Attachment 1


SUMMARY OF RESULTS


Nippon Telegraph and Telephone East Corporation (NTT East) was established and launched its operations on July 1, 1999 following the reorganization of Nippon Telegraph and Telephone Corporation. NTT East operates as a telecommunications enterprise in the eastern Japan region.

During the business year under review, the Japanese economy showed signs of mild improvement as a result of the impact of various policy measures and the Asian economic recovery. However, severe conditions persisted in general as private demand remained anemic as a consequence of sluggish personal consumption and the continued downturn in plant and equipment investment.

Market structures in the telecommunications field are undergoing important changes in tandem with the proliferation of mobile communications and the sharp increase in demand for digital data transmission services which are taking the place of conventional voice-based communication services. The rapid growth in Internet use is also contributing to the expansion of these markets. Competition in local telecommunications markets is being rapidly intensified by progress in GC interconnections and the increasing number of enterprises providing Internet access services using ADSL, wireless and optical fiber technologies. This means that intense competition is now affecting all telecommunications fields, ranging from regional and long-distance markets to the international market.

Various significant systemic changes are scheduled, including the introduction of price caps, long-run incremental cost methodology and dialing parity system. We expect these developments to lead to a new round of price-cutting and discounting, as well as increased efforts to obtain new customers.

Against this background, NTT East has adopted as its basic management principle the provision of timely and attractive services which are "inexpensive," "easy to use" and "reliable." NTT East has also launched various initiatives to re-direct its operations from telephones to information sharing in order to develop new sources of income.

Firstly, following on the rapid increase in Internet use, NTT East has been actively promoting INS-Net 64 and other ISDN lines. Similarly, in response to customer needs for less expensive Internet access, NTT East launched the "I・ai Plan," a discount service for Internet users providing fixed-rate access to one local number up to a certain maximum monthly amount. In response to strong customer needs, the "IP Connection Service," a flat-rate Internet access service for INS-Net service subscribers started on an experimental basis in November 1999, will be expanded in May and made available to a larger geographical area. At the same time, monthly charges will be reduced from 8,000 yen to 4,500 yen. In yet another related initiative aimed at meeting diverse customer needs for high-speed and low-cost Internet access services, the " ADSL Internet Access Service," a flat-rate access service based on ADSL technologies, was started in December 1999 on a trial basis.

In the corporate sector of the market, NTT East has actively promoted its management support program known as "Team marketing solution" featuring team collaboration with customers to meet management challenges. With the cooperation of other NTT Group companies, NTT East offers a full range of business solutions extending from systems design and construction to outsourcing of maintenance and operations. NTT continues to strengthen its marketing capabilities through such initiatives.

To improve the quality of our customer services while adjusting to changing lifestyles, beginning in July 1999, NTT East has extended the operating hours of its "Dial 116" services to include Saturdays, Sundays and holidays. The "Dial 116" service handles inquiries and orders for relocation of subscriber telephone lines and various other services.

The development of digital broadcasting points to the emergence of new information sharing markets featuring the merging of telecommunications and broadcasting. NTT East has been actively preparing for entry into this field as a new source of income and has taken steps to develop a cooperative framework with various other enterprises. As the first step, SN Planning Corporation Limited was jointly established with Japan Digital Broadcasting Services, Inc. in December 1999. The new company will be in charge of studying the feasibility of customer control systems for processing of subscriptions and billing and charging functions related to a digital satellite broadcasting system using the communications satellite scheduled for placement in orbit at 110 degrees east longitude. In March 2000, NTT East established NTT MediaCross, Inc., a consignee for maintenance and operation of systems for viewer identification. These are important preliminary steps for NTT East's entry into new information sharing markets.

NTT East is committed to rationalizing its operations and streamlining its management to create a firm foundation for responding to the rapid changes in the business environment. NTT East intends to position itself as the core company in the NTT Group as the Group transforms itself into a "Global Information Sharing Group." For this purpose, in November 1999, NTT East announced its "Mid-term Restructuring Plan" covering the three-year period between fiscal years 2000 and 2002. As part of this plan, NTT East will reduce its workforce by approximately 10,000 employees by the end of fiscal 2002 through such means as the merging or closing of branch offices, promoting greater efficiency by streamlining its headquarters and cutting overhead costs, re-assigning employees to Group companies, and postponing the recruitment of new workers. The program also contains cost-cutting measures in the area of plant and equipment investment featuring reductions in procurement and construction costs and promotion of demand-based and efficiency-enhancing capital investment. Through these measures, NTT East plans to cut costs by approximately 450 billion yen in the three-year period between fiscal years 2000 and 2002.

With regard to the Y2K problem, NTT East established a Y2K Committee charged with making all necessary adjustments in the company's facilities, systems and equipment. A contingency plan was also formulated to enable prompt action in case of any trouble. As a result of these efforts, no trouble occurred affecting the Company's telecommunications services, and NTT East was able to maintain stable and uninterrupted services throughout the period.

NTT East has undertaken various activities for the preservation of the global environment in the hope of contributing to a new century of safe and comfortable living. In December 1999, the company formulated the "NTT East Global Environmental Charter" and has launched various initiatives for the conservation of paper resources, prevention of global warming, and the reduction of waste. In addition, NTT East has created an "Ecology Community Plaza" to serve as a forum of exchange for activities related to the preservation of the global environment. NTT East will continue to pursue the objectives of its Charter to fulfill its corporate responsibility for protecting the global environment and contributing actively to the development of local communities.

Regarding instances of the leakage of customer information, we have taken seriously the public's stern criticisms of NTT East as a telecommunications enterprise privy to various types of personal information. We recognize this to be an extremely serious matter with critical repercussions on our business operations. As such, NTT East is taking concerted efforts to prevent any recurrence and is committed to regaining the confidence of its customers by implementing strict controls for the protection of customer information.

NTT East's financial performance during the period under review was as follows: operating revenues amounted to 2,154.7 billion yen, and current profit amounted to 56.7 billion yen. During the period under review, NTT East registered special losses related to a 325 billion yen addition to retirement allowance reserves. As a result, net loss came to 157.2 billion yen.


[Back]