Home > Corporate Information > News Releases > 2016 > May

1. Summary of Results for the Fiscal Year Ended March 31, 2016

The information and communications market is undergoing structural changes beyond the existing framework, including a further shift to broadband services and globalization, fixed-mobile convergence, IoT expansion (*1) and cloud computing development (*2), penetration of high-speed wireless and Wi-Fi compatible devices (*3) such as smartphones and tablet devices, and widespread use of applications that enable free phone calls and messaging.

The regional telecommunications market environment is also changing dramatically, with intensifying competition in broadband access facilities and services centered around the shift to fiber-optic access. In addition, new services that leverage a variety of wireless devices are also expanding, which in turn leads to diversification in the way that customers are using these devices, and offloading (*4) needs are increasing due to the expansion of the volume of data communications.

Amid such a difficult and volatile business environment, as a carrier with an important leadership role in the information and communications industry, NTT East has endeavored to be thorough in its compliance regime and to abide by the requirements of fair competition. At the same time, NTT East has aimed to secure a stable and solid foundation for its business, and to ensure its reliability as a social infrastructure, including the provision of high-quality, stable universal services, construction of a communications network that is resilient against disasters, and prompt restoration of services in case of large-scale natural disasters and other calamities.

NTT East has also endeavored to enhance the broadband network environment and further expanding fiber-optic access by offering services and products that leverage the advantages of the next-generation network ("NGN"), as well as offering customer-friendly pricing options with long-term appeal.

1.Efforts to Promote Fiber Optic and IP Services

Amid intensifying competition with respect to broadband services, NTT East launched new services and the "Hikari Collaboration Model" to expand and continue using "FLET'S Hikari" (*5) and to meet customers' needs.

  1. ⅰ.

    As opportunities for customers to use more communications increased in response to recent increased availability of video contents and proliferation of cloud services, on March 1, 2016, NTT East began offering a new "FLET'S Hikari" service named "FLET'S Hikari Lightplus" with a two-phase fixed fee rate and substantially more usage allowance compared to the existing "FLET'S Hikari Light".

    In addition, in order for customers to use "FLET'S Hikari" with even more peace of mind, NTT East launched a compensation service on January 20, 2016 named "Naoseru" for equipment connected to "FLET'S Hikari" that covers equipment failures and broken equipment.

    Furthermore, in an effort to have more customers utilize "FLET'S Hikari," NTT East implemented discount programs for new subscribers, called "Giga Push! Discount" and "Lighter than FLET'S Hikari Light! Discount".

  2. ⅱ.

    NTT East has been working to create new demand and to improve customer retention by supporting and actively developing new business partners for its "Hikari Collaboration Model", in which businesses receiving fiber-optic access services (FLET'S Hikari) from NTT East combine their own services with fiber-optic access services to create and provide their own new service. NTT East has also been working to promote early stable operations and increased efficiency of related operations.

    "Hikari Collaboration Model" enables business partners to easily provide fiber-optic access services to their customers under their own brand. Over 300 businesses in a variety of industries are currently utilizing and providing those services. The number of subscribers to fiber-optic access service ("Hikari Collaboration Model") exceeded 3 million in March 2016.

    An example of "Hikari Collaboration Model" usage includes IIDA CABLE TELEVISION Co., Ltd, being able to provide broadcasting services to the entire coverage area in Iida city and Shimoina county in Nagano prefecture by utilizing the fiber-optic access services provided by Hikari Collaboration business partners or NTT East.

    In addition, IIDA CABLE TELEVISION Co., Ltd. has decided to collaborate with NTT East in order to enhance their services to customers and to promote vitalization of the region by utilizing the fiber-optic access services.

    NTT East is committed to contributing to the promotion of ICT utilization in various fields and to widely provide added value to customers to whom it could not previously provide full coverage on its own by collaborating with business partners in various industries.

2.Initiatives Relating to the Solutions Business

In order to support its regional customers through the promotion of ICT utilization, NTT East carried out business operations for its corporate customers providing industry-specific solutions that take into account each industry's characteristics and trends.

  1. ⅰ.

    On December 21, 2015, NTT East launched an Ethernet-based communications service for corporate customers, "Business Ether PREMIER", offering quality equivalent to a conventional dedicated line which offers guaranteed bandwidth, high reliability, and low lag at a reasonable rate.

    In addition, NTT East began offering "Giga Raku Signage" on September 1, 2015. "Giga Raku Signage" is a cloud-based signage service aimed at smooth information sharing within the office as well as between different locations by centrally managing and delivering information through cloud utilization. It also began offering a cloud-type PBX service, "Hikari Cloud PBX", on January 21, 2016. This service enables the use of internal telephone lines free of charge on a wide range of devices including smart phones regardless of the location, in addition to internal call functions offered on communication devices such as conventional PBX and business telephones.

    In terms of industry-specific services, NTT East started offering "Omakase Kyoshitsu" in the education field on April 27, 2015. This cloud-based service provides learning support applications that are to be utilized in lessons using tablets and electronic blackboards. It also began providing a cloud-based learning platform service "Hikari Cloud Smart Study" on November 13, 2015, providing a one-stop service that offers tools required for online learning at supplementary schools, cram schools, schools and further education centers.

    Furthermore, on November 13, 2015, NTT East launched a cloud-based video delivery platform service, "Hikari Cloud Smart Video", for pharmaceutical and financial industry customers in response to information delivery and sharing needs between doctors and its customers.

    Furthermore, in response to the increased number of foreign visitors to Japan, local governments and shopping streets hope to be among the first to install public Wi-Fi (City Wi-Fi) at tourist spots. In order to meet those needs, NTT East installed City Wi-Fi and provided maintenance and operational support by utilizing its regionally-based operating structure.

