
Provides a virtual office environment, complete with light-hearted
chit-chat-like banter features(Scheduled for commercialization by NTT Group companies during
2020)
Enables discussion through closed windows of vehicles or buildings
just as if there were no windows

Customer Service• Use of Smart City Solutions(Provided to the City of Las Vegas by NTT, Inc. since August 2020)
Uses analysis of camera images to warn of or predict crowding; uses
sensors to detect people with high body temperatures• Interactive robot Jibo
• Business chat ELGANA(Available from NTT Neomeit since April 2020)
Upgraded corporate security features such as prevention ofunauthorized usage

Customer Support Initiatives
Billing(Available from NTT Data on a trial basis*2 since August 2020)
Automation of tasks commonly performed by local governments(revenue and expenditure management, etc.) with shared-use RPA /AI-OCR• Window Talk

We will continue to provide network operation, monitoring, and troubleshooting 24 hours a day, 365 days a year as usual. We will
also continue to provide line installation work and repairs upon customer request and we will take ample care to ensure safety
while providing such services.
While truncating business hours and limiting reception services at our customer service branches as well as running our callcenters with reduced staff, we will maintain efforts to provide stable telecommunication service by encouraging the use of ouronline customer services to handle procedures as well as providing remote consultations using ICT tools to keep our customers’
telecom lines up and running and provide the services required to maintain business operations.

• Smart local government platform NaNaTsu(English version available on a paid-for trial basis from NTT Disruption
since March 2020)
Support for business communication in hospitals, remote medical care,welfare,and public spheres using AI.

• AceReal for docomo(Available from NTT DOCOMO since June 2020)
Solution service to support work and 3D design collaboration in remoteenvironments

In March 2020, NTT Group companies extended payment deadlines upon requests from customers facing difficulty paying
service fees by the normal deadline.
In addition, given the constricted ability to use d POINTs due to shelter-in-place policies, NTT DOCOMO has re-awardedd POINTs that expired during March (or thereabouts), essentially extending the expiration date.

Support for Teleworking and Online Schooling
In light of schools’ use of remote learning and online schooling, in April 2020, NTT DOCOMO and NTT Communications havepartially waived data communications fees to customers under the age of 25 to support smartphone-based online learning.
In addition, as part of its support for teleworking, education, and health, NTT Group companies are deploying a variety ofmeasures such as opening consultation desks and providing certain services free of charge. In conjunction with these measures,
we have been using mobile handset data to analyze how populations have changed as a result of government response to
COVID-19, and we provide that analysis to central and local governments as well as the media.

10

NIPPON TELEGRAPH AND TELEPHONE CORPORATION*1 We plan to add features gradually, and offer a high-spec version on a for-pay basis*2 We plan to offer the service for commercial use starting in October 2020

ANNUAL REPORT 202011

Message from the CFO

Our medium-term financial targets will, of course, be incorporated into the evaluation indicators for NTT, the holding company.
They will also be incorporated into the evaluation indicators for the operating companies under the holding company to entrenchthese targets into Groupwide strategies in order to drive more effective initiatives.

NTT will target improvements in corporate value throughsteady profit growth, enhanced shareholder returns, andincreased efficiency in invested capital.

EPS

Performance Forecasts Accounting for COVID-19 Pandemic and Progress in
Global Businesses

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

Medium-Term Financial Targets and Underlying Policies
NTT has previously set financial targets for earnings per share (EPS) growth designed to guide efforts to achieve steady profit growthand enhance shareholder returns, and we continue to focus on EPS as one of our main management indicators. Currently, we areaiming to achieve EPS growth of 50% from the fiscal year ended March 31, 2018, by the fiscal year ending March 31, 2024. Our primary means of raising EPS to accomplish this target will be pursuing steady profit growth, but we will also carry out share buybacks
flexibly.
From the perspective of profit growth, we will strengthen the competitiveness of our global business, a pillar supporting our growth,and improve profit margins. Through this approach, we will look to achieve overseas sales of $25.0 billion and an overseas operating
profit margin of 7% in the fiscal year ending March 31, 2024. In our domestic business, meanwhile, we are targeting cost reductions
pertaining to fixed-line and mobile access networks of at least ¥800.0 billion in comparison to the fiscal year ended March 31, 2018,
by the fiscal year ending March 31, 2024. We will also target a capital expenditure to sales ratio of 13.5% or less for our domestic
network business in the fiscal year ending March 31, 2022, a target we aim to achieve through further streamlining and productivity
improvements in existing businesses.
NTT Group plans to aggressively develop its business in a manner oriented toward sustainable growth while maintaining financial
discipline with an emphasis on capital efficiency. Accordingly, the “Your Value Partner 2025” medium-term management strategy has
newly positioned return on invested capital (ROIC) among our financial targets with a target of 8% to be achieved in the fiscal year
ending March 31, 2024.

Transition of Medium-Term Targets
EPS Growth*1+50%
Profit expansion /share buybacks

212 yen*2

220 yenApprox. 320 yen

Overseas Sales /Overseas Operating Income Margin*3
Sales$25B Overseas
7.0% operating

Growth in sales and income

231 yen$18.4B
3.1%$18.9B
3.2%$19.5B
2.4%

incomemarginOverseas
operatingincome$1.75B*4(Fiscal
year)

2017

2018

2019

2023

(Target)

ROIC(Fiscalyear)$0.56B$0.60B

2017

2018

2023

(Target)(Fiscal
year)

2017

2018

2019

2023

(Target)0ｰ220 billion yen

FY2020 Forecast (Consolidated Revenues and Income)ｰ500 billion yen

Establish efficient operation
process / Productivity
improvement / Slimming
existing facilities

NTT Ltd.:	NTT Ltd. is forecast to achieve profitability. The profit reductions stemming from the COVID-19 pandemic are anticipated to be outweighed by the benefits of the shift toward high-value-added, high-margin services, and of cost reductions, including lower personnel and property expenses attributable to structural reforms. These benefits will contributeto a massive year-on-year increase in operating profit.
NTT DATA :	
NTT DATA is projected to post declines in both revenue and profit. In addition to the expected profit decline stemmingfrom the COVID-19 pandemic, a one-time increase in strategic costs will be incurred to advance structural reforms,
primarily in North America, for promoting digitization (enhancement of staff in digital-related fields, employee reeducation, resource optimization, office and data center consolidation, etc.).

FY2019 Result

FY2020 Forecast

Released on August 11, 2020

Year-on-Year

Operating Revenues¥11,899.4 billion¥11,500.0 billion(¥399.4 billion)

7.4%

2017

(¥70.0 billion)

13.8%

7.4%
13.5%
or less

6.6%

2018

2019

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Establish investment
efficiency / Revenue recovery
2023(Target)(Fiscal
year)

2017

2018

Domestic: (¥180.0 billion)
Overseas: (¥170.0 billion)

13.9%
13.7%

COVID-19 Impact(¥350.0 billion)

ｰ800 billion yen

Capex to Sales

8%

12

2019

(in fixed-line / mobile access networks)*5

We will face significant challenges in our global business as we pursue profit growth. Seeking to surmount these challenges, weare implementing ongoing structural reforms centered on NTT Ltd. and NTT DATA. At NTT Ltd., and are undertaking a massive shift
toward high-value-added, high-margin services. Through this shift, we aim to raise the ratio of total sales from these services fromthe 30% seen in the fiscal year ended March 31, 2019, to 50% in the fiscal year ending March 31, 2024. Steady progress is being madewith this regard, and we forecast a 4-percentage point year-on-year increase in this ratio to 36% in the fiscal year ending March 31,
2021. At NTT DATA, earnings power is being augmented through the enhancement of digital offerings.
The performance forecasts for NTT Ltd. and NTT DATA in the fiscal year ending March 31, 2021, are as follows.

(Domestic Network Business)*6

Transforming to a businessstructure with high capital efficiency(Fiscalyear)$0.46B

Cost Reductions

Progress toward our EPS target was more or less in line with our projections up until the fiscal year ended March 31, 2020. However,
we had to account for the adverse impacts of the global COVID-19 pandemic when formulating forecasts for the fiscal year ending
March 31, 2021. Accordingly, for this fiscal year, we are projecting a drop in revenue and increases in profit and EPS. In more specificterms, we expect a decline in sales of telecommunications equipment by NTT DOCOMO in Japan coupled with a drop in system
integrator sales overseas, which will be particularly pronounced in the second half of the fiscal year. These factors will push down
operating revenues by ¥350.0 billion and operating profit by ¥70.0 billion. We hope to achieve year-on-year growth in profit in thefiscal year ending March 31, 2021, despite these detractors, by compensating for the revenue decline through the downsizing ofcosts via means such as curtailing investments and through the improvement of operational efficiency via digital transformations.
The work styles and lifestyles we have embraced previously may see substantial change during and after the COVID-19 pandemic.
At NTT Group, we view this change as an opportunity on which we look to capitalize to achieve ongoing profit growth in the fiscal
year ending March 31, 2022, and beyond.

2019

2023

(Target)*1 EPS amounts reflect the two-for-one stock split with
an effective date of January 1, 2020.
*2 Excludes the effects of the arbitration award received
from Tata Sons Limited.
*3 Including results from the global holding company,
its subsidiaries and its affiliates. Overseas operating
income excludes temporary expenses, such as M&Arelated depreciation costs of intangible fixed assets.
*4 Estimated value of $ 25B multiplied by 7%*5 Figures are the amounts compared to FY 2017
*6 Excludes NTT communications’ data centers andcertain other assets

Operating Income

Profit*1
EPS*2¥1,562.2 billion¥1,590.0 billion+¥27.8 billion¥855.3 billion¥860.0 billion+¥4.7 billion

¥231

¥231

+¥0

Domestic:

(¥45.0 billion)

Overseas:

(¥25.0 billion)*1 Profit represents profit attributable to NTT, excluding noncontrolling interests.
*2 Amounts have been adjusted to reflect the two-for-one stock split with an effective date of January 1, 2020.

ANNUAL REPORT 202013

Message from the CFO

ROIC

Reference

Improvement of Invested Capital Efficiency through Receivable Liquidation andOther Means
NTT has proceeded to maintain ownership and practice in-house operation of access networks, network equipment, and a vast
amount of other communications equipment in order to establish a communications network that spreads to every corner of Japanand supply reliable, high-quality communications services. Our telecommunications business will continue to function as our corebusiness foundation going forward. However, we aim to move away from our antiquated business model that presumes asset ownership and to transition to management emphasizing cash flows. NTT also intends to diversify its portfolio by proactively developing
new businesses targeting future growth. Accordingly, we will be downsizing our overall asset portfolio while securing cash flows inorder to improve invested capital efficiency. These efforts will take the form of disposal of inefficient Company assets and idle equipment and curtailment of investments through equipment sharing. We thereby aim to create an asset portfolio that will allow for the
cash generated through business activities to be invested in new businesses.
Specifically, we will liquidate receivables and shift lease assets off the balance sheet. We will also examine a wide range of measures for our urban solutions (real estate) and data center businesses, which are being rapidly developed as growth businesses.
Potential measures include the utilization of real estate investment trusts and other funding schemes and property sales. In the data
center business, for example, data center operation is the most essential part of our business activities; we do not necessarily needto own the buildings ourselves. From this perspective, we will actively develop our businesses in a manner that focuses on the balance of returns from assets as well as on EPS, ROIC, and other indicators, as opposed to overemphasizing asset scale.

Shareholder Returns to Date
The enhancement of shareholder returns is among NTT’s most important management issues. Our basic policy is to pursue ongoing increases in
dividend policies, and flexible share buybacks are conducted to improve capital efficiency.
For the fiscal year ending March 31, 2021, NTT plans to issue dividend payments of ¥100 per share, an increase of ¥5 per share from theprevious fiscal year, making for the 10th consecutive year of dividend increases. This amount will also represent an increase of roughly eightfold
from the fiscal year ended March 31, 2004. Meanwhile, the Company conducted share buybacks totaling around ¥500.0 billion (approximately 100
million shares) in the fiscal year ended March 31, 2020, the largest buyback drive in the past decade, acquiring shares from the market and fromgovernment agencies. The aggregate total of shareholder buybacks conducted to date exceeds ¥4.0 trillion. Acquired shares of treasury stock areperiodically cancelled, and the number of shares cancelled over the past 10 years has reached 30% of the total number of shares issued. These
efforts have made large contributions to the growth of EPS, a main performance indicator of the medium-term management strategy.

Changes in Dividend120

 Dividends per share (Yen)(Left scale)90

Increased by approx.

Payout ratio (%)(Right scale)

Times

100
60

60

40

20

12.5
0

Share Buybacks(accumulated)(Trillion)

0

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

(Fiscalyear)(Forecast)

5.0

Approx. ¥4

trillion in buyback

4.2

4.0

3.3
3.0

2.8

2.9

2014

2015

3.5

3.7

2.4

COLUMN

2.0

Financial Risk Management
NTT manages financial risks through reliable and advantageous fund procurement based on procurement from Group companies and safe and efficient fund use centered on funding of Group companies.
The Company recognizes financial risks including significant interest rate risks, foreign exchange risks, and liquidity risks.
Derivative transactions, such as interest rate swaps, currency swaps, and exchange contracts, are used to manage interest
rate and foreign exchange risks and limit fluctuations in cash flows stemming from these risks. In regard to liquidity risks, thefollowing measures are taken to prepare for unforeseen circumstances, such as the global COVID-19 pandemic.
Yen-Denominated Provisions
The Company has increased the extent of its commitment line contracts with financial institutions from ¥30.0 billion to ¥300.0 billion, and ourcommercial paper issuance limit has been raised from ¥1.5 trillion to ¥2.0 trillion.

1.9

2.0

2011

2012

1.5
1.0

0
(Fiscalyear)

Changes in EPS and
Outstanding Shares

2010

2013

2016

Foreign Currency-Denominated Provisions
A portion of short-term U.S.-dollar denominated funds (approximately ¥200.0 billion) was converted to long-term funds. In addition, borrowing
limits from financial institutions were increased (approximately ¥240.0 billion approximately ¥480.0 billion) and funding sources were
diversified (development of procurement schemes using funds from U.S. commercial paper market) as part of our efforts to secure on-handliquidity.

 utstanding sharesO(excluding shares of treasury stock)*(Millions of shares)(Left scale)

2018

2019

231

250

5,293
EPS Growth
200(Average Annual Growth Rate +10%)
Cumulative total of shares decrease byaround 30% (4% Average Decrease Annually)

4,000 PS (Yen)E(Right scale)* Average number of shares outstanding, excluding own shares

2017

6,000

●

●

95

30

Liquidation of Receivables
NTT DOCOMO’s finance business had a total of ¥1.4 trillion in receivables, including credit card receivables and installment payment
receivables from sales of mobile phones. In the fiscal year ended March 31, 2020, approximately ¥50.0 billion of these receivables
was liquidated, and we intend to liquidate receivables on an even greater scale going forward based on funding needs.
Off-Balance Sheet Recording of Lease Business Assets
By transferring leasing businesses to NTT TC Leasing Co., Ltd., a joint venture between Tokyo Century Corporation and NTT, we
succeeded in reducing interest-bearing debt by ¥1.2 trillion, which had the benefit of increasing ROIC by 0.5 percentage point.

8

80

3,699
96

100

2,000

1,000
(Fiscal
year)

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

(Note1)	Dividends per share, outstanding shares, and EPS have been adjusted to reflect the hundred-for-one stock split carried out on January 4, 2009, two-for-one stock split carried out on July 1, 2015, and two-for-one stock split carried out on January 1, 2020.
(Note2)	U.S. GAAP were applied for fiscal years up to and including the fiscal year ended March 31, 2018, while International Financial Reporting Standards (IFRS) have been applied
for fiscal years from and including the fiscal year ended March 31, 2019.

14

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202015

About NTT GroupWho we are
NTT Group is a leading company in the telecommunications business. We operate in a wide range of domestic and overseas markets by utilizing the customer base and expertise in communication networks and ICT that we have cultivated over our history.

What we do
As “Your Value Partner”, we aim to work together with our partners to solve social issues through our business activities. We
work to make the world a place where all people can enjoy the benefits of ICT so that they may be able to live and work more
comfortably and happily.

Nippon Telegraph andTelephone Corporation(Holding Company)

Operating revenues

Formulate management strategies for NTT Group and promote
basic research and development

Mobile Communications BusinessBusiness
Activities

Mobile communications business, smart life business,
etc.

FY2017FY2018FY2019

Regional Communications Business

11,782.1

11,879.8

11,899.4

Business
Activities

1,641.1

1,693.8

1,562.2

Profit attributable to NTT

897.9

854.6

855.3

21,541.4

22,295.1

23,014.1

9,050.4

9,264.9

9,061.1

Earnings per share (EPS) (yen)*2*3

224.93220.13231.21Book-value per share (BPS) (yen)*2*3

2,295.79

2,416.01

2,492.60

10.2%

9.3%

9.3%

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

Cash flows from operating activities*4*5

2,773.2

2,397.9

2,602.5

Cash flows from investing activities(1,746.2)(1,774.1)(1,852.7)

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

1,027.0

623.8

749.8

Cash flows from financing activities*5(968.3)(584.3)(872.3)*1 NTT shareholders’ equity does not include the portion attributable to non-controlling interests.
*2 EPS is calculated based on the average number of shares outstanding during the fiscal year, excluding treasury stock, and BPS is calculated based on the number of shares outstandingat the end of the fiscal year, excluding treasury stock.
*3 NTT conducted a two-for-one stock split of its common stock with an effective date of January 1, 2020. The figures reflect the impact of this stock split.
*4 Amount excluding the impact of the last day of the previous fiscal years having been a non-business day*5 Excludes the impact on cash flows from operating and financing activities caused by the adoption of IFRS 16 (Leases)

16

NIPPON TELEGRAPH AND TELEPHONE CORPORATION¥(FY2019)(FY2019)

11,899.4
billion¥1,562.2
billion stable communication network that can be usedA
comfortably anytime, anywhere● Top-notch research and development capabilities● Large market share and stable customer baseBillions of yen

Operating profit

NTT shareholders’ equity*1

NTT DOCOMO, INC.

Operating
Profit*●Regional telecommunications operations in Japan andrelated businesses, etc.

Major Services FTTH and other services

Total assets

Main Company

Operating
Revenues*

Major Services Mobile phone services, “d market” services such as
movie and music distribution and e-book services, andfinance and payment services
Competitive
Advantages

Financial Highlights (IFRS)

Main Businesses

Competitive
Advantages

Secure, highly reliable, stable communication network● 
Provision of and support for ICT solutions withstrong local ties
● Large market share and stable customer base
●

33.7%

(¥4,651.3 billion)

Main Companies
Nippon Telegraph andTelephone East
Corporation

54.5%(¥854.7 billion)

Nippon Telegraph andTelephone West
Corporation

Long Distance and International Communications BusinessBusiness
Activities

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

Major Services Cloud services, data center services, migration support
services, and other services
Competitive
Advantages

 omprehensive solutions fromC
application to IT infrastructure● Global coverage● Strong customer engagement●

NTT, Inc.

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

Main Companies
NTT Ltd.
(Global Operating
Company)
NTT Communications
Corporation(Japan Operating
Company)

16.0%

Data Communications BusinessBusiness
Activities

Network system services, system integration, etc.,
in Japan and overseas

Major Services ERP services, ICT outsourcing, and other services
Competitive
Advantages

22.3%(¥3,079.9 billion)(¥2,205.8 billion)

Main Company
NTT DATACORPORATION

 igh-level technology development and projectH
management capabilities● Large market share and stable customer base in Japan● 
Powerful service delivery capabilities usingdevelopment bases in EMEA and in Central andSouth America
●

16.4%

(¥2,266.8 billion)

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

6.6%(¥103.6 billion)

Other Businesses
Business
Activities

24.8%(¥388.3 billion)

8.3%

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

11.6%(¥1,601.7 billion)(¥130.9 billion)

5.8%(¥90.9 billion)* The percentage of each segment’s simple total(including inter-segment transactions)

ANNUAL REPORT 202017

Value Creation Process―A Cycle of Sustainable Corporate Value Enhancement  ―Towards a sustainable society / SDGs

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

Management Resources,
ExpertiseContribute to
Realization of
Smart World /Society 5.0

Financial Targets

Social Issue Resolution

Input

through Busin ess Operation

R&D Capabilities

EPS Growth+50%

Outcome(Approximately ¥320 per share) verseas Sales /O
Overseas Operating Profit Margin*1$25 billion / 7%

Brand Image

Support Our Customers’
Digital Transformations

Accelerate Our Own
Digital TransformationsC ost Reductions(in fixed-line / mobile access networks)

at least ¥800 billion

ICT Infrastructure

bl i
As a Puc Utility and a Private CompanyHuman Resources

Financial Base

Leverage Talent,Technologies, and Assets

ROIC

Promote ESG Management,
and Enhance the Returns ofShareholders to Improve
Corporate Value

Return on invested capital

8%
Capex to Sales(Domestic Network Business)*2
Capital expenditure to sales ratio

Collabora tion with
Various Partners

Customer Base

13.5% or less●Enhancement ofManagement Resources

18

NIPPON TELEGRAPH AND TELEPHONE CORPORATION●

 he target year for EPS growth, overseas sales / overseas operating profit margin, costT
reductions, and ROIC is the fiscal year ending March 31, 2024 (regarding EPS growth*3
and cost reductions; the targets are compared with the fiscal year ended March 31, 2018).
The target year for capex to sales is the fiscal year ending March 31, 2022.

*1 Including results from the global holding company, its subsidiaries and its affiliates.
Operating profit excludes temporary expenses, such as M&A-related depreciation costs
of intangible fixed assets.
*2 Excludes NTT Communications’ data centers and certain other assets.
*3 Excludes the effects of the arbitration award received from Tata Sons Limited.
ANNUAL REPORT 202019

Medium-Term Management Strategy

NTT Group: Contributing to theRealization of a Smart WorldCOLUMN
Alliance with Toyota for Creating Smart Cities

Promote the B2B2X ModelNTT Group will accelerate the B2B2X model and provide value to end users (X) by supporting the digital transformation of the“Center B,” a service provider in various fields, while leveraging digitization of information, IoT, AI, and other social and technologicaltrends. As of June a year earlier, representing smooth progress toward our target of taking part in 100 projects by the fiscal year
ending March 31, 2022.
NTT’s B2B2X models are divided into four categories in line with the following objectives:● Evolution of industrial value chains● 
Invigoration of local economies and improvement of public safety and other city functions through the realization ofsmart cities● 
Enhancement of customer contact point platforms (evolution of customer responses with regard to distribution, services,financing, etc.)● 
Development of mobile and cross-data platforms (enhancement of services and creation of businesses by combining mobile datawith companies’ data)
In order to further advance the B2B2X model, we have established the B2B2X Strategy Committee to formulate strategies,
manage targets, and promote the business of NTT Group. Under this committee, we aim to increase the number of projects by promoting collaboration among the Group companies. For the foreseeable future, the Group will focus on developing new products. At
the same time, however, we intend to improve profit margins by evolving digital technologies and increasing the economic feasibilityof the scale and scope of digital data utilization.

B

B

X

In March 2020, NTT formed an alliance with Toyota Motor Corporation aimed at building a long-term and continuous cooperative relationshipthat enables the commercialization of smart city businesses, with each company acting as a core partner sharing the same values and promoting social development, with the aim of realizing smart cities that continue to evolve in accordance with the needs of residents. The twocompanies have previously engaged in collaboration in the connected car field. However, in response to these changes in the business environment, the two companies believe that it is necessary not only to seek to strengthen the business foundations that they have been cultivating
to date, but also, by further building upon the cooperative relations between them, to engage in the creation of new value that enables sustainable growth. In particular, the two companies have initiated activities related to smart cities, which can resolve various issues by improving theefficiency and sophistication of functions and services in cities and regions through the utilization of advanced technologies and create newvalue, including comfort and convenience, and which they view as being an important area of focus in the future.
Toyota is engaged in verification tests for realizing new urban solutions through coordination with various partner companies and researchers at Woven City, a project taking place at the soon-to-be former site of the Higashi Fuji Plant of Toyota Motor East Japan, Inc. (Susono City,
Shizuoka Prefecture), which is scheduled to close at the end of 2020. Meanwhile, NTT Group is collaborating with municipalities in Fukuoka,
Sapporo, Yokohama, and Chiba cities as well as with companies in an effort to resolve various city and community issues. The Groupis taking part in a smart city project in Las Vegas, Nevada in the United States. The data collected through this project will become the property of the City of Las Vegas. The major characteristic of the Las Vegas project is how advanced AI, IoT, and ICT resource management technologies are being utilized to quickly detect, analyze, and predict incidents and accidents and to optimally manage ICT resources. NTT Group
looks to promote initiatives for deployment of such practices in other cities. In addition, NTT Group is advancing initiatives in which it fully
capitalizes on its assets to contribute to creation of smart cities. For example, the Group is promoting smart urban development by utilizing
ICT to more effectively make use of NTT-owned real estate along with businesses in the smart energy field, which is an important componentof smart cities.
During the course of advancing these initiatives, the companies came to the conclusion that it would be necessary for both companies towork closely in jointly building and operating the “Smart City Platform”* as a core foundation for realizing smart cities while also engaging intheir own projects. This type of collaboration was deemed important in order to maximize the benefits of issue resolutions and value improvements from transforming cities into smart cities and to improve regional and national strength. Through this alliance, both companies hope todeploy smart city platforms in various cities in Japan and worldwide. The two companies will work together to build smart city platforms thatprovide value to all domains from people, cars, and houses to everyday life, business, infrastructure and public services related to residents,
businesses, and local governments. This platform will first be implemented in the Higashi-Fuji area of Susono City, Shizuoka Prefecture(Woven City) and in the Shinagawa area in Minato-ku, Tokyo (a part of the NTT block in front of Shinagawa Station), and will then be introduced to other cities in succession.
In the future, Toyota and NTT will target further growth through the enhancement of the competitiveness of smart cities while contributing
to the development of a sustainable society.
* The “Smart City Platform” furnishes a secure base for providing value to residents, businesses, and local governments and consists of smart city data management and information distribution functions, digital twins based on this data (urban development simulations), and peripheral functions. This platform acts as a “platform of platforms” thatfunctions as a platform for individual smart cities and as a platform for linking with other smart city platforms.

Service Providers(Main Players)

NTT Group

New Needs

Needs

ICT Tools

New Value
CreationTarget Numberof Projects

Contribute to a better life

100

(FY2021)
Various services
NTT Service

New Services

ToyotaService

AI, Edge computing,etc.

Environment
EnergyTransportation

Life
MedicalHealthPublicGovernment

Industry

Education
CultureValuesInformation and communication network

Sales Target

Partners
Digital Transformation

Lifestyle Change
Social Issue Resolution¥600 billion(FY2023)

Utilizationof AI

Development
environment(API, SDK, etc.)Highsecurity

Evolve into B2B2X model using digital services and data management

Smart City Platform
Data management,
information distribution

Digital Twin
(Simulation of city development)

Coordination
with othersystems andplatforms

Feedback
to citydevelopment

Information and communication networkNTT
device / data

Other
smart city
platforms

ToyotaDevice / data

City assets

20

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202021

Medium-Term Management Strategy

Roll Out 5th-Generation Wireless Systems

Enhance Competitiveness in Global Business

Infrastructure for the commercial 5G services launched in March 2020 had been installed in 92 cities across Japan as of June 30,
2020. NTT will expand upon this infrastructure going forward, working to install infrastructure in 500 cities, including all ordinancedesignated cities in Japan, by March 2021, and then to build 20,000 base stations throughout Japan by March 2022. Through the
installation of this infrastructure, we will spread use of
5G, a new transmission frequency that can offer high5G Area Construction
speed, high-capacity communications. One characteristic of 5G services is their low latency. We aim to achieve
this low latency by employing multi-access edge comDevelopment
rate of 5G
puting (MEC) and other technologies for reducing
infrastructure
20,000maintenancelatency throughout network structures, including wired
base
97.0%
stations
portions. NTT also intends to utilize network slicing
10,000500 cities
technologies that can flexibly supply low latency andbaseincluding all
stations
150 locations
government47
across Japanother 5G benefits on an individual application and serdesignatedprefectures
500 basecitiesstations
vice basis.
Mar. 31, 2020

Jun. 30, 2020

Mar. 31, 2021

Jun. 30, 2021

NTT Group’s growth strategies for enhancing competitiveness in its global business entail leveraging the strength of its capacity for
one-stop supply of everything spanning from solutions to communications infrastructure to provide comprehensive solutions forsupporting the evolution of customer businesses and to promote innovation with cutting-edge technologies. The Group is also building platforms for concerted efforts as a united “One NTT.” For example,
operations are being integrated into the global operating company, NTT Ltd.
and its structures are being reformed to grow sales through the supply ofhigh-value-added, high-margin services. Specifically, we are promoting salesof remote solutions in preparation for the period after the global COVID-19
pandemic and strengthening our hybrid cloud-related capabilities throughpartnership with Microsoft Corporation.

Mar. 31, 2022 Within FY2023

COLUMN
Major 5G Initiatives in Fiscal 2020u Development of the world’s first real-time live video distribution cloud system compatible with 360-degree 8K virtual reality,

8K wide, and multi-angle viewing to provide new video viewing experiences for the 5G era (February 2020)u Announcement of launch of 22 solutions as a co-creative initiative through the DOCOMO 5G Open Partner Program- Commencement of provision of comprehensive manufacturing equipment analysis solution for supporting productivity
improvements and automation in equipment failure prediction and image inspection (June 2020)- Launch of remote work support solution offering real-time support to workplaces from offices via augmented reality
smart glass (July 2020)
u Release of a new function for 5G-compatible smartphones that allows multiple channels to be viewed at once through the

TV services of NTT DOCOMO (June 2020)u Japan’s first virtual communication experience event using 5G technologies and Magic Leap 1 wearable devices held atspecial event site in front of Takanawa Gateway Station (July 2020)u Start of verification test of Japan’s first commercial 5G-powered system for supporting remote surgeries performed by

specialists while viewing high-definition video of surgeries (July 2020)

COLUMNDOCOMO Open Innovation Cloud TM

22

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Launched low-latency cloud services
Internet
NTT
DOCOMO’s
network
Base stations
Services andsolutionsTokyo

Kanagawa

Osaka

KyushuNTT formed a multi-year strategic alliance with Microsoft Corporation of the United States in December 2019 for providing secure, highly
reliable solutions for promoting the digital transformations of customers. Through this alliance, the companies will collaborate in the development of global digital fabrics as well as digital corporate solutions to be offered via Microsoft Azure. They will also pursue the co-creation of
next-generation technologies for the all-photonic network and digital twin computing fields. In these efforts, we will combine NTT’s top-class
ICT infrastructure, managed services, and specialized cybersecurity insight with Microsoft’s highly reliable cloud platforms and AI technologies.

Global Deployment of Smart City Technologies
In May 2020, NTT entered into alliances with the City of Austin, Texas in the United States, and the University of California, Berkeley targetingthe commercial introduction of solutions powered by smart city technologies.
The City of Austin previously faced frequent traffic congestion and traffic accidents at numerous intersections within the city. Theseissues proved difficult to resolve due to a lack of traffic information from the sites. Meanwhile, the University of California, Berkeley has experienced irregular spikes in campus traffic, causing issues such as traffic congestion and illegal parking, but lacked the road and roadside congestion information needed to address these issues. NTT Group hopes to identify the root causes of these social issues and formulate
solutions by utilizing the smart city technologies currently being provided in Las Vegas.
In this undertaking, we will leverage the data
analysis platforms of NTT Group together withthe edge micro data centers, high-definition
cameras, and IoT devices of Dell Technologies
Inc. to track traffic conditions in the downtown
area of Austin and on the campus of the
University of California, Berkeley.
Going forward, NTT Group will provide
solutions powered by its smart city technologies to improve traffic safety in the City ofAustin and to help develop a connected
campus scheme for the University of California,
Berkeley.

Distributed deployment nationwide

DOCOMO Open Innovation CloudTM is an MEC cloud service boasting
the low latency and high security expected in the 5G era. This service
is made possible by installing cloud platforms in the equipment
comprising NTT DOCOMO’s network, which allows for the use ofvirtual machine instances and virtual networks.
In May 2020, we began supplying the DOCOMO Image Recognition
Platform for use with image recognition solutions as well as facialrecognition-based entry management solutions through DOCOMOOpen Innovation CloudTM. Both of these offerings are powered by AI
technologies. We have also been expanding our network of bases for
supplying DOCOMO Open Innovation CloudTM. Furthermore, the Cloud
Direct service was launched in June 2020 as an open service fordelivering low latency and high security.

Strategic Alliance with Microsoft for Realizing New Digital Solutions

ANNUAL REPORT 202023

Medium-Term Management Strategy

Research and Development
NTT Group aims to contribute to the resolution of social issues by helping drive the shift from electronics to photonics.

IOWN
NTT R&D is envisaging the arrival of new smart societies that are not yet possible with today’s internet, with features such as mobility as a service (MaaS) for extreme failsafe systems and entertainment services offering deep immersion. To realize such smart
societies, we will require innovation that cannot be achieved merely by extending the trajectory of current technologies; we will needto realize ultralow power consumption, high-speed signal processing, and the fusion of virtual worlds that can equal or surpass
reality with sophisticated prediction technologies. NTT Group has proposed the “Innovative Optical and Wireless Network” (IOWN)
concept to realize new smart societies, and we are making a committed effort to realize this concept.
What’s IOWN?

Ctrl

Cloud

CY2020

Ctrl

1

Edge

Ctrl

End-to-End coordination of ICT resources
Network serviceAPI

NTT has released a concrete technology roadmap for the development of its “Innovative Optical and Wireless Network” (IOWN)
concept, and research and development are moving forward based on this roadmap. Starting in 2021, NTT will establish reference
models for key IOWN constitute technologies, promote these to the IOWN Global Forum, accelerate examinations, and develop specifications. Specifically, four technological directions have been defined in the IOWN Global Forum whitepaper—full-stack communication acceleration; data-centric communication and computing; computing scaling across device, edge, and center cloud; andsustainable growth with energy efficiency. R&D projects are being advanced in accordance with these themes.

Digital Twin Computing

API
Provider A

Provider B

API

Device Agent

Ctrl

Full-Stack
Communication
Acceleration

PublicPrivateTechnical work

Processor using
Photonics-Electronics
Convergence Technologies

Low power
consumption

Large capacity,
high quality

Low Latency

100 times electrical efficiency*

Transmission capacity

End-to-end latency

125 times●

Transmission
medium

Optical fiber cable

Transmission
equipment

Light (wavelength)
passes throughInformation
Opto-electronic
processing base elements

Various information communication
services are provided using 1/100th ofpower consumption.
* Target electrical efficiency for portion
where photonic technologies are applied

1/200*

Wavelength (optical signal)

Independent

Light

Light

Light/
Light
Wavelength

Transmit by wavelength● No waiting processing necessary● No data compression necessary
●

Light
A
B
C
D

Wavelength A

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

4

1

2

3

4

1

2

3

CY2023
4

2

3

4

1

Release 1
Technical Specifications

Release 1
Architecture

2

3

CY2025
4

1

2

3

4

Release 2
Technical Specifications

Release 2
Architecture
Reference model for
non-IP based  Layer 4 /Layer 3 acceleration

Specifications
development

Concept and Reference model for massive opticaland wireless capacity

Data-CentricCommunication
and Computing

Reference model of“data-hub” for low latency dataexchange and sharing

Specifications
development

Computing Scalingacross Device,
Edge, and Center
Cloud

Reference model forhigh-speed distributed
computing acrossdata centers

Specifications
development

Sustainable Growthwith Energy
Efficiency

1

CY2024

Basic concepts and reference models of photonic disaggregatedcomputing for significant energy efficiency

Specifications
development

Capacity expansion
for disaggregatedcomputingSpecification
development -1• Data transmission line specs• Module Controller I/F• Orchestrator Plugin I/FSpecification
development -2• Security management
system
• QoS management system• Operational
improvement, etc.

Large-volume movie(uncompressed)
No latency

Optical fiber

1000 [Tbps/fiber]

3

CY2022

Ctrl

Provider C

All-Photonics Network

Ctrl

2

CY2021IOWN GF
Whitepaper Roadmap

API

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONAPI

Multi-orchestrator

24

Cognitive
Foundation®

Agile allocation of ICT resources
Optimization of structure

IOWN is a concept for realizing
new smart societies that are not
yet possible with today’s internet.
IOWN comprises three maintechnology components: “allphotonics network” that uses
optical processing on not only
networks but also device processing; “digital twin computing”
that enables high-speed, realtime interaction between thingsand people in cyberspace; andCognitive Foundation®, in whichthese and various other ICT
resources are efficiently
managed.
The all-photonics network
incorporates new optical technologies at every level, fromnetworks to devices, and eveninside chips, to enable ultralow
power consumption, ultrahighspeed processing that has notbeen possible until now.
By allocating different wavelengths to different functions ina single optical fiber, it becomes
possible to provide multiple functions that support social infrastructure without mutualinterference, including information communication functions
such as internet and sensing
functions.

