NTT cuts costs to avoid losses

Nippon Telegraph and Telephone Corp has clawed its way back into the black by cutting spending, but the Japanese incumbent is facing huge problems now that revenue has started to fall. Only cuts in wages for 100,000 workers and a big reduction in capital expenditure have kept it out of the red but it desperately needs new growth markets if it is to recover its former glory.

In the six months to September 30, net income was JPY 33.2bn ($273.8m), up from a loss of JPY232bn ($1.9bn) on revenue 1.7% lower at JPY 5.4 trillion ($44.3bn).

NTT’s problem is that while fixed-line revenue has started to fall, growth at its DoCoMo mobile area is faltering as the market reaches saturation point. Overseas expansion has produced little but tears, and it has had to write off JPY 56.6bn ($470m) from its $5.5bn acquisition of US ISP Verio Inc in 2000.

The problem is exacerbated by problems on broadband roll-out. NTT has had a disappointing take-up for its fiber-to-the-home offering in the face of rivals offering less ambitious ADSL technology.

Source: Computerwire

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