We will now begin NTT, Inc.'s financial results briefing for FY 2025. Thank you very much for joining us today despite your busy schedules. I am Sekine from Public Relations and will serve as the moderator. Thank you. Let me first introduce today's three speakers. Akira Shimada, President and CEO, Representative Director. Toshihiko Nakamura, SVP and Director of Finance and Accounting Department. Akitoshi Hattori, SVP and Director of Corporate Strategy Planning Department. Please note that today's materials were uploaded to the NTT official website at 1:00 P.M., so please check them as well. Now we would like to start. President Shimada, please.
Thank you very much for your attendance today. I am Shimada, President of NTT, Inc. Let me explain our FY 2025 consolidated results and FY 2026 results forecast.
Following the explanation of the financial results, I will explain our initiatives for medium-term profit growth and the revision of our financial targets. For FY 2025, both operating revenue and profit increased year-on-year on a consolidated basis. Operating revenues reached a new record high. Operating revenue increased by JPY 704.4 billion year-on-year, reaching JPY 14,409.1 billion, thanks to the expansion of enterprise business of group companies, growth in the Smart Life business, and increased revenue from transferring data centers into REIT.
Regarding profits, EBITDA was JPY 3,423.3 billion, up by JPY 184 billion year-on-year, and operating profit was JPY 1,706.2 billion, up by JPY 56.7 billion year-on-year, thanks to increased profits from the expansion of enterprise business at group companies, increased profits in the Smart Life business, and from transferring data centers into REIT. Despite cost for measures to strengthen DOCOMO's customer base and improve mobile network quality, profit increased by JPY 37 billion year-on-year to JPY 1,037 billion, mainly due to the increase in operating profit. Regarding revenue and profits by segment. Integrated ICT Business segment. Although consumer communications business decreased due to a decline in mobile communication service revenue, operating revenue increased year-on-year thanks to the growth of Smart Life business centering on finance and enterprise business.
While profits increased in Smart Life and Enterprise businesses, operating profit decreased year-on-year due to costs associated with measures to strengthen the customer base and improve network quality. As a result of efforts to strengthen the customer base, NNT improved from the previous year and was positive except for Q2, which was affected by the discontinuation of small data volume plans. Global Solutions Business segment. Despite a revenue decrease of approximately JPY 35 billion due to foreign exchange, revenue and profits increased year-on-year, thanks to business growth both in Japan and abroad, and increase from transferring data centers into REIT. Regional Communications Business segment. Despite a decrease in legacy business revenue, both revenue and profit increased year-on-year, thanks to revenue increase in enterprise and fiber optic business.
Furthermore, the net addition in fiber optic service subscribers increased year-on-year due to strengthened sales of 10 Gb plans and all apartment units planned for the condominium market. Others, real estate and energy. Despite the expansion of the housing business in urban solutions, revenue increased year-on-year, but profit decreased due to the recording of impairment losses in Anode Energy in light of changes in the external environment, such as rising interest rates and construction costs. Next, I will explain FY 2026 results forecast. For FY 2026, operating revenue, EBITDA and operating profit will increase year-on-year and profit will decrease. We plan for increased operating revenue across all segments, primarily in our Integrated ICT Business and Global Solutions Business, aiming for a record high level.
EBITDA and operating profit will increase year-on-year, thanks to the expansion of our Enterprise business and Smart Life business, mainly in finance, despite the continued decline in network revenue. Profit will decrease year-on-year due to increased interest payments and others. Regarding revenue and profit by segment. In Integrated ICT Business segment, operating revenues will increase year-on-year and operating profit will be flat, thanks to the expansion of the Smart Life business, primarily finance, and the growth of the corporate business, despite a decrease in mobile communication service revenue. Efforts to improve network quality will continue and be strengthened. In sales, we plan to build a stronger customer base center of long-term users through DOCOMO Max, among others. Global Solutions Business segment.
While revenue and profits continue to increase thanks to business growth both in Japan and abroad. Operating revenues will increase and operating profit will decrease year-on-year due to transfer of data centers into REIT in FY 2025. Regional Communications Business segment. Despite a decrease in legacy business revenue and profit will increase year-on-year thanks to increased fiber optic service revenue and reduced expenses from the rebound effect of future cost mitigation measures implemented in NTT West in FY 2025. Others, real estate and energy. Operating revenues will increase year-on-year thanks to increased revenue from the expansion of the data center engineering business in urban solutions, as well as the rebound effect from impairment losses in NTT Anode Energy in FY 2025. Next is shareholder returns.