NTT Group aims to solve social issues by aiding the shift from electronics into the world of photonics.
Digital twin computing is a significant advance in existing digital twin technology. By performing calculations such as conversions,combinations, and replications for various digital twins representing things and people in the real world, and having those digital
twins interact, this new paradigm allows for free interactions between people and things to be recreated and tested. This can beused to build virtual societies at a level of precision that has never been achieved before, enabling us to run predictions and testingon large-scale, highly accurate futures, and to provide high-level communications offering new value. The technology is expected tosolve various social problems around the world and lead to the creation of innovative new services.
IOWN is set to change our world in new and exciting ways.

Wavelength B

Sound

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

IOWN Global Forum, Inc., which was established together with Intel Corporation of the United States and Sony Corporation ofJapan in January 2020, released a white paper describing four technological directions in April 2020. We have since commenced
technological evaluations of these directions. As of September 10, 2020, the IOWN Global Forum, which is operated by IOWN Global
Forum, Inc., had 29 member companies, including its three founders and 26 other companies from Japan and overseas. The firstmeeting of members of this forum was held in the form of an online conference in September. This meeting served as an opportunity for member companies from around the world to engage with each otherand discuss use cases and technologies in working groups.
Going forward, NTT will continue to work with partners from various industries and regions with the aim of quickly making the IOWN concept a reality.

ANNUAL REPORT 202025

Medium-Term Management Strategy

Research and Development for Realizing the IOWN Concept
4D Digital Platform™ Integrates Various Sensing Data in Real-Time and Enabling Future Predictions
In recent years, the remarkable advancement in IT technology enables the collection of large volume of IoT data and their analysis.
Accordingly, the government of Japan as well as various companies are moving ahead with research and development for creating systems that merge cyber and physical spaces in a sophisticated manner, as advocated in the government’s Society 5.0 vision.
However, in the linkage of sets of statistical data or the matching of misaligned position and time data, there are cases in which theaccuracy of future predictions cannot be heightened.
Our proposed 4D digital platform would resolve this by making it possible to precisely integrate position and time informationfrom sensing data while also providing latitude, longitude, height and time data useful in future predictions.
By applying this platform to various industries, we could contribute to the resolution of social issues and the creation of value.
The 4D digital platform™ integrates sensing data with highly precise position and time information in real-time into the Advanced
Geospatial Information Database, jointly developed with ZENRIN Co., Ltd. to perform high-speed analyses and the construction of
future prediction.
(1) D evelopment of the Advanced Geospatial
Conceptual Diagram of 4D Digital Platform
Information Database as a control point for
Cross-industry platform for precise sensing data integration
sensing data
and future prediction(2) R eal-time sensing data collection with highly
accurate position and time information
For various industries (3) High speed processing of large-volume(3) High-speed processing of large-volume datadata, and futureand future predictions with various
prediction withvarious simulations
simulations
4D
digitalplatform
By combining with various IoT data and industry
platforms, it can offer various values such as
Semi-static
Semi-static
Real timeincreasing smoothness of road traffic flow, improving ease of use of urban assets, and enabling coopAdvanced Geospatial
erative maintenance of social infrastructures.
Information Database(2) Real-time sensing datacollection with highly
As a cross-industry platform supporting people’s
accurate position and(1) D evelopment of Advanced Geospatial
time information
lives, and as the one of the key elements of Digital
Information Database as a control
point
for
4D
digitalplatform
Twin Computing, a part of NTT’s IOWN initiative, we
intend to leverage NTT R&D and NTT Group techHigh-precision
Existing map data
Sensing data
3D spatial information
nologies and assets toward sequential commercialRich
MMS
Mobility
Environmental
ization beginning in FY2021, with future expansion
2D mapsemantic(Mobile Mapping System)
sensingsensing
information
through ongoing R&D efforts.
Demonstration of All-Optical Switching toward Photonic Integrated Circuits for Ultrafast Information Processing

Experimental Demonstration of Ultra-High Precision Optical Frequency Transfer via 240-km-Long Telecommunications Fiber
NTT, the University of Tokyo, RIKEN and NTT East have demonstrated experiments of ultra-high precision optical frequency transfer
among multiple offices using a commercial optical fiber network over 200 km. This result shows that the optical frequency of opticallattice clock, which is one of the most accurate atomic clocks in the world invented by Professor Hidetoshi Katori of the University ofTokyo, can be distributed in the range of 200 km.
The technical point of this result is an optical frequency repeater that incorporates a quartz-based planar lightwave circuit (PLC).
The optical frequency transmitted through the fiber suffers various noises due to temperature changes and vibrations. The repeater
reproduces the received light and sends a part of the light to the previous office, where the returned light is used to detect and compensate the fiber noise. We have developed ultra-low noise optical interferometers manufactured on a small PLC chip, which canrealize fiber transmission with minimal deterioration. In the future, we are planning to develop a new infrastructure such as "elevationdifference measurement using relativistic effect (relativistic geodesy)" using the ultra-high accuracy of optical lattice clocks.
Long-Distance Transmission of 1 Tbit/s Ultra-High-Capacity Optical Signal
NTT and NTT Communications have successfully demonstrated long-distance transmission of a 1 Tbit/s optical signal in a commercial environment. A 1 Tbit/s optical signal using a wavelength division multiplexed technique was successfully transmitted over aworld-record breaking distance of 1,122 km. This was achieved using a new large-core low-loss optical fiber cable deployed in NTT
Communications’ commercial environment, which reduces optical losses and non-linearity, and original NTT technologies including:(1) a precise calibration technology that compensates for imperfections in the optical transponder and enables high-quality multiorder modulation optical signals to be transmitted and received, (2) an optical transponder integrating a digital signal processor that
implements the latest digital coherent technology, and high-bandwidth optical front-end circuits, and (3) transmission line design
technology.
This result should lead to transmission speeds 10 times that of systems currently in use (100 Gbit/s per channel) and an 80% or
greater reduction of power consumption per bit. As such, it is anticipated as a high-capacity communications network technology forthe expansion of 5G services and realizing the IOWN concept in the future.

Building A
Opticaltransponder

Optical amp.

Deployed
optical fiber

Building B
Opticalconnectors

1 Tbit/s optical signal(500 Gbit/s × 2)

OpticalMUX /DEMUXWavelength(λ)

1,122km

NTT and the Tokyo Institute of Technology have developed an ultrafast all-optical switching operation with the lowest energy consumption ever reported for all-optical switching at less than one picosecond (one trillionth of a second). Previously, it was reported
that all-optical switches would have difficulty operating at such a high speed with low energy consumption. The current achievement
combines an ultrasmall optical waveguide with a height and width of a few dozen nanometers called a plasmonic waveguide, withgraphene, a material that shows great promise for nonlinear optics. Such ultrahigh switching speed cannot be achieved by electricalcontrol. It is expected that this switch will be used in future photonic integrated circuits for ultrafast information processing. In addition, this development shows a promising possibility for applications of plasmonics.

26

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202027

Medium-Term Management Strategy

In-Orbit Verification of Low-Orbit Satellite MIMO Technologies

Initiatives for Realizing a Society Characterized by Remote Interactions
Highly Immersive 12K Wide Live Viewing of MLB Games Using Ultra Reality Viewing Technologies
NTT has concluded a multi-year partnership contract withMajor League Baseball (MLB). Through this partnership, we arepromoting the use of NTT’s cutting-edge technologies forrealizing next-generation baseball viewing experiences as asmart sports initiative. In October 2019, MLB and NTT conducted a verification test that used NTT’s Ultra Reality Viewing
technology for viewing of MLB postseason games. This was
the first successful instance of highly immersive live viewing
through synthesis and transmission of 12K wide video in the
United States.

Real-time transmission of the game from Tropicana Field in Tampa Bay to MLB Studios in
New Jersey

Verification of Network Technologies for Realizing Fully Autonomous Agricultural Equipment via Remote Monitoring throughCollaboration with Hokkaido University and Iwamizawa CityIn May 2020, a joint experiment agreement was formed between Hokkaido University, Iwamizawa City, SmartLinkHOKKAIDO Inc.,
NTT, NTT East, and NTT DOCOMO in relation to joint experiments for realizing smart agri-cities centered on smart agricultural equipment. Under this agreement, we will advance verification tests on technologies for predicting fluctuations in connection quality andautomatically adjusting the network to which autonomous agricultural equipment is connected accordingly. Goals of this undertaking includes reducing the labor requirements of agricultural work by allowing agricultural machinery to be operated in an unmanned
manner and helping address global food shortages.
Joint Experiment Fields
1
2
3

High-Precision Positioning
Technology
Next-Generation Network
Technology
AI Platforms

Technologies will be developed to allow for high-precision positioning even in areas in which satellite transmissions cannot
be received directly due to reasons such as signals being reflected.
Exceptionally safe, autonomous operation of agricultural equipment will be pursued through the development of technologies for predicting the quality of connections to multiple networks and automatically changing networks accordingly.
AI analyzes field sensors, weather information, and agricultural machinery operation information, and an AI platform automatically schedules agricultural work and makes it possible to create an optimal agricultural work plan.

Joint Research for Advancing World’s First Unmanned Ship Verification Test
NTT has concluded a joint research contract with MTI Co., Ltd., a research subsidiary of
Nippon Yusen Kabushiki Kaisha, for the advancement of the Designing the Future of Full
Autonomous Ship Project,* the world’s first verification test of unmanned ships incrowded areas of the ocean. Under this agreement, MTI will design the system concept
necessary for unmanned ships and develop and explore the related technologies.
Meanwhile, NTT will look into the application of its IOWN concept. In this manner, thestrengths of both companies will be utilized to complete a successful verification test by thefiscal year ending March 31, 2022, to demonstrate the future potential of unmanned ships.
Major Project Milestones
2019

2025
●

Developmentof system
essential
technologies
for automaticnavigation●

Verification of unmanned
ship operation (existing
domestic vessels)Prototype designand construction
planning● xamination of practicalE
implementation policies

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

2035

10%
●

●

Enhancedmaritime industry
competitiveness

Trial use pread of new use casesSand utilization

Platform and rule development

 ll newly built domestic vesselsA
unmanned ships
 0% of domestic vessels
5
unmanned ships

50%

Distribution
innovation and social
issue resolution
●

2040
●

 xpansion of application toEexisting domestic vessels

 pplication of certainAessential technologies
to large-scale vessels●

28* A verification test project advocated by the Nippon
Foundation as part of its MEGURI2040 unmanned
ship project

30%
●

●

2030

 equential application ofS
unmanned ship specifications to newly built ships

Alliance with IntelNTT has concluded a joint research contract Intel Corporation, set to conclude in April 2023. The resulting alliance is aimed at theco-creation of technologies for the IOWN. Through this alliance, NTT and Intel will conduct research for advancing the development oftechnologies that can meet the massive increases in data processing capacity necessary for realizing a smart connected society.
Joint Research Fields
1

Photonics / Photoelectric
Merging Technology

2High-Speed Decentralized
Computing

3

Open Frameworks

Development of new computing platforms using photoelectric merging technology will be pursued to expand the application of optical technologies out from the conventional long-distance signal transmission applications and introduce thesetechnologies into the signal processing components of processor chips coordinated with electronic circuits.
Computing infrastructure will be developed to fully utilize future high-capacity, low-latency communications infrastructure;link ground, edge, and cloud systems; and efficiently process the massive amounts of real-time data received from thephysical world.
An open software framework will be developed to use AI computing devices, which are growing ever more diverse andevolving at an accelerated pace, through the aforementioned high-speed decentralized computing infrastructure.

Cooperation with the ITER Organization

Portion of domestic maritime transport
performed by unmanned ships

2022

In May 2020, NTT submitted a technology verification
Satellite blind beam
Low-orbit satellite
proposal in response to the No. 3 open application bid bylimitation technology
Japan Aerospace Exploration Agency (JAXA) for verificaSatellite
Low-orbit
Satellite MIMO
tion of revolutionary satellite technologies. This proposal,
communication
satellite MIMO
transmission
waveform
pickupSatellite MIMO
technology
which was adopted, was for the realization of communicommunication
modelling
Satellite sensing
High-volume
cations with speeds exceeding 20 Gbps between low(communication
technology
waveform data
volumeestimation)
orbit satellites and ground facilities and ultrawide range
transmission
technology
IoT data collection. Based on this theme, NTT will conduct verification tests on the world’s first low-orbit satelGround base station
lite multiple input, multiple output (MIMO) technology
Method Method
etc.
AB
and on satellite sensing technologies. Our future plans
Time-frequency
On-ground IoT terminal
asynchronous MIMO
include launching miniature verification-use satellites in(ARIB STD-T10 or other standard)
inference prevention
technology
the fiscal year ending March 31, 2023, and exploring andMulti-protocol
batch receipt
verifying essential technologies and designing and develtechnology
oping satellite equipment for technology verification
In-Orbit Verification Test Scheme
tests leading up to the fiscal year ending March 31, 2024.
In addition, we will seek to realize high-capacity communications (with speeds exceeding 20 Gbps) between low-orbit satellites and ground facilities and develop low-cost sensing technologies for use in areas across the world, including those without on-ground communications networks.

Creation of
new industries

Economic benefits
More than¥1.0 trillion

In May 2020, NTT concluded a comprehensive cooperation agreementwith the ITER International Fusion Energy Organization (ITER
Organization), which is working to be the first in the world to verify theeffectiveness of fusion energy. NTT is promoting innovation throughresearch and development and the reduction of environmental impacts
through its business activities with the goal of lowering its environmental
footprint to zero. As one facet of these activities, we are contributing to
the plans of the ITER Organization with our IOWN and other advanced
R&D projects as well as our global infrastructure development capabilities.
Specifically, we look to offer technical support for information distribution and control platforms. These platforms will be utilized for ultrahighspeed, ultralow-latency connections between the fusion reactor andcontrol centers through all-photonic networks that use photonic (light)based technologies for everything from networks to terminals. Anotherapplication of the platforms will be fusion reactor control simulations,using digital twin computing for projecting future trends by comparing thephysical world with digital models.

ITER Tokamak Machine and Plant

ITER construction site in Provence in the south of France

ANNUAL REPORT 202029

Medium-Term Management Strategy

Alliance with NEC for Joint Research and Development and Global Rollout of ICT Products Utilizing Innovative Opticaland Wireless Technologies
NTT and NEC Corporation formed a capital and business alliance in June 2020 for the purpose of joint research and development andthe global rollout of ICT products utilizing innovative optical and wireless technologies. The companies aim to improve their corporate
value by expanding sales of products applying jointly developed technologies. In addition, through these initiatives, the companies
will contribute to the enhancement of the industrial competitiveness of Japan and to the improvement of the safety and reliability ofcommunications infrastructure, playing leading roles in working with numerous communications equipment vendors.
To promote open architectures such as O-RAN and to give form to the IOWN concept, NTT and NEC will set up a research anddevelopment structure and focus their efforts on the following objectives.
● 
By developing and utilizing cutting-edge technologies, the companies will develop and sell globally a compact digital signal processing circuit—featuring both world-leading performance and low power consumption as well as quality that meets market needs
and greater convenience from the customer point of view—plus optical information communications equipment incorporating this
digital signal processing circuit.
● 
Working with global operators and communications equipment vendors, the companies will promote O-RAN Alliance specifications
while developing and selling globally competitive products compliant with such O-RAN specifications. In the future, the companies
aim to attain top global market shares under NEC’s leadership. Moreover, the companies’ development efforts will be aimed atrealizing ultrahigh-speed processing, ultralow latency, and ultralow power consumption in these products at a level that has neverbeen attained before, by applying innovative devices utilizing optical and wireless technologies to base station equipment.
● 
The companies will develop innovative technologies and optical and wireless devices contributing to the realization of NTT’s IOWN
concept. As part of the development project, the companies will seek to enable greater-capacity, higher-functionality, and lowercosting submarine cable systems; high-capacity, low-latency, and automatic and autonomous space communication; and moresophisticated technologies to ensure infrastructure network security.
Establishment of Space Environment and Energy Laboratories
The Space Environment and Energy Laboratories is a research facility established in July 2020 with the purpose of developing innovative technologies to help regenerate the global environment and realize a sustainable and inclusive society. This facility is the firstNTT laboratory to have the word “space” in its name. Despite this name, however, the Space Environment and Energy Laboratories
will not research space itself; rather, it will reevaluate the sun and other aspects of the space environment from earth to researchmeans of regenerating the global environment and adapting to this environment from a dynamic perspective.
In the field of next-generation energy, the Space Environment and Energy Laboratories will research nuclear fusion together with
the ITER Organization as well as space photovoltaic power generation. Meanwhile, the facility will target the creation of energy systems that improve environmental value through local consumption and production of energy in the field of energy control technologies
that optimize energy distribution. As the first step of these efforts, we aim to complete development of a resilient electricity supply
system based on direct current microgrid utilization within the fiscal year ending March 31, 2023. In addition, the Space Environment
and Energy Laboratories is advancing a project in the field of CO2 conversion technologies, which entail absorption and fixation of
CO2 in the atmosphere. This project has the goal of commencing a verification test on technologies for improving the efficiency of
the artificial photosynthesis technologies developed by NTT in the fiscal year ending March 31, 2023. This facility is also engaged in
R&D projects in the field of environmental adaptation technology, which is used to respond to sudden natural disasters. Specifically,
the Space Environment and Energy Laboratories is working to develop a system that uses drones and other aerial equipment to
attract lightening to prevent lightening damage to communications equipment and other social infrastructure. The goal is to start averification test in the fiscal year ending March 31, 2023.
In this manner, the Space Environment and Energy Laboratories is a research facility with a penchant for tackling ambitious
research themes that have never before been imagined. Going forward, this facility will proactively collaborate with external researchand other institutions through means such as joint research in a diverse range of fields.

New Business and Regional Revitalization Initiatives
New Business Initiatives
Urban Solutions Business
NTT Urban Solutions, Inc. is the sole developer of NTT Group’s real estate business. The company utilizes NTT Group’s telephoneexchanges and other real estate while laterally drawing on the Group’s real estate- and energy-related personnel and technologies.
Moreover, the Group makes maximum use of its assets in a concerted effort to advance collaborative urban development projects
with companies and municipal authorities. Through these initiatives, we aim to grow the sales of the urban solutions business to ¥600
billion by the fiscal year ending March 31, 2026. Urban development projects in Japan are targeting the resolution of local issues
across the country in areas such as Sendai and Fukuoka. Overseas, we are developing the River Valley Project housing sales projectin Melbourne, Australia as well as a housing development project in Dallas, Texas in the United States. Having generated operating
revenues of ¥426.0 billion in the fiscal year ended March 31, 2020, we are making smooth progress toward the aforementioned target.
Smart Energy Business
NTT Anode Energy Corporation, NTT Group’s energy business operating company, announced its medium-term vision in November
2019. Guided by this vision, the company will seek to contribute to the realization of a sustainable society through the creation of
new energy distribution frameworks that complement existing alternating current networks. These frameworks will be designed toaddress social issues pertaining to the environment and energy, such as global warming and the need to secure emergency powersources in preparation for large-scale natural disasters. Specifically, NTT Anode Energy will develop five businesses, including green
power generation and backup power businesses, in the three fields of power generation; power transmission, distribution, and storage; and power retail and wholesale. Through these businesses, we will provide new value, such as improved energy efficiency andenhanced disaster resiliency in relation to coping with such eventualities as power blackouts during disasters.
NTT Group aims to double operating revenues from its energy-related businesses to ¥600.0 billion by the fiscal year ending
March 31, 2026. This target will be pursued via smart energy business initiatives advanced through investment in NTT Group as wellas through capital and business alliances with and investments in wide-ranging business partners. Operating revenues in the fiscal
year ended March 31, 2019 were ¥257.0 billion, and we are making progress toward achieving the target.

Regional Revitalization
Agricultural Field
In July 2019, NTT Group established NTT AgriTechnology Corporation, the Group’s
first company devoted to combining agriculture and ICT. This company was created with the aim to contributing to local communities and economic invigoration
through next-generation facility horticulture. To accomplish this objective, NTT
AgriTechnology will produce agricultural products at its own farm using IoT and AI
technologies while accumulating know-how and improving the quality of its solutions. Future endeavors by this company will include utilizing cutting-edge technologies to seek out new value and possibilities in the agricultural field in a quest
to invigorate local economies and contribute to urban development.
E-Sports Field
NTTe-Sports, Inc. was established in January 2020 with the goals of promoting
community building and making contributions to society and to economic invigoration through e-sports. This company develops a wide range of businesses
founded on its reliable, high-quality communications networks and state-of-the-art
ICT. Examples of these businesses include e-sports facility operation, support andeducation, platform provision, event solutions, and regional revitalization consulting. NTTe-Sports will continue its efforts to combine ICT with e-sports going
forward as it seeks to create new experiences and connections along with newcultures and societies.

30

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202031

Initiatives Aimed at Promoting ESG Management

NTT Group promotes environmental, social, and governance (ESG) management to address ESG-related issues appropriately.
In doing so, we reduce downside risks while expanding upside potential and driving sustainable increases in corporate value.
Thinking of our influence on society and the maintenance of our management base, we have identified five material issues andset numerical targets for each of them to guide our initiatives.

Relevant
Management
Resources

E
S
G

Relevant
Sustainable
Development Goals

Status of Initiatives for the
Medium-Term Management Strategy

Material Issues

Reduction ofEnvironmental Impact●●

Reduce environmental impact

Major Initiatives●

 everage ICT to contribute to theLenvironment

 romotion of zero environmental impactP- Promoting business activities that reduce environmental impact- Pushing the limits to create new innovation●

Improvement of electricity efficiency●

Promotion of e-mobility●

Promotion of smart energy businessSocial●Increase the proportion of our renewable energy use to

30% or higher (by FY2030)●

Electricity efficiency of telecommunications business

10 times or more (by FY2030)*●

Environment

Commendation by
Outside Parties

Targets

Conversion rate of general Company-use vehicles
in Japan to EVs 100% (by 2030)●

Contribution to reduction of CO2 emissions of society

10 times the Company’s own CO emissions or more
2(by FY2030)●

Final disposal ratio of waste
Under 1% (by FY2030)

Strengthening of
Security

R&D Capabilities●●

Human Resources

Protect personal information
 upport customers in reinforcing
S
information security●

Maintenance of security promotion systems●

Promotion of security business●

Securing of stability and reliability of communication services●

Number of incidents ofpersonal information leaks: 0

Brand ImageICT Infrastructure
Financial Base
Customer BaseStrengtheningof Disaster
Countermeasures
Utilization of Diverse
Human Resources

Reinforcement ofGovernance for
Sustainable Growth●

Strengthen disaster countermeasures

●

●

●

●

●

Promote diversity

 nhance structure on the basis ofE
the intent of Japan’s Corporate
Governance Code● nvironment that encourages a shift in work styles
E
centered on remote work●

Empowerment of women in the workforce●

Promotion of global diversity●

Initiatives for employing people with disabilities●

Respect for human rights in the supply chain●

Revision of compensation system for research personnel●

Further strengthening governance●Evaluation of Board of Directors’ effectiveness

●

●

●

Stable service provision rate: 99.99%
Number of major accidents: 0
Ratio of female managers: More than 10% (by FY2025)
Ratio of persons with disabilities: 2.2%
Employee satisfaction:

Higher than in the previous fiscal year

 trengthen global corporate
Sgovernance

Governance* Compared with the fiscal year ended March 31, 2014
Note: Underlined numerical targets relate to the standards set out by the U.S. Sustainability Accounting Standards Board (SASB).

Reduction of downside risks
Expansion of upside potential
32

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Ongoing improvementsof corporate value
ANNUAL REPORT 202033

Initiatives Aimed at Promoting ESG Management

Material ESG Issue 1 Reduction of Environmental Impact
NTT Group has formulated its new Environmental and Energy Vision, which targets zero environmental impact, to clearly indicate
its enhanced initiatives aimed at reducing its environmental impact. In addition to its own initiatives to reduce environmental
impact, NTT aims to reduce the environmental impact of customers, companies, and society through its provision of green ICT
services and social infrastructure.
In addition, in May 2020, NTT endorsed TCFD. We will continue to carry out disclosure of environmental information, withemphasis on our efforts to eliminate our burden on the environment.

Formulation of the Environment and Energy Vision 
In May 2020, NTT Group unveiled its Environment and Energy Vision, which targets zero environmental impact. The vision comprises
four pillars: the promotion of renewable energy, reduction of societal environmental load through ICT, development of innovativeenvironment and energy technologies, and realization of extremely low power consumption. By promoting business activities that
reduce environmental impact and pushing the limits to create new innovation through R&D, we will help reduce the environmental
impact of our customers, companies, and society as a whole.

Environment and Energy Vision: Zero Environmental Impact

Contribute to the reduction of the environmental impact of customers, companies, and societyInternal Factors

Social Demandu Large amount of electric power required foru Climate change caused by global warming, resource depletion associated with

operation of telecommunications equipment,
etc., accounting for close to 1% of Japan’scommercial electric power consumptionu Procurement of many products and materials

required for global business operations
Since global business operations use a large
amount of energy and natural resources, they
incur a significant cost and have a major
effect on the Company’s environmental load.

Various partners

global population increase and economic development, loss of biodiversity throughglobal environmental changes
Corporations are required to use energy efficiently, use resources effectively, andco-exist with nature. For the communications industry in particular, there is an
expectation to promote services that will replace resource use, as well as ademand to make use of smart energy solutions.

Operating companies’ initiatives

R&D initiatives

Promoting business activities that reduce
environmental impact

Pushing the limits to create new innovation

I. Promotion of renewable energy

III. Development of innovative environment andenergy technologiesu Aim to increase the proportion of our renewable energy use to

30% or higher by the year ending March 31, 2031

Relevant Laws, Regulations, and Global Trendsu First private Japanese company to have a Long Termu Participate in climate change initiatives (SBT*1), supportu Transition to a carbon-free society with the adoption of the Paris Agreement by

u Establish the Space Environment and Energy Laboratories

TCFD*2, and issue green bonds

Non-Commercial Cooperation Agreement with the ITER
Organization*4

COP21 and the Paris Agreement Implementation Guidelines by COP24, etc.
u Transition to a recycling-based society with the establishment of plastic resource

recycling strategies, etc.

II. Reduction of societal environmental load through ICT
u Promotion of teleworking

IV. Realization of extremely low power consumption(IOWN initiative)u Signed collaboration agreement with Intel Corporationu Develop “Connected Value Chains”(digitization of transactions, etc.)

Business Risks
Arising from
Materiality Factors

u Increase in costs due to rise in electricity prices and regulatory tightening around greenhouse gas emission

Business
Opportunities Arisingfrom Materiality
Factorsu Expansion of smart energy businessu Increase in maintenance cost for telecommunications equipment and data centers due to temperature riseu Increase in expenses stemming from high resource prices

u Reduction of the use of plastic, promotion of recyclingu Promotion of thermal insulation / power generation glass

using photovoltaic technology*3*1 Science-based targets (applying the WB target of 2°C)
*2 Task Force on Climate-related Financial Disclosures*3 Signed exclusive sales contract with inQs
*4 The ITER International Fusion Energy Organization

Initiatives for the Promotion of Renewable Energy u Expansion of business continuity solutions business using ICT

NTT Group endeavors to develop renewable energy resources itself, promote its own use of this energy, and provide it to othercompanies.
Promoting the development of renewable energy sources

Targets

We aim to secure renewable energy sources worth 4.5 million kilowatts by the year ending March 31, 2026. As well as investing itself,
NTT Group will enter alliances with a wide range of business partners, promoting efficient investment. In addition to large-scale
sources of electricity, such as solar and wind power, we plan to acquire smaller sources of electricity, such as biomass and geothermal generating facilities.

u Increase the proportion of our renewable energy use to 30% or higher
u Increase power efficiency of the telecommunications business by at least 10 times
u Convert 100% of fleet of general Company-use vehicles to electric vehicles
u Contribute to reducing the CO2 emissions of society by at least 10 times more than the Company’s own

emissions

Examples of specific initiativesu Final disposal rate for waste of 1% or loweru Collaboration with Mitsubishi Corporation on businesses related to renewable energy and storage batteries (June 2020)u Capital alliance with Furusato Netsuden Co., Ltd. (headquarters: Oguni-cho, Aso-gun, Kumamoto Prefecture) in the geothermal power business(July 2020)u Capital and business alliance with Forest Energy Inc. (headquarters: Shinagawa-ku, Tokyo) in the biomass power generation business (August 2020)
u Expansion in the wind power business (September 2020)

We disclose important information related to governance, strategy, risk
management, and indicators and targets, as recommended by the Task
Force on Climate-related Financial Disclosures (TCFD). The relevant
items of information are marked with the TCFD symbol for confirmation.

34

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONTCFDGovernance /Risk management

TCFD

Strategy

TCFD

Indicatorsand targets

Promoting our own use of renewable energy
We are engaging in a variety of initiatives to raise our ratio of renewable energy use to 30% or more by the fiscal year ending March
31, 2031. To meet this target, NTT Group will develop renewable energy sources itself and promote the shift to renewable energy inJapan at office buildings, telecommunications buildings, data centers, and research laboratories.

ANNUAL REPORT 2020

35

Initiatives Aimed at Promoting ESG Management

TCFD

Indicatorsand targets

TCFD

Strategy

Goals for the Reduction of Environmental Impact 

In addition to reducing environmental impact through its business activities, NTT Group prioritizes the reduction of environmental
impact within society through the use of ICT. Based on our analysis of materiality issues related to environmental problems, we have
set targets for environmental activities to undertake by the fiscal year ending March 31, 2031, and we are working to reduce environmental impact accordingly.

Reduceenvironmental
impact of business
operations

Quantitative Indicators

KPIs

Goal Achievement
Time

2017

2018

2019

Working to increase our usage of renewableenergy by developing green power sources
and using our own green power

Our own ratio ofrenewable energy use

More than 30.0%

FY2030——

7.9%

At least 10 times higher
than in FY2013

FY2030

3.6
times

4.5
times

5.4
times

At least 2 times higher
than in FY2017

2025

—

1.2
times

1.5
times

Improve power efficiency to reduce theenvironmental impact of business operations

Power efficiency ofcommunications services(Power efficiency per unitof communications
volume)Electric vehicles as apercentage of generalvehicles in Japan

100%
50%

Use ICT to contributeto the environment

While reducing CO2 emissions of theCompany, contribute to the reduction of
CO2 emissions of all society, including value
chains, through the utilization of ICT

Amount of contribution
to the reduction of CO2
emissions of all society

At least 10 times
the Company’s
emissions

FY2030

10.1
times

10.8
times

12.5
times

Effectively use
resources

Control the final disposal ratio of waste andwork toward the effective use of resources

Final disposal ratio ofwaste

Zero emissions(under 1%)

FY2030

1.18%

0.91%

1.17%

2030
2025

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

Results (FY)

Goals

—

0.34%

Impact of Climate Change on Businesses 

Potential Risks
The risk of an increase in costs due to changes in statutory laws and regulations, such as rises in power prices resulting from thefeed-in tariff scheme for renewable energy (FIT) and environmental tax, is actualizing. The FIT tax burden is increasing with eachpassing year. In addition, there is a risk that such natural disasters as torrential rain or typhoons could damage access networks,
which could give rise to physical and economic losses.
With respect to the aforementioned risks, we are implementing the following measures.
●

Our own use of renewable energy●

Consolidating telecommunications equipment and facilities, which account for most of NTT Group’s power use and upgrading to equipment withhigher levels of energy efficiency (including carrying out upgrades ahead of schedule)

1.45%
●

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

Securing the stability and reliability of telecommunications services in anticipation of large-scale natural disasters* Scale of assumed risks: Effect of increases in environmental tax (¥720 million per year), effect of FIT (¥19.1 billion–¥22.7 billion per year)

Potential Opportunities●

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

History and Engagement Policy for Environmental Activities ●

Since the inception of our business, we have continuously considered and acted in response to the environmental impact of ourbusiness activities along with ways to help address environmental issues.
History of Environmental Activities

2020s

2010s

●

2000s

1990s

2020 May ormulating the Environment and Energy Vision, which targets
Fa zero environmental impact● Submission of commitment letter to SBT

2010 November●●

 nnounced THE GREEN VISION 2020 as
A
NTT Group’s environmental vision for fiscal 2021●

2006 May
Formulated the NTT Group Vision for Environmental Contribution
as a guideline for activities for contributing to the reduction ofenvironmental impact for society

1991 July
Set up the Global
Environmental
Protection Promotion
Committee as adecision-making
organ

NIPPON TELEGRAPH AND TELEPHONE CORPORATION● xpanded disclosures in line withE
TCFD recommendations

 et “The Eco Strategy 2030” as the targets forS
fiscal 2031

2000 March

1991 April

Supporting the TCFD

2019 September

 nnounced the NTT Group Environmental
A
Statement, which expresses the future of ourplanet and the kind of enterprise we would like tobecome in the future

Set our targets for fiscal 2011 on paper resource
management, global warming prevention, andwaste management

1991 October

1992 March

1997 November stablished the NTT Global
E
Environmental Charterstipulating the basic
environmental principles,basic policies, andpromotion system

Formulated adetailed program
compiling theaction plans of eachbusiness unit

Set up issue-based
committees forpromoting initiatives
on six key issues

●

●

36

●

2016 September dded “conservation of biodiversity” to theAbasic policy of the NTT Group Global
Environmental CharterSet up theEnvironmental
Response Office

digitalization●

 ormulated the BasicF
Program of Environmental
Protection to set targets
for key action plans1999 July●●● hanged the name of the organizaCtion to the Environmental Protection
Office following the restructuringof NTT stablished the new NTT GroupE
Global Environmental Charter toclearly express our basic principles
and policies
 ormulated NTT Group Ecology
F
Program 21 as our basic concept
for promoting environmental
protection

Growing demand for ICT services as teleworking and remote working become more familiar and mainstream, and to support workstyletransformation due to digital transformation (DX), as well as to reduce environmental impact●●

Expansion of the business continuity solutions business leveraging ICT and cloud technologies in line with the corporate migration to the cloud andIncreasing demand for BCP-oriented ICT services addressing such factors as natural disasters and system failures

TCFD

Governance /Risk management

Organization for Environmental Management To address climate change and other environmental issues, following deliberation by the Company’s directors we introduced theEnvironment and Energy Vision in May 2020. This vision incorporates items deliberated by all members of the Board, including theoutside directors.
We also established the NTT Group Global Environmental Protection Promotion Committee as an internal unit under the CSR
Committee to discuss and determine the environmental activities policies for the entire Group.
The NTT Group Global Environmental Protection Promotion Committee, which meets regularly throughout a year, is chaired by
the general manager of the NTT Environmental Protection Office (Head of Research and Development Planning) with membershipcomprising heads of environmental departments at major Group companies (NTT East, NTT West, NTT Communications, NTT
DOCOMO, and NTT DATA, etc.). Also, this committee oversees the Climate Change Actions Committee, the Closed-loop Recycling
Committee, and the Natural Harmony Working Group and drafts basic policies, manages targets, and addresses issues related toenvironmental protection.
Further, risks and opportunities identified as having a significant impact on business, such as laws, regulations, and systems
related to the environment, are presented to the Business Risk Management Committee, which identifies Companywide risks, and to
the Board of Directors.
In addition to working with the environmental departments, the committee cooperates with other departments to pursue related
initiatives. Particularly with regard to electricity use, which accounts for more than 90% of NTT Group’s CO2 emissions, the committee
collaborates with the High Performance Energy Use Promotion Committee, which is responsible for promoting the Total Power
Revolution (TPR) campaign, NTT Group’s energy conservation activities. As for the risks and opportunities presented by environmental
issues to our facilities and equipment, monitoring and assessment are conducted through a collaborative effort between staff incharge of environmental issues and those responsible for facilities, and these individuals are appointed for every Group company.