    For small- to medium-sized enterprises (SMEs), NTT East started offering "MS Office Online on Azukeru" on April 25, 2015 as an optional service of "FLET'S Azukeru". This service enables frequently used "Word", "Excel®", and "PowerPoint®" documents to be edited directly on "FLET'S Azukeru". In addition, NTT East began offering its "Smart Device Management" service, which enables cloud-based management of tablets and smartphone device information and control of various functions, as a new part of "Office Marugoto Support" on April 7, 2015, as well as the "αUC" cloud service that helps achieve work efficiency by utilizing smartphones on December 16, 2015.

  2. ⅱ.

    NTT East started offering "Omakase My Number Pack" on September 30, 2015 as a product supporting the Social Security and Tax Number System. This pack enables one-stop collection and management of Individual Number-related information in one place by combining and providing a wide range of its services and collaborating with other companies.

    As an example of collaboration with other companies in connection with the introduction of the Social Security and Tax Number System, NTT East has decided to support security measures for SMEs' Individual Number(social security and tax number) by offering its security service with and combining it with the information security insurance provided by Tokio Marine & Nichido Fire Insurance Co., Ltd..

    In addition, NTT East launched a function that automatically collects access records of data files stored online,"FLET'S Azukeru PRO Plan," on August 6, 2015, allowing users to manage their Individual Number information online. Further, in response to increased security awareness through corporate activities for the Social Security and Tax Number System and customer requests for a lower service rate, "Office Marugoto Support (IT support)" was renewed on March 7, 2016 and is now offered with enhanced security functions and at a lower monthly fee.

3.Status of Business Operation Structure

NTT East is in the process of transforming its business structure from a consumer-focused business structure to one that focuses on its business and Hikari Collaboration segments. NTT East proactively transferred staff members from the consumer business segment to the target areas, strengthened its measures to approach customers with which it had few opportunities to interact (ICT Concierge), and proactively worked to prepare a system that can develop and support business partners using the Hikari Collaboration Model.

In addition, NTT East worked to improve the efficiency of its access-related facility operations by conducting a review of its facility maintenance area and separating its operation into blocks.

4.Corporate Social Responsibility Activities

NTT East considers Corporate Social Responsibility ("CSR") activities to be one of the most important pillars of the management of the company, and recognizes that it is the social responsibility of a company to contribute to the environmentally friendly, healthy and sustainable development of society.

NTT East has directed its efforts as follows: (ⅰ) ensuring a high degree of stability and reliability of vital infrastructure that is indispensable to the general public; (ⅱ) complying with laws and regulations, including those that ensure fair competition, protect personal information, make accurate representations in advertising, and regulate the dispatch of workers; and (ⅲ) providing information and communications services that contribute to the reduction of the environmental impact of society as a whole, as well as taking measures to reduce its environmental impact by, among other things, reducing its consumption of energy, resources and electricity.

In addition, to meet the communication needs in the case of an emergency or disaster, NTT East installed emergency public telephones (emergency use public telephones) at temporary shelters designated by the prefectural governor in accordance with regulations and in urban areas at bases for those having difficulties going home. A total of 31,000 units have been installed as of the end of the current fiscal year, increasing by 6,000 units from last year.

Having clearly defined the "Shape the NTT East Group is Aiming For," NTT East has made an effort to realize CSR activities befitting its position as the responsible company in the information and communications industry, such as working to widen the reach of the "NTT Group CSR Charter" (enacted in June 2006) and striving to set up specific practices for the PDCA cycle based on "KPIs" (*6) established for each important theme of CSR activities.

Examples of activities conducted to support restoration of disaster-affected areas include prioritizing the procurement of agricultural produce from disaster-affected areas and serving at employee cafeterias, participating in the "Fukushima Himawari Foster Parent Project" in which participants grow and send sunflower seeds to create jobs and for use as bio-diesel in Fukushima, and carrying out tree planting activities to create new disaster-prevention forests on the coastline of Higashi Matsushima-shi in Miyagi prefecture where the land remains vacant due to the tsunami. In addition, to promote and strengthen sports activities among disabled individuals, NTT East donated some of the proceeds from the telegraphic product "Calligraphy Art telegraph (Dream and Connect)" to the Japan Sports Association for the Disabled.

Furthermore, NTT East proactively endeavored to disclose relevant information to its stakeholders by issuing the "NTT East Group CSR Report 2015".

5.Financial Standing

As a result of these measures and cost reduction efforts, operating revenues totaled 1,722.3 billion yen (a decrease of 2.4% year on year), operating income totaled 161.8 billion yen (an increase of 47.3% year on year), ordinary income was 173.4 billion yen (an increase of 42.1% year on year), and net income totaled 118.7 billion yen (an increase of 70.7% year on year).

  • *1An abbreviation for Internet of Things. A concept in which things that were not connected to the Internet before can now be connected to the Internet.
  • *2A form of service providing software and hardware via a network that can be utilized as needed without the purchase (ownership) of software and hardware, such as a server.
  • *3An abbreviation for Wireless Fidelity. This is a brand name for certifying that the wireless LAN equipment has the compatibility to connect faultlessly with other equipment. This term is now used to describe the wireless LAN environment itself in which Wi-Fi-compatible equipment interacts with each other.
  • *4Dispersing the load in order to eliminate reduction in transmission speed or connection difficulties that arise due to an increase in the transmission volume.
  • *5A collective name for "FLET'S Hikari Next", "B FLET'S", "FLET'S Hikari Light", "FLET'S Hikari Lightplus" and "FLET'S Hikari Wi-Fi Access"(including"Hikari Collaboration Model").
  • *6An abbreviation for Key Performance Indicator. Key indicators for evaluating performance. This is a quantitative indicator that measures the degree to which goals have been achieved.