Nippon Telegraph&Telephone Corp.

The stable outlook reflects our view that the NTT group will likely maintain its 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. The outlook also reflects our expectation that the group can maintain a financial position commensurate with our ratings in the next one to two years thanks to moderate debt reduction. We could consider downgrading NTT if we see an increased likelihood of any of the following scenarios: The NTT group's market position declining considerably due to increased competition in the telecom sector; NTT's consolidated EBITDA margin falling and remaining below 27% despite cost reductions; Consolidated debt to EBITDA consistently exceeding 2.5x

...Nippon Telegraph & Telephone Corp. (NTT) group's profitability will improve moderately over the next one to two years, in S&P Global Ratings' view. New lower rate plans that NTT Docomo Inc. launched in its mobile communications business in March 2021 have weighed on the NTT group's profitability. The mobile communications business accounts for just over 45% of the group's consolidated EBITDA. Mitigating this downward pressure, however, we see strong earnings from the group's non-communications business, including NTT Docomo's contents service and finance and settlement business, as well as NTT Data Corp.'s information technology (IT) service. We expect the group's consolidated EBITDA margin to improve to nearly 28% in about a year through cost reductions across the entire group and enhancement of its non-communications business (see chart 1)....

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