ANNUAL REPORT 2020

37

Initiatives Aimed at Promoting ESG Management

NTT Anode Energy Corporation Envisions Smart Energy Business 
NTT Anode Energy spearheads NTT Group’s smart energy business.
The aim of this business is to establish a commercial business based on the new value resulting from the construction of directcurrent area grids. At present, alternating current is the power type used generally. In the telecommunications field, however, direct
current is used for its efficiency and reliability. We aim to utilize technology and expertise developed in telecommunications to construct direct-current grids on an area basis that are controlled by ICT. In this way, we will build a system that supplements alternatingcurrent grids. These initiatives will enable us to supply power during blackouts caused by disasters and to use storage batteries forthe enhancement of the stability of power supplies from renewable energy sources.
By maximizing synergies within NTT Group, NTT Anode Energy is working with partner companies to create a new framework forenergy distribution, invigorating industry and aiming for a sustainable society.

COLUMNNTT Group Issues Green Bonds
NTT Group issued green bonds for the first time in 2020. Green bonds are issued to raise funds for green projects (renewable energy, energy
conservation, and other environment-improving businesses) being promoted by companies, regional government bodies, and other entities.
NTT Group places top-level priority on environmental issues. Accordingly, as a group we are undertaking a host of measures to addressthese issues. One example is the issuance of NTT Group green bonds by NTT Finance, the Group’s core financial firm. The funds raised
through this issue will be used to fund projects that address environmental issues (green buildings, which deliver strong environmental performance; the generation of wind, power, and other renewable energy; and data centers that are highly efficient but conserve electricity).

Components of the Business

Target project

We conduct five projects in the three areas of power generation; power transmission and distribution and storage; and retail and wholesale. NTT Groupaims to double the sales of its energy-related businesses by the fiscal year ending March 31, 2026.
Power Generation(1) Green power generation business: Power supply solutions using renewable energy

Power Transmission
and Distribution andStorage(2) V PP (virtual power plant) business: Supply and demand coordination solutions through control of dispersed powersources*

Investment

Investors*F unctions such as generation by solar, water, and wind power, power supply by electric discharge from storage batteries (including EVs), and control of supply and demand by power storage in storage batteries.

Issuance ofgreen bonds,
with NTT Groupas representative(3) New service business: Advanced EVs charging infrastructure solutions using storage batteries and chargers** Plan to provide services in the future combining power supply from EV to buildings and grids (V2B: vehicle to building; V2G: vehicle to grid)(4) Backup power source business: Optimal emergency power supply solutions according to the type of disaster
Retail and Wholesale

Green buildings (Photo is of the first project)
Funds raised are
to be centrally
managed forallocation to eligible
projects
Renewable energy

Data center(5) Electricity retailing business: Provision of electricity having a low environmental impact
Statement of Investment in No. 1 Green Bond Issue (As of the time covenants were agreed upon, in Japanese syllabary order)

Overview of the Business

Asset Management One Co., Ltd.
Seven Bank, Ltd.
● Tokio Marine Asset Management Co., Ltd.
● The Bank of Nagoya, Ltd.

During Ordinary Times

Contribute to CO2 emissions reduction by charging batteries using green power, thenusing them to supply power to facilities
Use batteries to charge EVs and carry out VPP (demand control, etc.)

AI / Big data

VPP
(Demand control, etc.)

The Nomura Trust & Banking Co., Ltd.
Hanno-Shinkin Bank● 
Sumitomo Mitsui Trust Asset Management
Co., Ltd.

MUFG Bank, Ltd.
Midori Life Insurance Company● 
Meiji Yasuda Asset Management Company
Ltd., others

●

●

●

●

●

●

State of Green Bond Issuance

Here, we show the status of appropriation to qualified businesses of funds that have been raised through green bonds, as well as the environmental impact of qualified businesses based on the NTT green bond framework.

Peak cut<Reporting on the appropriation of funds>
EV

Peak cut

DC area grid●

Status of appropriation of funds raised through the issue of the green bonds to qualified businesses●

Ratio of new financing and refinancing

EV charging

DC area gridEV

EV

Amount issued

Amount appropriatedAmount unappropriatedRefinancing ratio¥40.0 billion¥40.0 billion

¥0

100%

●

Overview of qualified businesses to which funds raised are to be appropriated●Funds appropriated to qualified businesses and unappropriated funds

During Disasters
Use of funds

During power outages, supply green power and power stored in batteries via privately
operated DC lines and through use of EVs
Make disaster response headquarters independent and support evacuated residents
AI / Big data

Electricity supply
operations in response todisaster situations
Emergency
power supply

Green buildings●

EV

Project nameYears elapsed

Useful life remaining

AmountappropriatedAmountunappropriatedShinagawa Season Terrace

5 years

33 years¥35.0 billion

All appropriatedUrbannet Nagoya Nexta Building

Under
construction

Under
construction¥5.0 billion

All appropriatedIf unappropriated amounts remain, expected timing for appropriation
Not applicable<Impact Reporting>
Convenience stores, etc.
DC area grid●

Scheduled for release in the year ending March 31, 2022

Emergency
power supply

DC area gridBatteries

38

EVs

Evacuation
centerElectric power supply from batteries and EVs

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

39

Initiatives Aimed at Promoting ESG Management

Material ESG Issue 2 Strengthening of Security
With a full-fledged digital society, risks and opportunities by digitalization are emerging. Against this backdrop, the role of security is expanding. It is no longer simply a defensive measure that protects information assets and gives rise to expenses. Security
is also a target for strategic investments aimed at transforming and growing businesses and forming new markets.
As a global ICT corporate group that believes in the potential of digital society, NTT Group is committed to contributing to
global cyber-resilience. Further, we will proactively help realize cybersecurity worldwide by providing cybersecure ICT services.

Policies on Initiatives in the Security Field
Digital society remains in its initial phase, while cybersecurity is in its infancy. Precisely because cybersecurity is in its infancy, rather
than wait for the industry to take shape, NTT Group will be in the vanguard of efforts to take the initiative and create the industry.

Initiatives for the security of NTT Group
Contribution to
cybersecurity
worldwide

Development of personnel, technologies, and expertiseInternal Factors

Social Demandu Across a range of fields, such asu Increasing sophistication and diversity of cyberattacks

electric power, life sciences, andagriculture, development ofdiverse smart businesses basedon ICT services

Initiatives for strengthening the security of clientsu Reports of the vulnerability of ICT devices

 ue to the importance of cyber-resilience, companies are expected to take security measures, whileD
companies in the ICT industry are expected to strengthen the security of their own products andsolutions as well as the security of society overall.

u One of the world’s leading

telecommunications and ICT
services client platforms
It has become necessary to
steadily pursue digital businesses through the protectionof information assets and the
securing of safe ICT
platforms.

Relevant Laws, Regulations, and Global Trendsu Growing awareness of security as an important infrastructure and as an issue for the usability of

ICT infrastructureu Establishment of laws related to the treatment of personal information (enforcement of the General

Data Protection Regulation in Europe)u Initiatives by respective countries and regions focused on the safety of digital platforms, including

IT, operational technology, and the Internet of Things (the EU Cybersecurity Act, various collaborative
public–private sector measures for sharing threat information, etc.)

Business Risks
Arising from
Materiality Factors

u Delay in the digitalization of the socio-economy due to a loss of trust in digital infrastructure

Business
Opportunities Arisingfrom Materiality
Factorsu Increase in market opportunities because clients’ management teams view investments in security asu Loss of intellectual properties due to cyberattacks
u Loss of trust in us as an ICT company due to being perceived as a company with inadequate security

measuresResearch and Development

As the socio-economy digitalizes and the international situation changes, cyberattacks and othersecurity threats are becoming increasingly advanced and serious. In such conditions, NTT Group’s
responsibility is to protect the infrastructure of ICT services as well as clients’ information assets
and to provide sound platforms with a view to the growth of the digital economy.
In accordance with the medium-term management strategy, NTT Group has defined its mission as supporting the infrastructure of the digital economy and contributing to the construction
and development of free, open, and safe ICT platforms. NTT Group must realize its own digitaltransformation and those of clients in a reliable, safe manner. Moreover, these capabilities shouldbe the reason why NTT Group is the first choice of clients. In other words, our vision is for clients
to choose us because we offer security.
The impact of COVID-19 shows no signs of abating. Although socio-economic activity is beginning to return to previous levels in countries around the world, including Japan, we expect remote
working and online activity to increase beyond past levels. This situation represents a new challenge for NTT Group, which provides telecommunications and IT systems. Security will also
become an increasingly important issue in the post-COVID world. Realizing our vision for the
future will necessitate security across all activities, including customer response, research anddevelopment, operations, finance, human resources, and other administrative areas. We are pursuing initiatives aimed at ensuring NTT is considered the number one company in terms of security.

contributing to the management of business risks as well as to digital growthu Overall increase in opportunities to provide ICT services due to being perceived in Japan and overseas asan ICT company with outstanding security
u Establishment of competitive superiority by using safe and secure ICT infrastructure to develop solutions

Visionu Leveraging of fundamental research and development to strengthen the security of our services and theprovision of security solutions
u Use of advanced technology and external partnership for early detection of and responses to security threats

Shinichi Yokohama
Head of the Security andTrust Office
Chief Information Security
Officer (CISO)NTT

NTT Group will become the enabler both of its own digital transformation and those of clients.
The Group will be the first choice of clients because it ensures security.

Provision of Comprehensive Security Solutions Based on
Development and Verification that Leverage Business Scale
DemandSpecific Measures

Formation ofa sound digitalsociety

Growing demand for comprehensive security

Superiority	Unique position that allows the provision of a wide range of ICT-related
services on a global scale
Specific strategies	Development of “verified by NTT” solutions that take advantage of theCompany’s global operating environment, value chain, and digitaltransformationu Hiring and development of security personnel and community building

Early Detection of and Rapid Responses to
Security Threats
Demand	Shift in focus toward demand for damage minimization, which is arisingfrom an increased awareness that 100% protection is impossible
Superiority	Advanced analysis capabilities and analysts, such as a SIEM engine,
and personnel with a high level of integritySpecific strategies	Advanced analysis systems and professional support provided byanalysts

Differentiation Strategy

u Distribution of pioneering knowledge through participation in and contribution to global communities

Development of a Security Workforce with
Common Values

Cooperation with Stakeholders Aimed at Leading the Disseminationof Knowledge and at Developing a Digital Society

Superiority	More than 3,500 advanced and intermediate cybersecurity personnel
who have a shared sense of integrity and are committed to realizing
a secure digital society

Superiority	
The only Japanese company with a dedicated cyber-advocacy team(a team that makes policy recommendations and society-related
recommendations)

Specific strategies	Creation a system that uses formal and informal methods to attract,hire, and develop personnel

Specific strategies Proactive formation of cooperative relationships with major global
companies and governments of key countries

We will demonstrate leadership with a view to the sound development of an international digital society and prepare the groundworkfor expansion of the ICT services market. At the same time, we will move forward with the rollout of security solutions that leverageadvanced technologies and personnel.

40

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

41

Initiatives Aimed at Promoting ESG Management

Initiatives Aimed at Strengthening Security 

Security and Management Systems Strengthening of the Security of Our Services
We aim to provide safe and secure ICT services, which are an integral part of society’s infrastructure and underpin the digitalizationof the socio-economy. Therefore, we are strengthening the security of all our services, including our telecommunications equipment,
IT service environments, and services related to smart cities and buildings.
Global Coordination

The Group CISO Committee leads the construction of a governance system that coordinates the activities of Group companies. In
the fiscal year ended March 31, 2020, the Group CISO Committee convened three times, while the Information Security Liaison
Meeting met twice. In addition, systems have been put in place for dialogue with the senior management team, which receives regular reports on trends in external threats related to security at the Executive Officers Meeting. Also, management receives timely
reports when security incidents occur.

Board of Directors

Given the integration of our global businesses, we are also advancing global coordination with respect to security. To facilitate coordination within NTT Group, which spans a variety of different businesses and regions, the Group has introduced a risk-based management approach, built a framework founded on the recommendations of the U.S. National Institute of Standards and Technology,
and established common Group standards for identification, protection, detection, responses, and recovery.
Participation in and Contribution to Global Communities
Centered on the United States and Europe, we participate in government and industry initiatives aimed at strengthening cybersecurity and share information on security threats and best practice. Also, we are working with companies and organizations to form
communities based on mutual trust.

Group companies

President(Executive Officers Meeting)Asrequired
Rapid reportingwhen anincident occurs

Group CISO Committee
Chairperson: NTT CISO

Regularly

NTT Communications

Reporting onsocial trends
related tosecurity

Information Security Liaison Meeting

ICT-ISAC Japan,*1 an organization that facilitates information sharing, collaboration, and coordination in Japan’s ICT industry●

The global CSIRT community FIRST*2●

Industry Development Global Initiative Charter of Trust, Charter of Trust, Cybersecurity Tech Accord, CSDE*3

Establishment with ICT companies worldwide of CSDE,*3 an international council for the realization of a secure digital economyuIssuance of the IABG*4

In three countries and regions worldwide, coordination with bodies that conduct collaborative efforts aimed at sharing information on andneutralizing cyber-crime●*5 EC3: European Cyber Crime Centre*6 NCFTA: National Cyber-Forensics and Training Alliance*7 JC3: Japan Cybercrime Control Center

NTT DATA

Audit* The numbers of times in the chart indicate the number of implementations in the fiscal year ended March 31, 2020.

COLUMN
Establishment of the Security and Trust Office
In July 2020, we established the Security and Trust Office to reinforce
Group governance by centralizing and consolidating security functions at
the holding company. This organization has three main missions:u Proposing and presenting cybersecurity measures across the Group andEurope: EC3,*5 the United States: NCFTA,*6 Japan: JC3*7*1 ICT-ISAC Japan: ICT Information Sharing and Analysis Center Japan*2 FIRST: Forum of Incident Response and Security Teams*3 CSDE: Council to Secure the Digital Economy*4 IABG: International Anti-Botnet GuideNTT Ltd.

SupportInternal Control Office●●

2 times…

u

NTT East
NTT West

NTT-CERT

Participation in communities in Japan and overseas for the sharing of information on cyberthreats and best practice

NTT DOCOMO

Committee members: Head of Technology Planning,
Head of Research and Development Planning,
Head of General Affairs, CISOs of Group companies

Progress of Initiativesu

3 times

Structure of the Security and Trust Office
Head of the Security and Trust Office:
Shinichi Yokohama, Chief Information Security Officer

promoting activities at each operating company,u Conducting cybersecurity activities (including incident response) at theholding company (including laboratories), andChief cybersecurity
strategist

Counselor to Group CISO

u Serving as the Group’s representative on cybersecurity issues, dissemi-

nating information and fostering external alliances.

Training of Security Experts
We aim to increase the quality and number of security personnel. In these efforts, Group companies are advancing personnel development measures designed for respective personnel categories and skill level. The rise in cybersecurity threats attendant on theholding of international events necessitates even more countermeasures. Therefore, we are strengthening our security monitoring
capabilities and stepping up personnel development. Thanks to these initiatives, we had approximately 47,000 certified cybersecurity
personnel as of March 31, 2019. Of these personnel, 3,500 have become certified as advanced and intermediate cybersecurity personnel by acquiring additional knowledge and practical work experience. Thus, we believe that we have the capabilities to respond asneeded when major events are held.
NTT Group’s Security Personnel Hierarchy
Security management consulting / Security operation / Security development

Advanced

Security master / Security principal

Produce first-rate experts with best performance in the industry

Intermediate

Security professional

Reinforce the pool of specialists with deep experience and judgment

Security expert

Raise the level of workers who can do their work with the required knowledge

Research and Development Initiatives
As well as the development of technologies for the security of our services, we are focusing efforts on the development of security
element technologies. Further, in Palo Alto in the United States, in 2019, we established a new global research center, where pioneering, world-class researchers are tackling projects focused on cybersecurity and encryption technologies. We have also establishedthe IOWN Global Forum, Inc. to facilitate our collaboration with industry-leading companies to formulate security architecture fornext-generation communication infrastructures.
42

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Incident
response

Advocacy
Humanandresource
communicadevelopment
tion

Further, in 2004 we have already established NTT-CERT as an organization for responding to security incidents. NTT-CERT functions
as the core of NTT Group’s security efforts and belongs to a Group research center specializing in cybersecurity. Because it can takefull advantage of the center’s knowledge, the organization has outstanding technological expertise at its disposal. Moreover, theorganization has built networks withcybersecurity organizations in regions
NTT-CERT regular duties
Security portal
worldwide, affording it rapid access toInternal
Incident handlinginformation systems
information on global trends and newSecurity education /for NTT Group
Training
threats. NTT-CERT informs NTT GroupVulnerability data
distribution
companies about such information,
Domestic andinternational
Vulnerability handlingthereby strengthening the security of
research facilities
Security consulting, etc.
https://www.ntt-cert.org/
Public infrastructure
NTT Group and its clients.
●●●

by NTT Group

Field Support

Title

Beginner

Operations●

Job classification

Level* The scope of the three missions outlined above includes OT systems, as well as internal
IT systems.

Architecture Governance●●Prevention

Corporate solutionsof NTT GroupPowered by

Advanced security support

NICTER, etc.
Prior prevention

Detection
Response

ScienceCloud

Damagemitigation

Security
vendors

ANNUAL REPORT 2020

43

Initiatives Aimed at Promoting ESG Management

As cyberattacks grow increasingly ingenious in their methods and affect more people, we are having to adopt the attacker’s perspective in order to strengthen our ability to deal with the attacks. Although recent cyberattacks have not displayed particularly novel
technologies, they have become increasingly diverse and ingenious in their methodology and thus more difficult to detect byattempting to infiltrate Group companies and affiliates whose cybersecurity measures are weak and by pretending to represent
actual commercial transactions.
Against the backdrop of increasingly unstable world affairs, concerns are growing about cyberattacks stepping up their targets
from IT systems to important infrastructure and moving on from economic benefit to the pursuit of political gains.
To minimize the damage from cyberattacks under these circumstances, it is important to adopt the attacker’s mindset and anticipate how and why they will perpetrate an attack. Understanding the need to augment security measures to protect importantCompany assets and step up our ability to minimize damage, we are cultivating verification teams with white hacker expertise. They
probe our systems and address systematic vulnerabilities from a cyberattacker’s perspective, helping to make our security measuresmore visible and improve them.
Practical Cybersecurity Training

The DevSecOps Perspective
Safety of
specifications
Architecture
Risk analysis

Safety of code
Static analysis

Experiencing simulated response to sophisticated cyberattacksuCatching up with the latest cyberattacks and toolsuCompliance with global standards (NIST Framework)uLine up of 28 training courses in 4 fields (security operations, incident response, forensics, and penetration testing)

Dynamic diagnosis ofapplications● Monitoring of live
environments●

Safety of functions

PL A NRELEASE

DEV

OPS

Dynamic
inspection

Safety from new
methods of attack

OPE R TEA

BUILD

Monitoring

Safety of OSS

Summary of key traininguProvision of an Integrated Portal for
Application Security

DEPLOYThe ability to respond to recent-day cyberattacks appropriately requires an operational engineer’s technical knowledge. Also, it
requires the experience to act appropriately and make decisions swiftly. People responding to cyberattacks must also be appropriately armed with the leading-edge information about cyberattacks, and maintain their ability to judge situations.
Conventionally, this expertise and knowledge has mostly been gained on the job, as employees familiarized themselves with thetechnological measures and organizational settings required for cyberattacks. Efficiently training personnel to act of their own
accord required time and an appropriate atmosphere.
To address this issue, we have developed a training environment that provides a framework for virtually recreating an actual
cyberattack experience, with conditions that emulate an actual attack, and helping employees learn technological and organizational
responses. In this way, in addition to employees who have the on-the-job experience that equips them with knowledge about themost recent cyberattack methods, we can help operations engineers who have relatively little experience increase their skills andstrengthen their response capabilities.

To establish its top-class industry position in the field of security, NTT Group is enhancing its presence in the area of application security and DevSecOps (an application development and operational model that incorporates security from the outset) throughWhiteHat Security, Inc., a U.S. subsidiary.
In the application security field, WhiteHat provides the tools and services necessary
to create and operate software safely, and the company has earned high praise in the market. WhiteHat’s application security platform provides an ongoing risk assessment of organizations’ software assets, incorporates security measures, and makes it possible
to achieve DevSecOps.
WhiteHat’s forte in the application security field lies in its ability to test for Web applications’ vulnerabilities using software tools
and AI. This is combined with expert verification to reduce false positives in the testing results. In general, designing and producing
applications without security vulnerabilities is effective at preventing Web systems from the danger of outside attacks. By taking
advantage of WhiteHat’s strengths, we can efficiently confirm whether security has been ensured at each stage of the process, fromapplication production through to operation. In addition to network and endpoint security, we expect to help ensure more securesystem environments by also incorporating security response into the content of application design.

TE ST

Looking at Attacks from the Attacker’s Perspective

Enhancement of Security Services 

C ODEEnhancing Our Ability to Cope with Increasingly Ingenious and Sophisticated Cyberattacks Structural
examination●

Source code analysis●

 ynamic and staticDdiagnoses of mobile
source codes xamination of vulnerability to external
E
libraries● 
Examination of external librarylicenses●

Other Beginner and Intermediate-Level Cybersecurity Training
Follow-up training for certified personnel
In the fiscal year ended March 31, 2020, we provided an environment in which all of our approximately 42,000 certified personnel canundergo Web-based cybersecurity training about case studies of recent cyberattacks and incidents. As all employees may become
responsible for cybersecurity strategy implementation, we will expand the scope of security education to include all employees as we
strive to enhance their security awareness.
Online CTF contest
We adopt a game-based approach in which each company forms teams of up to four people and competes by answering questions
related to cybersecurity within a limited amount of time. After the close of the contest, we distribute videos showing explanations of
the questions, which was highly effective as a learning tool.
Due to the impact of COVID-19, this fiscal year represented our first online contest, which was attended by 153 people, comprising 50 teams from 12 companies. Through this contest, we expect to increase knowledge and drive up an interest in cybersecurity.
By making participation anonymous and entry easy, we aim to continue working to increase interest in security even among employees who do not currently work in that area.

COLUMN
Further Reinforcement of NTT Group’s Security System
NTT Group provides services to augment customers’ cybersecurity. We give top priority to providing customers with safe and secure network,
cloud, and other services. When security incidents occur, we provide a swift customer response. We also introduce wide-ranging groupwide
measures to prevent recurrence and otherwise keep our business from being affected.
In addition to putting in place measures to stop intrusion into its own systems, NTT Group understands the importance of early-stage
detection and swift response. While this is an area of strength for NTT, we are also investing to augment our capabilities. Recent cyberattacks
have underscored the importance of preparedness, so we are introducing behavior detection* functions as a more sophisticated approach toearly-stage detection throughout the Group. Going forward, we will endeavor to further enhance NTT Group’s security system.
* Behavior detection: A framework for using behavior to detect unknown malware that cannot be detected by conventional pattern matching methods. The system uses endpoint
detection and response (EDR) technology, which detects dubious behavior on a user’s PC or server and responds rapidly.

Catalog-based education
We systematize the learning of knowledge and skills required for beginner- and intermediate-level certification, and have built up acatalog of commercially available training programs and made it available to Group companies.
44

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

45

Initiatives Aimed at Promoting ESG Management

Security Business for Major Corporate Clients 

Security Business for Small and Medium-Sized Enterprises 

As digital transformation diversifies ICT environments, cyberthreats are becoming ever-more sophisticated, boosting demand forzero-trust security measures that assume internal penetration.
NTT Group’s global operating company (NTT Ltd.) continuously develops and introduces cybersecurity measures that support
leading-edge digital transformation. These include the advanced detection of cyberthreats through managed security services andimmediate responses to threats through managed detection and response. Further, the company offers DevSecOps, which provides
both security and the flexible agile development of applications that are important for digital transformation, as well as microsegmentation-enabled security technologies, which determine the lateral movement of threats that have penetrated from outside
or inside (including insiders) and realize access control or isolation on a segment or terminal basis.

IT is becoming indispensable for businesses. At the same time, regardless of whether their businesses are large or small, all kinds ofcompanies are facing increasing security risks. In particular, many small and medium-sized enterprises lack specialized security
personnel. Consequently, some clients are anxious because they feel that their security measures may be inadequate and they do
not have anyone to consult with regarding security measures.
Given this situation, NTT Group provides comprehensive security solutions that perform the role of a specialized security manager for clients. Specifically, we provide clients with wide-ranging support that covers everything from normal operations through tothe occurrence of incidents. As well as detecting and blocking unauthorized communications, the Group’s services monitor communications status, report on status through the distribution of reports, and support restoration if virus infections occur. Our lineup ofservices includes Omakase Cyber Mimamori, Omakase Antivirus (NTT East), Security Omakase Plan (NTT West), and Security Support
Desk (NTT Communications).
The number of contracts for such omakase-type security services has been growing in recent years. (In Japanese, omakasemeans “leave it to us.”) Going forward, we will continue creating safe, reliable ICT environments for clients.

Medicalinstitutions

Companies

Government
services

Financial
institutions

Power, railways,
and otherinfrastructure

Security Measures that NTT Ltd. Is Taking
Currently being provided

R&D
Cloud-Native Security

Network (Border) Security
Advanced detection of threats

Internet and closed networks
Cloud environment utilization (IaaS, PaaS, SaaS) + On-premises

Applications (group of microservices)● Access control● 
Data analysis (AI, machine learning)● User interface
etc.

Function
linkagethroughAPI

Next-Generation
End-Point Security
Immediate countermeasuresfor detection incidents(proliferation prevention, isolation)
Mobiledevices

Socialmedia

Application Security(Utilization of WhiteHat Security, Inc.)
Elimination of continuous
vulnerabilities by providing clientswith DevSecOps environments
 trengthening of Immediate
S
Responses

Network security measures

Terminal security measures

Omakase Cyber Mimamori

Omakase Antivirus

Network security measures

Terminal security measures

Scope of effectiveness of in-housenetwork monitoring

Scope of effectiveness ofanti-virus services

Dedicated box

PCs

Blocking of attacker’s control
Automation through SOAR

IoT Security

 ecurity for Industrial
S
Control Systems

Things(IoT)

Examples of NTT East’s Security Solutions

Intelligence on
global threats
Information on real-timethreats gathered
worldwide
Detection
logic enabled byWorld-classmachine learning and
SOC analysts +AI
Dedicated analytic
Increasingly
tools
sophisticatedalgorithms

Application development

Microsegmentation,
lateral movement detection

Risk assessment,
host reinforcement, threat detection

Product SOC (connected cars, etc.)
Assessment of the vulnerabilities
of IoT devices

Also, in response to the increase in cyberthreats to critical infrastructure, factories, plant equipment, and building automation systems, we are rolling out advanced security solutions catering to industrial control systems and IoT that have unique system compositions, specifications, and environments. By forming specialized teams in regions worldwide, we are able to offer solutions to clientsin a wide range of industries. We resolve clients’ security issues by providing services that cover risk assessment and countermeasures based on leading-edge technologies through to managed security services that detect threats in real-time and respond toincidents.
Identification of Issues and Policy for Countermeasures
Use of risk assessment to identify issues
and establish countermeasure policies

Internet

Omakase Cyber Mimamori
dedicated box

 Use of dedicated box to detectand block unauthorizedcommunication

Smartphones, tablets
computers

Network devices
in which anti-virus
software cannot
be installed

Monitoring of communications
status, reporting on status throughdistribution of reports, support forclient issues, response to faults

Eradication ofvirus infections andrestoration

Security management
programApplication of Leading-Edge Technologies

Assetvisualization

Vulnerability
management

Network analysis
and segmentation

Host
reinforcement

Use of segmentation and host reinforcement to reduce the risk of shutdown due
to malware infection or proliferation

Real-Time Monitoring and Operation
Threat detection and incident response
through continuous monitoring
Continuous
monitoring

46

Threat detection

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Incident response

ANNUAL REPORT 2020

47

Initiatives Aimed at Promoting ESG Management

Material ESG Issue 3 Strengthening of Disaster Countermeasures
As well as ensuring the stability and reliability of telecommunications services by anticipating the potential damage resulting
from large-scale disasters, in the event of disasters NTT Group helps clients restore their operations and achieve business
continuity.

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

Support for Customers’ Post-Disaster Restoration of Operations and Business Continuity 

NTT Group has defined three key themes for disaster countermeasures—improving the reliability of communications networks, securing critical communications systems, and promptly restoring telecommunications services. We have been strengthening efforts basedon these themes since the Great East Japan Earthquake.
Specifically, we are taking measures to improve the reliability of our telecommunications infrastructure. To ensure that our telecommunications services operate without interruption at all times, we employ transmission trunk line multi-routing, have enacted
blackout countermeasures for communications buildings and base stations, and are making communications buildings more disaster resistant. In addition, we are expanding the assortment of power supply vehicles and other disaster response equipment that wehave positioned throughout Japan and are continuously conducting training to prepare for major natural disasters. Furthermore, we
are making a daily effort to guarantee that, in the event of a disaster, we are able to immediately set up a Disaster Countermeasures
Office and other emergency preparations and make the necessary emergency and critical communications as a public institution as
designated by the Basic Act on Disaster Control Measures.
In recent years, natural disasters have been becoming more frequent and causing wider, bigger, and more lasting damage.
Recognizing the potential for natural disasters to have greater impacts on telecommunications facilities and services and for recovery
efforts to be prolonged, NTT is increasing the resilience of its facilities and taking steps to expedite recovery efforts.
In the fiscal year ended March 31, 2020, no serious telecommunications disruptions*1 occurred at four telecommunications business companies (NTT DOCOMO, NTT East, NTT West, and NTT Communications), while service stability was maintained at 100.00%,*2
under normal circumstances.

NTT Group has continued to provide telecommunications services in Japan, which cannot be allowed to be interrupted in the event of
a disaster, for over 100 years.
We are leveraging our track record of reliability and the associated expertise accumulated over our history to develop a solution
business for supporting customers in maintaining business continuity. We anticipate significant business opportunities to arise in thisregard going forward.
Damage from natural disasters, such as heavy rains and more frequent typhoons, is becoming increasingly common due to recent
climate change. As a result, there is a growing risk of water and lightning damage and power outages, which now threaten to cause
extensive damage should they occur. Many companies need to take measures to ensure that, if emergency situations such as disasters occur in the future, the organizations are able to continue important operations and restore order quickly. These measures arenecessary to provide support to disaster victims and facilitate swift recovery.
For this reason, NTT Group will help customers restore operations and maintain business continuity after disasters by developing
business continuity solution operations in a wide range of fields. Specifically, NTT Communications Corporation and NTT DATACORPORATION are providing data center services and cloud services, while NTT FACILITIES, INC., and NTT Anode Energy Corporation
are providing technologies and services related to buildings and electricity.

*1	Number of disruptions that led to a stop of or lowered the quality of telecommunications services and that fulfill the following conditions:
Voice services usable for emergency reports (110, 119, etc.): Service impacted for more than one hour with more than 30,000 people affected	Voice services not usable for emergency reports: Service impacted for more than two hours with more than 30,000 people affected or service impacted for more than one hour withmore than 100,000 people affected	Internet-related services (free): Service impacted for more than 12 hours with more than 1,000,000 people affected or service impacted for more than 24 hours with more than 100,000
people affected
Other services: Service impacted for more than two hours with more than 30,000 people affected or service impacted for more than one hour with more than 1,000,000 people affected*2	[1 – total hours under the impact of serious disruptions (number of affected users × hours of serious disruptions) / total hours of major service provision (number of users × 24 hours ×
365 days)] × 100%

Past initiatives
1 I mprove Communications

Network Reliability●

Transmission trunk line multi-routing●

Install large-zone base stations●

Build disaster-resistant facilities

Further efforts

2 S ecure CriticalCommunications●●

 ecure 100,119 and otherS
emergency services
 rovide tools to check safetyP
status (171)

Major Facility Resilience Initiatives
●

●

●

●

DisasterstrikesE xpansion of medium-zone base stations with countermeasures for blackouts
and natural disasters
Blackout countermeasures at base stations using electric vehicles
Integrated management and operation of NTT Group’s power supply vehicle
fleet (approx. 400 vehicles)E xamination of possibility of installation of underground cables or wireless
fixed-line telephony systems for disaster preparedness purposes

Major Initiatives for Expediting Recovery Efforts●●

 dvanced establishment of recovery teams (nationwide support teams, etc.)Athrough AI-powered prediction of damages
 einforcement of recovery teams and securing of staff through mobilization ofR
retired NTT employees, etc.

Reliable Provision of Communications Services under
Normal Circumstances●

3 Prompt Restoration●

 isaster countermeasure equipment (Power supply vehicles, Portable satelliteDequipment, etc.)●

Procure and convey materials and equipment for restoration purposes●

Use drones

Lessons from the Great Hanshin-Awaji Earthquake
and the Great East Japan Earthquake48

NIPPON TELEGRAPH AND TELEPHONE CORPORATION●●

 rovision of accurate, easy-to-understand information to support evacuation,Petc. (information on communications disruptions, recovery status, charging
points, emergency-use public telephones, support for non-Japanese visitors
and residents of Japan, etc.)
E stablishment of local trouble support stations in disaster stricken regions to
respond to issues and consultations regarding communication services
 oordination with municipal government agencies, etc. to secure communicaC
tions capabilities in times of disaster through installation of Wi-Fi systems andstorage batteries for public telephones

Disaster which causes wider, bigger, or lasting damage

Provision of Multilingual Information on Service Disruptions due to Disasters To give visitors to Japan and non-Japanese nationals who live in Japan access to important information during disasters, we areproceeding with efforts to provide information in multiple languages. NTT West Corporation’s official website provides information in
six languages, including English, Chinese, and Korean, while the official websites of NTT DOCOMO and NTT East issue information in
English. Moreover, respective Group companies use social networking services to issue information in English on service disruptions
due to disasters. As a result, we are now able to swiftly release readily understandable information on the impact of disasters on
communications, when services are expected to be restored, the introduction of free public telephone services, the installation of freepublic Wi-Fi, and the provision of disaster answering services. In this way, NTT Group is strengthening its responses to disasters.

COLUMN
Mutual Support Agreement with KDDI for Transporting Supplies in Times of Disaster
Conclusion of Social Contribution Coordination Agreement for Resolving Social Issues
In September 2020, NTT concluded a social contribution coordination agreement for resolving social
issues with KDDI CORPORATION. Under this agreement, should a major natural disaster occur, the twocompanies will promote mutual utilization of their ships for transporting the necessary supplies. In addition, the companies will work together to conduct disaster response drills and awareness-raising activities.
Specifically, the cable-laying ships of both companies will be used to transport supplies (portable basestations, power generators, fuel, mobile phones, water, food, etc.) to the affected areas in the event of adisaster. In this manner, the companies will support disaster victims by expanding the scope of relief activities and swiftly transporting supplies. This arrangement makes it possible to swiftly launch a recovery effort
in disaster-stricken regions, even if it is impossible to transport supplies via land routes, such as in the caseof a major earthquake directly under Tokyo, so long as the cable-laying ships of either company can beused. The companies will also continue looking into the areas of disaster recovery efforts in which reciprocal coordination can expedite recovery. Under normal circumstances, the companies will consider jointly
soliciting services that have disaster preparedness benefits and holding disaster preparedness events.
Through these efforts, KDDI and NTT aim to help achieve swifter and more abundant resolutions tosocial issues in order to contribute to the realization of a sustainable society by means such as the development of social infrastructure that is more resilient to environmental changes. Going forward, the companies
will investigate areas in which their assets can be utilized to aid in the resolution of social issues pertaining
to supporting job seekers, promoting healthy smartphone usage, and addressing climate change. These
efforts will be advanced alongside disaster preparedness initiatives. By engaging in joint social contribution
activities over a period of several years, the companies will acquire experience to be used together with
cutting-edge ICT to implement disaster countermeasures and resolve various social issues. This social
contribution campaign has been dubbed the “Tsunagu × Kaeru (Link and Transform) Project.”

Joint press conference held together with
KDDI President & CEO Makoto Takahashi

Ships owned by NTT World Engineering
Marine Corporation (Kizuna (top) and
Subaru (bottom))

ANNUAL REPORT 2020

49

Initiatives Aimed at Promoting ESG Management

Material ESG Issue 4 Utilization of Diverse Human Resources
Human resources (employees) will play a central role in becoming “Your Value Partner” that customers continue to select, which
is our vision. We will realize innovation by respecting and utilizing employees’ diverse values, promoting diversity and inclusion,and providing an environment that will make the most of employees’ capabilities.
As the scale of our business expands, so too do the opportunities for our employees to take active roles spread worldwide.
We will work to provide equal opportunities for all, regardless of race, nationality, religion, creed, culture, place of origin, mental or
physical challenges, sex, sexual preference, or gender identity, and will aim to become an organization where each and every oneof our employees can work with peace of mind toward solutions to society’s challenges. While respecting individuality, we willhold common values as “One NTT” and go forth to achieve our vision.

