Nippon Telegraph And Telephone Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Nippon Telegraph and Telephone (NTT) began its existence in 1953 as a government-owned corporation. It has since changed into a privatized firm after a 20-year conversion program with the Japanese government holding one-third of the company’s stock. NTT is the largest provider of telecommunications in Japan and the largest telecommunications company in Asia.

Based in Tokyo, NTT has more than 193,000 employees. Revenue in the year ending March 2008 was $91,192,000, with profits of $4,042,000. NTT provides the entire range of telecommunications services: mobile phones, land lines, and data communications. In addition, the company sells telecommunications equipment and operates Japan’s telecommunications networks. In 2008 NTT provided service to 46 million customers.

Through the years, NTT has been recognized as a leader and innovator in telecommunications. It has, however, encountered the problems plaguing other telecommunications companies in recent years: competing for market share in an environment of increasingly fierce competition and small profit margins. As a result, NTT has looked at ways of going beyond its core capabilities to widen its customer base.

NTT is currently divided into five operational components: Regional Communications, Long Distance and International Communications, Mobile Communications, Data Communications, and Other. Regional Communications provides telephone and related services within the prefects (provinces) of Japan. Long Distance and International Communications provides communications services between the prefects. Mobile Communications provides mobile telephone services, while Data Communications supports system and network services.

Finally, the Other component provides a wide range of miscellaneous support service for the company ranging from building maintenance to research and development.

As a result of legislation passed in 1984, NTT’s status as a government-owned and -operated monopoly began to change. From 1985 to 2005, the Japanese government privatized the company. In 2005 the last optional shares were sold with the government in possession of only the mandated one-third ownership (actually, 33.7 percent).

The process of privatization and removal of the monopoly apparatus included not only government divestiture of shares, but it also entailed reorganization of NTT as well as other actions. In 1985 NTT was incorporated as a private company. Two years later, it was listed on the Tokyo Stock Exchange. In the 1990s various branches of NTT came into being, began operations, and were subsequently listed on the Tokyo Exchange. In 1999 NTT was reorganized. There were now three subsidiaries: NTT East, NTT West, and NTT Communications. NTT East and West were given the responsibility for providing telephone service for Japan.

With the removal of the monopoly came competition, and as the 21st century began, competitors very quickly started to crowd NTT, cutting into its customer base. In 2001 the telecommunications company Softbank offered broadband internet services. With that success, Softbank began to expand, buying Japan Telecom and beginning to offer the basic fixedline service that NTT had been offering. With the acquisition of Cable & Wireless PLC, Softbank placed itself as the second-largest provider of fixed-line telecommunications in Japan.

In 2002, the year after Softbank entered the scene as an internet provider, NTT announced that it had suffered losses of $6.5 billion. NTT’s response, as shown the next year, was to decrease losses by providing a wider range of services, even though to keep customers, it had reduced the costs for phone service within Japan. In June 2003 NTT announced that it had developed significant improvements in fiber optics that would allow it to transmit at speeds 10 times faster than had previously been the case. The technical innovation was seen as a means of allowing NTT to expand into Japan’s broadband market to make up for the losses occurring that would continue as fixed-line services were not expanding and the mobile phone market appeared to reach saturation and gains could only be made by lowering the price for service. NTT was also looking for the number of customers it served through fiber optics to increase.

In May 2006 NTT reported that it had a 30-percent decline in full-year profits based on losses in both its mobile phone and fixed-line businesses. The president of the company had to acknowledge that the trend was not good and there were no grounds for optimism in the near-term future, although it was hoped that internet and computer services would at least partially offset the decline. The following year, NTT announced that it would maintain its strategy of looking beyond fixed-line communications as a way to counter losses.

Two years later, in March 2008, NTT had recovered and reported that profits were up by 32 percent based on the performance of long distance and international operations. Later in the year, NTT announced that net profit had increased in the April/ June quarter by 17 percent mostly because of sales of mobile phone handsets.

Bibliography:

Marie Anchordoguy, “Nippon Telegraph and Telephone Company (NTT) and the Building of a Telecommunications Industry in Japan,” Business History Review (v.75/3, 2001);
NTT, 2007 Annual Report, www.ntt.co.jp (cited March 2009);
Hidetaka Yoshimatsu, Politics of Telecommunications Reform in Japan (Australia-Japan Research Centre, 1998).

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