9432.T

Disaster Response to Kumamoto Earthquake

• NTT restored disrupted mobile services in 2 affected municipalities within approximately 2 days, using rapid Japan roaming implementation to maintain connectivity.
• The company continues to support evacuation shelters via the Tsunagu-Kaeru project in collaboration with other telecom firms and battery manufacturers, and is committed to full infrastructure recovery and local reconstruction support.

Consolidated Financial Performance

• Q1 FY2026 achieved a new record high for operating revenue, which reached 3,617.7 billion yen, a 355.7 billion yen Y-o-Y increase. 75 billion yen of this increase came from positive foreign currency impact. Growth was driven by the Global Solutions (DATA Group) overseas business, domestic business expansion, and DOCOMO-centered Smart Life (financial) growth.
• EBITDA increased 34.8 billion Y-o-Y to 836.2 billion yen, even after accounting for costs related to DOCOMO's customer base enhancement and network quality improvement efforts.
• Operating profit rose 20 billion Y-o-Y to 425.1 billion yen, and net profit increased 15.1 billion Y-o-Y to 274.8 billion yen.

Strategic Operational Initiatives

• Global IOWN Expansion: With government support, NTT is accelerating global IOWN service deployment. Remote heavy machinery operation surveys and demonstrations via IOWN APN have launched at CODELCO's copper mines in Chile, and a feasibility study for data center energy efficiency using PEC-2 photonic-electric convergence devices is underway in India with partner financial institutions. The company will continue expanding use cases across countries and industries to advance social implementation of IOWN technology.
• Distributed GPU Demonstration Environment: In July 2026, NTT launched the GPU over APN Testbed, a nationwide distributed GPU demonstration environment that leverages IOWN APN. The testbed spans 8 locations across Japan, enabling customers to verify advanced AI workloads including distributed AI training, distributed inference, and high-volume inter-site data transfer. NTT will advance co-creation with customers to develop new use cases for AIOWN.
• Sustainable Social Infrastructure Initiative: NTT formed a business alliance with METAWATER to drive DX-enabled operational efficiency at water and wastewater treatment plants, addressing aging infrastructure and labor shortages. NTT acquired an equity stake in METAWATER to build a long-term collaborative relationship, and aims to expand cross-sector wide-area social infrastructure management services to renewable energy, roads, and disaster resilience to support sustainable municipal infrastructure.
• DOCOMO Financial Group Launch: Launched on July 1, 2026, the group offers comprehensive cross-sector financial services including banking, securities, loans, and insurance, built on DOCOMO's existing customer base to strengthen NTT's financial platform.

Management maintained its full-year fiscal plan, and reaffirmed commitments to expand domestic and overseas enterprise business and grow the Smart Life business segment. Key specific targets include:

• Achieving 1,000 DOCOMO-branded shops equipped to support DOCOMO Financial services (bank account opening, securities support) by the end of FY2026, with 50% of these locations offering support at demand outlets.
• Stabilizing DOCOMO's domestic mobile market share at a minimum of 35%, with an goal of growing share if possible.

All segments delivered year-over-year (Y-o-Y) growth in both revenue and profit:

1. Integrated ICT business segment: Revenue and profit grew Y-o-Y, driven by customer base enhancement initiatives, strong MNP performance, strong sales of DOCOMO MAX that improved ARPU, and expanding Smart Life business (centered on DOCOMO's financial services). The rate of decline in mobile communication services revenue slowed steadily compared to the prior year, with management targeting a Y-o-Y revenue increase turnaround.
2. Global Solutions business segment: Both revenue and profit increased Y-o-Y, supported by domestic and overseas business growth and a positive 75 billion yen foreign exchange impact.
3. Regional Communications segment: Revenue increased Y-o-Y, as growth in Hikari business revenues offset declines in legacy business. Profit remained nearly flat compared to the prior year, and net additions to Hikari service were consistent with the prior year.
4. Others (Real Estate and Energy): Revenue and profit grew Y-o-Y, led by growth in the Urban Solutions real estate business.

• Rising inflation, interest rate hikes, and volatile foreign exchange markets create uncertainty for business planning and funding costs.
• Semiconductor procurement delays and rising semiconductor prices create potential risks to network device deployment timelines and costs, though NTT has proactively adjusted procurement scheduling to mitigate customer service impacts.
• Increasing competition for deposits in a rising interest rate environment creates challenges for DOCOMO Financial Group's deposit growth goals.
• Large-scale earthquakes and natural disasters continue to pose risks to communication infrastructure, even with existing business continuity plans (BCP) in place.
• Increasing labor costs and operating expenses put pressure on mobile business margins, requiring potential pricing adjustments to offset cost growth.

Q: What are NTT's expectations for the newly launched DOCOMO Financial Group? / A: DOCOMO Financial Group, launched July 1 2026, now offers full comprehensive financial services across banking, securities, loans and insurance. This creates a stronger, more robust integrated financial platform anchored by DOCOMO's existing 2,000 retail shops. As of end of August 2026, 200 shops are already equipped to support account opening, with a target of 1,000 equipped shops by the end of the fiscal year. Management sees the launch as a key milestone to expand NTT's smart life ecosystem.\n\nQ: What factors limited disaster damage from the Kumamoto earthquake, and what went well with the Japan Roaming collaboration? What challenges remain? / A: Early recovery (full mobile service restoration within 2 days) was supported by pre-existing redundant network routing, which allowed quick diversion of traffic around damaged inter-prefectural cables, and better access to affected areas compared to the 2024 Noto Peninsula earthquake. The four participating telecom companies split coverage responsibilities, coordinated Japan Roaming support efficiently, and secured early mobile battery supplies from manufacturers to support affected areas. NTT will incorporate lessons learned from this event to update its business continuity plans for future disasters.\n\nQ: What impact did the recent S&P credit rating downgrade have on NTT's strategy and planned 1.6 trillion yen foreign currency bond issuance? / A: The downgrade was widely expected in advance due to NTT's plan to take NTT DATA full ownership, so it did not come as a surprise. Most domestic rating agencies (including Moody's) have maintained NTT's existing rating. The incremental impact on borrowing costs is minimal, amounting to only a 0.1% increase. The downgrade will not impact NTT's ability to fund planned future capital expenditures or strategic investments, and the overall impact is very moderate.\n\nQ: What is the impact of a 1 yen fluctuation in USD/JPY exchange rates on NTT's financial performance? / A: NTT generates approximately 3 trillion yen in annual overseas revenue. A 1 yen fluctuation in exchange rates creates roughly a 20 billion yen impact on annual consolidated revenue, with approximately 2 billion yen of corresponding impact on annual profit.\n\nQ: How will NTT differentiate its payment and points ecosystem from competitors like SoftBank that are partnering with major convenience store chains? / A: NTT already maintains d POINT acceptance across multiple major convenience store chains including Lawson and FamilyMart, and management is committed to keeping d POINT available at Seven & i locations for customer convenience. NTT has an existing extensive in-house marketing partnership with CARTA that enables broader customer alignment than just payment and points integration, so the SoftBank/Seven & i capital partnership is not expected to have a material negative impact on NTT's ecosystem.