At today's board of directors meeting, we resolved to set the year-end dividend for FY 2025 at JPY 2.65 as projected. We resolved annual dividend forecast of JPY 5.4 for FY 2026, an increase of JPY 0.1 year-on-year. This will mark our 16th consecutive year of dividend increases since FY 2011. To improve capital efficiency and enhance shareholder returns, we will carry out a share buyback program up to JPY 200 billion. I will explain our initiatives toward medium-term profit growth. The contents are as outlined. I will explain the review of our medium-term financial targets for medium-term profit growth. Regarding the current medium-term financial target of EBITDA of JPY 4 trillion for FY 2027, our growth areas are steadily expanding profits through aggressive investment and achievement of results.
On the other hand, profits decrease in existing areas due to responses to changes in the business environment, such as strengthening the customer base and increasing traffic. As a result, consolidated EBITDA is below expectations, making it difficult to achieve the target for FY 2027. In light of these changes in the business environment, we will change our growth areas to value-added areas focusing on AI, which is expected to further expand our business and significantly increase our profits. As an immediate initiative, while maintaining cash generation capabilities through profit stabilization, we will rename our existing areas to connectivity areas and promote the transformation to AI-native infrastructure. Together with the value-added areas, we aim to achieve an EBITDA of JPY 4 trillion by FY 2030. In addition, we will continue strategic upfront investments in areas with promising future growth to achieve sustainable profit growth.
Next, I will explain seven specific initiatives aimed at achieving an EBITDA of JPY 4 trillion by FY 2030, categorized into three areas, which are value-added areas, connectivity areas, and strategic upfront investment to support continued growth. First, I will explain three initiatives in the value-added areas. The first initiative is expanding the domestic corporate business by maximizing customer value. In light of the rapid advancements in AI, it is anticipated that the business model will shift from those that rely on traditional human resources to those that are driven by customer value. By capturing this change and leveraging the human resources created by NTT DATA through the introduction of AI, we can extend these resources to customers of DOCOMO business that have a broader customer base than NTT DATA. This will enable us to provide high value-added integration to a wider range of customers.
Furthermore, by combining NTT DATA and NTT DOCOMO businesses products and services, we will expand our customer value-driven business by providing a sovereign compliant full stack AI businesses. Through these initiatives, we aim to achieve EBITDA of JPY 1.2 trillion for our domestic corporate business by FY 2030. Next, I will explain acceleration of the growth of our overseas business with a focus on AI and data centers. In our IT services business, we will create AI-native businesses utilizing NTT DATA AIVista, and promote the expansion of our inorganic capabilities, mainly in the AI domain. Furthermore, our data center business, in light of a robust demand, will continue to make growth investments centered on the cloud and AI inference domains, primarily targeting hyperscaler customers. Through these initiatives, we aim to achieve EBITDA of JPY 600 billion for our overseas corporate business by FY 2030.
As our third initiative, I will explain further expansion of our personal business with a focus on financial services. With NTT DOCOMO Financial Group scheduled to be established in July of this year. At its core, we will grow our financial customer base with payments and banking as a starting point, and expand our revenues by promoting investment loans and other utilization. Furthermore, by combining one of the largest membership bases in Japan, the account members' usage data, and the vast amount of data generated daily on the network with AI.
Will strengthen the competitiveness of our personal agents and marketing solutions. Through these initiatives, towards 2030, we aim to achieve EBITDA of JPY 500 billion, with our financial business driving the entire Smart Life business. I will explain our initiatives in the connectivity areas. I will explain our vision for transition to AI-native, next-generation infrastructure. In the future, AI computational processing will shift from being learning-centric to real-time inference-centric, and the primary focus of communication will expand from person to person, to things to things, and further to AI to AI, and robot to robot, leading into an explosive increase in transactions.
In response to these changes, NTT will first focus on conversion into AI-native infrastructure, IOWN, which optimizes various resources such as GPUs, networks, and power to realize a secure usage environment and integrate operations, including in the edge, first starting in Japan. This will enable full-scale business deployment in the 2030s. I will explain our efforts towards realization of IOWN as a next-generation AI-native infrastructure. To date, under the IOWN concept, we have been working on the social implementation of the all-photonic network and photo-electric conversion devices. The IOWN APN will be rolled out into all prefectural capitals by FY 2027, in line with the equipment upgrades of the existing services. Towards 2030, we aim to expand nationwide by creating needs in various industries.
