News Release

February 28, 2002
For Immediate Release

NTT East Submits Business Operation Plan for Fiscal Year Ending March 31, 2003
for Approval to Minister for Public Management, Home Affairs, Posts and Telecommunications

Nippon Telegraph and Telephone East Corporation (NTT East) today submitted its business operation plan for the fiscal year ending March 31, 2003 for approval to the Minister for Public Management, Home Affairs, Posts and Telecommunications.

Information and communications are expected to contribute enormously to invigorating and enhancing the efficiency of socioeconomic activities and to creating new industries in order to make Japan into the world's most advanced IT nation and thereby achieve the aim of the e-Japan Strategy. Moreover, as needs grow steadily more sophisticated, diverse, and global in character, the structure of the information and telecommunications market is undergoing dramatic change, characterized by surging demand for mobile and Internet communications. The regional communications market has also ushered in an era of competition in every field. With the dramatic changes to the market structure, the full-fledged introduction of Dialing Parity (Carrier-Selection Service) has intensified competition while charges are falling dramatically in the Internet access market.

In this operating environment, NTT East will continue to strive to provide high-quality, stable universal services, while also enhancing the stability and strength of its management base. Moreover, the company will strive to foster the development of information sharing, through, for example, the provision of services to handle the rapid growth and diversification of the Internet market and other new services employing sophisticated infrastructure, with the aim of contributing to a wide range of both corporate and individual activity. At the same time, the company will devote itself to promoting the development of optical access networks in anticipation of greater demand for broadband services, contributing to the formation of a fair telecommunications market, improving applied research and development, and ensuring reliability and communality in the field of telecommunications. Through these endeavors, NTT East will seek to make a real difference to the world.

In the management of business operations for the fiscal year ending March 31, 2003, based upon this fundamental thinking, NTT East will make every effort to ascertain people's opinions and demands swiftly and accurately, and to improve services accordingly. In the face of the present very difficult operating environment, the company will promote radical structural reforms and reduce costs. It will devote its full energies to the expansion of Internet communications demand by enlarging service areas and by creating new demand through a full lineup of services, including HIKARI, in anticipation of the full-fledged spread of broadband services. It will also ensure the ongoing development of stable operations by working vigorously to assure the smoothness of connections and the openness of networks, to strengthen disaster countermeasures, to develop its human resources, and to undertake new business operations. It will also position itself to return the fruits of these measures to customers, the community, and--through the holding company--to shareholders.

In line with this thinking, for the fiscal year ending March 31, 2003, NTT East will give priority to the following categories in the conduct of its business management, and will do so flexibly so as to respond to changes in the operating environment.

1. Voice Transmission Services

(1) Subscriber Telephones

NTT East will respond to all demand for subscriber telephones, including the relocation of existing lines. The number of subscribers is projected to total approximately 25.49 million by the end of the fiscal year ending March 31, 2003.

Item Planned Number
Additional Installations 320,000 subscribers
Relocations 3.38 million subscribers

(2) Social-Welfare Telephones

The advance of the welfare society has been accompanied by a greater social requirement for telecommunications services in the sphere of welfare. To respond to this need, NTT East will continue to promote the installation of welfare-related products, such as its "Silver Phones Series" (Anshin [Relief], Meiryo [Clearness], Hibiki [Sound], and Fureai [Communication]).

Item Planned Number
Silver Phones
Anshin (Relief) 100 units
Meiryo (Clearness) 100 units

(3) Public Telephones

NTT East will promote the installation of IC-card public telephones, and also continue to promote the installation of social welfare public telephones such as public telephones with a volume adjustment function, and public telephone boxes usable by people in wheelchairs. In this way, it will strive to improve social welfare facilities and public services.

Item Planned Number
IC-Card Public Telephones 7,000 units
Public Telephones with Volume Adjustment Function 7,000 units

(4) INS-Net Digital Services

INS-Net digital services can be provided in all regions in which demand is forecast. Nonetheless, subscriber lines decreased over the past year with the development of ADSL. The numbers of INS-Net 64 lines and INS-Net 1500 lines are projected to total approximately 4,687,000 and 39,000, respectively, by the end of the fiscal year ending March 31, 2003.

Item Planned Number
INS-Net 64 Subscriber Lines (607,000) circuits
INS-Net 1500 Subscriber Lines (12,000) circuits

2. Data Transmission Services

To respond to heightening demand for broadband services, NTT East will endeavor to enhance access services, expand service areas, and provide new services through a full lineup using ADSL and fiber optics.

3. Leased Circuit Services

In the field of leased circuit services, NTT East is planning to install the facilities needed to cater to the increasingly varied demand for circuits, including for high-speed digital transmission and voice and image transmission.

Item Planned Number
Conventional Leased Circuits (41,000) circuits
High-Speed Digital Transmission Circuits 20,000 circuits

4. Telegraph Services

NTT East will continue to conduct the maintenance of systems and other operations in order to further improve services and to promote increased operating efficiency in its telegraph services.

5. Improvements and Advances in Telecommunications Equipment

(1) Optical Access Network

The switchover to the use of optical fiber in the access network will be actively promoted in accordance with factors such as heightening demand for broadband services.

Item Planned Number
Optical Subscriber Cables 2.4 million fiber km
(Cover rate at the end of March 2003 will be 69%.)

(2) Telecommunications Network

In its telecommunications network, NTT East will not only meet demand for broadband services, but at the same time will further upgrade network services and improve network economy and efficiency.

(3) Disaster-Prevention Measures

NTT East will take all necessary measures in the sphere of disaster-prevention measures. These will include disaster-prevention measures for telecommunications equipment and facilities, measures to ensure emergency communications, and measures to strengthen the structure for crisis management and the restoration of systems if large-scale disasters occur, and to assist with the sharing of information after a natural disaster.

(4) Installation of Underground Transmission Cables

With regard to the burying of transmission cables, from the standpoint of improving the reliability of communications facilities, ensuring safe and pleasant passage spaces, and enhancing the appearance of urban areas, NTT East will work in cooperation with the national and local governments and with other companies.

(5) Facility Maintenance

The maintenance of facilities will be directed at ensuring stable and high-quality services, by, for example, replacing cables and other facilities on an on-going basis. Through this, NTT East will aim not only to maintain customer services, but also to ensure safe operations, harmonization with the social environment, and the stabilization of communications systems.

NTT East will seek to minimize costs by making exhaustive use of existing equipment and facilities in improving and upgrading communications facilities.

6. Promotion of R&D Activities

To further stabilize and strengthen its management base, and to respond to the rapid expansion and diversification of the Internet market and public demand for the creation of an advanced information and telecommunications network society, NTT East will promote research and development in the spheres of network systems and access systems so as to improve the sophistication of telecommunications networks. In addition, to position itself to give customers the choice of a diverse range of reliable and convenient services through sophisticated telecommunications networks, NTT East will also conduct research and development in such areas as information sharing applications and communications terminals of various types.

A summary of the business plans for the above principal services and plant and equipment investment plans are outlined in the attached tables.

- Table 1
Principal Services Plan for Fiscal Year Ending March 31, 2003
- Table 2
Capital Investment Plan for Fiscal Year Ending March 31, 2003
- Attachment 1
Revenues and Expenses Plan for Fiscal Year Ending March 31, 2003
- Attachment 2
Plan of Sources and Applications of Funds for Fiscal Year Ending March 31, 2003

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