News Release

March 1, 2004

Submission for Approval of Business Operation Plan
for Fiscal Year Ending March 31, 2005

Nippon Telegraph and Telephone East Corporation (NTT East) today submitted its business operation plan for the fiscal year ending March 31, 2005 to the Minister of Public Management, Home Affairs, Post and Telecommunications for approval.

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 very structure of the information and telecommunications market is undergoing dramatic change, characterized by surging demand for mobile and Internet communications. The regional telecommunications market has also ushered in an era of full-fledged competition in the IP field as the market structure is undergoing a complete shift with the rapid spread of IP telephones not only in the corporate market but also the household market. With the dramatic changes to the market structure, charges for Internet access are also falling with the expansion of demand and the heightening of competition.

Amidst such a difficult and sharply fluctuating operating environment, Nippon Telegraph and Telephone East Corporation (NTT East) will continue to strive to provide high-quality, stable universal services, while also enhancing the stability and strength of its management base. The company will lead the rapidly growing and diversifying Internet market and provide new services employing highly reliable and sophisticated infrastructure, with the aim of contributing to a wide range of both corporate and individual activities. NTT East will strive to fulfill its mission as a leading company in the IP era and will contribute to its further development with the aim of fostering information sharing. At the same time, the company will devote itself to efficiently providing optical access networks as an infrastructure for broadband services and to ensuring reliability 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, 2005, based upon this fundamental concept, NTT East will make every effort to ascertain customer opinions and demands swiftly and accurately, and to improve services accordingly. In the face of today's difficult operating environment, the company will also endeavor to further raise the efficiency of management. Moreover, NTT East will devote its full energies to the expansion of demand for Internet communications that match user needs, including providing safe and secure high value added services that are sure to lead the broadband market. NTT East will also ensure the ongoing development of stable operations in the future and position itself to return the fruits of these measures to customers, the community, and--through the holding company--to shareholders.

In line with this concept, for the fiscal year ending March 31, 2005, 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 25.38 million by the end of the fiscal year ending March 31, 2005.

(1) Subscriber Telephones

(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]).

(2) Social-Welfare Telephones

(3) Public Telephones

While securing a minimum level of public means of communication, NTT East will review public telephones which are in low use today. The company will strive to improve social welfare facilities and public services by continuing to promote the installation of wheelchair-accessible public telephone boxes.

(3) Public Telephones

(4) INS-Net Digital Services

INS-Net digital services can be provided in all regions in which demand is forecasted. The numbers of INS-Net 64 lines and INS-Net 1500 lines are projected to total approximately 3,974,000 and 37,000, respectively, by the close of the fiscal year ending March 31, 2005.

(4) INS-Net Digital Services

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.

3. Leased Circuit Services

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 Facilities

(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.

(1) Optical Access Network
(Cover rate at the end of March 2005 will be 83%.)

(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 upgrade 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 capital investment plans are outlined in the attached tables.

- Table 1 Principal Services Plan for Fiscal Year Ending March 31, 2005
- Table 2 Capital Investment Plan for Fiscal Year Ending March 31, 2005
- Attachment 1 Revenues and Expenses Plan for Fiscal Year Ending March 31, 2005
- Attachment 2 Plan of Sources and Applications of Funds for Fiscal Year Ending March 31, 2005
- Reference The earnings forecast for the fiscal year ending March 31, 2004 announced in autumn 2003 has been revised.
- Reference Outline of NTT East's Business Operation Plan for Fiscal Year Ending March 31, 2005

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