In addition, we will accelerate the IOWN social implementation by expanding the ecosystem of photonic and electric conversion devices through a collaboration with diverse partners who possess advantages and competitiveness in each of the fields. I will explain our near-term initiatives in the connectivity areas, specifically maintaining cash generation capacity by stabilizing telecommunications business profit. In our consumer communications business, we aim to maintain profit levels by strengthening customer engagement and evolving our products to maintain the number of subscribers and improve ARPU, as well as by working to improve productivity through the use of AI. Regarding the migration to alternative services using fiber optic and mobile technologies for fixed line telephones, which began a pilot program in some areas in April of this year. We will continue to provide capital support to ensure a smooth transition.
In some of the areas where we have started the migration to alternative services using fiber optic and mobile technologies for fixed line telephones, we will continue to provide capital support to ensure smooth transition. Finally, I will explain our strategic upfront investments to support continued growth. In the mobility sector and, well, the space and optical sort of quantum computing. We will be more focusing our efforts in these areas. In the mobility sector, we will continue to provide services such as autonomous driving support through NTT Mobility and accelerate our efforts to realize infrastructure collaborating Mobility AI Platform in collaboration with Toyota Motor.
In space for utilizing IOWN technology, we are to establish the technology so that we are to really have the integration of the space and ground, and to re-introduce disaster prevention areas, we will really expand our businesses. As for the in the field of optical quantum computing, we will collaborate with OptQC to develop a world-class optical quantum computer and aim for early commercialization. By continuous strategic growth investments in these areas, we will strive to achieve sustainable profit growth beyond FY 2030. Our mid-term financial targets are as shown. As I explained earlier, we aim to achieve JPY 4 trillion in EBITDA, our main indicator, by FY 2030. Furthermore, excluding the financial business, we plan to set a target for ROIC and work towards improving capital efficiency.
As for the non-financial indicators related to sustainability, there are no changes to our targets. Regarding shareholder returns, we will continue our existing policies with the basic principle being to implement steady increase in dividends, and we will also strive to improve capital efficiency by flexibly conducting share buybacks. Due to increased funding demand, interest-bearing debt has expanded recently, but our policy is to ensure a certain level of financial soundness in the mid-term. By 2030, we will work to generate cash so that we can reduce our interest-bearing debt to EBITDA ratio, excluding financial businesses, to approximately 3.5 x. The EBITDA will break down by business segment is as shown here. Lastly, with this revision, the NTT Group's previously stated mid-term management strategy will be pursued under the name New value creation & Sustainability 2030, powered by IOWN.
This concludes my presentation. Thank you.
We would like to take questions from the media, the journalists. We'll take questions from those present in the venue. If you have a question, please raise your hand. Our staff members will bring you a microphone. Please state your company name, media name, and your name before asking your question. Due to time constraints, please limit your questions to one or two per person. We will now begin taking questions. The person behind this gentleman. The person behind, please.
Thank you for the explanation. Toma from NHK. My question is on financial results. Regarding the results forecast, next fiscal year, profit, you expect to decline. Your medium-term financial target is also being pushed out, postponed somewhat. EBITDA, JPY 4 trillion for FY 2030, you revised. What is the reason? Is it DOCOMO's financial results? Is that the main reason?
That's how I see it. Am I correct? Once again, could you elaborate, President Shimada, on where DOCOMO stands? Towards the recovery, what are the key priority areas for its recovery?
Thank you, Toma-san. As you rightly said, mobile business environmental change led to the revision of our medium-term financial target and medium-term strategy. Last year and the year before that, DOCOMO strengthened its customer base and focused on the, it made investments to improve the network quality, that pushed down its profit. This time, the forecast, consumer business is still expected to decline. Profit is declining, the enterprise profit will increase and will offset the shortfall the overall profit can increase. This is what we have to achieve. Now, we want to continue making a turnaround. We are two years behind now.
AI business, AI introduction, implementation is progressing rapidly. Last year, AI-related revenue was around targeted at JPY 150 billion, but we ended at JPY 180 billion. AI-centered business strategy needs to be introduced. In addition, regarding infrastructure, we need to shift to AI-based infrastructure. That is why we revised, revisited our medium-term strategy. It will take some time, so the JPY 4 trillion EBITDA target will be set now at FY 2030. We want to achieve this target as soon as possible. Thank you.
We will take the next question. The person in the very front row.
Mizushima from Nikkan Kogyo Shimbun. Because of the higher cost, what are the impacts you experience? Interest rate is, well, increasing, and because of the Middle East situations. Inflation is being accelerated, is expected to accelerate. The impact, well, for FY 2026, what is your view of the potential impact? Particularly as for the, well, electricity will charge increase and also the, well, the labor cost increase. What would be the potential impact you are expecting?
