Nippon Telegraph&Telephone Corp.

The stable outlook on NTT reflects our view that the group's consolidated profitability will temporarily decline in the next year or so due to mobile phone rate cuts and intensifying competition in its mobile communications business but will recover in the following two years or so, because of cost reductions. We believe the NTT group can sustain its leading position and high competitiveness in domestic telecommunications by maintaining its solid customer base through price cuts. We also expect the NTT group to maintain its extremely sound financial standing in the immediate future under prudent financial management. We may consider downgrading NTT if competition in fixed-line and mobile communications markets continues to intensify, significantly weakening the group's market position; or if

... & Telephone Corp. (NTT) is likely to maintain a leading position and a strong customer base in an increasingly competitive domestic mobile communications market. It also maintains an overwhelming market position in Japan's fixed-line and FTTH markets. The NTT group has a dominant share of about 70% of the domestic fixed-line and FTTH markets. S&P Global Ratings expects the group to maintain strong competitiveness in the maturing FTTH business with an increase in its number of customers through wholesales services. In the domestic mobile communications market, competition is likely to further intensify due to both government initiatives to promote competition and the planned market entry of Japan-based online marketplace operator and electronic commerce company Rakuten Inc. However, we think the NTT group can maintain an industry-leading position and a solid customer base in the domestic mobile communications market. We hold this view...

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