1.Summary of Results for the Fiscal Year Ended March 31, 2010

In the fiscal year ended March 31, 2010, against a backdrop of improvements in the global economy, particularly in Asia, and the positive effects of large scale economic stimulus measures, the Japanese economy showed signs of recovery, mainly in exports and production. The economic climate continued to be difficult, however, with capital investments decreasing substantially and the job market rapidly worsening due mainly to a deterioration in corporate earnings.

In the information and telecommunications sector, in addition to the rapid growth of mobile phones and the expansion of Internet usage following upon advances in the use of IP and broadband networks, Nippon Telegraph and Telephone East Corporation (“NTT East”) is implementing dynamic structural changes through the integration of communications and broadcasting, as well as of fixed-line and mobile communications, and the expansion of new network services that utilize SaaS^*1, cloud computing^*2, CGM^*3 and other services.

In the broadband market, fiber-optic access services have expanded to account for over half of broadband services. In addition to facility competition from other businesses and increasing service competition, the market environment is undergoing major change as a result of the expansion of triple play service offerings, including video distribution, and the appearance of new services for information devices other than personal computers. In the fixed-line telephone market, the shift from conventional fixed-line telephony to optical IP telephony advanced as fiber-optic access services expanded. In addition, competition with direct subscriber telephone services provided by competitors using dry copper lines and telephone services provided by cable television operators continued.

In this difficult and changing business environment, NTT East endeavors to be an “accessible all-around ICT corporation”^*4 that provides and maintains high quality and stable universal service, allowing customers to place their trust in us with peace of mind. In line with NTT Group’s new Medium-Term Management Strategy “Road to Service Creation Business Group - full-scale rollout of broadband and ubiquitous service” adopted by Nippon Telegraph and Telephone Corporation (“NTT”) in May 2008, NTT East has devoted its energy to promoting and expanding safe, secure, reliable, and appealing broadband services that meet customers’ needs, through new services and products that utilize the framework of the NGN^*5 and its networks.

(1) Efforts to Promote Fiber-optic and IP Services

In line with the NTT Group Medium-Term Management Strategy, “Road to Service Creation Business Group - full-scale rollout of broadband and ubiquitous service”, NTT East’s area coverage rate^*6 for FLET’S Hikari^*7 expanded to over 90%, and the service coverage area for FLET’S Hikari Next, a highly-reliable fiber-optic access service that uses the NGN and can be used for bandwidth-secured applications, expanded to approximately all of the B FLET’S service coverage area.

FLET’S Hikari achieved a steady increase in subscriptions, which topped 7 million in October 2009. Of this figure, FLET’S Hikari Next subscriptions exceeded 1 million, accounting for a majority of new FLET’S Hikari subscriptions. Business Ether Wide, a VPN-type service that utilizes the NGN and is tailored for large group of users, is also seeing a steady increase in subscriptions. In addition, NTT East worked to expand its service offerings, launching for FLET’S Cast subscribers the FLET’S line ID subscriber notification service, which provides enhanced security, FLET’S Hikari Next Family High Speed Type and FLET’S Hikari Next Mansion High Speed Type, both of which boast a maximum downlink speed of 200 Mbps, and Hikari Denwa Office A (Ace), an optical IP telephony service which is tailored to large offices and is compatible with FLET’S Hikari Next.

NTT East will continue to develop and offer new, highly convenient services that take full advantage of the wide bandwidth, high quality and high security characteristics of the NGN and will seek to further enhance the appeal of the NGN. NTT East will also move forward with efforts aimed at creating a rich communication environment and new business opportunities.

To improve FLET’S Hikari’s accessibility, NTT East introduced discounts on monthly charges, installation charges and other fees. NTT East strengthened efforts to encourage continued customer use of the FLET’S Hikari service, such as expanding fiber optic coverage for apartments to control cancellations due to moves and launching the members-only program FLET’S Hikari Members Club, which is designed to enhance customer satisfaction through improved CRM^*8.

To increase FLET’S Hikari use, NTT East bolstered video services by expanding the service area of FLET’S TEREBI^*9, which is offered through an alliance with Opticast Inc. NTT East also launched “FLET’S TEREBI Building-wide Subscription Plan”^*10 , a new fee structure for multi-unit dwelling owners, management companies and management unions, introduced “CATV Yamagata & FLET’S Hikari”^*11 through a partnership with CATV Yamagata KK and “New Digital Cable & FLET’S Hikari”^*12 through collaboration with New Digital Cable Corp., and reached agreement on collaboration with Siogama Cable TV Co., Ltd. NTT East also teamed with businesses in a broad range of fields, including: cooperation with Sohgo Security Services Co., Ltd. in the Internet-based monitoring service “Home Security”; collaboration with Lifenet Insurance Company in the life insurance industry’s first remote videophone consulting service; provision of “Bugyo on FLET’S”, which offers a safe and comfortable core corporate operation management environment, through cooperation with OBIC BUSINESS CONSULTANTS CO., LTD.; provision of “FLET’S SPOT” at Starbucks Coffee locations operated by Starbucks Coffee Japan, Ltd.; agreement on collaboration with Shobi University and Tokyo Kasei Gakuin University for provision of “FLET’S SPOT Community Model”^*13; and agreement on collaboration with Ricoh Co., Ltd. and Fuji Xerox Co., Ltd. in the office ICT field. NTT East also sought to increase usage scenarios and expand high value-added services, releasing the living room PC “Hikari BOX”, part of the Hikari LINK series of information devices that help create a convenient, safe and comfortable lifestyle through FLET’S Hikari.