NTT Group’s Workstyle Reforms 
NTT Group is undertaking a host of initiatives targeting increasing diverse workstyles. We are also improving compensation
schemes and environments to support telework-centered workstyles.
“Family is Part of the Team”
As one of the many available workstyles, we recommend working from home. To enable employees to work at home stress-free, wehave adopted “Family is Part of the Team” as our motto for fostering big-heartedness and a spirit of mutual cooperation.

Promoting Working from Home
In response to COVID-19, people throughout the Group have been working at home. In corporate and other departments where working from home was possible, even after June 2020 we set 50% as the maximum level for office work. To prevent the infection fromspreading and in response to repeated government requests to refrain from going out, in July 27 we encouraged employees to takeadvantage of summer holidays and otherwise endeavor to keep the office-work ratio at 30% or less.

Industry LeadingIntelligenceTo create an environment that encourages remote workstyles, in October 2020, we will begin providing an allowance for people
working at home and in other remote locations, discontinue reimbursement for regular commuter passes, and introduce the Super
Flex-time System. We will also review compensation to better reflect remote workstyles, address team management and the cultivation of human resources, and further review job-based and other compensation schemes.

PeopleGlobal / Local

Services
Expertise

Diversity &Inclusion

Expansion of Workstyle-Related Systems

Best in Class

Cutting Edge

Technical
Expertise

Shared Values

Connect

Trust

Integrity

Ratio of female
managers*1

Male employees using
childcare leave*2

Working from home*3

Total work time*4

6.3%

112%

96.7%

1,833 hours

Target:Ratio of female managers of 10% by the year
ending March 31, 2026

Target:
80% of eligible male
employees taking childcare leave by the year
ending March 31, 2021

Target:90% of people making
use of working-fromhome system by the year
ending March 31, 2021

Target:1,800 hours (first half)by the year ending
March 31, 2023

(FY2019)(FY2019)(FY2019)(FY2019)

Name of System

Details

Remote Work Allowance

The Company pays people working at home or in other remote locations under all forms of employment¥200 per day of working remotely.

Introduction of Framework for
Paying Actual Commuting
Costs

For departments that are able to make use of remote working, the Company will discontinue reimbursementof commuter passes, instead paying actual commuting costs based on the number of times commuting.

Super Flex-time System

On an organization-specific basis, employees will have the option of not setting core working times(working at least three hours per day).

Shift of Telephone Exchanges to Satellite Offices

Employment of people
with disabilities*4

To put in place an environment that encourages a shift in workstyles centered on remote work, we are swiftly creating satellite
offices from telephone exchanges’ station facilities. We are also making use of general satellite offices and otherwise working to
make office facilities more dispersed. We plan to open our first satellite office at a station facility in October 2020 in Noborito,
Kawasaki City. The facility is equipped with booths for online conferences and other facilities suited for working in a post-COVID
world. Looking closely at employees’ needs, such as those related to the areas where they live, we will consider expanding this initiative to Kansai and other regions outside the Tokyo metropolitan area.

2.44%(As of June 1, 2020)
Target:2.2% or more

*1 Domestic Group companies (29 companies)*2	Percentage of total number of male workers using paternity leave or leave for purposes of child raising(items disclosed by companies with “Platinum Kurumin Certification”)
	Number of employees with children entering grammar school by the fiscal year ended March 31, 2020, who took time off work for child raising /number of employees who gave birth (or whose partners gave birth) in the fiscal year ended March 31, 2020.
*3 Only NTT (holding company) Percentage of employees who have worked from home at least once
*4 Domestic Group companies (more than 45.5 employees)

50

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

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Initiatives Aimed at Promoting ESG Management

Empowerment of Women in the Workforce 

Initiatives to Empower Women / Initiatives to Increase the Ratio of Female Managers As one facet of personnel diversification, we are focusing on gender and taking steps to empower women. In the fiscal year ended
March 31, 2013, when women accounted for 2.9% of our managers, we prepared a plan for a twofold increase in the number offemale managers. The plan called for lifting this percentage to 6.0% by the fiscal year ending March 31, 2021. We reached this target
one year early, in the fiscal year ended March 31, 2020. We have now set a new target, of raising the ratio of female managers to 10%
or more by the year ending March 31, 2026.
Aiming for more proactive hiring of female employees, inPercentages of Women by Employee Rank
the fiscal year ended March 31, 2014, we formulated our “At(Fiscal year)
2012
2019
Least 30% Female New Graduate Hire” project, and haveachieved at least 30% every fiacal year since then.
1.3%
3.6%
Officers(10 persons)(25 persons)
By advancing workstyle reforms through the establishment of workplace conditions and systems that help employees achieve a work-life balance, including the meeting of such
2.9%
6.3%
Managers(717 employees)(1,625 employees)commitments as child-rearing and family-care, we are creating an environment that enables even more women to play
13.8%
19.5%
important roles in our organization. Further, NTT Group conGeneral employees(18,441 employees) (19,858 employees)
ducts career development training for women and promotes
women to important positions so that business management
Note: NTT, major domestic Group companies, and affiliated companies(39 companies in total)reflects a wider variety of opinions.

We are cultivating women for management positions in the aim of increasing
the number of female employees in positions of leadership and their participation in management decision-making. Specifically, we are boosting the percentage of women we send on manager-oriented training programs in Japan andoverseas an augmenting opportunities for growth. We set up a mentoring
system for senior management positions and deploying women so they cangain an awareness of tough assignments. We are creating a new e-learning
environment that managers who are on childcare leave can easily take part inand fostering stronger personal networks among women across NTT Group. In
these ways, we are encouraging increases in both skills and awareness.

Number of Female Managers
(%)
15

1,800

1,625

1,200

919

817

717

1,053

2012

2013

2014

2015

2016

2017

2018

2019

Held in four cities, our workshops were attended by 94
employees.

2025(Target)The Employee Value Proposition video can be viewed at the link below.

Female managers
Percentage of female managers
Note: NTT, major domestic Group companies, and affiliated companies (39 companies in total)

https://www.youtube.com/watch?v=7HiIEXBG6R0

Hiring of Women (New Graduates)
(%)
3,000

2,668

2,727
2,456

2,000

30.1%

28.1%

30.2%

2,315
30.5%

2,281
30.5%

2,514
32.7%

2,763

32.2%

2,913

31.5%

1,000

45

30

15

0
(Fiscal year)

With a view to strengthening the competitiveness of its global businesses by
securing and retaining talented personnel overseas, the Group is taking lateralmeasures across its organization.
In 2018, we examined the type of employee value proposition we could offer
NTT Group employees based on the “One NTT” Shared Values, namely,“Connect,” “Trust,” and “Integrity.” Through workshops, interviews, and surveys,
the Group collected and consolidated feedback from employees working at its
overseas companies. In light of this feedback, we defined a Groupwide
Employee Value Proposition. Also, we prepared a video and a tagline to communicate the proposition to employees in a readily understandable manner.
NTT Group is using the video and tagline to ensure all Group employees fully
understand the Employee Value Proposition. Further, we are incorporating the
proposition into training for new Group employees.

00(Fiscal year)

10

Formulation of an Employee Value Proposition 

5

6.3%

5.7%

5.1%

4.6%

4.0%

3.6%

3.3%

or more

1,186

600

2.9%

10.0%

1,468

1,341

Training of female managers

Promotion of Global Diversity Each year, we conduct Group training for senior managers of NTT Group in
Japan and overseas, called Global Leadership Development Program Leadership
Excellence and Accelerating Diversity (GLDP LEAD). This training is designed tofoster leadership among managers aiming to move to higher positions, andfemale managers account for more than half of participants. This trainingemphasizes diversity and innovative culture as organizational capabilities of
topmost importance. In the fiscal year ended March 31, 2020, 30 employees
from 10 countries underwent this training in Switzerland.

0

2012

2013

2014

2015

2016

2017

2018

2019

Number of female new graduates hired
Percentage of female new graduates hired
Note: NTT, major domestic Group companies, and affiliated companies (39 companies in total)

GLDP LEAD

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NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

53

Initiatives Aimed at Promoting ESG Management

Initiatives for Employing People with Disabilities 

Initiatives for Securing Personnel to Support R&D 

Utilization of OriHime-D, a Robot That Is Controlled Remotely by People with Physical Disabilities
We have begun using OriHime-D*, a robot that can be controlled remotely by people who have physical disabilities or find it difficult
to go outdoors, to perform such tasks as receiving visitors and guiding them to conference rooms and reception areas. With thisrobot, we aim to provide more opportunities for people with disabilities to contribute to society, as well as to ensure social distancing when greeting people. We
began trialing the robots in February 2020, followed by a full-fledged launch on July
1, 2020.
With COVID-19 prompting major changes in workstyles, ICT is being deployed in
new ways to help maintain social distancing and provide employment opportunities
for people with disabilities. This is the first example of OriHime-D being used toperform office work by people with disabilities.

With a view to producing innovative research results and securing and deploying personnel who will ensure that we can competewith other world-class research bodies and companies, in Japan we introduced a new compensation system in April 2019 thatreflects medium- to long-term research results and revised career tracks. These changes will enable us to reflect strong research
results in top-class researchers’ compensation, helping us to retain talented research results and focus on fields that require
medium- to long-term focus and decisions.
In addition to its existing in-house recruiting system, in 2020, NTT Group introduced Lab-Chale, an internal job-search site specifically for laboratories. This system gives employees easy access to internal job postings. Employees can also become internal “freeagents,” seeking out positions where they can pursue specific research themes. In these ways, we aim to create a more attractive
workplace in which researchers can make the most of their capabilities. We also expect the system to help us retain talented
research personnel engaging in budding research themes.
Also, overseas we have well-established compensation systems that flexibly reflect conditions in respective countries and theabilities of talented personnel.

* An avatar robot about 120cm tall developed by OryLab Inc., OriHime-D is controlled remotely and can be used forgreeting guests or performing physical labor. “OriHime” is a registered trademark of OryLab Inc.

Lectures by Employees with Disabilities as Training for Group Companies on Maintaining a Barrier-Free Mindset
An employee who is also a para athlete is encouraging employees to have barrier-free hearts and supporting
para sports at elementary and junior high schools. For these activities, NTT Group was cited as an exemplarycompany under the Tokyo metropolitan government’s “Heart Barrier Free Project.”

Participation in The Valuable 500
In December 2019, we joined “The Valuable 500,” an international initiative to promote the participation in business of people with disabilities. Being in accordance with the purposes of The Valuable
500*, NTT promotes the following initiatives.
* “The Valuable 500” was launched at the World Economic Forum’s Annual Summit in Davos in January 2019. This initiative aims to get global
leaders to commit to accountable action on disability inclusion to bring the business, social, and economic value of people living with disabilities across the world.

1.	By sharing values, the core principles that support our activities (“connect,” “trust,” and “integrity”), we will encourage a culture of diversity and inclusion
by creating a workplace where all employees, including employees with disabilities, can feel that they belong and they can work as who they are.
2.	We have set a target for the employment rate for employees with disabilities in our business goals.
3.	We will actively share our activities regarding disability internally and externally.
4.	We will aim to develop services and products that enable people with disabilities to become more integrated into society, and we will keep reviewing theaccessibility we build and deploy.
5.	We will keep educating our employees to learn about diversity and inclusion, including the understanding of people with disabilities, and to become
more inclusive.

Balance between Work and Childcare or Nursing Care 
In addition to issuing five days of leave for every five years of continuous service, we conduct a Life Plan Leave Program, whichenables employees to accumulate each year up to three days of annual leave that would otherwise become invalid (with an upper
limit of 40 days). Also, this program allows employees to take leave, regardless of reason, that is separate from annual leave. NTT set
having male employees take at least 80% of their child-rearing leave as a target for the fiscal year ending March 31, 2021. We are
creating systems and conditions that make it easier for employees to take child-rearing leave. Moreover, we are encouraging not only
female employees but also male employees to avail of leave.
In the fiscal year ended March 31, 2020, the ratio of childcare leave and child-rearing leave taken by male employees reached112%, up 64 pt.s from the previous year.
Work

Special leave (childbirth, family care), life plan leave, nursing care leave, short-term leave for nursing care, childcare leave,long-term care leave, shorter working hours to provide childcare or nursing care, limit on or exemption from overtime work,
shift work on an individual unit basis to provide childcare or nursing care, reemployment of employees who resigned toprovide childcare or nursing careWelfareOne-time payment for childbirth and nursing (health insurance), childcare and family care concierge, childcare and familycare subsidy, office for advice on in-house systems

Initiatives Related to LGBTQ (1) Systems
With respect to the approximately 200,000 employees of NTT Group companies in Japan, in April 2018 we began the application, in
principle, of all systems for spouses to same-gender partners who have the equivalent of spousal relationships with employees.
SalaryAllowance for dependent, allowance for working away from home, expenses of returning home, relocation expenses (family
relocation expenses)

Work

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

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

Work overseas

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

Respect for Human Rights in the Supply Chain 
In recent years, a variety of problems have come to light across corporate supply chains, such as long working hours, child labor,
inappropriate disposal of chemical substances, bribery, and other forms of impropriety. In their procurement activities, companies
are being called upon to conform to social norms, laws, and regulations, and to meet their corporate responsibilities.
Given these circumstances, in 2013, NTT Group formulated its Supply Chain CSR Promotion Guidelines for working with its suppliers to ensure corporate responsibility in its procurement activities. The guidelines spell out specific requirements of suppliers in six
areas: human rights and labor, health and safety, the environment, fair trading and ethics, quality and safety, and information security.
We have made these guidelines available in Japanese and English, and we disseminate them widely among suppliers across
NTT Group, both in Japan and overseas. We request that suppliers comply with these guidelines, our basic policy on procurement
and the Green Procurement Guidelines, which indicate NTT Group’s fundamental stance on green procurement. Each year, we conduct supply chain CSR surveys of our suppliers. In the fiscal year ended March 31, 2020, these surveys uncovered no suppliers in thehigh-risk category. The surveys cover seven categories (human rights and labor, health and safety, the environment, fair trading andethics, quality and safety, information security, and social contribution activities). In the category of human rights, for example wemonitor such activities as respect for the rights to freedom of association and to exercise the right to collective bargaining, as wellas such on child labor and forced labor.

54

NIPPON TELEGRAPH AND TELEPHONE CORPORATION(2) Major Initiatives
Pride House Tokyo: Legacy*, which provides LGBTQ information, will be recognized for the first time as an authorized program in the
Organizing Committee of the Olympic and Paralympic Games in October 2020. In addition to providing information on diversity andinclusion, including LGBTQ topics, we are collaborating with other companies and will sponsor events to strengthen LGBTQ
initiatives.
* “Pride House Tokyo: Legacy” provides multipurpose spaces for the planning of off-line and online events, has individual spaces for counseling support, and has a free library housing
Japan’s LGBTQ Community Archives.

ANNUAL REPORT 2020

55

Initiatives Aimed at Promoting ESG Management

Material ESG Issue 5 Reinforcement of Governance for Sustained Growth
Toward Even Stronger Corporate Governance NTT strives to meet the expectations of various stakeholders, including its shareholders andother investors as well as customers, business partners, and employees. The Company also
recognizes the need to strengthen its corporate governance system based on the intent of theprinciples of Japan’s Corporate Governance Code. NTT is in conformity with all 78 principles ofJapan’s Corporate Governance Code.

To further stimulate strategic discussion by the Board of Directors, we have worked to
optimize the size of the Board, and we made 50% of the Board outside directors. We
have also adopted an executive officers system, and by clearly separating the functionsof managerial decision-making / supervision and business execution, we will implement
an even stronger corporate governance and work to improve our business mobility.

Outside directors

50%

Outside directors

27%

A History of Strengthening Corporate Governance 

2020–

Since June 2020—

Outside directors

Separation of the functions of managerial decisionmaking / supervision and business execution

17%

Since June 2019—

2020
●

●

●

 ptimizing the size of the Board of Directors
O
50%
Ratio of outside directors: 27%

  2018●●● stablishment of NTT, Inc.
E
(strengthening of the governanceof the global business), appointmentof three foreign-national directors
 onducting of evaluation
Cquestionnaire on the effectivenessof the Board of Directors

  2019●●●●

 ommencement of ESG information
C
disclosure in notices of convocation●

 ppointment of two female directors (one inside and one outside),A
a Company first
Increase in the number of outside Members of the Board: 2

4

 trengthening of the reflection of KPIs in performance-linked
S
compensation
 xpansion and improvement of statements regarding theEcompensation of directors, strategic shareholdings,
succession plans, and evaluations of the effectivenessof the Board of Directors

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

Inclusion of summary of directors in notices of convocation

General Meeting of Shareholders
Election / removal

Strengthening of information disclosure with an awareness of dialogue with stakeholders
  2011●

  2015

 ppointment of firstA
female corporate officer(1 outside Audit &Supervisory Board
Member)

●

●

●

●

  2017

Response to Corporate Governance Code● stablishment of independence standards for independent Members of theE
Board and independent Audit & Supervisory Board Members

Decision-making /supervisory functions

Introduction of notices ofconvocation that areviewable via smartphones

Appointment andCompensation Committee

Commencement of issuance of sustainability reports

  2006
Increase in number of outside Audit & Supervisory Board Members: from 2 members●

Appointment of financial expert as Audit & Supervisory Board Member●

Commencement of disclosure of Corporate Governance Report

3 members

Proposal /reporting onimportantmatters

Executive officers
Business sections

Establishment of a foundation for corporate governance1985●

 ppointment of multipleA
outside Members of the
Board

2003
●

●

56

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Increase in number of Audit & Supervisory Board Members: from4 members (2 inside members, 2 outside members)
5 members (3 inside members, 2 outside members)

President (executive officers council)
Delegation of executive
authority
Instruction / supervision

Various Committees

Audit & Supervisory Board

SupportReportingInstruction /reporting●Business executionfunctionsSupervision

Board of Directors

Election /removal and supervisionGroup
Companies

Audit

Office of Audit &Supervisory
Board Members
Accounting audit

Evaluation

Strengthening of supervisory function and improvement of corporate governance transparency

NTT(Holding
Company)

Election / removal

Cooperation

 ommencement of disclosure of the notices of convocation before they areCsent (henceforth, 42–45 days before the date of the convening of the Ordinary
General Meeting of Shareholders, in Japanese and English on the same date)

Election / removal

Reporting2006–

Corporate Governance System Disclosure of specific KPIs for officers’ earnings-linked remuneration

Further reinforcement of oversight function by enhancing
diversity, Advancement of disclosure

2018–

2011–

Up till May 2019—

 doption of executive officers systemASeparation of the functions of managerial decision-making /supervision and business execution

Supervision
Coordination

Independent Auditor
Cooperation

Cooperation

Internal Control OfficeInternal audit

2005
●

●

 stablishment of Appointment and Compensation
E
Committee

Outside independent directors and outside independent Audit & Supervisory Board Members

Inside directors and inside Audit & Supervisory
Board Members
As of June 2020

Commencement of issuance of CSR reports

Establishment of Disclosure Committee

ANNUAL REPORT 2020

57

Initiatives Aimed at Promoting ESG Management

Board of Directors
Members of the Board * As of June 30, 2020

Executive Officer * As of July 31, 2020

Hiromichi Shinohara

Jun Sawada

Jun Sawada

Shinichi Yokohama

Chairman of the Board

President andChief Executive Officer

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

Senior Vice President
Head of Security and Trust
CISO (Chief Information Security Officer)

Akira Shimada

Hideaki Ozaki

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

Senior Vice President
Head of Global Business

Years Served as Member of the Board: 1144,300Shares Owned: 1978	Joined Nippon Telegraph andTelephone Public Corporation2018	Chairman of the Board of the Company

Years Served as Member of the Board: 
634,400Shares Owned: 1978	Joined Nippon Telegraph andTelephone Public Corporation2018	President and Chief Executive Officer

Naoki Shibutani

Akira Shimada

Naoki Shibutani

Senior Executive Vice President

Senior Executive Vice President

Years Served as Member of the Board: 821,908
Shares Owned: Years Served as Member of the Board: —
9,200
Shares Owned 1981	Joined Nippon Telegraph andTelephone Public Corporation2018	Senior Executive Vice President

1985	Joined the Company
2020	Senior Executive Vice President

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

Katsuhiko Kawazoe
Executive Vice President
Head of Research and Development Planning

Eiichi Sakamoto
Senior Vice President
Head of General Affairs

Katsuhiko Shirai

Sadayuki Sakakibara

Outside Independent Memberof the Board

Outside Independent Memberof the Board

Ryota Kitamura

Years Served as Member of the Board: 
89,600
Shares Owned: Years Served as Member of the Board: 
820,500Shares Owned: 2012 Member of the Board of the Company
2016 Honorary Advisor of Waseda University

2012	Member of the Board of the Company
2018	Honorary Chairman of theJapan Business Federation
2019	Outside Director of SHIMANO INC.
2019	Outside Director of Nitori Holdings Co., Ltd.
2019	Director and Chairperson of theBoard of Japan Investment Corporation
2020	Chairman of the Boardof The Kansai Electric Power Co., Inc.

Senior Vice President
Head of Corporate Strategy Planning

Kazuhiko Nakayama
Senior Vice President
Head of Finance and Accounting

Katsuichi Sonoda
Senior Vice President
Head of Strategic Business Development

Akiko Kudo
Senior Vice President
Head of Public Relations
Deputy Head of Business Strategy

Hiroki Kuriyama
Senior Vice President (part time)
In charge of 2020 Project andBusiness Collaboration

Atsuko Oka
Senior Vice President
Head of Technology Planning

Tadao Yanase
Senior Vice President
Head of Business Strategy

Ken Sakamura

Keiko Takegawa

Outside Independent Memberof the Board

Outside Independent Memberof the Board

Years Served as Member of the Board Shares Owned: 19002002	Director of YRP Ubiquitous Networking
Laboratory2014	President of Vitalizing Local Economy
Organization by Open Data & Big Data
2017	Professor and Dean of Faculty ofInformation Networking for Innovation and
Design of Toyo University
2017	Emeritus Professor of the Universityof Tokyo2019	Member of the Board of the Company
2019	President of Association for
IoT Services Coordination

58

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

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

16002019	Member of the Board of the Company
2019	Audit & Supervisory Board Memberof MITSUI MINING & SMELTING CO., LTD.
2020	Professor and Dean of Faculty of Global
Business of Showa Women’s University

ANNUAL REPORT 2020

59

Initiatives Aimed at Promoting ESG Management

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

Corporate Governance

26%●

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 Agenda
Items Presented to theBoard of Directors in thefiscal year ended
March 31, 2020

Financing and loans, etc.

Katsuhiko Shirai

Sadayuki Sakakibara

Ken Sakamura
Keiko Takegawa

Major Subjects

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

Results Aggregation andAnalysis Method

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

Review of NTT Group operational structure●

Global strategy●

M&A matters of operating companies●

Report on the status of execution of duties●

Approval of Annual Reports and financial statements●

Research and development plans, etc.

In the evaluation of the fiscal year ended March 31, 2020, positive responses were received for all questions, indicating thatthe Board of Directors is effectively fulfilling its important expected roles and responsibilities. We received particularly highmarks for the appropriate number and percentage of outside directors, and that the Board has amply discussed items thatare of great importance for business management. At the same time, there were opinions stated about the composition of
the Board, namely that there were too many overall directors, as well as opinions about support for outside directors, specifically that there should be more and better opportunities for outside directors to gain knowledge. Other opinions stated concerned the clear separation of the functions of managerial decision-making / supervision and business execution, the needfor discussion of overall strategies and other issues regarding the duties of the Board of Directors, as well as other means ofmaking corporate governance more effective.

Statements made at Board of Directors’ Meetings
Outside Member of the Board Katsuhiko Shirai made comments mainly concerning the circumstancesof Group management and global strategies from his perspective as an operational director of an educational institution with extensive experience.
Outside Member of the Board Sadayuki Sakakibara made comments mainly concerning the circumstancesof Group management and shareholder return from his perspective as a corporate executive with extensive
experience.
Member of the Board Ken Sakamura made comments mainly concerning organizational operations andhuman resources strategies from his perspective as an administrator of universities and other research
institutions with extensive experience.
Member of the Board Keiko Takegawa made comments mainly concerning system design from her
perspective with extensive experience in PR and diversity measures at government institutions.

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Anonymous surveys comprised 25 questions involving 4-level rankings as well as open-ended questions

u Evaluation Resultsu Future Response Measures

In response to the three tasks identified through the evaluation, the Company will take the measures stated below andendeavor to heighten the effectiveness of the Board of Directors.
Rate of attendance at Boardof Directors’ Meetings
11/11(100%)
11/11(100%)
8/8(100%)
8/8(100%)

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

60

Questionnaire Format

NTT Group operations

Status of Activities of Independent Outside Members of the Board (FY2019)
Name

All 15 directors and all 5 corporate auditors

Evaluation Implementation April 2020●

11%
Returns of Shareholders (share buybacks and dividends)

Participants

63%

Capital Policy●u Overview of Evaluation

Management Strategy(Number of Board of Directors’Meetings held in the fiscal year
ended March 31, 2020: 11)●

Evaluation of the Effectiveness of the Board of Directors

Regarding the scale and composition of the Board of Directors

Responses

Reduce the number of directors from 15 to 8 (June 2020)

Regarding support for outside directors

Responses

Conduct dialog on what kind of themes should be discussed and secure opportunities to explain previous efforts that will
form the basis of discussion and analysis

Board of Directors’ Operation Practices

Responses

Adopt an executive officers system (June 2020)
Utilize exchange-of-opinion meetings between directors, including outside directors, for discussions on overall strategies
and market analysis in new fields

Executive Officers Meeting 

Various Committees 

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

A number of committees have been established under the
Executive Officers Meeting to discuss important mattersrelated to business execution. Major committees include theTechnology Strategy Committee, which deliberates on theGroup’s R&D vision and technology development strategy; theInvestment Strategy Committee, which examines investment
projects that are larger than a certain scale; and the Finance
Strategy Committee, which discusses basic financial strategies
and financial issues. These committees, which are convened asnecessary throughout the year, are, in principle, chaired by thepresident or a senior executive vice president and are attended
by relevant executive officers and others.

ANNUAL REPORT 2020

61

Initiatives Aimed at Promoting ESG Management

Messages from Outside Independent Members of the Board
I believe that the needs and expectations for information and communications technology will become even greater and morewidespread as new lifestyles and workstyles take hold. As NTT is an information and communications company, I believethat it must fulfill its expected social role and continuously improve corporate value.
Based on my experience as a science and engineering educator and as a manager of an educational institution, I makerecommendations and appropriate decisions after rigorously confirming the integrity and competitiveness of each business,and the potential risks and response scenarios for new partnerships and collaboration projects. For example, I have broughtup the necessity collaboration with the academic community to take the initiative in the new field of life science, and the needfor the Group as a whole to engineer efficient and beneficial systems. I have also confirmed andcalled attention to the future potential of the SmartInfra business as well as financing policies
during the uncertain circumstances caused by the COVID-19 pandemic. I also support generous
shareholder return measures amid these unpredictable times caused by COVID-19.
Management supervision is also an important role of outside directors, and when it comes tomonitoring the business execution status of each director, I provide advice for global businessgovernance and perform other checks to achieve sustainable growth.
Furthermore, with the reassessment of the operation, scale, and composition of the Boardof Directors in June 2020, I believe there will be more active strategic discussions, which will
be utilized in Group management. I will continue to contribute to proper business operations
and enhancement of enterprise value by flexibly and continuously monitoring businessexecution and providing appropriate support risk-taking for the sake of growth.

Katsuhiko Shirai

Outside Independent Memberof the Board
Assumed the position of Outside Memberof the Board of the Company in June 2012

Ken Sakamura

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

62

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Innovations based on AI and IoT are evolving day by day, and we are seeing escalating
global competition that transcends regional and national boundaries. We are also
facing new challenges. As society evolves from its experience with COVID-19, we arecertain to see further digitization. At the same time, though, we will need to defend
against cyberattacks, and respond to new laws and regulations in business operations, new concepts of privacy, and standardization of ethics in the information field.
Against this backdrop, in addition to NTT’s various management resources suchas its R&D, ICT infrastructure, and human resources, collaboration with partners is
indispensable for the achievement of NTT Group's digital transformation (DX) andfor the DX of NTT customers. I have experience contributing to the realization ofubiquitous computing and IoT. I have been involved in an open architecture researchand development project centered on a real-time OS called TRON (The Real-time
Operating system Nucleus) for over 40 years, and released the fruits of those efforts
openly and free of charge throughout the world. Based on that experience, I havesupported the success of NTT’s medium-term management strategy by advising on
the importance of securing human resources and protecting personal informationand the need for an open platform for the development and expansion of new businesses for further DX.
The reassessment of the operation, scale, and composition of the Board of
Directors in June 2020 has good prospects for enhancing the effectiveness of theBoard of Directors. I aim to contribute to the sustainable growth of NTT by objectively supervising management’s strategy formulation and job execution, making
appropriate judgments and evaluations, and supporting the success of medium-term
management strategies through lively discussions between management and outside directors.

Taking advantage of my long experience in corporate management at Toray Industries,
Inc. and Japan Business Federation (Keidanren), I work to supervise management from
Outside Independent Member
the perspective of solving social issues through business activities and contributing toof the Board
Assumed the position of Outside Member
the Sustainable Development Goals (SDGs), as well as enhancing governance. In theof the Board of the Company in June 2012
last two years, NTT’s governance system has taken a big step up, but it is still a workin progress, and I believe one of the major roles of outside directors is to further
strengthen the effectiveness of governance.
On the Board of Directors, I have made recommendations and voiced various observations regarding global businessstrategy and governance, the monitoring of individual business segments, feasibility and risk response
in investment and collaboration projects and new businesses, as well as shareholder returns.
This spring, I had the first opportunity as an outside director to hold dialog with institutional
investors. It was a beneficial opportunity to exchange opinions on a wide range of issues such as
shareholder returns, growth investment in R&D and new businesses, capital efficiency, governance,and diversity, as well as to obtain knowledge and suggestions from those investors. While keeping
the views of shareholders and investors constantly in mind at meetings of the Board of Directors
and other forums, I will continue to monitor management from a medium- to long-term perspective with the aim of achieving sustainable growth and enhancing NTT’s enterprise value
by providing proactive input utilizing my independence as an outside director and my experience in corporate management.
During this turbulent period when digital transformation is making rapid progress and it
is on the verge of transforming into a Smart World and Smart Society, as a leader in telecommunications, NTT has tremendous growth potential. In anticipation of changes in the
global economy and society in the post-COVID era, I hope NTT will become a company
capable of achieving greater growth beyond its medium-term management strategy into
2030 and 2040.

Sadayuki Sakakibara

As a civil servant, I have long been involved in the promotion of diversity, and I have been working on the active participationof women in various fields, particularly the promotion of corporate initiatives and support for the appointment of female
corporate executives.
Innovation and the creation of new services are indispensable for solving social issues. Such innovation requires the
securing of talented human resources as well as the promotion of diversity. Particularly in the rapidly evolving ICT industry,
I believe it is necessary to incorporate new perspectives and values by promoting diversity.
As COVID-19 demands accelerated adoption of ICT, I am aware that NTT has a number of issues that still require attention. It needs to coalesce its Group abilities to deal with a competitive environment that is changing
faster and faster, and enhance Group governance as a corporate entity active on the global stage.
NTT also has abundant business resources including a diverse work force, while it has a greatsocial responsibility as well. I will put my experience in diversity to use to make appropriate decisions. In terms of corporate ethics, I will make recommendations on the need to create mechanisms to address harassment of external entities such as business partners and contractors,
and to avoid and handle risks by collecting and analyzing information from multiple angles forthe growth of global business.
Furthermore, with the revisions to the structure of the Board of Directors this year,
I hope that more strategic discussions and enhanced management supervision will bepromoted, and that outside directors from different backgrounds will exchange opinionsfrom a variety of perspectives at Board of Directors’ meetings. I aim to continue contributing to NTT’s sustainable growth andmedium- to long-term enhancement of
Keiko Takegawa
enterprise value through important
Outside Independent Member
decision-making and oversight of busiof the Board
Assumed the position of Outside Member
ness execution as an outside director.
of the Board of the Company in June 2019

ANNUAL REPORT 2020

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Initiatives Aimed at Promoting ESG Management

Audit & Supervisory Board
Members of the Audit & Supervisory Board * As of June 30, 2020

Takao Maezawa

Kanae Takahashi

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

Years Served
4
as Audit & Supervisory Board Member: 
20,008
Shares Owned: 1978	Joined Nippon Telegraph andTelephone Public Corporation
2016	Full-Time Audit & Supervisory
Board Member

Years Served—
as Audit & Supervisory Board Member: 
4,200
Shares Owned: 1987	Joined the Company
2020	Full-Time Audit & Supervisory
Board Member

Hideki Kanda

Outside Independent Audit &Supervisory Board Member

Outside Independent Audit &Supervisory Board Member

Years Served
6
as Audit & Supervisory Board Member: 
6,900
Shares Owned: Years Served
as Audit & Supervisory Board Member: Shares Owned: 1974	Registered as Attorney-at-Law(Daini Tokyo Bar Association)(registration up-to-date)2012	Established Kowa Law Office2013	Outside Director of Alps Electric Co., Ltd.
(currently registered as Alps Alpine
Co., Ltd.)2014	Outside Audit & Supervisory
Board Member of the Company

2016	Professor of Professional School of Law(Law School) of Gakushuin University
2016	Emeritus Professor of the Universityof Tokyo2017	Director of Sumitomo Mitsui Trust Bank,
Limited2019	Outside Audit & Supervisory Board Memberof the Company

Outside Independent Audit &Supervisory Board Member
Years Served
as Audit & Supervisory Board Member: Shares Owned: 101985	Registered as a Certified Public Accountant(registration up-to-date)2019	Outside Audit & Supervisory
Board Member of the Company
2019	Director of Sumitomo Mitsui Trust Bank,
Limited2020	Audit & Supervisory Board Memberof Kirin Holdings Company, Limited(present post)

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

Activities of the Audit & Supervisory Board 

Takashi Iida

Kaoru Kashima

The Audit & Supervisory Board 

10

Amid global business reorganization, expansion of business domains, and other major changes in the running of its business, in thefiscal year ended March 31, 2020, based on its auditing plans, we worked to achieve efficient and effective audits in collaboration with
its Internal Control Office, accounting auditors, and Group company corporate auditors on initiatives for legally-mandated audits as wellas progress on the medium-term management strategy and maintaining and improving corporate governance. In addition, due to theglobal COVID-19 pandemic, we have partially canceled the local exchange of opinions with overseas subsidiaries that was scheduled
after the end of February 2020, but by taking measures such as substituting with web conferencing, we avoided any major impact on
auditing activities.
Our corporate Audit & Supervisory Board Members, which include independent outside corporate Audit & Supervisory Board
Members, ascertain the status of the execution of duties by directors andSummary of Opinion Exchanges
make recommendations as necessary, by attending important meetings
Exchanges with Representative Members of thesuch as the Board of Directors, and holding theme-based discussions
Board
10with representative directors and discussions with individual directors
Discussions with Representative Members of theboards of Group companies
42
and Group company representative directors. We also implement initiaExchanges with Independent Auditor
10
tives that help improve the audit activities of Group company corporate
auditors by receiving reports on audit results from corporate auditors of
Exchanges with the Internal Control Office10
major Group companies, exchanging opinions, and holding regular trainListening to and discussing the status of corporate
governance and efforts to maintain and improve it
ing sessions for corporate auditors by outside experts.
from the representative directors of major GroupThrough such activities, we promote sound and sustainable growthcompanies
19
and development for NTT and our Group companies from an indepenNumber of major domestic bases visited19
dent standpoint different from that of business executives, and we help
In addition, the Audit & Supervisory Board received reports onstrengthen corporate governance systems and raise awareness ofaudit results from the auditors of major Group companies andcompliance.
exchanges opinions.
Status of Activities of Outside Independent Members of the Audit & Supervisory Board (FY2019)

Name
Takashi Iida

Hideki Kanda

Kaoru Kashima

Statements made at Board of Directors’ meetings and Audit & Supervisory Board
meetings
Audit & Supervisory Board Member Takashi Iida made comments mainly concerning
corporate governance based on the professional perspective fostered through his
extensive experience as a lawyer.
Audit & Supervisory Board Member Hideki Kanda made comments mainly concerning
corporate governance from his expert perspective based on his abundant experience asa university professor.
Audit & Supervisory Board Member Kaoru Kashima made comments mainly concerning
accounting auditing from her expert perspective based on her abundant experience as acertified public accountant.

