Nippon Telegraph&Telephone Corp.

The stable outlook reflects our view that, although we expect the takeover to damage NTT's financial soundness, the company will likely maintain a financial position commensurate with our ratings in the next one to two years thanks to a moderate reduction in debt. We also expect NTT to maintain a dominant position in the domestic fixed-line and FTTH sectors and a leading position in the mobile communication sector, as well as its strong customer base. We could consider downgrading NTT if we see an increased likelihood of any of the following scenarios: The NTT group's market position considerably declining due to increased competition in the mobile communication sector; NTT's consolidated EBITDA margin falling and remaining below 27% despite cost reductions;

...Nippon Telegraph & Telephone Corp. (NTT)'s takeover of NTT Docomo Inc. will likely benefit NTT's performance and operations to some extent, in S&P Global Ratings' view. The Japan-based telecommunications company completed the acquisition of its listed mobile communications subsidiary through a tender offer in November 2020. NTT Docomo has a solid operational base as Japan's largest mobile communications company in terms of subscribers and a strong capability to generate cash flow. We expect NTT to maintain and boost competitiveness amid Japan's increasingly competitive mobile market, because the takeover should make it easier to utilize groupwide resources and technology. The NTT group will likely maintain its dominant position in the domestic fixed-line and FTTH markets. The group has a share of about 70% of these markets and we expect it to remain extremely competitive in the maturing FTTH business with an increase in customer numbers through wholesale services. The FTTH business is becoming...

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