To improve customer service NTT East took steps to reduce the time it takes to commence optical access services, including increasing the number of applications where installation work dates can be determined immediately, such as for optical cabling^*14 for multi-unit dwellings, and increasing the use of remote installation. Moreover, as part of its efforts to offer services that subscribers can use with peace of mind, NTT East expanded its Internet security service FLET’S Virus Clear as well as Remote Support Service, which remotely handles customer inquiries on general broadband matters, including personal computers, routers and printers. In March 2010, subscriptions to FLET’S Virus Clear and Remote Support Service surpassed 1 million and 1.5 million, respectively.

(2) Measures Relating to the Solutions Business

With the aim of providing optimal services to corporate customers and enhancing service quality, NTT East has combined the Corporate Business Headquarters, which provided individual solutions primarily to large businesses, with the Business Marketing Department of the Consumer Business Headquarters, which provided generalized packages to small and medium-sized enterprises, to form the Corporate Business Headquarters, which is responsible for the corporate user market as a whole.

With respect to its efforts aimed at large businesses, NTT East engaged in efficient and effective ICT-based marketing activities tailored to regional customers. NTT East focused on industry-specific solutions that incorporate industry characteristics and trends in such areas as local government, police and fire departments, education and universities, agriculture, regional banks and healthcare. NTT East is striving to cultivate demand for its data center business and has opened the Nerima Data Center, which boasts lower costs, scalability and flexibility.

NTT East also endeavored to expand and improve its corporate VPN and Business Ether services. A 10Gbps product was added to the existing lineup of 10Mbps, 100Mbps and 1Gbps products of the corporate VPN service “FLET’S VPN Gate” and the service was made compatible with FLET’S Hikari Next Business Type as an access line. NTT East also launched Business Service Failure Notification, a service which provides e-mail notification to Business Ether customers in case of line failures.

Moreover, with the aim of eliminating the digital divide and providing a broadband service environment that meets regional needs, NTT East partnered with individual local governments to improve the broadband environment.

For small and medium-sized businesses, NTT East introduced “Flat-rate Intragroup Calling”, a new flat-rate service for the optical IP telephony service Hikari Denwa Office Type, among other services. NTT East also started offering “FLET’S Software Delivery Service”, which allows software companies to distribute packaged software to users via FLET’S Hikari, and “FLET’S MATOMETE SHIHARAI”, a service that performs billing and collection of fee-based information service charges for subscribers to “FLET’S Software Delivery Service” and “FLET’S Cast.”

(3) Status of Business Operation Structures

The consolidation of the “116 Center” sites, an initiative that had started in prior years, was completed. Other initiatives pursued as part of NTT East’s efforts to achieve efficient operation of its call centers included the consolidation of sites for interconnection operations and repair service operations, such as “113 Center” sites.

In addition, to achieve flexible business operations that can promptly respond to changes in the business environment, NTT East worked to raise efficiency by improving its systems and BPR^*15, including those of its construction contractors, and other measures such as shortening order processing time for FLET’S Hikari.

(4) Corporate Social Responsibility Activities

NTT East considers Corporate Social Responsibility (“CSR”) activities to be one of the most important pillars in the management of the company. NTT East believes that it is the social responsibility of a company to contribute to the environmentally-friendly, healthy and sustainable development of society. To this end, pursuant to the NTT Group CSR Charter (adopted in June 2006), NTT East sought not only to comply with the law and address its efforts towards realizing a low-carbon society, but also to maintain and gain the trust of its customers by providing a safe and secure communication infrastructure.

In its compliance efforts, NTT East continued to direct its efforts towards compliance with laws and regulations concerning privacy protection, appropriate advertisement displays, fair competition and worker dispatch.

Amid the growing societal interest in information security, including preventing data leaks and unauthorized access, NTT East formed the Information Security Department in April 2010. The Information Security Department’s goal is the thorough implementation and strengthening of security measures for protecting and managing customer information, and of measures for the proper use of and prevention of unauthorized access to such information. Towards this end, the Information Security Department is tasked with drafting company-wide policies on information security, improving related structure and rules, and planning, implementing and inspecting security measures. The establishment of the department is also designed to carry out groupwide and uniform efforts on information security for the NTT East group.