Attendance rate
Board of Directors’
Audit & Supervisory
meetings
Board meetings
11/11(100%)

23/23(100%)

8/8
(100)

14/15
(93)

7/7
(100)

14/14
(100)

Evaluation of the effectiveness of the Audit & Supervisory Board In the fiscal year ended March 31, 2020, we evaluated the effectiveness of the Audit & Supervisory Board to review our audit activities
and reflect them in our audit plan for the next fiscal year and improve our audit quality. After discussion and verification by all Audit &Supervisory Board Members based on the results of questionnaires by each individual member, it was determined that the Board had
effectively fulfilled its role and duties. Increasing opportunities for the exchange of opinions with representative directors has enabled
us to more actively share management issues, confirm risk awareness, and make recommendations from Audit & Supervisory Board
Members. It also helped ensure that accounting audit processes are appropriate by augmenting communication with the auditing firm.
While these positive points were acknowledged, we also recognized the need to strengthen cooperation with the Internal Control
Office and corporate auditors of Group companies in light of global business restructuring and expansion of business domains. We
will continue to further improve the effectiveness of the Audit & Supervisory Board.
64

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

65

Initiatives Aimed at Promoting ESG Management

Succession Plan Nomination of Directors
Composition and Activities of the Appointment and Compensation Committee For the purpose of improving the objectivity of and transparency indecisions regarding the appointment of and compensation for
Members of the Board, NTT has established, on a non-statutory basis,
the Appointment and Compensation Committee, which consists of four
Members of the Board, including two outside independent Members of
the Board, as a preliminary review institution of the Board of Directors,
and is increasing the effectiveness of governance. In the fiscal year
ended March 31, 2020, in addition to holding meetings of the
Appointment and Compensation Committee five times, committee
members met to exchange opinions and ideas on multiple occasions
and engaged in active discussions.

Composition of the Appointment and Compensation
Committee
InsideMembers of
the Board

2

4

Outsideindependent
Members of
the Board

Number of Appointment and Compensation Committee
Meetings in the Fiscal Year Ended March 31, 2020: 5

In terms of the composition of the Company’s Board of Directors, the nomination of executives is based on the “NTT Group Personnel
Policy,” and personnel with the skills to resolve issues recognized by NTT Group are nominated broadly from inside and outside of theGroup. Outside Members of the Board and outside Audit & Supervisory Board Members are elected with the expectation that they
can provide opinions based on a broad management perspective or as an expert. Furthermore, both inside and outside Members of
the Board are elected in line with NTT Group’s promotion of diversity. Moreover, with the revisions to the structure of the Board of
Directors in June 2020, 50% of the Board are now outside directors, including one woman.

NTT Group Personnel Policy
NTT Group strives to contributeto the resolution of social issues
and the realization of a safer,more secure, and more affluent
society. To accomplish this goal,
the Group acts as a trusted “Your
Value Partner” that customers
continue to select in order toprovide them with new value on a
global basis. NTT has establishedthe policy of positioning individuals that share these ideals in theupper ranks of NTT Group’s
management, and NTT is electing
such individuals from both insideand outside the Group.

u Nomination of Candidates for Members of

the BoardIn regard to Member of the Board candidates,individuals are elected based on the broadranging perspectives and experience, superior
management skills and leadership, and businesssenses and motivation necessary to contributeto the overall development of NTT Group in orderto facilitate the improvement of the Group’s
corporate value. The Board of Directors is of asize appropriate to the Group’s business, and thecomposition of the Board of Directors takes into
account a balance of specialties and diversity.
From the perspective of strengthening thefunction of supervising business execution, foroutside independent Members of the Board,NTT elects individuals who present no risk of aconflict of interest with general shareholders. In
principle, NTT appoints several outside independent Members of the Board.

Compensation of Members of the Board and Audit & Supervisory Board Members

2

Nomination Policy u Basic Policy

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

u Nomination of Candidates for Audit &Supervisory Board Members
NTT has the policy of electing candidates for
Audit & Supervisory Board Members who havethe capacity to provide audits based on specialized experience and insight. From the perspective of guaranteeing fair audits of the executionof duties by Members of the Board, with respect
to outside independent Audit & Supervisory
Board Members NTT elects individuals who
present no risk of a conflict of interest withgeneral shareholders. In accordance with theCompanies Act, NTT ensures that outside
independent Audit & Supervisory Board
Members make up half or more of the Audit &Supervisory Board.

With regard to compensation policy and the composition and levels of compensation of Members of the Board of NTT, in order toimprove objectivity and transparency, NTT established the Appointment and Compensation Committee, comprised of four Membersof the Board, including two outside independent Members of the Board. Compensation matters are decided by the Board of Directors
after deliberation by this committee. In the fiscal year under review, in addition to holding meetings of the Appointment andCompensation Committee five times, committee members also met to exchange opinions and ideas on multiple occasions.
Compensation of Members of the Board (excluding outside Members of the Board) consists of a base salary and a bonus. Thebase salary is paid monthly on the basis of the scope of each Member of the Board’s roles and responsibilities. The bonus is paidtaking into account factors including the degree of achievement of performance indicators, such as EPS for the fiscal year ended
March 31, 2020. Moreover, regarding earnings metrics, we have adopted the financial objectives set out in our medium-term management strategy as metrics. Specifically, we evaluate our performance based on EPS, operating profit, ROIC, Capex to Sales, overseas
sales, overseas operating profit ratio, and the number of B2B2X projects.
Also, Members of the Board make contributions of a certain defined amount or more from their base salary and bonus for thepurchase of NTT shares through the Board Members Shareholding Association in order to reflect NTT’s medium- to long-term business results in compensation. Purchased shares are to be held by the Members of the Board throughout their terms of office. The
composition ratio of compensation in a case where standard business results are achieved is roughly 70/30 of fixed compensation
to performance-related compensation.
In addition, with the aim of realizing a stronger awareness of achieving the medium-term management strategy, sustainablegrowth, and medium- to long-term improvement in corporate value, NTT is considering expanding the ratio of overall compensation
occupied by performance-related compensation from fiscal 2021.
In order to maintain a high level of independence, compensation of outside Members of the Board consists of a base salary only,
and is not linked to NTT’s business results.
Compensation of Audit & Supervisory Board Members is determined by resolution of the Audit & Supervisory Board and consistsof a base salary only, for the same reasons as those cited above with respect to outside Members of the Board.
A proposal to expand the ratio of performancebased compensation to total compensation fromthe fiscal year ending March 31, 2022, is underconsideration.

Performance-based compensation:
approximately 30%

Fixed compensation: approximately 70%

Bonus

Base salary

Based on factors that
include operating profit for
the respective fiscal year

Based on the size and scope of responsibility for each role

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

https://www.ntt.co.jp/ir/mgt_e/governance/04.html

66

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Treasurystock

Amounts above certain amounts of base salaries
and bonuses are used for purchase through theBoard Members Shareholding Association.

Total Compensation of Members of the Board and Audit & Supervisory Board Members (Fiscal Year Ended March 31, 2020)
Class

Members of the Board(excluding Outside Members of the Board)
Audit & Supervisory Board Members(excluding Outside Audit & Supervisory Board Members)
Total

Number of Persons Paid
(persons)

Monthly Remuneration Board Member Bonuses

Total Amount(millions of yen)(millions of yen)(millions of yen)

11

447

98

545

2

74

—

74

13

521

98

619

Notes: 1. Maximum limits on total annual compensation of Members of the Board and Audit & Supervisory Board Members were set at ¥750 million for Members of the Board (15 membersor less) and ¥200 million for Audit & Supervisory Board Members (five members or less) at the 21st Ordinary General Meeting of Shareholders held on June 28, 2006.
			 2. In addition to the above, there was a bonus of ¥18 million paid to six Members of the Board who concurrently serve as employees.
			 3. With respect for the performance indicator targets for the payment of executive bonuses for the fiscal year under review, all of the targets have been achieved except for overseas
sales and overseas operating income margin.
			 4.	The total amount of compensation, etc. paid to outside Members of the Board and Audit & Supervisory Board Members in fiscal 2019 was ¥97 million to nine persons (including
two outside Audit & Supervisory Board Members who resigned on June 25, 2019, at the conclusion of the 34th Ordinary General Meeting of Shareholders).
ANNUAL REPORT 2020

67

Initiatives Aimed at Promoting ESG Management

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

Strategic Shareholdings

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

Business Risk
Management Committee

Risk analyses

processes●

Information security risks●

Disaster risks●

Investment risks●

Compliance risks

Other risks that need
to be considered

Small

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

Material risks, etc.
Material risks

MediumFormulation of risk analysis

Risk correlation analyses

Large

Internal Control

With respect to business risk management, NTT has established Risk Management Rules stipulating basic policies on risk management with the aims of, among others, anticipating and preventing the materialization of potential risks and minimizing losses if any
risk materializes. Chaired by a senior executive vice president, the Business Risk Management Committee spearheads efforts todevelop and operate a PDCA cycle for managing risks. During the fiscal year ended March 31, 2020. the committee held one meeting
during which discussions involved identifying risks that could potentially have a Companywide impact, policies for managing suchrisks, and other such matters.
NTT has also formulated the NTT Group Business Risk Management Manual and distributed it to each Group company, in orderto facilitate Groupwide risk management initiatives. On the basis of the manual, which stipulates matters that include proactive
measures for potential risks, collaborative Groupwide approaches and policies for addressing risks that materialize, and pathways
for communicating information, systems have been developed and implemented that enable swift action to be taken.

Degree of influence on business operations

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

Promotion of Risk Management

●

●

Low

MediumHigh

Financial risks
 uman resource andHlabor risks···

Frequency of occurrence

Evaluation /Improvement

Risk
countermeasures

Designated Priority Risks
2002●

A History of Internal
Control /Risk Management

●

●

●

 stablishment of Business Risk Management
E
Committee
Establishment of Corporate Ethics Committee

2006
●

●

2018

Establishment of Internal Control Office stablishment of Basic Policies Concerning theE
Development of Internal Control Systems stablishment of NTT Group Corporate
E
Ethics Charter stablishment of Groupwide Corporate
E
Ethics Help Line2010
Establishment of
Risk Management Rules●

More information on the Basic Policies Concerning the Maintenance ofInternal Control Systems for NTT Group can be found on NTT’s corporate website.

https://www.ntt.co.jp/ir/mgt_e/governance/06.html●●

Establishment of the IT Strategy OfficeImprovement of the management andoperation of the Groupwide Corporate Ethics
Help Line (establishment of a reporting route
to Audit & Supervisory Board Members that is
separate from reporting routes to the senior
management team)

System failure, network failure, and related risks

Damage to network caused by major disasters
Indirect damage caused by major disasters
Impact of COVID-19
Service level compromised or other damage caused by cyberterrorism

Risk of operating revenues decline due to changes
in market structure and increased competition

Decline of NTT Group's consolidated operating revenues

Domestic and overseas investments not producing expected returns

Investments do not produce expected returns

Domestic and overseas scandals, contractual issues,
and related risks

Loss of social trust and damage to income stemming from complianceviolations

Risk of terrorism or similar incidents domestically or internationally

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

For more information on risk factors, please refer to NTT’s corporate website.

https://www.ntt.co.jp/ir/mgt_e/risks_factors.html

68

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020

69

Stakeholder Engagement

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

Examples of Engagementu Venues for customer inquiries

Customers

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

u General Meetings of Shareholders, financial results

Shareholders
and Investors

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

u Creation of inquiry forms

Business
Partners

Through the procurement of products thatconsider the environment and humanrights, and the creation of fair partnerships, we fulfill our social responsibility as
a company and aim to grow sustainably
with our business partners.

u Participation in industry groups and initiatives

ICT Companies
and Industry
Associations

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

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

u Conducting of employee satisfaction surveys

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

u Support and collaboration through social contribution

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

u Compliance with laws and regulations(Enterprises and Individuals)

Employees(Employees, Their Families,
and Retired Employees)

Local
Communities

CentralGovernment andAdministrative
Agencies
70

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

u Conducting of customer satisfaction surveys
u Utilization of websites and social media

announcementsu Explanatory presentations for individual investors(17 times, including webcast presentations)u Explanatory presentations for institutional investors(Over 400 individual consultations and 7 conferences)u Publication of yearly reports (annual reports, etc.)

u Disclosure of procurement policies and guidelines, etc.
u Surveys for suppliersu Explanatory presentations for suppliersu Participation in committees, etc.

u Regular interviewsu Communication between management and employeesu Groupwide Corporate Ethics Help Lineu CSR conferences

activitiesu Negotiation with local community residents whenconstructing or installing equipmentu Donations, sponsorship, and other supportu Suggestions for government policyu Participation in public-private partnership projects

ANNUAL REPORT 202071

Operations in Review

Mobile Communications Business

TOPICSIn the Mobile Communications Business Segment, we worked to promote sales of
the new billing plans, Gigaho and Gigalight, which feature simple structures andgreat value, and docomo Hikari, started to provide 5G services, and collaborated
with various business partners in the smart life area, in an effort to provide newvalue-added services.

uIn order to reduce customer waiting times at docomo shops, we introduced the ability to book via the Internet or by telephone, andextended the time slots during which appointments are possible. In addition, from December 2019, we unified our support approach to
explain to customers who purchase a terminal at a docomo shop and wish for initial setup and data transfer, that they may receive thisservice free of charge.

uWe concluded a capital and business alliance agreement with M3, Inc., the largest domestic medical IT company, which counts approximately 90% of Japan’s physicians as members, and established empheal, Inc. to support corporate health management.

Competitive Advantagesuu A stable communication network that can be used comfortably anytime, anywhereAs a result of providing information related to 5G technology and specifications, and offering a 5G technology verification environment
free of charge, the number of participants in the DOCOMO 5G Open Partner Program, which is an initiative aimed at creating new solutionsu Top-notch research and development capabilities

with partner companies, had risen to 3,400 as of the end of March 2020.

u Large market share and stable customer base

FOCUS
Collaboration in Various Fields Centered on d POINTs

Composition by Segment for the Fiscal Year Ended March 31, 2020

Operating
Revenues

33.7

Operating
Profit54.5%(¥4,651.3 billion)

CapitalInvestment

31.7

%

(¥854.7 billion)

Number of
Employees

8.6%(¥572.8 billion)%(27,558)

NTT DOCOMO has formed a business alliance with Recruit Co., Ltd., through which it seeks to grow its ecosystems. Centered on
d POINTs, these efforts are aimed at increasing convenience for and improving the quality of services provided to customers of
Recruit’s services and d POINT CLUB subscribers.
1. Linking of Recruit Group’s Online Services with d POINTs
By linking the Recruit IDs used for all online services provided by the Recruit Group with NTT DOCOMO’s d ACCOUNTs, we make itpossible to accumulate and use d POINTs when using the Recruit Group’s online services.
Going forward, we will examine the possibility of collaborating in supporting sales promotions by d POINT affiliates and in marketing in order to further expand the base of d POINT CLUB subscribers.
2. Enhancement of Coordination with Air BusinessTools
From April 2020, Recruit’s AirPAY service was made compatible with d POINTs, adding to prior compatibility with the d PAY payment
service and making it possible to accumulate and use d POINTs at AirPAY affiliates.
Note: Using d POINTs through Recruit services requires the registration of d POINT user information.

Collaborative Ventures for Supporting Healthcare Institutions and Patients with ICT and IoT
Phase 1—Commencement of Virtual Outing Trial for Hospitalized Patients

XX,XXX
Number of Subscriptions
by Mobile Network Operator

Churn Rate

Number of d POINT CLUB Members(Thousand subscriptions)(%)(Million members)

43,186
1.22
58,6430.86
0.65

80,326(Fiscal year) 2015

2016

2017

2018

2019

‌ NTT DOCOMO ‌ KDDISoftBank* Created by NTT based on data published by the
Telecommunications Carriers Association. KDDIfigures include UQ mobile subscriptions.
SoftBank figures include Y!mobile subscriptions(excluding PHS).

(Fiscal year)

2017

65.60

70.15

75.09

1.07
0.76

0.96

0.57

0.72
0.54

2018

2019

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

(Fiscal year) 2017

2018

2019

The global COVID-19 pandemic has prompted healthcare institutions to place limits on face-to-face interactions with patients, forcing
frontline healthcare workers to provide the necessary healthcare services while limiting their number of interactions with patients.
In response to this situation, there is an increased need to introduce ICT- and IoT-powered remote technologies. NTT DOCOMO isexamining the potential for collaborative ventures with M3, Inc. and Sony Corporation, to utilize ICT and IoT to address such issues in
the healthcare field.
As the first phase of these ventures, we have commenced a trial using virtual reality (VR) and augmented reality (AR) technologies
to provide hospitalized patients with opportunities for virtual outings and support virtual visits. Specifically, we offer programs thatallow patients to become immersed in travel videos with a 360° viewing perspective simply by putting on VR goggles in their hospitalroom, giving them the opportunity to experience outings that feel almost real. Another offering is a virtual visitation system thatallows patients to meet with their families even when face-to-face visits are discouraged due to fear of COVID-19 infection.
Going forward, we hope to contribute to the resolution of a wide range of issues pertaining to improving patient quality of life,
facilitating treatment and rehabilitation, enabling
remote examinations and remote explanations topatients’ families, and allowing for communication
between physicians and patients.

Virtual outing using VT and AR technologies (image)72

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202073

Operations in Review

Regional Communications Business

TOPICSIn the Regional Communications Business Segment, we worked on the Hikari
Collaboration Model, which provides wholesale fiber-optic access services, among
other things, to various service providers, as well as strengthening our solutions
business with the aim of revitalizing local communities and regional economies.

u We established NTT AgriTechnology Corporation, NTT Group’s first “Agriculture × ICT” specialist company, aiming to promoteurban development through agriculture by utilizing IoT / AI. In addition, in order to promote such initiatives as contributing to therevitalization of local communities and regional economies, we established NTTe-Sports, Inc. as a joint venture with SKY Perfect
JSAT Corporation and Taito Corporation.
u NTT East and NTT West collaborated with many local governments nationwide, promoting a variety of initiatives aimed at utiliz-

ing ICT for urban development. Beginning in the Kyoto area, NTT West has started the staged deployment of a Local Revitalization
Cloud service, which is a shared-usage cloud for universities and local governments.

Competitive Advantages
u Secure, highly reliable, stable communication networku In order to address the societal issues of how to save and pass on regional cultural and artistic assets, and to respond to ouru Provision and support of ICT solutions with strong local ties

customers’ expectation that we will help revitalize local communities and convey their appeal through culture and art, we promoted the collection of digital data related to local culture and art, and broadcasted information using cutting-edge technology tocontribute to the revitalization of local communities through local artistic and cultural traditions. We also hosted the “Digital ×
Hokusai (prelude)” interactive exhibition as a means of expressing the concept of this initiative.

u Large market share and stable customer base

FOCUS
Opening of eXeField Akiba Facility for Creating New Culture and Communities through E-Sports andComposition by Segment for the Fiscal Year Ended March 31, 2020

Operating
ProfitOperating
Revenues

22.3

24.8

%

%

(¥388.3 billion)(¥3,079.9 billion)

XX,XXX

Provision of eXeLAB Comprehensive Communication Platform

CapitalInvestment

28.9

Number of
Employees

23.4%(¥522.5 billion)

Fixed-Line Broadband Services Subscriptions

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

6.71
1.40

NTT East
Total for NTT Eastand NTT West

33.09

%

(74,754)53.7%

12.44 million
subscriptions

NTT West

9.68 million

subscriptions(Fiscal year)

2015

2016

2017

2018

2019

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

74

NIPPON TELEGRAPH AND TELEPHONE CORPORATION*C reated by NTT from materials published by the Ministry of Internal Affairs andCommunications. Includes subscriptions related to provision of wholesale telecommunications services.

NTTe-Sports, Inc. opened eXeField Akiba, an e-sports facility located in Akihabara UDX, in August 2020. This facility will function asa pillar supporting NTTe-Sports’ efforts to accomplish its mission of building communities and contributing to local economic invigoration through e-sports as well as the core that will organically link all of its various undertakings. Moreover, eXeField Akiba isequipped with cutting-edge equipment to allow for distribution of footage from online e-sports events from across Japan. By providing a venue for forming connections between different people and communities through this facility, we aim to help entrenche-sports culture, build communities, and evolve e-sports-related technologies.
In conjunction with the opening of this facility, the eXeLAB comprehensive communication platform for gamers was launched,also in August 2020. The recent boom in the video game market seen has been due in no small part to communication between
players in the form of nationwide tournaments and exchanges between e-sports teams
and fans. However, the differences in information available by region have led to disparities between the efforts of players. Event organizers, meanwhile, face issues with regard
to the hassle of making all the necessary adjustments for arranging events, impeding thecontinuation of such events. To address these issues, eXeLAB provides forums for communication between gamers as well as tools for the management of tournaments andteams. We hope that these features will help promote the expansion and acceleration of
gaming events while making them more efficient. Through eXeLAB, we also aim to support the development of e-sports and contribute to the creation of new connections amid
the new normal.
Establishment of New Company to Realize Sustainable Next-Generation Livestock Production andDairy Farming and Circular Community Ecosystems
Biostock was established in July 2020 through joint investment by Biomass Research Co., Ltd., and NTT East for the purpose ofrealizing sustainable livestock production and dairy farming and invigorating regional economies.
The number of people engaged in livestock production and dairy farming is declining in Japan while the number of animals eachfarmer has to care for is increasing. Meanwhile, many farmers have expressed an interest in introducing biogas plants, which are ameans of utilizing animal excrements while eliminating odors, but have been unable to do so because of the high introduction costs,
which cannot be covered through their own capital or borrowings.
Given this situation, we are working to eliminate the high hurdle to introduction of biogas plants through a monthly payment modelthat requires no initial investment. This is made possible by combining the biogas plant introduction expertise of Biomass Researchwith the ICT capabilities of NTT East. We also intend to coordinate with a diverse range of partners to offer additional solutions, suchas sophisticated IoT- and AI-powered control systems that can perform farm operation procedures other than excrement disposal
remotely without human involvement and optimal growth management systems that analyze environment and growth data.
Going forward, we will promote digital transformations in livestock production and dairy farming through coordination capitalizing
on NTT Group’s assets and Biomass Research’s expertise.

ANNUAL REPORT 202075

Operations in Review

Long Distance and International Communications Business

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

In the Data Communications Business Segment, we responded to the accelerationof our customers’ digital transformation at a global level, and to their increasingly
diversified and sophisticated needs, by working to expand our business in the
global market and to extend and consistently provide a range of IT services, suchas offerings of digitalization and system integration, that are responsive to thechanges in the market.

Competitive Advantages

Competitive Advantages

u Full-stack solutions from application to IT infrastructureu High-level technology development and project management capabilities

u Global coverageu Large market share and stable customer base in Japanu Strong customer engagementu Powerful service delivery capabilities using development bases around the world

Composition by Segment for the Fiscal Year Ended March 31, 2020

Operating
Revenues

16.0%(¥2,205.8 billion)

Operating
Profit6.6%(¥103.6 billion)

Composition by Segment for the Fiscal Year Ended March 31, 2020

CapitalInvestment

15.5

%

(¥279.3 billion)

Number of
Employees

16.2

16.4

%

(51,580)

TOPICSuOperating
RevenuesIn order to respond to demand for cloud services and data centers, we worked to enhance our service provision structure. In Europe, we

u

10.7

%

(¥193.8 billion)

41.8

%

(133,196)

We were selected as a strategic partner for the digital transformation project of Naturgy Energy Group, SA, a gas and electrical energy
bution and various operations related to utility retail service using a advanced platform that we had developed among others.

uIn pursuit of our growth strategy in North America, we converted two U.S.-based companies, Flux7 Labs Inc. and NETESOLUTIONS

voice recognition system, a tool which automates the entry of transaction data for market instruments by utilizing voice recognition and

CORPORATION, to subsidiaries. The acquisitions of these companies will strengthen our capabilities in relation to Amazon Web Services

processing technology, text mining, and RPA. Mizuho Bank has begun using the system in its market banking operations.

and U.S. federal government healthcare.

FOCUS
GIGA School Pack for Helping Supply a Computer for Every Student
NTT Communications has teamed up with Lenovo (Japan) Ltd. to develop the GIGA School Pack, which combines educational-use
computers for elementary and junior high school students with the Manabi Pocket, a cloud-based education support platform tosupport the GIGA School Scheme* aimed at helping supply a computer for every student. Applications for this service have been
accepted since March 2020. We will look to promote digital transformations at educational institutions by providing the GIGA School
Pack to elementary and junior high schools across Japan going forward.
* Scheme aimed at helping supply every student with a computer and to develop high-speed, high-capacity communication networks in an integrated manner to ensure schools acrossJapan can continue to provide equal and individually optimized learning environments on into the future

Direct Access via Microsoft Azure ExpressRoute from Berlin 1 Data Center
A Microsoft Azure ExpressRoute connection point allowing for direct access to Microsoft Azure has been installed in the Berlin 1 Data
Center of NTT Ltd. The ability to access Azure directly without passing through a standard Internet connection makes it possible forcustomers to establish hybrid clouds with increased levels of safety and reliability. This connection point can be accessed by customers using our data centers in the EMEA region.

76%

Number of
Employees

utilities company in Spain. We will provide BPO / ITO services for maintaining and operating systems related to gas and electricity distri-Indonesia Jakarta 3 Data Center.
Together with Mizuho Financial Group, Inc., Mizuho Bank, Ltd., and Mizuho Information & Research Institute, Inc., we jointly developed a8.3(¥130.9 billion)

CapitalInvestment

TOPICS

began operating Netherlands Amsterdam 1 Data Center and Germany Frankfurt 4 Data Center, while in Asia, we began construction ofu%(¥2,266.8 billion)

Operating
ProfitNIPPON TELEGRAPH AND TELEPHONE CORPORATION

FOCUS
Evolution of Catch&Go, a Cash Register-Free Digital Store Service that Allows for Shopping via Facial Recognition
NTT DATA provides Catch&Go, a cash register-free digital store service. In addition to the QR code recognition systems used in prior experimental digital
stores, we have introduced facial recognition systems and dynamic pricing
using electronic price cards. We will test the new shopping experience thatenables customers to enter a store and make payments purely through facialrecognition as well as the use of electronic price cards linked to the store’s
inventory information to improve sales and reduce waste loss.
Global Access to Historical Cultural Heritage throughout the ASEAN Region via Digital Archiving
NTT DATA is participating in the ASEAN Cultural Heritage Digital Archive project, which entails the digitization of important historicalcultural heritage from throughout the ASEAN region. Through this project, NTT DATA compiled cultural heritage from across theregion into a digital archive system, making around 160 digitized cultural heritage articles from Indonesia, Thailand, and Malaysia
available for viewing. This archive includes image, voice, and video data as well as 3D data of structures. In the future, the project
aims to provide access to cultural heritage from the entire ASEAN region.

ANNUAL REPORT 202077

Operations in Review

Other Businesses

FOCUS

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

Collaboration in Renewable Energy and Storage Battery Businesses
In December 2019, NTT Anode Energy Corporation reached an agreement with Mitsubishi Corporation to examine possibilities forcollaboration in the energy field as part of their business alliance for the promotion of industrial digital transformations.
Specific Initiatives
1. Renewable Energy Projects
The companies will investigate the possibility of joint investment
in domestic and overseas renewable energy projects and of
supplying electricity to NTT Group companies.

Composition by Segment for the Fiscal Year Ended March 31, 2020

Operating
Revenues

11.6%(¥1,601.7 billion)

Operating
Profit5.8%(¥90.9 billion)

CapitalInvestment

13.2

%

(¥238.2 billion)

Number of
Employees

10.0%(31,951)

1. Renewable Energy
Projects

2. Energy Management
Business with EVs andEnergy Storage Batteries

2. Energy Management Businesses with Electric Vehicles andStoresCommercial
buildings
Storage Batteries
EnergyMitsubishi Corporation and NTT Anode Energy are looking into
optimizationPowerthe possibility of developing microgrid platforms* that incorposupply
rate electric vehicles and storage batteries, new decentralized
CommunicationEVs
power businesses that use microgrid platforms, and new energy
facilities
solutions businesses that utilize the business networks of bothInvestigating joint
Investigating new distributed
companies.
investment andpower and energy solution
Through these initiatives, we will combine NTT Group’s ICT
power supply
businesses
and direct current supply technologies with the Mitsubishi
Corporation Group’s power business insight and expertise toprovide customers with clean power options and the kind of energy-management services that will make them more resilient tochange in the energy landscape.
* Business platforms that provide optimal energy solutions to customers by organically linking storage batteries, electric vehicles, and chargers throughout a given area via ICT

Launch of Corporate Wellness Support Service—Support for Health Management via Big Data Analysis

Details of Major Initiatives

78

Real Estate Business

Finance BusinessWe promoted our mainstay office and commercial business,
residential business, and global business through NTT Urban
Solutions, Inc., a company managing NTT Group’s real estatebusiness. In Japan, we were involved in urban development
projects in Fukuoka, Sendai, and other cities.

We have developed financial services such as leasing andfinancing to facilitate the popularization of ICT devices andresolve social challenges revolving around the environmental,
educational, and medical fields. Furthermore, we provided
billing and collection services for telecommunication service
bills, and credit card transaction settlement services.

Electric Power Business

System Development Business

Led by NTT Anode Energy Corporation, which promotes smart
energy business in NTT Group, we worked on initiatives for asafe and secure society that uses natural energy and finite
energy resources efficiently without waste, and is resilient tonatural disasters and other risks.

In preparation for digital transformation, we have begun developing and deploying a cluster of IT systems that will become
the new service platform. We were also engaged in initiatives
to develop solutions for resolving societal issues, such asurban security and the revitalization of regions.

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONIn April 2020, NTT Life Science Corporation launched Genovision, a new health management support service to help promote corporate health management and employee health.
As employee health is becoming an important issue for companies, there is an increase in need for health management thatapproaches employee health from a management perspective and implements it strategically.
To cater to the demand associated with this trend, NTT Life Science offers Genovision packages bundling Genovision Dock,a genetic testing service for employees; Genovision Action, a lifestyle habit improvement support service for employees; andGenovision Insight, a health management consulting service for companies. Based on the ICT and security technologies, NTT Grouphas developed thus far, these services combine big data analysis with healthcare data and genome data acquired through genetic
testing to deliver lifestyle habit improvement support that is optimized for every employee.
We are rolling out these services for use by domestic employees via healthcare institutions operated by NTT Group, and we plan
to gradually expand the scope of availability to the various healthcare institutions across Japan with which Group companies havecontracts. These services will also be made available for external companies, and we aim to support the health improvement andhealth management efforts of companies nationwide and their employees through Genovision services.
Notifyrecommendations

Set goals

Proposecustomized plans

Continuous support
through lifelog analysis

ANNUAL REPORT 202079Operations in Review

NTT Group Topics
Fiscal year ended March 31, 2020

Fiscal year ending March 31, 2021

Holding Company (Groupwide Coordination)
May

April

September Formed technology partnership with U.S. Major League Baseball nnounced IOWN, a revolutionary optical technology-basedA
network concept

JanuaryE stablished NTTe-Sports, Inc., a new company
in the e-sports field

JanuaryE stablished IOWN Global Forum with Intel Corporation andSony Corporation to share the future of communication

December Entered in strategic alliance with Microsoft

Corporation to realize new digital solutions

June

E ntered into an industry-government-academia cooperation agreementwith Hokkaido University and Iwamizawa City

June

Succeeded in verification test of 1 Tbps long-distance ultrahigh-capacity optical signal transmission

December Formed business partnership with Mitsubishi

Corporation to pursue industrial digitaltransformations

December Joined the Valuable 500 international initiative

July

Concluded a comprehensive cooperation agreement with
Chiba City on smart and natural future urban development

JulyE ntered in capital and business alliance with JTOWER Inc.
for promoting sharing model in 5G era

JulyReached agreement with Tokyo Metro Co., Ltd. for collaborationon co-creation of Tokyo’s attractiveness and vitality

for promoting contributions by people withdisabilities

April

Started providing ONE CONTACT, the Group's unified brand for contact center businessMay

F ormed smart city and smart
campus alliances with the City ofAustin, Texas in the United States,
and the University of California,
BerkeleyMay oncluded comprehensiveC
cooperation agreement with the
ITER International Fusion Energy
Organization

May

Announced environment and energy vision

February Entered in capital and business alliance with

Tokyo Century Corporation for expanding
leasing and finance business

March Entered in capital and businessalliance with Toyota Motor
Corporation pertaining todevelopment of smart cities

March Entered in capital and businessalliance with ZENRIN Co., Ltd. forenhancing maps in the IoT and AI era

E stablished NTT Research, Inc., an overseas basic
research institution, in Silicon Valley

April
August Started providing

June

DOCOMO Lending
Platform for supporting
provision of new
financial services

 tarted providing new
S
Gigaho and Gigalite
rate plans

Regional Communications Business
July TT East established NTT
N
AgriTechnology as the Group’s firstcompany devoted to combining
agriculture and ICT

September Started providing 5G pre-commercial services

F ormed capital and business alliance with NEC Corporation for the purpose of
joint research and development and the global rollout of ICT products utilizing
innovative optical and wireless technologies

June oncluded joint research agreement with MTI Co., Ltd. on unmanned shipC
verification project

March Started providing 5G commercial services
June

for March 2026) in preparation for 5G era

October NTT West started providing Regional Revitalization Cloud

joint-use cloud service for universities and municipalities

October NTT West concluded partnership contract with Fukui City forpromoting regional revitalization through use of ICT

February NTT East established Local 5G Open Lab,the first laboratory of its type in Japan,
with the University of Tokyo

April

March Succeeded in ultrahigh precision optical frequency transfer

via 240-km-long telecommunications fiber together with the
University of Tokyo, RIKEN, and the Japan Science andTechnology Agency

December Began offering services from Osaka

June TT Global Data Centers announced construction of Jakarta No. 3 Data Center inNIndonesia, its first location to invest in from the construction phase

June TT Communications announced acquisition of leading North AmericanNmanaged service provider Symmetry Holding

No. 7 Data Center, one of the largest
data centers in the Kansai region

July TT East established a new company, Biostock, to realizeNsustainable livestock production and dairy farming andinvigorate regional economies

February Commenced free provision of Manabi Pocket, cloud-based

remote education support platform

August Started providing Nework, an online work spaceMerged global business of NTT Communications with Dimension Data andNTT Security to form NTT Ltd.

