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1. Summary of Results for the Fiscal Year Ended March 31, 2015

In the fiscal year ended March 31, 2015, while the economies of Europe and certain emerging countries weakened, the U.S. economy remained stable, leading to a gradual recovery of the global economy. The Japanese economy grew steadily overall, despite decreases in consumer spending levels and other areas due to the increase in the consumption tax rate enacted in April 2014.

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

Regional telecommunications markets are also changing dramatically, with intensifying competition in broadband service facilities and services centered around the shift to fiber-optic access, and increasing offloading (*3) needs due to the expansion of the volume of data communications. 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.

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 ensure the reliability of 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 times of large-scale natural disasters and other calamities.

NTT East has also engaged in efforts to further enhance broadband/ubiquitous environments and to expand fiber-optic access service user demographics through the provision of new services and products utilizing the next generation network (NGN), as well as providing customer-friendly rate menus that encourage subscribers to use its services for longer terms.

1.Efforts to Promote Fiber Optic and IP Services

Amid intensifying competition with respect to broadband services, NTT East launched new services and carried out other initiatives designed to promote the expansion and continued use of "FLET'S Hikari" (*4) and meet customers' needs when using their Wi-Fi-compatible devices.

  1. ⅰ.Starting on July 1, 2014, NTT East began offering the new "FLET'S Hikari" services "FLET'S Hikari Next Giga Family Smart Type" and "FLET'S Hikari Next Giga Mansion Smart Type," which provide transmission speeds at the fastest available level in Japan for both access networks and for home wireless LAN environments, providing a maximum upload and download (sending and receiving data) transmission speed of about 1Gbps, and which are compatible with the latest high-speed wireless LAN standards. In addition to these services, on December 1, 2014, NTT East began providing "FLET'S Hikari Next Family Giga Line Type" and "FLET'S Hikari Next Mansion Giga Line Type" services, which do not utilize Wi-Fi routers.

    Furthermore, in order to allow even more customers to utilize "FLET'S Hikari," NTT East has implemented discount campaigns aimed at attracting new subscribers, including the "Giga Push! Campaign" and "Lighter than FLET'S Hikari Light! Discount" programs.

    The membership program for subscribers to "FLET'S Hikari," the "FLET'S Hikari Members Club," exceeded five million members (*5) on April 11, 2014. To commemorate this milestone, NTT East conducted a gift campaign beginning in May 2014 for customer members to win points, products and other items through a lottery.

  2. ⅱ.The growing penetration of high-speed wireless Wi-Fi-compatible devices such as smartphones, tablets and similar devices led NTT East to provide connectivity to "Hikari Station" (*6) Wi-Fi Internet hotspots through the Android/iOS application "Japan Connected-free Wi-Fi" (*7) beginning on August 26, 2014. Users of smartphones and other devices, including visitors to Japan, can now enjoy more convenient Wi-Fi Internet connectivity at tourist attractions and in urban areas. In addition, in order to create demand and enhance convenience for visitors to Japan, Japan Airlines Co., Ltd. ("JAL") and NTT East collaborated to provide IDs and passwords through the websites of JAL's overseas domains (*8) to enable visitors to Japan to access free wireless Wi-Fi services at "Hikari Station" hotspots.

    Furthermore, given the expansion of the O2O services (*9) market, on November 4, 2014, NTT East started providing the "O2O Cloud Service," an application service that uses Wi-Fi and is aimed at businesses in the restaurant, retail and other similar industries. This service allows businesses to link to an application for smartphones and tablets to display coupons, recommendations or other information to customers, while also gathering preregistered information from users connected to the Wi-Fi access point.

  3. ⅲ.In an effort to promote the prosperity of society through the active use of ICT (*10), NTT East held an interactive caravan event, the "Showa Retro Community Forum," with the objective of stimulating interest in the Internet among senior citizens who still do not use it, by demonstrating to them the Internet's enjoyability and usefulness. By taking an event car through various areas (a total of 17 prefectures) in eastern Japan, NTT East had senior citizens interact with new technologies and services as they experienced the nostalgic "Showa Retro Worldview."

    In addition, in order to contribute to the maintenance and stabilization of management of nursery schools through the active utilization of ICT, Global Bridge Co. and NTT East collaborated to provide the "Child Care System" nursery school operational management system, with NTT East providing one-stop service, which includes "FLET'S Hikari" services, public wireless LAN access point services, utilization support, fee collection agency services, and other services.

  4. ⅳ.In order to cultivate new demand by promoting new ICT utilization, on February 1, 2015, NTT East began offering the "Hikari Collaboration Model." NTT East's wholesale provision of services such as "FLET'S Hikari" to various service providers will allow such service providers to combine their services with fiber optic access services and provide new services to their customers.

2.Initiatives Relating to the Solutions Business

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

  1. ⅰ.On August 20, 2014, NTT East launched "FLET'S VPN Prio" as a new IP-VPN service for the bandwidth priority service "FLET's Hikari Next Prio," aimed at customers with large-scale networks. This enables the structuring of a private network capable of reliable transmission that minimizes delays compared to the previous "FLET'S VPN Wide."

