Company Reports

NTT's fiscal first-quarter revenue increased by 11%, with operating profit up 4.9% and net profit up 5.8%. Acquisitions like SBI Sumishin Net Bank and currency depreciation also helped top- and bottom-line growth.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021, and it has spent several years generating synergies from this in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities, and cross-selling synergies. NTT DoCoMo also made several decisions to lower pricing in 2014, 2019, and 2021 that had a significant impact on its earnings. However, with NTT having taken over the remainder of NTT Data, we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph's, or NTT's, fiscal 2025 (ended March 2026) revenue increased by 5.7%, with operating profit up 3.4%, but management pushed out its previous target for hitting EBITDA of JPY 4 trillion to fiscal 2030 from fiscal 2027.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and it has spent several years generating synergies from this in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT offering to take over the remainder of NTT Data, with that takeover expected to complete at the end of September 2025, we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph's third-quarter fiscal 2025 revenue increased by 5.8% with operating profit up 6.9% but management reduced fiscal 2025 operating profit guidance by 3.2% primarily because of weaker results from its mobile business, DoCoMo.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and it has spent several years generating synergies from this in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT offering to take over the remainder of NTT Data, with that takeover expected to complete at the end of September 2025, we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph's second-quarter fiscal 2025 revenue increased by 4.8%, with operating profit up 11.4%, but down around 12% excluding an asset sale. Management made no change to fiscal 2025 guidance for 3.5% revenue growth and 7.3% operating profit growth.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and it has spent several years generating synergies from this in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT offering to take over the remainder of NTT Data, with that takeover expected to complete at the end of September 2025, we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph, or NTT's, first-quarter fiscal 2025 revenue increased by 0.7%, with operating profit down 7%. Management made no change to fiscal 2025 guidance for 3.5% revenue growth and 7.3% operating profit growth.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and it has spent several years generating synergies from this in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT offering to take over the remainder of NTT Data, with that takeover expected to complete at the end of September 2025, we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and its near-term strategies will focus on continuing to extract synergies from this consolidation in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to significantly lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT offering to take over the remainder of NTT Data we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph's fiscal 2024 revenue increased by 2.5% with operating profit down 14%. Fourth-quarter revenue was flat with operating profit down by 43%. Fiscal 2025 guidance calls for 3.5% revenue growth and 7.3% operating profit growth.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and its near-term strategies will focus on continuing to extract synergies from this consolidation in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to significantly lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT also consolidating its international businesses with NTT Data we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

Nippon Telephone & Telegraph's third-quarter fiscal 2024 revenue decreased by 3.5% with operating profit down 10.5%. This compares with 0.7% revenue increase and 10.5% operating profit decline in the first half.

Nippon Telephone & Telegraph's second-quarter fiscal 2024 revenue increased by 3.0% year over year, with operating profit up 1.7%, broadly in line with our expectations. This compares with a 4.1% revenue increase and an 8.2% operating profit decline in the first quarter.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and its near-term strategies will focus on continuing to extract synergies from this consolidation in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to significantly lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT also consolidating its international businesses with NTT Data we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.

We reduced our fair value estimate for Nippon Telegraph and Telephone Corp. to JPY 162 per share from JPY 172 following a fiscal 2023 result (fiscal year ended March 2024) and guidance that were below our expectations. Our narrow moat rating for NTT based on efficient scale is also retained, with the firm still earning returns on invested capital above its weighted average cost of capital. We see the shares as undervalued at these levels. Fiscal-year revenue was up 1.8% year on year, with operating profit up 5.1% and net profit up 5.5%. However, revenue was boosted to the tune of JPY 200 billion because of weakness in the Japanese yen, and there were also increased asset sales. Guidance for fiscal 2024 is for revenue increasing 0.6%, operating profit declining 5.9%, and net profit declining 14%. Guidance for dividends is for an increase to JPY 5.20 in fiscal 2024 from JPY 5.10 in fiscal 2023, implying an increase in the dividend payout ratio, which we believe NTT can easily afford given the new dividend payout ratio will still only be 38%.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and its near-term strategies will focus on continuing to extract synergies from this consolidation in areas such as merging management, network synergies from the cellphone business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to significantly lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT also consolidating its international businesses with NTT Data we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult cellphone market.

We reduced our fair value estimate for Nippon Telegraph and Telephone, or NTT, to JPY 172 per share from JPY 176 following a third-quarter fiscal 2023 result (quarter-ended December 2023) that was below our expectations. Our narrow moat rating for NTT based on efficient scale is also retained with the firm now earning ROIC above WACC. We see the shares as broadly fairly valued at these levels.

NTT is an anomaly in the telecom world. It owns a world-class wireless business in NTT DoCoMo, but its fixed-line business struggled to generate a decent return on investment for many years. NTT consolidated NTT DoCoMo in 2021 and its near-term strategies will focus on continuing to extract synergies from this consolidation in areas such as merging management, network synergies from the mobile business using some of NTT’s fixed-line core network and backhaul transmission, alignment of research and development activities and cross selling synergies. NTT DoCoMo has also made several decisions to significantly lower pricing, in 2014, 2019, and 2021 that had significant impact on its earnings. However, with NTT also consolidating of its international businesses with NTT Data we see further potential synergy and cost-reduction opportunities which should help offset the effects from what has been at times a difficult mobile market.