June

 tarted providing BXO Managed Workspace Security,S
a corporate cloud security management service

September Commenced provision of Catch&Go, a cash register-free digital store service
February Developed digital archive system

consolidating historical cultural heritage
from throughout the ASEAN region

Other Businesses

 tarted providing AceReal for docomo, a remote workS
support solution

 TT East and NTT West started providing FLET’S Hikari Cross
N
service offering transmission speeds up to 10 Gbps

Data Communications Business
April

Established Space Environment and Energy Laboratories

 tarted providing d-Healthcare for Biz, a health management
S
support service for corporations

October Announced discontinuation of FOMA and i-mode services (scheduledLong Distance and International Communications Business

Julypartnership agreement with KDDI
CORPORATION and commenced mutual
utilization of ships for transporting
supplies after disasters and othermutual efforts

June

July

Mobile Communications Business

September Concluded social contribution

AprilE ntered into business partnership with TOYOTA Connected Corporationin the mobility service field

September Energy business operating company, NTT Anode Energy started operations
July

Established NTT Life Science Corporation to support health management through big data analysis

July

Urban solution business operating company, NTT Urban Solutions started operations

E xpanded network of global digital technology consolidation bases to sevento strengthen capabilities in advanced technology fields

June
March NTT Urban Development opened The Hotel Seiryu

Kyoto Kiyomizu on the former site of an elementary
schoolIssued NTT Group green bonds
August NTT Anode Energy announced capital andbusiness alliance with Forest Energy Inc.
in the field of biomass power generation

November NTT Anode Energy announced medium-term vision

80

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202081

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

Billions of yen

U.S. GAAP

2011

2012

2013

2014

2015

2016

2017

2018

IFRS

2018

2019

2020

Profit and loss (For the year)

Profit and loss (For the year)
Operating revenues¥10,305.0¥10,507.4¥10,700.7¥10,925.2¥11,095.3¥11,541.0¥11,391.0¥11,799.6

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

Operating expenses

9,090.1

9,284.4

9,498.8

9,711.5

10,010.8

10,192.8

9,851.2

10,156.7

Operating expenses

10,141.1

10,186.0

10,337.3

Operating income

1,214.9

1,223.0

1,202.0

1,213.7

1,084.6

1,348.1

1,539.8

1,642.8

Operating profit

1,641.1

1,693.8

1,562.2(39.1)

16.4

(4.3)

80.5

(17.9)(18.9)(12.0)

112.8(53.2)(11.9)(3.3)

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

1,175.8

1,239.3

1,197.6

1,294.2

1,066.6

1,329.3

1,527.8

1,755.6

474.6

583.2

474.0

486.5

397.3

354.8

468.4

541.9

Finance income and costs
Share of profit (loss) of entities accounted for using
equity method
Profit (loss) before tax
Income taxes

0.7

(7.6)

(16.1)(50.8)

5.9

5.8

(0.0)

5.6

Net income

701.9

648.6

707.6

756.9

675.2

980.2

1,059.4

1,219.3

Less—Net income attributable to non-controllinginterests

192.2

180.9

185.7

171.4

157.1

242.5

259.2

309.6

Less—Profit attributable to non-controllinginterests

909.7

Profit attributable to NTT

Net income attributable to NTT

¥

509.6

¥

467.7

¥

521.9

¥

585.5

¥

518.1

¥

737.7

¥

800.1

¥

Profit5.0(10.1)

11.3

1,740.5

1,671.9

1,570.1

533.8

533.2

458.8

1,206.7

1,138.7

1,111.3

308.8
¥

897.9

284.1
¥

854.6

256.0
¥

855.3

Balance sheet (At year-end)

Balance sheet (At year-end)
Net property, plant and equipment¥ 9,900.6¥ 9,806.4¥ 9,776.7¥ 9,839.7¥ 9,801.5¥ 9,551.9¥ 9,719.0¥ 9,821.1

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

Total assets

19,665.6

19,389.7

19,549.1

20,284.9

20,702.4

21,035.9

21,250.3

21,675.8

Total assets

21,541.4

22,295.1

23,014.1

Total current liabilities

3,689.1

3,494.3

3,499.4

3,676.8

3,721.7

3,741.1

4,131.4

4,239.0

Total current liabilities

4,622.4

5,228.1

6,607.6

Total long-term liabilities

5,895.6

5,847.7

5,527.7

5,657.4

5,902.7

6,009.6

5,560.4

5,354.3

Total non-current liabilities

5,353.4

5,262.3

4,943.9

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

3,772.0

3,770.1

3,765.6

3,765.0

3,784.7

3,817.5

3,800.0

3,791.6

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

3,334.5

3,279.2

3,190.6

Total NTT shareholders’ equity

8,020.7

7,882.6

8,231.4

8,511.4

8,681.9

8,833.8

9,052.5

9,486.0

Total NTT shareholders’ equity

9,050.4

9,264.9

9,061.1

Non-controlling interests

2,060.2

2,165.1

2,290.6

2,413.5

2,368.0

2,406.3

2,455.3

2,546.6

Non-controlling interests

2,515.3

2,539.9

2,401.5¥10,080.9¥10,047.7¥10,522.0¥10,924.8¥11,049.8¥11,240.1¥11,507.8¥12,032.6¥11,565.7¥11,804.8¥11,462.6¥ 2,830.9¥ 2,508.3¥ 2,453.7¥ 2,727.9¥ 2,391.8¥ 2,711.8¥ 2,917.4¥ 2,637.5¥ 2,541.3¥ 2,406.2¥ 2,995.2

Net cash used in investing activities(2,052.2)(1,971.2)(1,776.3)(2,106.8)(1,868.6)(1,759.8)(2,089.3)(1,841.8)

Net cash used in investing activities(1,746.2)(1,774.1)(1,852.7)

Net cash used in financing activities¥   (249.6)¥   (948.1)¥   (745.2)¥   (622.4)¥   (678.0)¥   (707.6)¥   (981.5)¥   (931.7)

Net cash used in financing activities¥   (968.3)¥   (584.3)¥ (1,041.3)¥ 4,553.5¥ 4,274.0¥ 4,036.0¥ 4,200.0¥ 4,406.7¥ 4,163.3¥ 4,088.2¥ 3,854.8¥ 3,971.6¥ 4,262.7¥ 4,699.9

D/E ratio

56.8%

54.2%

49.0%

49.3%

50.8%

47.1%

45.2%

40.6%

D/E ratio

43.9%

46.0%

51.9%

Capital investment (For the year) (1)1,870.1

1,946.6

1,970.0

1,892.8

1,817.5

1,687.2

1,700.0

1,674.8

Capital investment (For the year)

1,697.9

1,697.0

1,806.6

Depreciation and amortization (For the year)

1,962.5

1,910.7

1,899.2

1,880.3

1,828.0

1,766.3

1,462.2

1,339.4

Depreciation and amortization (For the year)

1,346.9

1,333.6

1,465.3

268.2

267.9

269.2

249.3

233.8

213.4

211.6

213.9

208.6

211.3

224.9

EBITDA

3,286.0

3,234.1

3,244.2

3,204.2

3,063.4

3,277.9

3,183.3

3,215.8

EBITDA

3,237.1

3,241.4

2,979.5

EBITDA margin (1)

31.9%

30.8%

30.3%

29.3%

27.6%

28.4%

27.9%

27.3%

EBITDA margin

27.5%

27.3%

25.0%

Free cash flows

778.7

537.1

677.4

621.1

523.2

952.1

828.0

795.8

Free cash flows

795.1

632.0

1,142.5

219

224

227

240

242

241

275

283

5,292,693,556

5,102,077,600

4,847,523,076

4,599,032,856

4,374,720,036

4,211,565,656

4,093,356,288

3,991,825,514

Weighted average number of shares outstanding (4)Cash dividends, applicable to earnings for the year (4)Total equity
Cash flows (For the year)

Cash flows (For the year)

Net cash provided by operating activities

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

Research and development expenses (For the year)

Employees (Thousands) (At year-end)
Weighted average number of shares outstanding

Total equity(2)

Net cash provided by operating activities

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

Research and development expenses (For the year)

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

283

308

319

3,991,825,514

3,882,137,457

3,699,278,775

30

35

40

42.5

45

55

60

75

75

90

95

Dividend payout ratio (%)

31.2%

38.2%

37.2%

33.4%

38.0%

31.4%

30.7%

32.9%

Dividend payout ratio (%)

33.3%

40.9%

41.1%

ROE (%)

6.4%

5.9%

6.5%

7.0%

6.0%

8.4%

8.9%

9.8%

ROE (%)

10.2%

9.3%

9.3%

EPS (Yen) (2)

96.29

91.67

107.67127.31118.43175.17

195.47227.89EPS (Yen) (4)224.93220.13231.21

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

18,911

19,454

3.1%

3.2%

2.4%

—

(220.0)(500.0)Cash dividends, applicable to earnings for the year (2)Medium-term financial targets

Overseas operating income margin (%) (5)Cost reductions (Billions of yen) (6)Capex to sales (%)

18.1%

18.5%

18.4%

17.3%

16.4%

14.6%

(1) Please refer to Reconciliation of Capital Investment and Reconciliation of EBITDA Margin on page 99.
• Capital investment is on an accrual basis for the acquisition of property, plant and equipment.
• From the fiscal year ended March 31, 2017, the method for calculating EBITDA has been revised.
EBITDA = Operating income + Depreciation and amortization + Loss on sales of property, plant and equipment + Impairment loss
EBITDA margin = (Operating income + Depreciation and amortization + Loss on sales and disposal of property, plant and equipment + Impairment loss) / Operating revenues × 100(2) Adjusted for the 2-for-1 stock split with effective dates of July 1, 2015 and January 1, 2020.

82

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

14.9%

14.2%

ROIC (%)

7.4%

7.4%

6.6%

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

13.7%

13.9%

13.8%

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

ANNUAL REPORT 202083

Financial Summary

Business Segment Data
Total Operating Revenues

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

15,0002,000

12,0004,240.0

4,224.3

9,000

6,000

3,000

0
(Fiscal year
ended
March 31)

4,461.2

4,383.4

4,527.1

4,584.6

4,769.4

4,762.3

4,470.1

3,505.5

3,407.9

3,308.2

3,232.9

3,231.6

3,659.8

3,572.3

1,657.9

1,809.9

1,998.6

2,250.9

4,027.2

3,766.3

1,332.7

1,678.7

1,163.2

1,251.8

1,303.5

1,343.9

1,511.0

1,616.8

1,718.7

2,043.1

2,045.2

1,083.2

1,251.9

1,328.5

1,272.2

1,294.5

1,282.3

1,236.6

1,214.6

1,120.3

2011

2012

2013

2014

2015

2016

2,129.3

2017

2,218.9

2018

2,242.2

2018

3,152.3

1,500

4,651.3

Regional communications business
Other businesses

726.8

668.5

753.7

703.1

661.8

595.2

597.1

576.4

577.0

593.7

807.0

811.8

786.0

722.8

666.2

622.1

583.4

549.6

549.6

541.0

168.4

198.1

227.6

244.9

244.3

139.1
120.2

134.0
121.7

147.7

140.9

134.0
108.3

158.1

194.1

194.8

179.2

1,240.3

1,601.7

147.5
122.1

232.5

2,163.6

135.5

152.3

235.0

2,266.8

2,278.7

2019

2,205.8

500

0

2020

‌ Long distance and international communications business

572.8

1,000

3,079.9(Fiscal year
ended
March 31)

IFRS

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

4,840.8

‌

2011

2012

Mobile communications business Data communications business

160.7

2013

150.7

2014

150.6

2015

2016

116.6

2017

122.1

2018

141.5

2018

522.5

279.3
193.8
238.2

138.7

2019

2020

IFRS

U.S. GAAP

Regional communications business
Other businesses‌ Long distance and international communications businessGroup Data

Operating Expenses(Billions of yen)

Billions of yen

12,000

NTT DOCOMO (Consolidated)

9,000

3,363.6

3,385.2

6,000
3,677.9

3,900.0

3,000(Fiscal year
ended
March 31)3,644.0

3,747.6

3,738.8

3,632.9

3,787.3

3,775.3

3,827.2

3,142.9

2,948.7

2,878.6

2,880.0

2,791.6

3,566.9

3,445.1

3,336.7

1,885.1

2,154.2

2,088.4

2,125.3

2,151.6

2,178.5

1,235.6

1,562.0

1,536.7

1,682.4

1,086.2

1,180.3

1,217.7

1,275.9

1,424.7

1,504.1

1,610.8

1,915.3

1,922.0

2,015.9

1,198.6

1,272.4

1,204.8

1,220.4

1,205.0

1,158.0

1,115.9

1,154.6

1,075.4

03,633.7

2011

1,032.2

2012

2013

2014

2015

2016

2017

2018

2018

2,691.6

2,102.2

2020

2019
4,840.8

4,651.3

2018
1,786.8

2019
1,740.6

1,677.1

2018
1,494.0

2019
1,462.3

1,434.3

Operating expenses

1,302.1

3,775.3

3,827.2

3,796.6

1,554.1

1,498.0

1,421.1

1,374.7

1,344.0

Operating profit

987.0

1,013.6

854.7

232.7

242.7

256.0

119.4

118.3

132.2

Profit before taxes

1,141.7

1,002.6

868.0

230.3

241.0

255.0

113.6

113.7

129.3

790.8

663.6

591.5

162.4

166.0

178.4

80.0

80.7

91.8

Profit attributable to NTT

2,135.9

Billions of yen

1,510.8

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

2020

Total Operating Profit

2020

NTT Ltd. Group*4
2020

NTT Communications
Group*5*6
2020

NTT DATA (Consolidated)
2020

2019
—

4,426.8

2019
—

897.7

2019
—

794.6

2018
2,039.7

20192,163.6

2,266.8

Operating expenses / Selling, general andadministrative expenses—

4,193.2

—

919.1

—

698.4

1,916.5

2,015.9

2,135.9

Operating profit

—

233.5

—

(21.4)

—

96.2

123.1

147.7

130.9

Profit before taxes

—

—

—

(31.6)

—

108.9

122.7

146.9

120.2

Profit attributable to NTT

—

—

—

(34.0)

—

110.5

82.4

93.6

75.1

Operating revenues‌ Long distance and international communications business

2020

2018
4,762.3

Fiscal year ended March 31

Regional communications business
Other businesses

2020

NTT West Group*2

Operating revenues

Fiscal year ended March 31

IFRS

U.S. GAAP‌ Mobile communications business Data communications business2019

3,796.6

NTT East Group*1(Billions of yen)
Billions of yen

1,800

NTT Urban Solutions
Group*7

1,500

9,00
600
300
0
(Fiscal year
ended
March 31)

788.4
839.1

127.3
97.1
77.0
44.9

2011

876.4

87.3
116.7
71.5
56.6

2012

‌ Mobile communications business Data communications business

84

836.4

93.0
121.3
85.8
53.3

2013

817.2

127.2
127.5
67.9
56.1

2014

951.6

982.1

987.0

854.7

635.8

168.9
113.6
86.4
67.5

2015

265.0

359.5

96.7
112.7
74.0

40.8
107.9
77.3

2016

2017

354.3

351.6

360.7

93.6
127.8
78.6

90.6
123.2
98.7

100.1

2018

2018

Regional communications business
Other businesses

147.7
85.6

2019
IFRS

U.S. GAAPNIPPON TELEGRAPH AND TELEPHONE CORPORATION

1,013.6‌ Long distance and international communications business

388.3
103.6
130.9
90.9

2020

2020

2020

2019
—

426.0

2018
160.6

2019
168.0

147.9

Operating expenses / Selling, general andadministrative expenses

—

384.2

132.7

140.4

122.1

Operating profit

—

48.7

30.4

28.6

32.1

Profit before taxes

—

41.4

27.9

25.6

25.2

Profit attributable to NTT

—

27.3

18.1

16.1

16.0

Fiscal year ended March 31
1,200

NTT Urban Development(Consolidated)

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

ANNUAL REPORT 202085

Financial Summary

Quarterly Data (IFRS)
Billions of yen

1Q

2Q

3Q

Years Ended March 31

4Q

FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY20192,808.7
290.2
227.2
939.5
179.8
792.2
379.9
2,284.1
591.6

2,852.7
272.2
234.5
938.0
198.0
837.7
372.3
2,315.5
592.1

2,915.4
252.3
231.3
923.3
187.6
876.6
444.3
2,410.2
606.0

2,882.4
280.8
236.9
949.6
184.2
855.2
375.7
2,368.7594.9

2,940.5
266.1
238.5
930.5
234.5
877.2
393.7
2,406.9590.7

2,974.1
245.5
235.2
918.2
173.0
930.8
471.3
2,496.5
595.8

3,055.8
287.8
235.7
939.1
304.1
884.0
405.0
2,684.5
614.2

3,002.0
271.0
237.2
934.1
280.1
884.9
394.9
2,545.6603.0

2,973.1
249.9
240.2
899.7
189.3
928.1
465.9
2,505.5
612.1

3,035.2
288.0
233.5
929.3
210.2
925.9
448.3
2,803.8592.6

3,084.6
268.4
236.5
918.7
216.6
994.3
450.1
2,917.9605.8

3,036.7
251.7
259.8
878.1
141.9
995.9
509.4
2,925.0
614.6

11,782.1
1,146.9933.3
3,757.4
878.3
3,457.4
1,608.9
10,141.1
2,393.4

11,879.8
1,077.7
946.7
3,721.2
929.2
3,594.1
1,611.0
10,186.0
2,391.6

11,899.4
999.4
966.5
3,619.3691.8
3,731.4
1,891.0
10,337.3
2,428.5

1,305.9
331.0
—
—
—
—
27.3
28.3
524.7
527.8
289.3

1,341.8
325.5
—
—
—
—
26.8
29.3
537.2
542.7
289.7

1,390.3
360.5
1.5
—
—
1.5
21.1
30.7
505.2
526.8
280.5

1,378.6
333.3
0.7
—
—
0.7
35.5
25.7
513.7
514.1
274.8

1,426.3
331.0
0.0
—
—
0.0
32.4
26.6
533.5
535.7
270.0

1,480.7
361.6
2.6
0.3
—
2.3
27.6
28.3
477.6
475.1
267.1

1,519.7
339.5
150.1
25.3
124.8
0.0
34.7
26.3
371.3
486.8
217.3

1,475.5
334.2
67.3
—
66.0
1.3
34.1
31.5
456.4
452.1
232.4

1,463.9
365.2
2.9
1.7
—
1.2
31.8
29.6
467.6
465.9
249.3

1,629.6
343.3
27.0
8.8
—
18.2
56.7
154.5
231.5
211.7
116.5

1,674.1
343.0
59.0
39.4
—
19.6
78.9
157.1
166.7
141.4
62.4

1,671.4
378.0
9.6
0.9
—
8.6
91.1
160.2
111.7
102.4
58.4

5,833.9
1,346.9
177.9
34.1
124.8
19.0
154.2
234.9
1,641.1
1,740.5897.9

5,917.7
1,333.6
126.4
39.4
66.0
21.0
172.2
244.5
1,693.8
1,671.9854.6

6,006.4
1,465.3
16.7
2.9
—
13.7
171.6
248.8
1,562.2
1,570.1
855.3

NTT Consolidated Financial Position
AssetsCurrent assets(incl.) Cash and cash equivalents(incl.) Trade and other receivables
Non-current assets(incl.) Property, plant and equipment
Liabilities and Equity
Liabilities
Current liabilities(incl.) Trade and other payables
Non-current liabilities(incl.) Long-term debt(incl.) Defined benefit liabilities
Equity21,233.6
5,574.8
1,161.7
3,361.0
15,658.8
8,724.6
21,233.6
10,033.3
4,406.5
1,469.2
5,626.8
3,178.2
1,880.9
11,200.3

21,467.0
5,702.3
797.1
3,823.7
15,764.6
8,820.7
21,467.0
9,802.9
4,618.2
1,510.6
5,184.7
2,793.1
1,864.4
11,664.0

22,568.6
6,355.9
1,021.5
4,219.0
16,212.7
8,923.9
22,568.6
10,926.2
5,308.5
1,685.9
5,617.7
2,834.9
1,883.2
11,642.4

21,454.9
5,733.2
984.4
3,693.8
15,721.7
8,786.9
21,454.9
9,874.1
4,221.1
1,425.8
5,653.0
3,185.1
1,894.2
11,580.8

21,719.8
6,082.5
889.6
3,965.9
15,637.3
8,941.8
21,719.8
9,655.7
4,329.1
1,484.8
5,326.6
2,936.3
1,879.1
12,064.1

22,233.6
5,957.8928.0
4,070.8
16,275.8
8,939.7
22,233.6
10,677.6
5,068.3
1,672.0
5,609.3
2,792.5
1,896.7
11,555.9

21,443.6
5,849.5892.2
3,900.4
15,594.1
8,699.1
21,443.6
9,852.6
4,231.8
1,570.5
5,620.8
3,163.0
1,911.9
11,591.0

21,899.8
6,385.2
908.4
4,149.0
15,514.7
8,858.6
21,899.8
10,169.4
4,843.8
1,615.5
5,325.6
2,907.7
1,891.9
11,730.4

22,941.7
6,434.8875.5
4,524.4
16,506.9
9,007.6
22,941.7
11,307.4
5,604.4
1,704.8
5,703.1
2,867.6
1,912.5
11,634.3

21,541.4
5,869.2
895.0
4,022.2
15,672.3
8,812.2
21,541.4
9,975.8
4,622.4
1,811.7
5,353.4
2,953.9
1,860.5
11,565.7

22,295.1
6,580.0
946.1
4,391.4
15,715.2
9,012.9
22,295.1
10,490.4
5,228.1
2,092.5
5,262.3
2,865.2
1,878.0
11,804.8

23,014.1
6,703.5
1,033.6
3,502.8
16,310.6
9,087.5
23,014.1
11,551.5
6,607.6
2,142.8
4,943.9
2,165.8
1,873.5
11,462.6

Interest-Bearing Liabilities (Consolidated)
Interest-bearing liabilities

4,636.9

4,359.5

4,757.2

4,315.6

4,064.1

4,463.2

4,276.5

4,560.1

5,131.9

3,971.6

4,262.7

4,699.9

369.1
122.3
106.4

321.4
124.9
102.1

330.7
97.9
88.6

401.2
145.2
126.2

361.1
130.5
108.0

368.0
120.6
110.5

383.3
135.9
123.6

367.6
134.0
114.0

411.5
119.7
114.5

544.4
173.6
193.4

646.8
204.3
217.0

696.6
234.7
208.9

1,697.9
577.0
549.6

1,697.0
593.7
541.0

1,806.6
572.8
522.5

52.1
44.6
43.7

38.4
38.2
17.8

48.5
42.1
53.6

56.7
53.7
19.3

50.3
40.2
32.1

58.7
41.9
36.2

47.5
40.9
35.3

45.4
45.4
28.8

63.4
54.2
59.7

78.7
55.6
43.2

110.2
55.4
60.0

108.7
55.7
88.6

235.0
194.8
141.5

244.3
179.2
138.7

279.3
193.8
238.2

60.9
45.5
—
—
46.3
5.3
—

60.6
41.5
—
—
32.3
5.5
—

52.0
36.6
—
—
42.8
4.8
35.5

60.1
66.1
—
—
51.7
4.1
—

57.7
50.3
—
—
44.6
5.1
—

63.9
46.6
36.7
21.5
—
—
13.3

59.0
64.7
—
—
42.5
3.8
—

54.6
59.4
—
—
39.7
4.7
—

59.0
55.5
25.8
37.4
—
—
32.1

88.6
104.8
—
—
68.6
7.8
—

101.2
115.8
—
—
102.6
5.7
—

96.1
112.8
51.2
54.5
—
—
48.4

268.6
281.0
—
—
209.1
21.1
—

274.1
266.9
—
—
219.3
20.9
—

271.0
251.5
113.6
113.5
—
—
129.4

NTT Consolidated Financial Results
Operating revenues
Fixed voice-related services
Mobile voice-related services
IP/packet communications services
Sales of telecommunications equipment
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Goodwill
Metal cable-related
Other
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Profit before taxes
Profit attributable to NTT

Capital Investment
Capital investment
Mobile Communications Business
Regional Communications BusinessLong Distance and International
Communications Business
Data Communications Business
Other Businesses(Ref.) Capital investment by group
NTT East GroupNTT West GroupNTT Ltd. GroupNTT Communications Group (from July 2019) *NTT Communications Group
Dimension Data (Consolidated)
NTT Urban Solutions Group* Overseas subsidiaries of NTT Communications Group were transferred to NTT Ltd. Group with as part of the global reorganization of NTT Group in July 2019.

86

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202087

Financial Summary

Business Segments (IFRS)
Billions of yen

1Q
Mobile Communications Business
Operating revenues
Mobile voice-related service
IP/packet communications service
Sales of telecommunications equipment
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Regional Communications Business
Operating revenues
Fixed voice-related service
IP/packet communications service
Sales of telecommunications equipment
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit (loss)
Long Distance and International
Communications Business
Operating revenues
Fixed voice-related service
IP/packet communications service
Sales of telecommunications equipment
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit (loss)
Data Communications Business
Operating revenues
System integration services
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Other Businesses
Operating revenues
IP/packet communications service
System integration services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit

2Q

3Q

Years Ended March 31

4Q

FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY20191,133.6
229.7
533.5
157.0
213.5
851.5
72.6

1,176.7
236.9
544.6
178.6
216.5
866.7
73.0

1,159.3
233.6
541.2
167.7
216.8
880.6
72.3

1,160.7
239.4
540.8
162.0
218.4
883.2
71.4

1,212.9
241.0
541.7
211.8
218.4
912.3
72.3

1,170.7
237.6
538.7
150.1
244.3
909.2
72.7

1,295.1
238.3
539.1
284.7
233.1
998.9
72.2

1,264.6
239.7
542.5
259.7
222.7
973.1
72.6

1,186.0
242.6
522.0
171.0
250.4
938.4
73.7

1,172.9
235.5
523.8
186.2
227.4
1,041.7
71.9

1,186.7
238.7
530.4
194.3
223.4
1,075.1
71.1

1,135.3
262.5
500.6
119.5
252.8
1,068.5
69.5

4,762.3
942.8
2,137.2
789.8
892.4
3,775.3
288.1

4,840.8
956.2
2,159.3
844.4
880.9
3,827.2
288.9

4,651.3
976.3
2,102.5
608.2
964.2
3,796.6
288.2

644.8
119.1
—
12.5
2.5
282.1

666.6
113.8
—
10.4
3.0
309.9

655.0
141.5
—
8.7
3.1
278.7

671.7
121.3
—
16.1
2.7
277.5

706.1
117.7
—
13.3
3.0
300.6

678.6
143.5
—
11.2
3.2
261.5

786.2
122.0
—
15.5
2.9
296.3

766.1
117.1
—
14.3
3.1
291.5

700.5
146.0
1.7
12.5
4.1
247.6

779.1
124.2
11.8
23.0
31.7
131.1

785.1
122.3
32.8
30.8
33.0
111.6

774.5
149.9
0.5
39.1
35.0
66.8

2,881.8
486.6
11.8
67.2
39.8
987.0

2,923.8
470.9
32.8
68.8
42.0
1,013.6

2,808.6
580.8
2.2
71.5
45.3
854.7

786.7
288.5
379.5
18.5
28.4
71.9
635.4
190.6

768.9
274.0
374.4
18.3
27.6
74.6
626.9
178.4

746.5
255.3
372.5
17.8
29.7
71.2
601.9
175.0

792.1
280.4
381.4
19.2
38.0
73.2
655.1
184.7

775.5
267.9
374.1
18.7
41.1
73.7
641.2
178.4

763.3
245.8
370.6
21.9
52.9
72.1
637.1
169.8

798.7
286.7
380.0
18.5
37.2
76.2
779.4
182.8

781.1
271.7
377.3
18.9
37.7
75.5
706.0
177.9

766.5
252.2
374.1
17.1
48.6
74.4
639.6
171.3

854.0
287.5
382.7
20.6
63.1
100.2
810.1
178.7

826.8
271.6
374.9
20.7
62.5
97.0
817.5
172.9

803.7
252.9
372.5
19.8
74.9
83.6
813.0
166.6

3,231.6
1,143.1
1,523.7
76.7
166.6
321.4
2,880.0736.8

3,152.3
1,085.2
1,500.7
76.6
168.9
320.9
2,791.6707.6

3,079.9
1,006.1
1,489.7
76.6
206.1
301.3
2,691.6
682.7

301.3
112.0
—
13.7
17.9
151.3

305.1
110.7
—
14.4
18.3
142.0

293.4
102.8
—
11.6
19.1
144.6

323.2
112.9
0.6
18.2
15.5
137.1

318.7
110.8
—
17.6
15.8
134.3

331.2
103.7
—
16.0
16.4
126.1

324.8
114.7
124.8
16.9
15.5
19.3

317.0
111.9
66.0
17.4
15.8
75.0

330.8
103.1
—
17.7
16.7
126.9

396.1
115.4
2.2
29.6
88.1
43.9

398.2
114.5
3.7
40.9
87.2
9.4

402.3
104.8
0.9
51.4
87.1
(9.4)

1,345.4
455.0
127.6
78.3
136.9
351.6

1,338.9
448.0
69.7
90.3
137.1
360.7

1,357.6
414.5
0.9
96.7
139.3
388.3

533.4
60.4
99.8
4.7
325.5
43.0
492.3
96.0

541.2
55.7
106.0
1.6
338.6
39.3
509.1
102.5

555.9
50.4
106.4
2.6
352.2
44.3
526.8
107.7

562.7
59.1
101.8
3.9
357.8
40.1
523.7
97.6

572.0
56.8
105.8
4.4
363.3
41.6
532.6
102.7

562.0
53.7
105.8
1.8
375.9
24.9
531.7
102.2

570.0
60.8
103.4
1.6
362.2
42.0
569.7
111.4

571.3
56.0
107.9
1.9
357.4
48.1
537.6
103.7

542.2
53.0
102.4
1.6
362.0
23.2
505.6
105.5

576.1
59.5
105.2
4.5
358.5
48.3
566.0
99.6

594.3
51.8
107.8
3.6
379.7
51.4
599.2
102.4

545.7
50.9
103.7
5.0
352.5
33.6
538.0
100.3

2,242.2
239.9
410.2
14.7
1,404.0
173.4
2,151.6404.6

2,278.7
220.3
427.5
11.5
1,439.1
180.3
2,178.5411.4

2,205.8
207.9
418.3
11.0
1,442.6
125.9
2,102.2
415.7

353.3
40.5
—
0.9
1.6
41.1

361.3
42.8
—
0.7
1.8
32.0

362.1
52.7
1.5
0.6
2.1
29.1

382.2
41.2
0.2
0.9
1.6
39.1

384.2
43.3
—
0.7
1.6
39.4

371.2
51.5
2.3
1.3
3.3
30.2

387.5
42.5
25.3
1.4
1.6
0.3

381.8
43.8
0.2
2.4
5.7
33.6

345.4
51.3
0.0
1.7
1.8
36.6

398.8
43.6
11.6
2.2
10.1
10.1

414.2
48.6
19.4
4.1
10.5
(4.9)

364.0
55.2
4.7
3.6
10.3
7.7

1,521.8
167.8
37.1
5.4
15.0
90.6

1,541.6
178.4
19.7
7.9
19.6
100.1

1,442.6
210.7
8.6
7.1
17.5
103.6

472.1
472.1
445.7
182.8

505.2
505.2
476.0
193.3

527.3
527.3
497.4
203.3

491.9
491.9
461.9
193.1

517.5
517.5
486.4
193.5

550.5
550.5
516.6
201.6

521.4
521.4
490.4
202.2

528.0
528.0
493.5
202.5

564.2
564.2
534.4
213.5

559.9
559.9
524.0
198.5

612.9
612.9
560.0
214.9

624.8
624.8
587.4
221.7

2,045.2
2,045.2
1,922.0
776.6

2,163.6
2,163.6
2,015.9804.2

2,266.8
2,266.8
2,135.9
840.1

221.5
38.5
—
0.3
2.6
26.4

242.6
37.2
—
0.2
2.7
29.3

243.5
48.1
—
0.1
2.5
29.8

227.8
38.1
—
0.5
2.6
30.0

251.9
38.3
—
0.2
2.5
31.1

263.5
48.4
0.3
0.3
2.6
33.9

245.9
39.1
—
0.3
2.8
31.0

247.6
39.9
—
0.6
2.9
34.5

267.8
49.9
0.0
0.4
2.9
29.8

280.6
38.2
1.7
1.3
3.7
35.9

300.9
38.2
0.7
1.3
4.1
52.9

308.5
50.0
2.0
1.5
3.7
37.4

975.7
153.9
1.7
2.4
11.6
123.2

1,043.0
153.6
0.7
2.2
12.2
147.7

1,083.4
196.3
2.3
2.2
11.6
130.9

274.8
5.9
32.4
236.5
246.3
63.2

267.2
5.7
35.5
226.0
241.2
61.6

338.5
6.0
35.6
296.9
309.7
60.8

281.3
6.4
34.7
240.2
251.0
62.6

297.8
5.9
37.1
254.7
266.4
61.3

382.3
6.7
34.3
341.3
355.2
67.7

293.0
5.6
39.7
247.6
265.8
62.1

290.3
6.1
34.7
249.5
264.5
61.4

375.9
7.0
37.8
331.1
348.8
66.0

365.6
6.6
40.9
318.1
352.8
65.5

385.0
6.9
44.8
333.3
382.5
69.6

504.9
7.1
51.6
446.2
497.1
82.5

1,214.6
24.5
147.7
1,042.3
1,115.9253.5

1,240.3
24.6
152.1
1,063.5
1,154.6
253.9

1,601.7
26.7
159.4
1,415.6
1,510.8
277.0

158.6
20.8
—
0.5
3.2
28.5

152.8
22.3
—
1.6
2.9
26.0

212.3
32.3
—
0.4
4.0
28.9

164.7
20.2
—
0.6
2.8
30.3

178.9
21.7
0.0
1.5
3.0
31.4

252.3
32.0
—
0.5
2.8
27.1

177.8
21.5
—
1.4
2.9
27.2

176.3
21.4
1.1
0.9
3.4
25.8

244.7
31.7
1.2
1.0
4.1
27.1

242.6
22.1
0.0
2.3
20.3
12.8

255.6
25.5
2.4
5.1
24.2
2.5

349.4
35.9
1.6
3.4
24.2
7.8

743.8
84.6
0.0
4.8
29.3
98.7

763.7
90.9
3.6
9.0
33.6
85.6

1,058.7
131.9
2.8
5.2
35.1
90.9

Note: Figures for each segment include intersegment transactions.

88

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202089

Financial SummaryGroup Summary (IFRS)
Billions of yen

1Q

2Q

3Q

Years Ended March 31

4Q
FY2017FY2018FY20191,135.3

4,762.3

4,840.8

4,651.3

767.1

3,092.7

3,130.7

3,094.3

678.9

2,867.3

2,844.4

2,757.8
336.4

FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY20191,133.7

1,176.7

1,159.3

1,160.8

1,212.9

1,170.7

1,295.3

1,264.6

1,186.0

1,172.5

1,186.7

766.1

785.4

778.6

784.1

786.5

780.0

780.6

785.9

768.5

762.1

772.9

716.5

718.3

699.7

729.2

716.8

697.6

721.8

712.6

681.7

699.8

696.6

NTT DOCOMO Consolidated
Operating revenues
Telecommunications services
Mobile communications services
Optical-fiber broadband service and othertelecommunications services

49.6

67.1

78.9

54.9

69.7

82.5

58.7

73.2

86.9

62.2

76.3

88.2

225.4

286.3

Equipment sales

157.0

178.6

167.7

162.0

211.8

150.1

284.7

259.7

171.0

186.2

194.3

119.5

789.8

844.4

608.2

Other

210.7

212.6

213.0

214.7

214.6

240.6

230.0

219.0

246.5

224.3

219.5

248.7

879.7

865.8

948.8

851.6

866.7

880.6

882.9

912.3

909.2

999.0

973.1

938.4

1,041.7

1,075.1

1,068.5

3,775.3

3,827.2

3,796.6

Personnel expenses

72.6

73.0

72.3

71.4

72.3

72.7

72.2

72.6

73.7

71.9

71.1

69.5

288.1

288.9

288.2

Expenses for purchase of goods and services
and other expenses

556.3

566.4

554.1

577.3

602.1

573.3

688.3

658.2

594.1

709.3

707.0

700.8

2,531.3

2,533.7

2,422.2

Depreciation and amortization

119.1

113.8

141.5

121.3

117.7

143.5

122.0

117.1

146.0

124.2

122.3

149.9

486.6

470.9

580.8

—

—

—

—

—

—

—

—

1.7

11.8

32.8

0.5

11.8

32.8

2.2

91.0

103.2

104.0

96.9

106.9

108.5

101.0

110.9

110.4

101.5

111.0

108.7

390.4

432.0

431.7

Operating expenses

Impairment losses
Communication network charges

12.5

10.4

8.7

16.1

13.3

11.2

15.5

14.3

12.5

23.0

30.8

39.1

67.2

68.8

71.5

Operating profit

282.1

309.9

278.7

277.8

300.6

261.5

296.2

291.5

247.6

130.8

111.6

66.8

987.0

1,013.6

854.7

Profit before taxes

289.8

317.1

285.4

285.5

304.1

263.2

445.3

290.5

247.9

121.1

91.0

71.5

1,141.7

1,002.6

868.0

Profit attributable to NTT DOCOMO, INC.