    On June 20, 2014, NTT East launched the "Biz Hikari Cloud Natural Disaster Victim Relief Support System" for local governments as a cloud-based service that comprehensively supports efforts to aid in disaster victims' livelihood rehabilitation, such as "Issuance of Disaster Damage Certificates" (*11) by local governments. This system enables local governments to support disaster victims promptly and impartially and allows disaster victims to receive prompt support in the event of a disaster.

  2. ⅱ.Amid a business climate where small- to medium-sized enterprises (SMEs) are utilizing mobile devices to achieve greater operational efficiency, on December 1, 2014, NTT East launched "Giga Raku Wi-Fi," which provides ready-made Wi-Fi environments in response to customer requests, combining Wi-Fi access point equipment and support from installation through operation. Mobile ICT can be effectively utilized in the office, addressing the needs of NTT East customers who hope to improve productivity in their businesses and create new business opportunities.

    In addition, on December 10, 2014, NTT East launched "IT Support Plan Mini Light" as a new, lower-cost option that provides support in the office ICT environment with a more limited range of content than the existing support lineup for "Office Marugoto Support," a support service aimed at SMEs in the event of problems with office IT equipment, including breakdowns or other malfunctions.

  3. ⅲ.On June 24, 2014, NTT East launched "FLET'S Azukeru PRO Plan" as an addition to the lineup of the "FLET'S Azukeru" online storage service. This service provides enhanced security compared to previous plans and adds additional functionality aimed at businesses, such as the ability to scheduling appointments on calendars. This plan enables schedule sharing and management of calendars among customers with the same subscription agreement as well as calendar registration and confirmation via smartphones and other mobile devices while away from the office.

3.Status of Business Operation Structure

NTT East, in response to the changing market and business environments, and in order to further enhance operational efficiency and to promote service provision by working even more closely with local communities, revised its business management structure on July 1, 2014.

Specifically, in order to further promote the efficiency of its 17 branch offices in each prefecture of the NTT East area, NTT East merged its branch offices into six business divisions and consolidated operations for efficiency where possible. To promote service provision in even closer conjunction with the local communities, NTT East established 29 branch offices as internal units within these business divisions, which divide the larger markets, namely the greater Tokyo metropolitan area (Tokyo, Kanagawa, Chiba and Saitama) and Hokkaido.

In connection with these developments, NTT East reorganized its 17 regional subsidiaries in each prefecture of the NTT East area and NTT East Solutions Corporation, which had overseen corporate sales in the Tokyo area, into four companies. In addition, in order to further increase business efficiency and to promote greater consistency in, and improvement of, service levels, front office operations (including 116 call centers) that had previously been outsourced to multiple companies were re-established as NTT EAST JAPAN SERVICE CORPORATION to operate in a centralized manner.

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, having further 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 leading company in Japan's 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" (*12) established for each important theme of CSR activities. Furthermore, by issuing the NTT East Group CSR Report 2014, NTT East proactively endeavors to disclose relevant information to its stakeholders.

5.Financial Standing

As a result of these and other cost reduction efforts during the fiscal year ended March 31, 2015, operating revenues totaled 1,765.4 billion yen (a decrease of 0.5 percent from the previous fiscal year), operating income totaled 109.8 billion yen (an increase of 64.6 percent from the previous fiscal year), recurring profit was 122.0 billion yen (an increase of 33.0 percent from the previous fiscal year), and net income totaled 69.5 billion yen (an increase of 28.9 percent from the previous fiscal year).

  • *1A form or service providing software and hardware, etc. via a network that can be utilized as needed without the purchase (ownership) of software and hardware, such as a server.
  • *2An abbreviation for Wireless Fidelity. This is a brand name for ensuring compatibility, so that wireless LAN equipment can connect effortlessly with other equipment. This term is now used to signify the wireless LAN environment itself in which Wi-Fi-compatible equipment interacts with other equipment.
  • *3Dispersing the load in order to eliminate reduction in transmission speed or connection difficulties that arise due to an increase in the transmission volume.
  • *4A collective name for "FLET'S Hikari Next," "B FLET'S," "FLET'S Hikari Light" and "FLET'S Hikari Wi-Fi Access" (includes Hikari Collaboration Model).
  • *5 Numerical value for the "FLET'S Hikari" circuit unit.
  • *6A public wireless LAN access point service provided by NTT East for store and facility owners.
  • *7An application that can connect to free Wi-Fi Internet services, provided by NTT Broadband Platform Inc.
  • *8JAL websites aimed at customers in overseas areas (26 locations globally in 11 languages, excluding Japanese).
  • *9An abbreviation for Online-to-Offline. Promote customer purchasing activities and attract customers to small retail shops and facilities, etc. through information from Internet-based media (websites, email, applications, etc.).
  • *10An abbreviation for Information and Communication Technology. Data communication technology. A collective term for technology related to data communication via computers, including hardware, software, systems, and data communication.
  • *11 Documents by which local governments certify the extent of damage to homes and such during disasters, such as fires, floods, earthquakes, etc.. These documents are required when applying for support funds for disaster victim relief or disaster restoration home financing, and claiming indemnity insurance payments, etc.
  • *12An abbreviation for Key Performance Indicator. This is a quantitative indicator that measures the degree to which goals have been achieved.