NTT Inc. ADR (NTTYY) Q3 2026 Earnings Call Transcript

2026-02-05 03:40:38 ET

NTT Inc. ADR (NTTYY) Q3 2026 Earnings Call February 4, 2026 11:30 PM EST

Company Participants

Akira Shimada - President, CEO & Representative Director

Conference Call Participants

Yasuhiro Kobayashi
Yuka Nakao

Presentation

Akira Shimada
President, CEO & Representative Director ...

Thank you for participating today. I am Shimada, President of NTT, Inc. I will now explain the financial results for the 9 months ended December 31, 2025. The consolidated financial results for Q3 FY 2025 show increased revenue and profit year-on-year. Operating revenue reached new record high levels in Q3. Although operating revenue was impacted negatively by approximately JPY 55 billion due to foreign exchange as a result of expansion of enterprise business across group companies and increase in revenue by transferring data centers for REIT, operating revenue increased by JPY 371.3 billion year-on-year to JPY 10,421 billion.

Regarding EBITDA, while there were cost investments at DOCOMO to reinforce its customer base and to implement measures to improve mobile network quality due to increased profits from the expansion of enterprise business at the group companies and transferring data centers for REIT, EBITDA increased by JPY 104.8 billion year-on-year to JPY 2,657.3 billion, and operating profit increased by JPY 57.9 billion year-on-year to JPY 1,457.1 billion. Profit driven by a rise in operating profit and other factors increased by JPY 75.4 billion year-on-year to JPY 926.1 billion.

As for operating revenue and operating profit by segment, in the Integrated ICT business segment, Consumer Communications business declined due to factors, including reduced mobile communication service revenue. However, growth in smart life business centered on finance services and enterprise business led to an increase in operating revenue year-on-year. Despite profit growth in smart life business and enterprise business, because of cost to reinforce the customer base and improved network quality, operating profit declined year-on-year. As a result of measures to reinforce customer base, sales capability is steadily improving and MNP was positive during Q3.

In the Global Solutions business segment, despite an approximately JPY 55 billion negative impact from foreign exchange rates, driven by business growth domestically and internationally and transferring data centers for a REIT, operating revenue and operating profit increased year-on-year. In the Regional Communications business segment, although there was a decline in legacy business revenue due to factors such as growth in enterprise business and the fiber optic business revenue, operating revenue and operating profit increased year-on-year. Net adds in fiber optic service increased year-on-year due to strengthened sales of 10 giga plan and comprehensive bundled service for condominiums. In Others, such as Real Estate, Energy, et cetera, due to expansion in office, commercial and residential businesses within NTT Urban Solutions, operating revenue increased year-on-year.

Next, I will explain the full year financial results forecast. In order to reflect the revised forecast of DOCOMO and NTT DATA Group, we have revised downward the consolidated forecast for NTT this fiscal year. Details will be explained later by each company. Regarding DOCOMO, amid intensifying and prolonged competition requiring greater-than-expected investment to reinforce its customer base, it is necessary to make sure to continue implementing key measures for future growth, such as measures to reinforce customer base and improve network quality. As a result, operating profit has been revised downward by JPY 83 billion.

Particularly with respect to DATA GROUP, reflecting the realized profits of gain on the transfer of data centers for REIT based on market environment exchange rate fluctuation, the operating profit was revised downward to JPY 26 billion. Particularly at DOCOMO, intensified competitive environment is expected to continue in addition to the achievement of the results by strengthening of customer base and improvement of mobile network quality, we endeavor to recover performance by accelerating efforts through growth in smart life business, focusing on finance and enterprise business and cost reduction through fundamental review on organization and business processes. The summary of fiscal year 2025 financial result forecast by company is shown on the slide.

Next, I would like to go over 4 topics. First, let me talk about the mass production of photonics-electronic convergence devices. The switches using photonics electronics convergence devices through collaboration with supply chain partners, including Broadcom and Accton Technology will begin commercial provision within FY 2026. Furthermore, for the mass production of photonics-electronics convergence devices, innovative device is continuously preparing to increase production volume per line through automation of assembly, mounting and inspection processes to expand production lines in response to demand. Through these efforts, up to 30,000 units production per month will be feasible, and we would like to proactively cater to the demands of hyperscalers and cloud operators.

Next is social implementation of AI, integrating digital and physical domain. Till now, NTT has been promoting introductory support to respond extensively to globally major LLM in addition to the development and provision of genuinely Japan-made LLM tsuzumi. The order amount for our AI business for FY 2023 Q3 was JPY 147.8 billion for the entire group, far exceeding the pace of achieving annual target of JPY 150 billion. Currently, initiatives at Toyota Motors, Mujin and Trial Holdings are making progress. And while we continue to collaborate with the leading companies of each industry domestically and overseas, we will accelerate the social implementation of AI that integrates digital and physical domains.

Next, I will talk about exhibition at MWC Barcelona 2026. At MWC Barcelona 2026 to be held in Barcelona in March, photonics unlocks an intelligent power optimized future is our key message. After 7 years, we will jointly exhibit as NTT Group. I will deliver a keynote speech on March 4 and speak about our efforts to reduce power consumption through optical technology centered on IOWN, such as photonics-electronics convergence devices and optical quantum computers. Please come to the event.

On the progress under medium-term management strategy, our efforts since November is shown on the slide. This concludes my presentation. Thank you for your attention.

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