199.9

218.3

192.3

192.2

188.7

180.0

305.6

200.5

170.0

93.2

56.1

49.2

790.8

663.6

591.5
1,677.1

Expenses on disposal of fixed assets

NTT East Group*1
430.2

424.2

409.3

432.3

425.6

414.0

441.2

431.7

417.5

483.1

459.1

436.2

1,786.8

1,740.6

Fixed voice related service

151.1

144.5

135.7

147.6

142.3

131.5

150.7

145.4

134.9

149.7

141.3

132.1

599.1

573.6

534.2

IP/packet communications service

210.8

209.7

210.5

212.9

210.6

209.6

212.8

211.5

210.9

215.1

210.7

211.1

851.6

842.5

842.1
31.0

Operating revenues

Sales of telecommunications equipment

7.3

7.2

7.3

7.3

7.4

8.6

7.0

7.4

7.1

8.3

8.3

8.0

29.9

30.3

System integration services

14.0

13.0

14.2

16.8

18.5

24.2

17.9

17.7

24.3

31.3

26.2

37.2

80.0

75.4

99.9

Other

47.0

49.8

41.7

47.7

46.8

40.1

52.7

49.7

40.4

78.7

72.5

47.7

226.1

218.8

169.9

341.3

336.6

321.2

352.9

340.4

334.6

413.3

378.2

337.4

446.6

442.7

427.8

1,554.1

1,498.0

1,421.1

Personnel expenses

99.8

93.6

92.8

96.8

93.4

88.3

95.6

92.7

90.5

93.9

92.8

88.0

386.1

372.6

359.6

Expenses for purchase of goods and services
and other expenses

164.7

167.3

156.7

176.9

172.3

172.5

179.7

172.1

174.1

230.6

221.6

209.7

751.8

733.3

713.0

Depreciation and amortization

59.9

59.1

55.3

60.3

58.6

56.1

60.9

59.2

54.8

61.9

60.9

55.9

242.9

237.9

222.1

Impairment losses

—

—

—

0.6

—

—

60.9

36.1

—

1.5

2.5

—

63.0

38.7

—

Expenses on disposal of fixed assets

7.2

6.7

5.9

9.8

7.5

8.7

7.8

9.5

8.8

13.4

19.8

28.8

38.2

43.5

52.1

Operating expenses

9.7

9.9

10.5

8.5

8.6

9.1

8.4

8.5

9.2

45.4

45.0

45.4

72.1

72.1

74.3

Operating profit

88.9

87.6

88.2

79.4

85.1

79.4

27.9

53.5

80.1

36.5

16.3

8.4

232.7

242.7

256.0

Profit before taxes

88.4

87.5

88.1

79.2

84.5

79.2

27.0

53.0

79.5

35.8

16.0

8.2

230.3

241.0

255.0

Profit attributable to NTT East

61.5

61.7

61.2

54.3

59.2

55.9

19.4

37.5

55.7

27.2

7.6

5.5

162.4

166.0

178.4
1,434.3

Taxes and dues

NTT West Group*2
366.6

354.1

346.0

370.7

359.9

355.7

368.1

361.7

356.6

388.6

386.6

376.1

1,494.0

1,462.3

Fixed voice related service

139.5

131.2

121.4

135.6

127.9

116.6

137.9

130.2

119.2

140.7

132.7

123.3

553.7

522.0

480.5

IP/packet communications service

168.9

164.8

162.1

168.7

163.7

161.1

167.3

165.9

163.4

167.7

164.2

161.5

672.5

658.6

648.1

Sales of telecommunications equipment

11.3

11.1

10.5

12.0

11.4

13.4

11.5

11.5

10.1

12.5

12.6

12.0

47.2

46.7

46.0

System integration services

14.8

15.0

16.0

21.6

23.0

29.1

19.8

20.5

25.2

32.8

36.8

38.1

88.9

95.4

108.3

Operating revenues

32.2

31.9

35.9

32.9

34.0

35.5

31.7

33.5

38.8

34.9

40.2

41.3

131.6

139.6

151.5

304.2

299.8

289.6

312.9

310.8

308.8

376.7

339.8

309.8

380.8

393.6

393.9

1,374.7

1,344.0

1,302.1

Personnel expenses

91.0

85.1

82.4

88.1

85.2

81.4

87.5

85.5

81.2

85.5

81.1

78.7

352.1

336.8

323.6

Expenses for purchase of goods and services
and other expenses

146.4

146.8

145.2

156.7

156.1

165.2

155.3

156.4

163.9

181.7

193.8

201.0

640.2

653.1

675.4

Depreciation and amortization

52.1

51.6

47.6

52.6

52.1

47.6

53.8

52.7

48.4

53.5

53.8

49.0

212.0

210.3

192.6

Impairment losses

—

—

—

—

—

—

63.9

29.9

—

0.7

1.2

0.9

64.6

31.0

0.9

Expenses on disposal of fixed assets

6.5

7.9

5.8

8.5

10.2

7.3

9.2

8.0

8.8

16.7

21.5

22.6

40.9

47.7

44.6

Other
Operating expenses

Taxes and dues

8.2

8.3

8.6

7.0

7.2

7.3

7.0

7.2

7.5

42.7

42.2

41.7

64.9

65.0

65.0

Operating profit (loss)

62.4

54.3

56.4

57.8

49.1

46.8

(8.6)

21.9

46.8

7.8

(7.0)

(17.8)

119.4

118.3

132.2

Profit (loss) before taxes

61.1

53.3

55.6

56.2

47.9

46.3

(10.1)

20.7

46.0

6.4

(8.2)

(18.6)

113.6

113.7

129.3

Profit (loss) attributable to NTT West

42.5

37.7

39.1

39.1

33.9

32.7

(6.2)

15.5

32.6

4.7

(6.4)

(12.7)

80.0

80.7

91.8

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

90

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202091

Financial Summary

Billions of yen

1Q
FY2017FY2018FY20192Q
FY2017FY2018FY20193Q
FY2017FY2018FY2019Years Ended March 31

4Q
FY2017FY2018FY2019FY2017FY2018FY2019NTT, Inc. (Global Holding Company) Group*1
Operating revenues——

1,073.1——

1,102.3——

1,096.3——

1,155.0——

4,426.8

Operating expenses——

1,013.8——

1,037.8——

1,030.5——

1,111.2——

4,193.2

Operating profit

—

—

59.3

—

—

64.5

—

—

65.8

—

—

43.9

—

—

233.5

Operating revenues

—

—

—

—

—

316.4

—

—

303.4

—

—

277.9

—

—

897.7

Operating expenses

—

—

—

—

—

322.7

—

—

301.5

—

—

295.0

—

—

919.1

Personnel expenses

—

—

—

—

—

71.5

—

—

73.2

—

—

70.0

—

—

214.6

Expenses for purchase of goods and services
and other expenses

—

—

—

—

—

225.1

—

—

205.0

—

—

193.9

—

—

624.1

Depreciation and amortization

—

—

—

—

—

23.1

—

—

22.6

—

—

25.5

—

—

71.3

Impairment losses

—

—

—

—

—

2.3

—

—

0.0

—

—

4.4

—

—

6.7

Expenses on disposal of fixed assets

—

—

—

—

—

0.0

—

—

0.1

—

—

0.1

—

—

0.2

NTT Ltd. Group*2

Taxes and dues

—

—

—

—

—

0.7

—

—

0.6

—

—

1.0

—

—

2.3

Operating profit (loss)

—

—

—

—

—

(6.3)

—

—

2.0

—

—

(17.1)——(21.4)

Profit (loss) before taxes

—

—

—

—

—

(9.9)

—

—

(0.0)

—

—

(21.3)——(31.6)

Profit (loss) attributable to NTT Ltd.

—

—

—

—

—

(14.1)

—

—

(3.2)

—

—

(16.7)——(34.0)
794.6

NTT Communications Group (from July 2019)*3
Operating revenues*4

—

—

—

—

—

258.6

—

—

254.1

—

—

281.9

—

—

Cloud computing platforms

—

—

—

—

—

24.6

—

—

24.5

—

—

26.1

—

—

75.2

Data networks

—

—

—

—

—

98.7

—

—

95.7

—

—

98.5

—

—

292.9

Voice communications

—

—

—

—

—

57.2

—

—

57.2

—

—

56.1

—

—

170.4

Applications & content

—

—

—

—

—

20.0

—

—

18.3

—

—

22.1

—

—

60.3

Solution services

—

—

—

—

—

51.2

—

—

52.0

—

—

71.7

—

—

174.9

Other
Operating expenses
Personnel expenses

—

—

—

—

—

6.9

—

—

6.4

—

—

7.5

—

—

20.8

—

—

—

—

—

218.2

—

—

220.4

—

—

259.8

—

—

698.4

—

—

—

—

—

30.2

—

—

31.9

—

—

29.5

—

—

91.6

Expenses for purchase of goods and services
and other expenses

—

—

—

—

—

157.1

—

—

156.9

—

—

187.5

—

—

501.5

Depreciation and amortization

—

—

—

—

—

28.4

—

—

28.9

—

—

29.7

—

—

87.0

Impairment losses

—

—

—

—

—

—

—

—

—

—

—

0.1

—

—

0.1

Expenses on disposal of fixed assets

—

—

—

—

—

1.2

—

—

1.6

—

—

3.5

—

—

6.3
11.9

—

—

—

—

—

1.2

—

—

1.2

—

—

9.5

—

—

Operating profit

Taxes and dues

—

—

—

—

—

40.4

—

—

33.7

—

—

22.1

—

—

96.2

Profit before taxes

—

—

—

—

—

38.3

—

—

34.7

—

—

35.9

—

—

108.9

Profit attributable to NTT Communications

—

—

—

—

—

37.3

—

—

25.2

—

—

48.1

—

—

110.5

NTT DATA Consolidated
Net sales

470.3

505.2

527.3

490.1

517.5

550.5

519.7

528.0

564.2

559.6

612.9

624.8

2039.7

2,163.6

2,266.8

Public and social infrastructure

90.5

106.7

100.1

101.2

101.7

112.8

107.2

109.0

120.6

146.0

162.5

166.6

444.9

479.9

500.2

Financial

130.6

130.9

139.0

136.7

135.1

141.8

140.4

133.3

141.3

152.2

159.8

158.2

559.9

559.1

580.4

Enterprise and Solutions

107.2

120.7

135.1

114.0

129.9

146.9

122.1

130.3

148.0

134.9

149.0

158.5

478.1

529.8

588.6

North America

110.9

101.5

103.0

108.3

107.4

105.4

107.2

105.0

105.5

101.5

108.0

112.0

427.9

421.9

426.0

EMEA and LATAM

86.5

103.7

110.8

90.6

102.9

106.6

104.5

115.9

117.2

105.9

117.7

120.8

387.5

440.1

455.4

Eliminations or Corporate(55.4)(58.3)(60.9)(60.7)(59.6)(63.1)(61.7)(65.5)(68.4)(80.9)(84.0)(91.3)(258.7)(267.3)(283.7)

Cost of sales

355.3

378.4

395.1

367.7

394.6

414.5

392.2

395.0

423.2

420.3

450.6

461.8

1535.5

1,618.6

1,694.6

Gross profit

115.1

126.8

132.2

122.4

122.9

136.1

127.4

132.9

141.1

139.3

162.3

162.9

504.2

545.0

572.2

Selling, general and administrative expenses

88.8

97.7

102.3

92.4

92.0

102.2

96.6

98.7

111.3

103.3

108.9

125.5

381.0

397.3

441.3

Operating profit

26.3

29.1

29.8

30.0

30.9

33.9

30.8

34.2

29.8

35.9

53.4

37.4

123.1

147.7

130.9

Profit before taxes

26.9

30.2

30.8

28.2

30.8

32.1

30.7

33.6

29.4

36.9

52.3

27.8

122.7

146.9

120.2

Profit attributable to NTT DATA

16.9

20.8

21.0

18.4

17.9

19.2

20.9

20.9

17.7

26.2

34.1

17.3

82.4

93.6

75.1

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

92

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202093

Financial Summary

Billions of yen

1Q
NTT Communications Group*1
Operating revenues*2
Cloud computing platforms
Data networks
Voice communications
Applications & content
Solution services
Other
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Profit before taxes
Profit (loss) attributable to NTT Communications
Dimension Data Consolidated*3
Operating revenues
System integration services
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit (loss)
Profit (loss) before taxes
Profit (loss) attributable to Dimension DataNTT Urban Solutions Group*4
Operating revenues
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit
Profit before taxes
Profit attributable to NTT Urban Solutions
NTT Urban Development Consolidated
Operating revenues
Operating expenses
Personnel expenses
Expenses for purchase of goods and services
and other expenses
Depreciation and amortization
Impairment losses
Expenses on disposal of fixed assets
Taxes and dues
Operating profit (loss)
Profit (loss) before taxes
Profit (loss) attributable to NTT Urban Development

2Q

3Q

Years Ended March 31

4Q

FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019

319.9
43.1
118.7
68.7
29.8
50.7
9.0
276.4
48.3

326.3
49.0
122.4
66.8
30.6
51.3
6.1
289.3
50.6

337.3
54.7
122.5
62.7
33.5
56.6
7.3
299.8
53.3

324.3
45.4
120.0
69.1
30.6
54.5
4.9
283.3
47.3

345.2
52.0
121.2
66.8
31.5
67.3
6.4
304.5
50.5

—
—
—
—
—
—
—
—
—

334.2
47.7
122.0
71.1
31.2
56.3
5.8
329.4
58.5

348.9
51.8
122.2
69.1
33.9
61.0
10.8
308.8
51.6

—
—
—
—
—
—
—
—
—

355.1
49.1
120.2
67.4
34.3
76.5
7.7
325.9
47.9

371.5
54.7
122.0
63.9
38.5
86.5
5.9
357.3
50.0

—
—
—
—
—
—
—
—
—

1,333.5
185.3
480.8
276.3
125.8
238.0
27.3
1,215.0
202.0

1,392.0
207.5
487.9
266.6
134.5
266.2
29.2
1,259.8
202.8

—
—
—
—
—
—
—
—
—

193.2
32.5
—
0.9
1.5
43.5
44.6
31.6

200.6
35.7
—
0.6
1.8
37.1
37.9
27.1

198.0
44.4
1.5
0.6
2.0
37.5
37.6
24.4

200.2
33.5
—
0.8
1.5
41.0
43.3
31.4

215.2
36.5
—
0.7
1.6
40.7
41.1
28.2

—
—
—
—
—
—
—
—

208.4
34.4
25.3
1.4
1.5
4.8
4.4
(7.0)

215.9
37.2
—
2.4
1.7
40.1
39.4
28.2

—
—
—
—
—
—
—
—

231.0
34.8
0.1
2.2
9.9
29.2
23.5
22.9

247.9
42.1
2.7
4.1
10.3
14.3
13.6
15.0

—
—
—
—
—
—
—
—

832.7
135.2
25.4
5.3
14.4
118.5
115.8
78.8

879.6
151.5
2.7
7.9
15.4
132.1
132.1
98.5

—
—
—
—
—
—
—
—

208.4
208.4
168.3
40.2
36.9
3.3
1.9
0.1

215.2
215.2
172.4
42.8
39.3
3.4
1.4
0.3

220.7
220.7
178.4
42.4
44.9
(2.5)
(4.0)
(3.8)

232.8
232.8
188.2
44.6
41.3
3.3
1.9
2.3

228.6
228.6
184.0
44.6
38.4
6.1
3.3
0.5

—
—
—
—
—
—
—
—

231.6
231.6
188.1
43.5
42.7
0.8
0.1
(0.8)

224.5
224.5
182.2
42.3
38.3
4.0
2.7
0.6

—
—
—
—
—
—
—
—

214.5
214.5
180.2
34.4
40.0
(5.6)
12.0
8.1

225.0
225.0
180.1
44.9
39.0
5.9
4.4
3.7

—
—
—
—
—
—
—
—

887.5
887.5
724.8
162.7
160.9
1.8
15.9
9.7

893.3
893.3
718.7
174.6
155.2
19.4
11.8
5.2

—
—
—
—
—
—
—
—

—
—
—

—
—
—

77.6
68.0
15.0

—
—
—

—
—
—

98.1
84.6
15.1

—
—
—

—
—
—

100.4
89.7
16.2

—
—
—

—
—
—

149.7
141.8
23.6

—
—
—

—
—
—

426.0
384.2
70.0

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

43.1
8.5
—
—
1.2
13.5
12.5
8.4

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

60.6
8.6
—
—
0.1
13.4
12.2
7.9

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

63.5
8.9
—
—
1.0
11.0
9.9
6.3

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

95.9
9.6
0.4
—
12.0
10.6
6.7
4.6

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

263.2
35.7
0.4
—
14.5
48.7
41.4
27.3

40.1
23.1
—

29.9
21.5
2.5

34.1
25.3
2.5

31.1
18.0
—

42.0
31.0
2.6

40.1
28.4
2.5

39.4
24.8
—

37.5
29.1
2.6

35.3
26.6
2.4

49.9
46.2
—

58.6
58.6
2.9

38.2
41.6
2.6

160.6
112.2
—

168.0
140.4
10.8

147.9
122.1
10.1

—
—
—
—
—
12.4
11.7
7.7

14.3
4.2
—
—
0.3
9.9
9.3
6.0

16.3
5.5
—
—
0.8
12.6
11.7
7.8

—
—
—
—
—
9.0
8.2
5.3

23.6
4.4
0.0
—
0.3
9.9
9.0
5.7

20.5
5.7
—
—
(0.3)
11.3
10.2
6.5

—
—
—
—
—
9.7
9.8
6.5

20.8
4.4
0.8
—
0.2
8.0
7.2
4.5

17.7
5.9
—
—
0.5
8.4
7.3
4.4

—
—
—
—
—
(0.8)
(1.9)
(1.4)

38.9
4.6
0.9
—
11.3
0.7
(0.0)
(0.1)

20.7
6.2
0.4
—
11.4
(0.3)
(4.0)
(2.8)

—
—
—
—
—
30.4
27.9
18.1

97.8
17.7
1.8
—
12.2
28.6
25.6
16.1

75.4
23.5
0.4
—
12.4
32.1
25.2
16.0

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

94

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202095

Financial Summary

Operational Data
Mobile Communications Services Subscriptions

Fixed-Line Broadband Services Subscriptions

Mobile Aggregate ARPU

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

(Yen)

(Yen)

90,00025,00080,32660,00021,65820,000

4,790

4,740

18,50315,00010,00030,000

6,000

6,000

4,000

4,000

2,000

2,000

4,820

5,000
0
(Fiscal year)

2010

FOMA (3G)2011 2012 2013 2014 2015 2016 2017 2018 2019‌ LTE (Xi)0
(Fiscal year)

5G

02010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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

‌

0

2010

2011 2012 2013 2014 2015 2016 2017 2018 2019

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

Telephone Subscriber Lines + INS-Net

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

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

40,0004,000

12,00030,000

3,000

9,000

2,000

6,000

20,00017,085

10,000

1,000

0

0

(Fiscal year)

2010

2011 2012 2013 2014 2015 2016 2017 2018 2019

Telephone subscriber lines(Fiscal year)‌ INS-Net

Fiscal years ended March 31

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NTT East‌ NTT West

Hikari TV / FLET’S TV Transmission Services(Thousands of subscriptions)
3,500

11,517

2,983

3,000
2,500
2,000

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(Fiscal year)

1,000
500
0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(Fiscal year)‌ FLET’S ISDN

2012

1,828

1,500

3,000

537

FLET’S ADSL

2011

(Fiscal year)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Hikari TV

2013

2014

2015

2016

2017

2018

‌ FLET’S TV transmission services

2020

2019

Mobile Communications Services Subscriptions(Thousands of subscriptions)
5G

—

—

—

—

—

—

—

—

—

14

LTE (Xi)

26

2,225

11,566

21,96530,744

38,67944,54450,09755,872

61,66456,74657,90549,97041,14035,85132,28530,33626,273

22,581

18,648

FLET’S Hikari

15,05916,56417,30018,05018,716

19,25920,053

20,53321,07821,658Hikari Denwa

12,113

13,90015,16916,256

17,10817,37417,75918,032

18,24418,503

Telephone subscriber lines

30,271

27,521

25,042

23,00021,286

19,943

18,797

17,53816,363

15,144

INS-Net

4,613

4,150

3,724

3,366

3,058

2,776

2,539

2,331

2,138

1,942

FLET’S ADSL

2,858

2,322

1,848

1,483

1,219

1,053

919

780

602

483

FLET’S ISDN

193

152

127

109

95

85

77

70

62

54

11,662

11,882

11,611

11,466

11,586

11,411

11,231

11,057

10,945

11,517

1,413

2,004

2,453

2,823

3,014

3,052

3,023

3,016

3,001

2,983

592

861

1,003

1,161

1,345

1,432

1,521

1,615

1,716

1,828

FOMA (3G)Fixed-Line Broadband Services Subscriptions(Thousands of subscriptions)*1

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

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

NTT Group Major ISPs (Thousands of subscriptions)*3
Hikari TV / FLET’S TV Transmission Services(Thousands of subscriptions)Hikari TV
FLET’S TV Transmission Services*1
Fiscal years ended March 31

2011

2012

2013

2014

2015

2016

2017

2018

2020

2019

Mobile Aggregate ARPU (Yen)*4*5
Mobile ARPU (5G + LTE (Xi) + FOMA)

—

—

—

—

—

—

—

—

4,360

4,230

docomo Hikari ARPU

—

—

—

—

—

50

190

340

440

510

Voice ARPU

2,530

2,200

1,760

1,490

1,280

1,210

1,250

1,370

—

—

Packet ARPU

2,540

2,590

2,720

2,880

2,820

2,910

2,990

2,970

—

—

Smart ARPU

—

350

420

—

—

—

—

—

—

—

NTT East

5,880

5,920

5,860

5,660

5,490

5,510

5,250

5,080

4,910

4,790

NTT West

5,890

5,940

5,880

5,830

5,680

5,470

5,280

5,100

4,930

4,820

New

Old

ARPU of FLET’S Hikari (Yen)*4*1 The number of subscriptions for FLET’S Hikari, Hikari Denwa, and FLET’S TV transmission services includes wholesale services provided to service providers by NTT East and NTT West.
*2 The number of telephone subscriber lines is the total of individual lines and central station lines (including the Subscriber Telephone Lite Plan). “INS-Net” includes INS-Net 64 and INS-Net
1500. In terms of the number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases approximately 10 times greater than INS-Net 64. For this reason,
one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions (including subscriptions to the INS-Net 64 Lite Plan).
*3 “NTT Group Major ISPs” includes WAKWAK and InfoSphere, in addition to OCN and Plala.
*4 Please see page 98 for the ARPU calculation method and other details.
*5 The ARPU calculation method was changed from the fiscal year ended March 31, 2016. Accompanying this change, the new method has been applied retroactively to the ARPU figures
for the fiscal year ended March 31, 2014, and the fiscal year ended March 31, 2015. Packet ARPU from the fiscal year ended March 31, 2009, to the fiscal year ended March 31, 2011,
includes an amount corresponding to Smart ARPU.											

96NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 202097

Financial Summary(1) FLET’S Hikari includes B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light, FLET’S Hikari Lightplus and FLET’S Hikari WiFi Accessprovided by NTT East, FLET’S Hikari Premium, FLET’S Hikari Mytown, FLET’S Hikari Next, FLET’S Hikari Mytown Next, FLET’S HikariLight and FLET’S Hikari WiFi Access provided by NTT West, and the Hikari Collaboration Model wholesale provision of services
provided by NTT East and NTT West to service providers.
FLET’S Hikari optional services include wholesale services provided to service providers by NTT East and NTT West.
(2) Revenues from interconnection charges are excluded from the calculation of Aggregate Fixed-line ARPU (Telephone Subscriber Lines+ INS-Net Subscriber Lines) and FLET’S Hikari ARPU.
(3) For purposes of calculating Aggregate Fixed-line ARPU (Telephone Subscriber Lines + INS-Net Subscriber Lines), the number of subscribers is that for fixed-line services (Telephone Subscriber Lines or INS Net Subscriber Lines).
(4) In terms of number of channels, transmission rate, and line use rate (base rate), INS-Net 1500 is in all cases roughly ten times greaterthan INS-Net 64. For this reason, one INS-Net 1500 subscription is calculated as ten INS-Net 64 subscriptions.
(5) For purposes of calculating FLET’S Hikari ARPU, the number of subscribers is determined based on the number of FLET’S Hikari
subscribers (including B FLET’S, FLET’S Hikari Next, FLET’S Hikari Light, FLET’S Hikari Lightplus and FLET’S Hikari WiFi Accessprovided by NTT East, FLET’S Hikari Premium, FLET’S Hikari Mytown, FLET’S Hikari Next, FLET’S Hikari Mytown Next, FLET’S HikariLight and FLET’S Hikari WiFi Access provided by NTT West), and Hikari Collaboration Model wholesale services provided by NTT Eastand NTT West to service providers.
(6) Number of Active Subscribers used in the ARPU calculation of NTT East and NTT West is as below:
FY Results: Sum of number of Active Subscribers for each month from April to March
Active Subscribers = (number of subscribers at end of previous month + number of subscribers at end of current month)/2

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

Method of Calculating ARPU(a) NTT DOCOMO
NTT computes ARPU for NTT DOCOMO as follows:
Aggregate ARPU = Mobile ARPU + docomo Hikari ARPU.
(1) Mobile ARPU: Mobile ARPU related revenues {voice-related revenues (basic monthly charges, voice communication charges) +packet-related revenues (basic monthly charges, packet communication charges)} / Number of active users docomo Hikari ARPU:
docomo Hikari ARPU-related revenues (basic monthly charges and voice communication charges) / Number of Active Users(2) Number of Active Users used in the ARPU calculation of NTT DOCOMO is as below.
Sum of number of Active Users for each month during the applicable period
Active Users = (number of users at end of previous month + number of users at end of current month)/2.
(3)The number of “users” used to calculate ARPU is basically the total number of subscriptions, excluding the subscriptions listed below:
Number of Active Users = subscriptions
Subscriptions of communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver”
and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to MVNOs; and Data
Plan subscriptions in the case where the customer contracting for such subscription in his/her name also has a subscription for Xi orFOMA services in his/her name.
Revenues from communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver,” andwholesale telecommunications services and interconnecting telecommunications facilities that are provided to MVNOs, and the impact ofd POINTs-related revenues, among others, are not included in NTT DOCOMO’s ARPU calculation.

(b) NTT East and NTT West TT separately computes the following two categories of ARPU for the fixed-line business conducted by each of NTT East and NTT West,N
using the following measures:• Aggregate Fixed-line ARPU (Telephone Subscriber Lines + INS-Net Subscriber Lines): Calculated based on revenues from monthly
charges and call charges for Telephone Subscriber Lines and INS-Net Subscriber Lines, which are included in operating revenues from
Voice Transmission Services (excluding IP Services), and revenues from FLET’S ADSL and FLET’S ISDN, which are included in operating
revenues from IP Services.
• FLET’S Hikari ARPU: Calculated based on revenues from FLET’S Hikari (including FLET’S Hikari optional services), which are included inoperating revenues from IP Services and Supplementary Business, revenues from monthly charges, call charges and device connection
charges for Hikari Denwa, which are included in operating revenues from IP Services, and revenues from FLET’S Hikari optional services,which are included in Supplementary Business revenues.

98

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Reconciliation of Capital Investment

Billions of yen

Fiscal years ended March 31
Payments for property, plant and equipment
Payments for acquisition of intangible fixed assets
Purchase of property, plant and equipment, intangible assets,
and investment property

2016(U.S. GAAP)2017(U.S. GAAP)2018(U.S. GAAP)2019 (IFRS)

2020 (IFRS)¥1,265.6¥1,301.7¥1,308.7

—

—

371.9

400.1

402.0

—

—

—

—

—

¥1,672.4¥1,856.4¥1,637.5¥1,701.8¥1,710.7¥1,672.4¥1,856.4(49.7)

1.8

36.0(24.6)

49.7

Fiscal years ended March 31

2016(U.S. GAAP)2017(U.S. GAAP)2018(U.S. GAAP)2018 (IFRS)

2019 (IFRS)

2020 (IFRS)

Operating income / Operating profit¥ 1,348.1¥ 1,539.8¥ 1,642.8¥ 1,641.1¥ 1,693.8¥ 1,562.2

1,766.3

1,462.2

1,339.4

1,346.9

1,333.6

1,316.8

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

130.7

107.4

71.4

71.2

87.5

83.9

Impairment losses

32.7

73.9

162.2

177.9

126.4

16.7

3,277.9

3,183.3

3,215.8

3,237.1

3,241.4

2,979.5¥11,541.0¥11,391.0¥11,799.6¥11,782.1¥11,879.8¥11,899.4

28.4%

27.9%

27.3%

27.5%

27.3%

25.0%

Total
Differences between capital investment

Reconciliation of EBITDA Margin

Depreciation and amortization

EBITDA
Operating revenues
EBITDA margin

Billions of yen

Note: As IFRS 16 (Leases) became effective on April 1, 2019, NTT Group has changed the method of accounting for lease payments under operating leases from expenses to depreciation. In
consideration of the comparability of EBITDA with actual results in FY 2018, EBITDA and depreciation of its components in actual results in FY 2019 have not been adjusted to reflect
this change.

ANNUAL REPORT 202099

Consolidated Statements of Financial Position

Consolidated Statements of Profit or Loss andConsolidated Statements of Comprehensive Income

Nippon Telegraph and Telephone Corporation and its subsidiaries
March 31

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

2019

2020

¥

946,134¥ 1,033,574

ASSETS

Operating revenues

Current assets
Cash and cash equivalents

Consolidated Statements of Profit or Loss

Millions of yen

2019

2020

¥11,879,842¥11,899,415

Operating expenses

4,391,434

3,502,834

Personnel expenses

2,391,617

2,428,484

Other financial assets

117,753

32,384

Expenses for purchase of goods and services and other expenses

5,917,693

6,006,379

Inventories

331,634

257,329

Depreciation and amortization

1,333,647

1,465,310

Other current assets

550,487

530,073

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

172,167

171,597

6,337,442

5,356,194

Impairment losses

126,398

16,655

Assets held for sale242,524

1,347,307

Total current assets

6,579,966

6,703,501

Goodwill

39,443

2,933

Metal cables

66,003—

Other

20,952

13,722

Trade and other receivables

Subtotal

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

9,012,947

9,087,463—

446,828

886,531980,841

1,627,762

1,694,060

Investment property

967,006

1,106,145

Investments accounted for using the equity method

298,261

283,291

Goodwill
Intangible assets

Other financial assets

1,138,502

846,285

Deferred tax assets

1,124,467

1,153,042

659,704

712,677

Other non-current assets
Total non-current assets
Total assets

15,715,180

16,310,632¥22,295,146¥23,014,133

Current liabilities¥ 1,397,545¥ 2,054,506

Trade and other payables

2,092,479

2,142,752—

154,126

Other financial liabilities

44,305

16,943

Accrued payroll

468,216

469,395

Income taxes payable

237,282

214,098

Other current liabilities

988,244996,360

5,228,071

6,048,180

Liabilities directly associated with assets held for sale

248,839
10,337,264

Operating profit

1,693,833

1,562,151

Finance income

24,46546,986

Finance costs

36,36250,253

Share of profit (loss) of entities accounted for using the equity method
Profit before taxes
Income taxes
Profit11,257
1,570,141

533,174

458,795

1,138,687

1,111,346

854,561

855,306

Profit attributable to Non-controlling interests

284,126

256,040¥220.13¥231.21

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

—

559,432

5,228,071

6,607,612

2,865,181

2,165,778—

378,346

Other financial liabilities

175,087

129,229

Defined benefit liabilities

1,878,013

1,873,501

Deferred tax liabilities

61,18970,249ProfitOther non-current liabilities

282,815

326,791

Other comprehensive income (net of taxes)

Total current liabilities(10,075)
1,671,861

Profit attributable to NTT

Basic earnings per share (yen)Short-term borrowings

Subtotal

244,487
10,186,009

Earnings per share attributable to NTT

LIABILITIES AND EQUITY

Lease liabilities

Taxes and dues
Total operating expenses

Non-current liabilities
Long-term borrowings
Lease liabilities

Total non-current liabilities
Total liabilities

5,262,285

4,943,894

10,490,356

11,551,506

EquityNippon Telegraph and Telephone Corporation (“NTT”) shareholders’ equity
Common stock100

937,950

937,950

Additional paid-in capital

2,341,206

2,252,672

Retained earnings

5,954,305

6,499,942

Treasury stock(150,635)(653,369)

Other components of equity

182,087

23,908

Total NTT shareholders’ equity

9,264,913

9,061,103

Non-controlling interests

2,539,877

2,401,524

Total equity

11,804,790

11,462,627

Total liabilities and equity¥22,295,146¥23,014,133

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Consolidated Statements of Comprehensive Income

Millions of yen

2019

2020

¥1,138,687¥1,111,346(68,503)

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

5,967

Share of other comprehensive income of entities accounted for using the equity method(4,637)(2,266)

Remeasurements of the defined benefit plans(13,250)

11,365

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

(11,920)(59,404)

Items that may be reclassified subsequently to profit or loss
Cash flow hedges(2,784)(18)

Foreign currency translation adjustments

2,791(84,107)

Share of other comprehensive income of entities accounted for using the equity method(12,025)

1,774

Total of items that may be reclassified to profit or loss

(12,018)(82,351)(23,938)(141,755)

1,114,749

969,591

Total other comprehensive income (net of taxes)
Total comprehensive income
Comprehensive income attributable to NTT
Comprehensive income attributable to Non-controlling interests

826,154743,451¥ 288,595¥ 226,140

ANNUAL REPORT 2020101

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Nippon Telegraph and Telephone Corporation and its subsidiaries

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

Fiscal year ended March 31, 2019

Millions of yen
Millions of yen
NTT shareholders' equity

Additional
Common stock paid-in capital

As of March 31, 2018

¥937,950

Cumulative effect of adoption of IFRS 9“Financial Instruments”¥2,396,555

Retainedearnings

Treasury stock

Other
componentsof equity¥6,125,957¥(610,742)¥200,6382020¥ 1,138,687¥ 1,111,346

1,333,647

1,465,310

Cash flows from operating activities
ProfitTotal

Non-controllinginterests

Total equity

Depreciation and amortization¥9,050,358¥2,515,296¥11,565,654

Impairment losses

126,398

16,655

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

10,075(11,257)——

14,033—(2,432)

11,601

7,565

19,166

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

85,70380,971

937,950

2,396,555

6,139,990(610,742)

198,206

9,061,959

2,522,861

11,584,820

Gain on sales of property, plant and equipment and intangible assets(10,142)(12,885)

Income taxes

533,174

458,795

Profit——854,561——854,561

284,126

1,138,687

Decrease (increase) in trade and other receivables(338,018)

210,566

Other comprehensive income

—

—

—

—

(28,407)(28,407)

4,469(23,938)

1,572

59,880——854,561—(28,407)826,154

288,595

1,114,749

Dividends of surplus——(313,605)——(313,605)(142,171)(455,776)

Transfer to retained earnings——(8,383)

—

8,383

—

—

—

Transfer to non-financial assets

—

—

—

—

3,905

3,905

—

3,905

Purchase and disposal of treasury stock

—

0

—

(258,153)—(258,153)—(258,153)

Cancellation of treasury stock—(2)(718,258)

718,260

—

—

—

—

Changes in ownership interestin subsidiaries without loss of control—(61,233)———(61,233)(135,038)(196,271)

Share-based compensation transactions—(6,589)———(6,589)—(6,589)Put options granted to non-controllinginterests—

12,475———

12,475

5,630

18,105

As of April 1, 2018
Comprehensive income

Total comprehensive income
Transactions with owners andother transactionsTotal transactions with owners andother transactions
As of March 31, 2019—(55,349)(1,040,246)

460,10712,288(623,200)(271,579)(894,779)¥937,950¥2,341,206¥5,954,305¥(150,635)¥182,087¥9,264,913¥2,539,877¥11,804,790

Decrease (increase) in inventories
Decrease (increase) in other current assets(11,538)

17,266

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

99,452

22,736

Increase (decrease) in other current liabilities

12,511

18,922

Increase (decrease) in defined benefit liabilities

834

2,470

Increase (decrease) in other non-current liabilities

4,359

11,370

Other
Subtotal(7,427)3,444,718

79,33088,632

Interest paid

(39,416)(49,829)

Income taxes paid
Net cash provided by (used in) operating activities(613,389)(488,310)

2,406,157

2,995,211

Cash flows from investing activities
Purchase of property, plant and equipment, intangible assets, and investment property(1,672,350)(1,856,351)

Purchase of investments(65,623)(202,410)

Proceeds from sale or redemption of investments

55,178294,153(107,264)(126,915)

Expenses due to acquisition of control of subsidiaries
Other

15,92338,796(1,774,136)(1,852,727)

Net increase (decrease) in short-term borrowings

486,124

707,276

Proceeds from increases in long-term borrowings

434,922315,549

Repayments of long-term borrowings(627,680)(512,882)—(184,384)

Cash flows from financing activities

Fiscal year ended March 31, 2020

Millions of yen
NTT shareholders' equity

Additional
Common stock paid-in capital

As of March 31, 2019(7,082)
2,979,632

Interest and dividends received

Net cash provided by (used in) investing activities

Retainedearnings

Treasury stock

Other
componentsof equity

Total

Non-controllinginterests

Total equity

Repayment of lease liabilities
Payments for acquisition of interests in subsidiaries from non-controlling interests(164,415)(364,643)

Dividends paid

(313,605)(354,827)¥937,950¥2,341,206¥5,954,305¥(150,635)¥ 182,087¥9,264,913¥2,539,877¥11,804,790

Dividends paid to non-controlling interests(142,020)(151,058)

Profit——855,306——

855,306

256,040

1,111,346

Payments for purchase of treasury stock(258,215)(501,431)

Other comprehensive income

—

—

—

—

(111,855)(111,855)(29,900)(141,755)

Other

—

—

855,306—(111,855)

743,451

226,140

969,591

Comprehensive income

Total comprehensive income
Transactions with owners andother transactions
Dividends of surplus——(354,827)——(354,827)(151,414)(506,241)

Transfer to retained earnings——

46,324—(46,324)———

Purchase and disposal of treasury stock

—

1

—

(502,734)—(502,733)—(502,733)

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

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

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

19,392———

19,392(1,916)

17,476

Other—(1,928)(1,166)——(3,094)(1,007)(4,101)Total Transactions with owners andother transactions
As of March 31, 2020

102

2019

NIPPON TELEGRAPH AND TELEPHONE CORPORATION—(88,534)(309,669)(502,734)(46,324)(947,261)(364,493)(1,311,754)¥937,950¥2,252,672¥6,499,942¥(653,369)¥ 23,908¥9,061,103¥2,401,524¥11,462,627

623

5,139

(584,266)(1,041,261)

Effect of exchange rate changes on cash and cash equivalents

3,376(13,783)

Net increase (decrease) in cash and cash equivalents

51,13187,440Cash and cash equivalents at the beginning of the year

895,003

946,134¥ 946,134¥ 1,033,574

Net cash provided by (used in) financing activities

Cash and cash equivalents at the end of the year

ANNUAL REPORT 2020103Operating and Financial Review
Operating Revenues and Expenses
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 of telecommunications equipment, system integration and other.
Operating revenues in the fiscal year ended March 31, 2020 increased 0.2% from the previous fiscal year to ¥11,899.4 billion. This
increase was due to such factors as an increase in revenues in thedata communications business segment, both domestically andoverseas, and an increase in revenues from the effect of expanding
the scope of consolidation of Ennet Corporation in the otherbusiness segment.
Operating revenues for each service category for the fiscal year
ended March 31, 2020 are summarized as follows:■ Fixed Voice Related Services
NTT Group’s fixed voice related services include a portion of theservices it provides in the regional communications businesssegment and long distance and international communications
business segment, such as telephone subscriber lines, INS-Net,conventional leased circuits and high speed digital.
Fixed voice related revenues for the fiscal year ended March 31,
2020 decreased 7.3% from the previous fiscal year to ¥999.4 billion,
accounting for 8.4% of total operating revenues. This decrease wasdue to a continued decline in the number of subscriptions for telephone subscriber lines and INS-Net caused by the increased popularization of mobile phones and optical IP telephones, and anincrease in free or low-priced communications services offered by
OTT operators.
■ Mobile Voice Related Services
Mobile voice related services include a portion of the services NTT
Group provides in the mobile communications business segment,such as LTE (Xi).
Mobile voice related revenues for the fiscal year ended March 31,
2020 increased 2.1% from the previous fiscal year to ¥966.5 billion,
accounting for 8.1% of total operating revenues. This increase wasdue to, mainly to the revenue boosting effect associated with the
reduction of Monthly Support discounts.
■ IP/Packet Communications Services
NTT Group’s IP/packet communications services include a portion of
the services it provides in the regional communications businesssegment, such as FLET’S Hikari, a portion of the services it provides
in the long distance and international communications businesssegment, such as Arcstar Universal One, IP-VPN, and OCN, as well as
a portion of the services it provides in the mobile communications
business segment, such as LTE (Xi) packet communications services.
In the fiscal year ended March 31, 2020, revenues from IP/packet
communications services decreased 2.7% from the previous fiscal
year to ¥3,619.3 billion, accounting for 30.4% of total operating
revenues. This decrease was due to, among other things, the increased number of transfers to the Hikari Collaboration Model in theregional communications business segment and a decrease inrevenues in the mobile communications business segment due tothe introduction of new billing plans, despite the continued increasein the number of docomo Hikari subscriptions in the mobile communications business segment.

