NTT FY1H07 results

NTT announced a 12% drop in FY1H earnings to $2.5bn, while sales were flat at $44.6bn. Operating profit declined 9% to $5.9bn. Earnings were hit by lower income in fixed voice services, weaker earnings in DoCoMo due to increased costs of migrating customers to 3G services, sharper competition from KDDI and Softbank, partially offset by an increase in NTT Data operating profit (+100%). The broadband market continues doing well, but the number of ADSL subscribers is now in a slight decline, while optical access services are spreading at an accelerating pace. FTTH is expected to drive growth, but need heavy investments, weighting on earnings. NTT expects to gain 6m FTTH users (from currently 4m) and 3M VOIP customers by March 07. In the mobile segment, DoCoMo has been gradually losing market share to its key rival KDDI, particularly in the 3G marketplace. The mobile number portability (MNP) system introduced in Japan three weeks ago, has shown KDDI almost doubling DoCoMo in new added customers. So DoCoMo has to strengthen its overall service offerings, expand its FOMA network, increase marketing efforts and enrich handset line-up.