With respect to its efforts to achieve a low-carbon society, NTT East has made proposals for the reduction of the environmental burden caused by use of information communication services and for conversion of its network facilities to energy saving devices. The “NTT East Group Act Green 21” campaign was launched to promote measures that will lead to reduction of the environmental burden in various situations and to encourage environmental awareness by NTT East’s employees. The campaign encourages employees to undergo the “eco Test”^*16 certification, register in the “Our Home’s Minister of the Environment” program^*17, and participate in local cleanup activities. As proactive measures for the greening of the NTT East Head Office Building, NTT East introduced the rooftop greening with “green potatoes”^*18 program, a solar power generating system, and LED^*19 lighting, and also promoted the use of low-emission vehicles for all company cars and the change of all fluorescent lights in public phone booths to LED lights.

Furthermore, NTT East worked to foster, through its diversity management^*20 strategy, a culture that promotes the diversified use of personnel and various working styles. As risk management measures, NTT East established an H1N1 influenza task force, strengthened early restoration capabilities in the event of disasters, and participated in joint disaster drills held with the Self-Defense Forces as countermeasures for large-scale disasters.

To promote the principles of the NTT Group CSR Charter and group-wide CSR activities, NTT East enhanced its CSR management by setting the “NTT East Group CSR Goals” and issued the NTT East Group CSR Report 2009 to proactively disclose relevant information to its stakeholders.

(5) Financial Standing

As a result of these efforts during the fiscal year ended March 31, 2010, operating revenues totaled 1,928.6 billion yen (a decrease of 1.2% from the fiscal year ended March 31, 2009), recurring profit was 71.7 billion yen (an increase of 9.7% from the fiscal year ended March 31, 2009), and net profit totaled 50.5 billion yen (a decrease of 34.8% from the fiscal year ended March 31, 2009).

Notes:

• *1.SaaS: Software as a Service. A system for providing software application functions to customers as needed via a network.
• *2.A computing method in which software and data that were managed and used by computers that a user is actually using are utilized on demand in the form of a service via the Internet and other networks.
• *3.CGM: Consumer Generated Media. Blogs, SNS and other online media created by the transmission of information by consumers themselves.
• *4.ICT: Information and Communication Technology.
• *5.NGN: Next-Generation Network.
• *6.Area coverage rate = Number of fixed telephone facilities in FLET’S Hikari service area / Number of fixed telephone facilities
• *7.FLET’S Hikari includes NTT East’s FLET’S Hikari Next and B FLET’S.
• *8.CRM: Customer Relationship Management. A technique aimed at increasing sales by deepening ties with customers.
• *9.A service available to subscribers of NTT East’s telecommunication services FLET’S Hikari and FLET’S TEREBI Transmission Service, as well as the broadcasting service Opticast Facility Usage Service offered by Opticast Inc., that enables reception of terrestrial broadcasts (digital/analog) and BS broadcasts (digital/analog).
• *10.A service available to multi-unit dwelling owners, management unions and management companies with subscriptions to NTT East’s telecommunication services FLET’S Hikari Next Family High Speed Type and FLET’S TEREBI Transmission Service Building-wide Subscription Plan, as well as the broadcasting service Opticast Facility Usage Service offered by Opticast Inc., that enables their tenants to receive terrestrial broadcasts (digital/analog) and BS broadcasts (digital/analog).
• *11.A service available to subscribers of NTT East’s telecommunication services FLET’S Hikari Next and FLET’S TEREBI Transmission Service, as well as the broadcasting service Digital Service EX offered by CATV Yamagata KK, that enables reception of terrestrial broadcasts (digital/analog), BS broadcasts (digital) and CS broadcasts.
• *12.A service available to subscribers of NTT East’s telecommunication services FLET’S Hikari Next and FLET’S TEREBI Transmission Service, as well as the broadcasting service Basic Course (FLET’S Hikari plan) or Light Course (FLET’S Hikari plan) offered by New Digital Cable Corp., that enables reception of terrestrial broadcasts (digital/analog) and BS broadcasts (digital/analog).
• *13.A form in which NTT East offers the public wireless LAN service FLET’S SPOT, which is designed to improve the usage environment for community facilities, such as university campuses, and to promote broadband use among students and other users of these facilities.
• *14.An All-Optical method for installing optical fiber directly to individual units in buildings served by NTT East by running lines through common areas in the building.
• *15.BPR: Business Process Reengineering. The setting of a target (sales, profit margin, etc.) relating to corporate activities, and the analysis and optimization of operations, workflows and organizational structures with the goal of achieving that target.
• *16.Certification test for Environmental Specialists, sponsored by the Tokyo Chamber of Commerce and Industry.
• *17.Sponsored by the Ministry of the Environment.
• *18.A registered trademark of NTT Facilities, Inc. It is a method of rooftop greening that uses aero-hydroponics to grow sweet potatoes, which are easy to cultivate.
• *19.LED: Light Emitting Diode. A type of semiconductor device which becomes luminous when carrying an electric current.
• *20.A management strategy for employing diverse human resources.