104

NIPPON TELEGRAPH AND TELEPHONE CORPORATION■ Sales of Telecommunications Equipment

This category includes a portion of the services NTT Group provides
in the mobile communications business segment and the regional
communications business segment.
In the fiscal year ended March 31, 2020, revenues from telecommunications equipment sales decreased 25.5% from the previous
fiscal year to ¥691.8 billion, accounting for 5.8% of total operating
revenues. This decrease was mainly due to a decrease in thenumber of equipment units sold as a result of the introduction ofservice/device separation plans in the mobile communications
business segment.
■ System Integration

NTT Group’s system integration services include its data communications business segment and a portion of the services it provides
in the long distance and international communications businesssegment and the regional communications business segment.
In the fiscal year ended March 31, 2020, revenues from system
integration increased 3.8% from the previous fiscal year to ¥3,731.4
billion, accounting for 31.4% of total operating revenues. This
increase was mainly due to factors such as the NTT’s expansion ofits scope of business both domestically and overseas in the data
communications business segment.
■ Other
Other services principally comprise building maintenance, realestate rentals, systems development, leasing activities and the
Smart Life area in the mobile communications business segment.
In the fiscal year ended March 31, 2020, revenues from otherservices increased 17.4% from the previous fiscal year to ¥1,891.0
billion, accounting for 15.9% of total operating revenues, mainly due
to the effect of expanding the scope of consolidation of Ennet
Corporation.

Operating Expenses

The Fiscal Year Ended March 31, 2020, Compared with the Fiscal Year Ended March 31, 2019
2019

2020

Operating revenues¥11,879.8¥11,899.4

19.6

0.2%

1,077.7

999.4(78.2)(7.3)%

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

946.7

966.5

19.8

2.1%

3,721.2

3,619.3(101.9)(2.7)%

929.2

691.8

(237.3)(25.5)%

3,731.4

137.3

3.8%

Other

1,611.0

1,891.0

280.0

17.4%

Operating expenses

10,186.0

10,337.3

151.3

1.5%

Operating profit

1,693.8

1,562.2(131.7)(7.8)%

Finance income and costs(11.9)

(3.3)

8.6

72.5%

Share of profit (loss) of entities accounted for using equity method(10.1)

11.3

21.3

—

1,671.9

1,570.1(101.7)(6.1)%

533.2

458.8

(74.4)(14.0)%

Profit before taxes
Income taxes
Profit1,138.7

1,111.3(27.3)(2.4)%

Less—profit attributable to non-controlling interests

284.1

256.0

(28.1)(9.9)%

Profit attributable to NTT

854.6

855.3

0.7

0.1%

■ Depreciation and Amortization Expenses
Depreciation and amortization expenses in the fiscal year ended
March 31, 2020 increased 9.9% from the previous fiscal year to¥1,465.3 billion. This increase was mainly due to the effect of
adopting IFRS 16 (Leases).

interests) for the fiscal year ended March 31, 2020 increased 0.1%
from the previous fiscal year to ¥855.3 billion.

Operating Profit

Financing, Capital Resources and Use of Funds

As a result of the foregoing, operating profit for the fiscal year ended
March 31, 2020 decreased 7.8% from the previous fiscal year to¥1,562.2 billion.

Finance Income and Costs■ Personnel Expenses

Share of Profit (Loss) of Entities Accounted for Using
Equity Method

for Purchase of Goods and Services and Other
ExpensesIn the fiscal year ended March 31, 2020, expenses for purchase ofgoods and services and other expenses increased 1.5% from theprevious fiscal year to ¥6,006.4 billion. This increase was mainly due
to an increase as a result of expanding the scope of consolidation of
Ennet Corporation in the other business segment, partially offset bya decrease in revenue-linked device costs and a decrease as a resultof adopting IFRS 16 (Leases) in the mobile communications
business segment.

Percent Change

3,594.1

Finance income and costs for the fiscal year ended March 31, 2020was ¥(3.3) billion compared to ¥(11.9) billion for the previous fiscal
year.

■	
Expenses

ChangeSystem integration

Operating expenses in the fiscal year ended March 31, 2020 increased 1.5% from the previous fiscal year to ¥10,337.3 billion. The
reasons for the increase are discussed below.

Personnel expenses in the fiscal year ended March 31, 2020 increased 1.5% from the previous fiscal year to ¥2,428.5 billion. This
increase was mainly due to the increase in personnel expenses as aresult of the expansion of overseas businesses in the data communications business segment, despite a decrease in personnel
expenses due to employee retirements in the regional communications business segment.

Billions of yen

Fiscal years ended March 31

Share of profit (loss) of entities accounted for using equity method
for the fiscal year ended March 31, 2020 was ¥11.3 billion comparedto ¥(10.1) billion for the previous fiscal year.

Profit before Taxes
As a result of the foregoing, profit before taxes for the fiscal year
ended March 31, 2020 decreased 6.1% from the previous fiscal yearto ¥1,570.1 billion.

Income Taxes
In the fiscal year ended March 31, 2020, income taxes decreased
14.0% from the previous fiscal year to ¥458.8 billion. Effective tax
rates for the fiscal year ended March 31, 2019 and for the fiscal year
ended March 31, 2020 were 31.89% and 29.22%, respectively.

Profit Attributable to NTT
As a result, profit for the fiscal year ended March 31, 2020 decreased
2.4% from the previous fiscal year to ¥1,111.3 billion. Profit attributable to NTT (excluding the profit attributable to non-controlling

Liquidity and Capital Resources
Cash flows provided by operating activities during the fiscal year
ended March 31, 2020, excluding the impact of non-business days
and the adoption of IFRS 16 (Leases), amounted to ¥2,602.5 billion,
an increase of ¥204.6 billion from ¥2,397.9 billion in the fiscal year
ended March 31, 2019. This increase was due to, among otherfactors, an increase in collections of trade receivables. Cash flows
provided by operating activities for the fiscal year ended March 31,
2020 was ¥2,995.2 billion.
NTT Group used the cash flows provided by operating activities
mainly to acquire property, plant and equipment, pay dividends andcomplete stock repurchases.
Cash flows used in investing activities during the fiscal year
ended March 31, 2020 amounted to ¥1,852.7 billion, an increase inpayments of ¥78.6 billion from ¥1,774.1 billion in the fiscal year
ended March 31, 2019. This increase was due to, among otherfactors, an increase of ¥184.0 billion in investments for property,
plant and equipment and intangibles on a cash basis, and anincrease of ¥136.8 billion in purchase of investments, despite anincrease of ¥239.0 billion in proceeds from sale or redemption of
investments.
The increase in payments for investments in property, plant andequipment and intangibles for the fiscal year ended March 31, 2020
resulted from, among other factors, an increase in capital expendituresdue to the promotion of urban solutions business in the other business.
For the fiscal year ended March 31, 2020, capital investments
amounted to ¥1,806.6 billion on an accrual basis, of which ¥572.8
billion was invested in the mobile communications business and¥522.5 billion was invested in the regional communications business.
Cash flows used in financing activities during the fiscal year
ended March 31, 2020, excluding the impact of the adoption of IFRSANNUAL REPORT 2020105

Consolidated Subsidiaries

Operating and Financial Review

16 (Leases), amounted to ¥872.3 billion, an increase in payments of¥288.0 billion from ¥584.3 billion in the fiscal year ended March 31,
2019. This increase in payments was due to, among other factors,
an increase in share repurchases. Cash flows used in financing activities for the fiscal year ended March 31, 2020 was ¥1,041.3 billion.
As of March 31, 2020, the total balance of the interest-bearing
debt of NTT Group was ¥4,699.9 billion, an increase of ¥437.2 billion
from the balance of ¥4,262.7 billion as of March 31, 2019. The ratio
of interest-bearing debt to shareholders’ equity stood at 51.9% as ofMarch 31, 2020 (from 46.0% as of March 31, 2019).
NTT Group believes that the net cash it expects to generate fromoperating activities, financing from banks and other financial institutions and/or offerings of equity or debt securities in the capital
markets will provide the requisite financial resources to meet NTT
Group’s currently anticipated capital investment and other expenditure needs and payment of debt.

Liquidity
As of March 31, 2020, NTT Group had cash and cash equivalentsbalance at the end of the fiscal year of ¥1,033.6 billion, a decrease of¥136.2 billion compared to the balance of ¥1,169.8 billion as ofMarch 31, 2019, which excludes the impact of non-business days.
Cash equivalents represent a temporary cash surplus used to repay
debts and make capital investments, among other factors, and areused as working capital. Accordingly, the balance of cash equivalents fluctuates each fiscal year depending on particular financing
and working capital requirements.

Risk Factors
In addition to the information contained in this Annual Securities
Report relating to NTT Group’s business, accounting and othermatters, prospective investors should also carefully consider therisks described below related to NTT Group’s business environment,
business strategy and operations, regulations to which NTT is
subject and NTT’s relationship with the Government, which may bematerial to such investors’ judgment, as summarized below.
Forward-looking statements included herein are made as of thedate of the filing of this Annual Securities Report. Additional risks not
currently known to NTT or that NTT now deems immaterial may also
impair NTT Group’s business operations. The forward-looking statements included in this Annual Securities Report also involve risks anduncertainties. NTT Group’s actual results could differ materially fromthose anticipated in these forward-looking statements as a result of anumber of factors, including the risks NTT Group faces as described
below and elsewhere in this Annual Securities Report.

1.	The spread of the COVID-19 pandemic may have an effect on
the business of NTT Group as a whole.
2.	NTT Group’s business may be affected by both the global andJapanese economic situation.
3.	NTT Group’s operating revenues may suffer from changes inmarket structure and increased competition.
4.	NTT Group’s growth in its global business may be lower than
anticipated.
5.	NTT Group may not achieve anticipated cost savings.
6.	NTT Group’s international and domestic investments, acquisitions, alliances and corporate collaborations may not be successful, or NTT Group may be unable to exert the necessarycontrol over its investments.
7.	NTT Group may be unable to obtain the licenses for third-party
intellectual property necessary for the operation of its business,
may be subject to claims related to the infringement of the intellectual property from other companies, or may be unable toprotect its own intellectual property rights, all of which could
adversely affect its business operations and financial position.
8.	NTT Group may be unable to hire or retain necessary personnel,
which could have an adverse effect on NTT Group’s results ofoperations and financial condition.
9.	Cyberattacks could cause service interruptions or cause thequality of NTT Group’s service to decline, which may affect NTT
Group’s results of operations and financial condition.
10.	
System disruptions, network disruptions, disruptions tobusiness operations or issues with system architecture that
occur as a result of natural disasters may affect NTT Group’s
results of operations and financial condition.
11.	NTT’s reputation and credibility may be affected by fraud or
misconduct in Japan or abroad, or by inappropriate use or leaksof confidential business information and personal information.
12.	Misuse of products and services offered by NTT Group may
have an adverse impact on NTT Group’s credibility and corporate image and could expose NTT Group to liability.
13.	NTT Group may be subject to unfavorable decisions in litigationor other proceedings, which could have an adverse effect on its
operations.
14.	Changes or decisions regarding telecommunications regulations may affect NTT Group’s business.
15.	The frequencies that NTT Group can use are limited, and it ispossible that it will not be able to secure adequate frequency
spectrum for its operations.
16.	NTT Group may be impacted by laws, regulations and systems
relating to the environment, such as those relating to reductionof greenhouse gas emissions.
17.	The Government owns enough NTT Shares to give it considerable influence over whether resolutions at NTT shareholder
meetings are adopted.
For more information on risk factors, please refer to NTT’s corporate website.
https://www.ntt.co.jp/ir/mgt_e/risks_factors.html

Company
Consolidated subsidiaries(As of March 31, 2020)

CapitalVotingrights ratio

Millions of yen%

Main line (s) of business

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

949,680

66.23

Provision of mobile communications services and smart life area services

12,321100.00

Provision of internet connection and video distribution services

REGIONAL COMMUNICATIONS BUSINESS SEGMENTNIPPON TELEGRAPH AND TELEPHONE
EAST CORPORATION

335,000

100.00

Provision of intra-prefectural communications services in the eastern part of JapanNIPPON TELEGRAPH AND TELEPHONE
WEST CORPORATION

312,000

100.00

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

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

748,723100.00Governance and strategy formulation, and promotion of measures in the global business of NTT GroupLONG DISTANCE AND INTERNATIONAL COMMUNICATIONS BUSINESS SEGMENT
NTT Communications Corporation

230,979

100.00

Provision of inter-prefectural communications services, international communications services, and Internetrelated services

NTT Ltd.

USD8,287.19
million100.00

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

Dimension Data Holdings plc

USD888.52
million100.00

Provision of IT system building and maintenance support for corporations

NTT Security Corporation

39,468100.00

Provision of professional security services

NTT America

USD2,968.75
million100.00

Provision of ICT services in North America

NTT EUROPE

GBP178.58
million100.00

Provision of ICT services in Europe

Lux e-shelter 1

EUR403.21
million100.00

Provision of data center-related services in Europe

Arkadin International

EUR177.24
million100.00

Provision of teleconference, web conference, and video conference services

NTT Global Data Centers Americas

USD424.29
million100.00

Provision of data center-related services in North America

NTT Global Networks

USD513.53
million100.00

Provision of network services

NETMAGIC SOLUTIONSINR16,611.93
million100.00

Provision of data center-related services in India

GYRON INTERNET

GBP93.00
million100.00

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

NTT Managed Services Americas
Intermediate Holdings

USD925.24
million100.00

Provision of managed services in North America

Transatel

EUR5.86
million

80.70

Provision of mobile connectivity services for IoT

WhiteHat Security

USD0.1
million100.00

Provision of security services

Symmetry Holding

USD216.45
million100.00

Provision of managed services in North America

Spectrum Holdings

USD4,101.93
million100.00Management of subsidiaries of Dimension Data Holdings plc in Europe and North America

DATA COMMUNICATIONS BUSINESS SEGMENTNTT DATA CORPORATION

142,520

54.21

Provision of data communications system services and network system services

NTT DATA

USD5,056.13
million100.00Consulting, system design, and development in North America

NTT DATA Services

USD2,114.29
million100.00Consulting, system design, and development in North America

EVERIS PARTICIPACIONESEUR123.02
million100.00Consulting, system design, and development

USD5,078.07
million100.00Management of subsidiaries of NTT DATA CORPORATION in North America

NTT Urban Solutions, Inc.

108,372

100.00

Contact point for urban solutions business, and integrated management of urban solutions-related
information

NTT Urban Development Corporation

48,760100.00Real estate acquisition, development, construction, leasing, and management

NTT FACILITIES, INC.

12,400100.00Design, management, and maintenance of buildings, equipment, and electric power facilities

NTT Anode Energy Corporation

7,924

100.00Development of smart energy solutions and energy management system

NTT FINANCE CORPORATION

16,771100.00

Lease and installment sales of telecommunications-related devices, and billing and collection of charges forcommunications and other services

NTT COMWARE CORPORATION

20,000100.00Development, production, operation, and maintenance of information communications systems and software

NTT ADVANCED TECHNOLOGYCORPORATION

5,000

100.00Technology transfer, technical consulting, and design and development of systems

NTT Data International

OTHER BUSINESSOther 945 companies

106

NIPPON TELEGRAPH AND TELEPHONE CORPORATIONANNUAL REPORT 2020107

Career Summaries of Members of the Board andAudit & Supervisory Board Members

108

Hiromichi Shinohara

Jun Sawada

Akira Shimada

Takao Maezawa

Kanae Takahashi

Takashi Iida

Chairman of the Board
Years Served as Member of the Board: 11
Shares Owned: 44,300
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2009: Senior Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2011: Senior Vice President		
Head of Research and Development Planning		
Head of the Information Sharing Laboratory Group		
Member of the Board of the Company
Oct. 2011: Senior Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2012: Executive Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2014: Senior Executive Vice President		
Head of Research and Development Planning		Member of the Board of the Company
Jun. 2018: Chairman of the Board of the Company (present post)

President and Chief Executive Officer
Member of the Board
Years Served as Member of the Board: 6
Shares Owned: 34,400
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2008:	Senior Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2011: Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2012: Senior Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department
		Member of the Board of NTT Communications
Corporation
Jun. 2013: Senior Executive Vice President
		Member of the Board of NTT Communications
Corporation
Jun. 2014: Senior Executive Vice President		Member of the Board of the Company
Jun. 2016:	Director and President, Chief Executive Officer of
NTT Security Corporation
Jun. 2018: President and Chief Executive Officer
		Member of the Board of the Company (present post)
Aug. 2018: President and Chief Executive Officer
		Member of the Board of NTT, Inc. (present post)

Senior Executive Vice President
In charge of business strategy and risk management
Member of the Board
Years Served as Member of the Board: 8
Shares Owned: 21,908
Background and Experience
Apr. 1981:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2007:	Vice President of Corporate Strategy Planning of
the Company
Jul. 2007:	General Manager of the Accounts and Finance
Department of Nippon Telegraph andTelephone West Corporation
Jul. 2009:	General Manager of the General Affairs and Personnel
Department of Nippon Telegraph andTelephone East Corporation
Jun. 2011:	Senior Vice President		General Manager of the General Affairs and Personnel
Department
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2012:	Senior Vice President		
Head of General Affairs		Member of the Board of the Company
Jun. 2012:	Member of the Board of Nippon Telegraph andTelephone West Corporation
Jun. 2015:	Executive Vice President		
Head of General Affairs		Member of the Board of the Company
Jun. 2018:	Senior Executive Vice President		Member of the Board of the Company (present post)
Aug. 2018:	Member of the Board of NTT, Inc.
Oct. 2018:	Senior Executive Vice President of NTT, Inc.
(present post)

Full-time Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 4
Shares Owned: 20,008
Background and Experience
Apr. 1978:	Joined Nippon Telegraph andTelephone Public Corporation
Jun. 2006:	Executive Manager of the Human Resources
Management Department, General Manager of theTraining Institute		Executive Manager of General Affairs of
NTT Communications Corporation
Jun. 2008: Senior Vice President		Deputy General Manager of the Enterprise Business
Division		Member of the Board of NTT Communications
Corporation
Jun. 2011:	Executive Vice President		Deputy General Manager of the Enterprise Business
Division		Member of the Board of NTT Communications
Corporation
Aug. 2011:	Executive Vice President		
Head of the Second Sales Division		Member of the Board of NTT Communications
Corporation
Jun. 2012:	President and CEO of NTT PC Communications
Incorporated
Jun. 2016:	Full-Time Audit & Supervisory Board Member of theCompany (present post)
Aug. 2018:	Audit & Supervisory Board Member of NTT, Inc.
(present post)

Full-time Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: —Shares Owned: 4,200
Background and Experience
Apr. 1987: Joined the Company
Jul. 2013:	Deputy Head of the Internal Control Office of the General
Affairs Department of the Company
Jun. 2014:	Head of the Internal Control Office of the General Affairs
Department of the Company
Jun. 2016:	Executive Manager of the Kanagawa Division andManager of the Kanagawa Branch of the
Kanagawa Division		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2016:	Executive Manager of the Kanagawa Division andManager of the Kanagawa Branch of the
Kanagawa Division		Member of the Board of NTT EAST-MINAMI KANTOCORPORATION
Jun. 2019:	Executive Vice President
		Executive Manager of the Corporate Strategy Planning
Department and the NW Facilities Business Department
		Member of the Board of NTT InfraNet Co., Ltd.
Jun. 2020:	Full-Time Audit & Supervisory Board Member of theCompany (present post)

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 6
Shares Owned: 6,900
Background and Experience
Apr. 1974:	Registered as Attorney-at-Law(Daini Tokyo Bar Association) (registration up-to-date)		Joined Mori Sogo Law Offices(currently Mori Hamada & Matsumoto)Apr. 1991:	Deputy Chairman of the Daini Tokyo Bar Association
Apr. 1997:	Executive Governor of the Japan Federation of
Bar Associations
Apr. 2006:	Chairman of the Daini Tokyo Bar Association
Apr. 2006:	Vice President of the Japan Federation of
Bar Associations
Jan. 2012:	Established Kowa Law Office (present post)
Jun. 2012:	Corporate Auditor (Part-Time) for Shimadzu Corporation
Jun. 2013:	Corporate Auditor of JAFCO Co., Ltd.
Jun. 2013:	Outside Director of Alps Electric Co., Ltd.
(currently registered as Alps Alpine Co., Ltd.)(present post)
Jun. 2014:	Outside Audit & Supervisory Board Member of theCompany (present post)

Naoki Shibutani

Katsuhiko Shirai

Sadayuki Sakakibara

Hideki Kanda

Kaoru Kashima

Senior Executive Vice President
Senior Executive Manager of the New Business Development
Headquarters and the Digital Transformation Headquarters
Member of the Board of Nippon Telegraph and Telephone East
Corporation
Years Served as Member of the Board: —Shares Owned: 9,200
Background and Experience
Apr. 1985: Joined the Company
Jul. 2013:	Executive Manager of the Medium-term Management
Strategies Promotion Office of the Corporate Strategy
Planning Department of Nippon Telegraph andTelephone East Corporation
Jun. 2014:	Senior Vice President
		Executive Manager of the Plant Planning Department of
the Network Business Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jul. 2017:	Senior Vice President
		Executive Manager of the Plant Planning Department of
the Network Business		Headquarters and Tokyo Olympic & Paralympic
Promotion Office		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2018:	Senior Executive Vice President		Senior Executive Manager of the New Business
Development Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jul. 2019:	Senior Executive Vice President		Senior Executive Manager of the New Business
Development Headquarters and the Digital
Transformation Headquarters
		Member of the Board of Nippon Telegraph andTelephone East Corporation
Jun. 2020:	Senior Executive Vice President
Member of the Board of the Company (present post)

Outside Independent Member of the Board
Years Served as Member of the Board: 8
Shares Owned: 9,600
Background and Experience
Apr. 1965:	Assistant of the First Faculty of Science andEngineering of Waseda University
Apr. 1968:	Full-Time Lecturer of the Faculty of Science andEngineering of Waseda University
Apr. 1970:	Assistant Professor of the Faculty of Science andEngineering of Waseda University
Apr. 1975:	Professor of the Faculty of Science andEngineering of Waseda University
Nov. 1994:	Director of Academic Affairs and Director of theInternational Exchange Center of Waseda University
Nov. 1998:	Executive Director of Waseda University
Nov. 2002:	President of Waseda University
Nov. 2010:	Educational Advisor of Waseda University
Apr. 2011:	Chairperson of the Foundation for the Open Universityof Japan (resigned on March 31, 2017)
Jun. 2012:	Member of the Board of the Company (present post)
Jun. 2012:	Director of Japan Display, Inc.
(resigned on June 18, 2019)Nov. 2016:	Honorary Advisor of Waseda University (present post)

Outside Independent Member of the Board
Years Served as Member of the Board: 8
Shares Owned: 20,500
Background and Experience
Apr. 1967:	Joined Toyo Rayon Co., Ltd.
(currently registered as Toray Industries, Inc.)
Jun. 2002:	President of Toray Industries, Inc.
Jun. 2010:	Chairman and Representative Member of the Board of
Toray Industries, Inc.
Jun. 2010:	Director of Mitsui O.S.K. Lines, Ltd.
(resigned on June 24, 2014)
Jun. 2012:	Member of the Board of the Company (present post)
Jun. 2013:	Director of Hitachi, Ltd. (resigned on June 20, 2018)
Jun. 2014:	Chairman of the Japan Business Federation (Keidanren)(resigned on May 31, 2018)
Jun. 2014:	Chairman of the Board of Directors of
Toray Industries, Inc.
Jun. 2015:	Chief Senior Adviser and Chief Senior Counselor of
Toray Industries, Inc.
Jun. 2017:	Senior Adviser of Toray Industries, Inc.
Jun. 2018:	Special Adviser of Toray Industries, Inc.
(resigned on June 25, 2019)
Jun. 2018:	Honorary Chairman of the Japan Business Federation(present post)
Mar. 2019:	Director of SHIMANO INC. (present post)
May 2019:	Director of Nitori Holdings Co., Ltd. (present post)
Dec. 2019:	Director and Chairperson of the Board of Japan
Investment Corporation (present post)
Jun. 2020:	Chairman of the Board of the Kansai Electric Power
Co., Inc.

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 1
Shares Owned: 0
Background and Experience
Apr. 1977:	Research Assistant of the Faculty of
Law of the University of Tokyo
Apr. 1980:	Lecturer of the Faculty of Law of Gakushuin University
Apr. 1982:	Associate Professor of the Faculty of Law of
Gakushuin University
Apr. 1988:	Associate Professor of the Faculty of
Law of the University of Tokyo
Apr. 1991:	Associate Professor of the Graduate Schools for
Law and Politics of the University of Tokyo
May 1993:	Professor of the Graduate Schools for Law and Politics
of the University of Tokyo
Apr. 2016:	Professor of the Professional School of Law(Law School) of Gakushuin University (present post)
Jun. 2016:	Emeritus Professor of the University of Tokyo(present post)
Jun. 2017:	Director of Sumitomo Mitsui Trust Bank, Limited(present post)
Jun. 2019:	Outside Audit & Supervisory Board Member of theCompany (present post)

Outside Independent Audit & Supervisory Board Member
Years Served as Audit & Supervisory Board Member: 1
Shares Owned: 0
Background and Experience
Nov. 1981:	Joined Showa Audit Corporation(currently Ernst & Young ShinNihon LLC)
Apr. 1985:	Registered as a Certified Public Accountant(registration up-to-date)Jun. 1996:	Partner of Showa Ota & Co.
(currently Ernst & Young ShinNihon LLC)
Jun. 2002:	Senior Partner of ShinNihon & Co.
(currently Ernst & Young ShinNihon LLC)
Jul. 2006:	In charge of personnel of HR Development
Headquarters of ShinNihon & Co.
Sep. 2010:	Managing Director of Ernst & Young ShinNihon LLC		In charge of the Corporate Culture Promotion Office		
In charge of the Public Relations Office
Jul. 2012:	General Manager of Knowledge Headquarters		Managing Director of Ernst & Young ShinNihon LLC
Jul. 2013:	Representative Director of Ernst & Young InstituteCo., Ltd.
Jun. 2019:	Outside Audit & Supervisory Board Member of theCompany (present post)
Jun. 2019:	Director of Sumitomo Mitsui Trust Bank, Limited(present post)
Jun. 2020:	Audit & Supervisory Board Member of Kirin Holdings
Company, Limited (present post)

Ken Sakamura

Keiko Takegawa

Outside Independent Member of the Board
Years Served as Member of the Board: 1
Shares Owned: 900
Background and Experience
Apr. 2000:	Professor of the Interfaculty Initiative in Information
Studies and the Graduate School of Interdisciplinary
Information Studies of the University of Tokyo
Jan. 2002:	Director of YRP Ubiquitous Networking Laboratory(present post)
Apr. 2009:	Director of the Institute of Infrastructure Application of
Ubiquitous Computing of the Interfaculty Initiative inInformation Studies of the University of Tokyo
Oct. 2014:	President of Vitalizing Local Economy Organization by
Open Data & Big Data (present post)
Apr. 2017:	Professor and Dean of Faculty of Information
Networking for Innovation and Design of Toyo University(present post)		Head of Collaboration Hub for University and Businessof Toyo University
Jun. 2017:	Emeritus Professor of the University of Tokyo(present post)
Jun. 2019:	Member of the Board of the Company (present post)
Aug. 2019:	President of Association for IoT Services Coordination(present post)

Outside Independent Member of the Board
Years Served as Member of the Board: 1
Shares Owned: 600
Background and Experience
Jul. 2008:	Director-General for Policies on Cohesive Society and
Minister’s Secretariat of the Cabinet Office
Jul. 2009:	Director-General for the Gender Equality Bureau of the
Cabinet Office
Dec. 2012:	Director-General of the Public Relations Office of the
Cabinet Office
Jul. 2014:	Director of the Gender Equality Bureau of the Cabinet
OfficeApr. 2019:	Professor of Showa Women’s University
Jun. 2019:	Member of the Board of the Company (present post)
Jun. 2019:	Corporate Auditor of MITSUI MINING & SMELTING
CO., LTD. (present post)
Apr. 2020:	Professor and Dean of Faculty of Global Business of
Showa Women’s University (present post)

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Note: As of June 30, 2020

ANNUAL REPORT 2020

109

Stock Information(As of March 31, 2020)

Corporate Information

Principal Shareholders

Company name	NIPPON TELEGRAPH AND
TELEPHONE CORPORATION
Date of establishment April 1, 1985
Head office
Otemachi First Square, East Tower, 5-1,		Otemachi 1-Chome, Chiyoda-ku, Tokyo		
100-8116, Japan+81 (3) 6838-5111
Telephone
Common stock¥937,950,000,000
Total number of shares authorized
to be issued by NTT
6,192,920,900 shares
Total number of shares issued
3,900,788,940 shares
Aggregate voting rights
36,306,767
Number of shareholders(including holders of fractional shares)
812,089

Name

Number ofshares held(Thousands)

Ratio of the number ofshares held to thetotal number ofshares issued (%)

The Minister of Finance
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account 9)
Japan Trustee Services Bank, Ltd. (Trust Account 5)
JPMorgan Chase Bank 385632
Japan Trustee Services Bank, Ltd. (Trust Account 7)
Moxley & Co. LLC
Japan Trustee Services Bank, Ltd. (Trust Account 1)
THE BANK OF NEW YORK MELLON 140044

1,260,906
200,508
165,856
59,57653,43248,451
41,99537,58827,40527,206

34.69
5.52
4.56
1.64
1.47
1.33
1.16
1.03
0.75
0.75

Tokyo (Stock Code: 9432)

Notes: 1. Number of Shares Held is rounded down to the nearest thousand.		
					 2. NTT’s holdings of treasury stock (265,592,712 shares) are not included in theabove table. In addition, as part of a business and capital alliance, NTT allocated80,775,400 shares of its treasury stock to Toyota Motor Corporation by means ofa third-party allotment through the disposal of shares, with a disposal date ofApril 9, 2020.
					 3. Equity ownership percentages do not include treasury stock.

Investor Relations

Breakdown of Shares by Shareholder

https://www.ntt.co.jp/ir/contact_e/
Telephone: +81 (3) 6838-5481

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

Stock Exchange on Which the Company Is Listed

National and Local Governments 1,260,946 (34.69)

Depositary for NTT American Depositary Receipts (ADRs)
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, NY 10179, U.S.A.
Inquiries 
JPMorgan Service Center
P.O. Box 64504
St. Paul, MN 55164-0504, U.S.A.
Telephone: 1-800-990-1135 (General)
1-651-453-2128 (From outside the U.S.A.)

Financial Institutions

763,330 (21.00)

Financial Instruments Business
Operators

65,672 (1.81)

Other Corporations

43,093 (1.18)

Foreign Corporations, etc.

942,428 (25.92)

Individuals, etc.

559,725 (15.40)

Notes: 1. The percentages represent the ratio of shareholders’ shares to the total number
of issued shares excluding treasury stock.
					 2. “Other Corporations” above includes 57 thousand shares in the name of Japan
Securities Depository Center.

Restrictions under the NTT Act
The NTT Act requires the government to own at least one-third of the total number of issued shares.* Pursuant to the NTT Act, the proportion of voting rights offoreign nationals and foreign corporations is limited to less than one-third of thetotal voting rights.
If the proportion of voting rights of foreign nationals and foreign corporations
should exceed one-third, pursuant to the NTT Act, NTT is prohibited from registering ownership of shareholders in excess of such limit.
As of the end of March 2020, 9,424,018 of the voting rights were owned byforeign nationals and foreign corporations.
* For the time being, pursuant to Article 13 of the NTT Act, any increase in the number ofshares attributable to the issuance of new shares is not included in calculating the total
number of issued shares for the purposes of the NTT Act.

NTT’s Share Price on the Tokyo Stock Exchange(Yen)(Points)
3,000

3,000

2,000

2,000

1,000

1,000

0

0

(Thousands of shares)
300,000
200,000
100,000
0

2011

2012

N
 TT’s share price (upper left scale)

2013

2014

TOPIX index (right scale)

2015

2016

2017

2018

2019

2020

‌NTT’s trading volume (lower left scale)Notes: 1. NTT’s share price and TOPIX index are the simple average closing prices on the last trading day every month.
					 2. NTT’s trading volume refers to the number of NTT shares traded every month.
					 3. NTT conducted a 100-for-1 stock split of its common stock, with an effective date of July 1, 2015, and a 2-for-1 stock split of its common stock, with an effective date of January
1, 2020. NTT share prices have been adjusted to reflect the impact of these stock splits.

110

NIPPON TELEGRAPH AND TELEPHONE CORPORATION