Nippon Telegraph&Telephone Corp.

Overview Key strengths Key risks Leading position in Japan's telecom market, with a solid customer base as the largest telecom company in the country Fierce competition and weak competitive position in the growth area of IT service business relative to telecom business World-class technologyConsolidated revenue underpinned by solid earnings from telecom-related and IT service businesses and groupwide cost reductions Somewhat weaker groupwide profitability than that of U.S. and European telecom majors, due to high costs of maintaining broad mobile and fixed-line communications networks, in addition to expanding IT service business Ability to steadily generate high levels of cash flow from telecom businessExtremely strong interest coverage ratios that support financial standing Likelihood of key cash flow ratios remaining somewhat weak for

...Nippon Telegraph & Telephone Corp. (NTT) group will likely maintain the strongest position in Japan's mobile communications market despite a fierce competitive environment. NTT's mobile communications business, operated by NTT Docomo Inc., holds the largest share of the domestic market at over 40%. The business generates more than 50% of the NTT group's consolidated EBITDA. In response to government requests since 2021, Japan's three major telecom operators have lowered the rates they charge customers for communications. Even after that, NTT Docomo leads its two peers in new customer acquisition, having successfully attracted young customers with new discount rate plans. Underpinning NTT's strong competitive position in mobile communications, in our view, will continue to be its strong brand recognition, stable and high-quality communications networks, and diverse service plans combining fixed-line and mobile communications. Solid earnings from the telecom-related and IT service businesses...

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