Exactly as you said. We hope that the Middle East situations will return back to the peaceful, normal times as quickly as possible. I think there is quite a significant impact from Middle East circumstances. We cannot be optimistic with respect to the power changes. Basically, it is driven by LNG, and so dependency on oil is not that much because it is not being used for power generation. Relatively speaking, that impact might be smaller, but we should be cautious and have to keep watching. In addition to that, energy cost as well as the labor cost tends to be become higher. Within our mid-term plan, we haven't factored in some pass-through of such cost increase.
We really have to, well, consider specific timing, because, well, the cost itself is increasing. Whether we will pass that on to the customers or not, that should be considered. At this point in time, we haven't, well, factored in that factor into our plan yet. Thank you.
To my left. Yes, please.
Shimizu from The Nikkei newspaper. Thank you very much. I have two questions. First is on IOWN. In your medium-term plan, this is a priority key focus area. The existing data center business-
...is, I think, included. IOWN's profit increase impact. What is the increment positive impact from IOWN, if you can quantify that? EBITDA, by FY 2030, new JPY 4 trillion target, how much will IOWN be representing?
IOWN profit increase or revenue increase is difficult to quantify, one is IOWN 1.0. As I said earlier, APN, it is embedded in APN. It's already started. We will deploy this as infrastructure and recoup the investment. The PEC, photonic- electronic convergence in optical devices, it needs to be deployed. We are at that timing now. This year, FY 2026 or FY 2027 will be the starting year. The optical device market size is said to be around JPY 1 trillion. We want to take a sizable portion of that.
In any case, this is a market that will start very soon, this PEC, photonic- electronic convergence, we want to gain good business there. In our medium-term strategy, it will be in the second half of the period. The revenue will be realized in the second half, and we want to prepare ourselves to make that happen. Digital twin will be similar in terms of progress. AI-related digital twin market will expand. With those three, AI, IOWN will be established. I think the revenue will be recorded going forward. Thank you.
My second question is about PEC. NVIDIA has announced its investment plan recently, and the overseas players are now becoming very aggressive. Under such circumstances, the semiconductor players have the decision-making power on which device to introduce?
Is your positioning in the PEC, the photonic- electronic convergence device?
This PEC device, the biggest users are hyperscalers. Hyperscalers and the surrounding various vendors are saying that it's now an era of optical, optics, they're taking various actions. NTT Group's innovative device products are in essence already starting, not many have started yet. We are now, our device is now being evaluated highly, we want to gain, make inroads into the market going forward. Thank you very much.
We would like to take one more question from the venue and to from Yomiuri Shimbun.
For ask for the HR and DOCOMO Financial President. Hiroi-san will become the President. Financial services is positioned as the very core in the mid-term management plan. If you could make any comment as to this for HR. Within the mid-term management plan or strategy by FY 2030, on a year-year-year basis, we would like to triple that number in terms of the financial businesses. This is going to be a driver for future growth.
Mr. Hiroi is well-versed and has much of the insight in financial area.
We hope that, well, he will be leading the steady sort of, and the smooth growth in this area. NTT DATA Group, well, they will, Mr. Yutaka Sasaki is, well, going to be replacing Takashi Hiroi. The NTT DATA within the mid-term management strategy, as has been mentioned, well, there is a sort of much of the growth potential in the mid-term, particularly in domestic or corporate business. If I can just make comments related to that. In Japan, JPY 100 billion or revenue or more, there are approximately 2,000 companies with that kind of the sales size. 500 of them are the NTT DATA's, well, customers. For DOCOMO business, 90-some percentage is their customers.
They are really, well, generating almost the same level of the revenue side from these, well, big size clients. NTT DATA itself, well, they are really, well, being engaged with each of the client business. They are really having a very in-depth engagement. Of course, there are some sort of duplication and overlapping, but at least, well, the market is, well, 3 x as much, and it is, well, still to be tapped. For NTT DATA. We were not able to really, well, secure the resources up until now. It was quite challenging for them to really provide support to these customers.
Furthermore, we are really going to leverage AI. We are to really have the higher utilization of SEs and to really well go into the well, businesses of the customers with whom we were not able to really well have the business transactions. Sasaki-san has such a knowledge and experience, and so inclusive of the overseas business side, we are expecting him to take the lead. The well, domestic business and global businesses have been connected under his leadership, and so we hope that he will take advantage of that experience. It cannot be, well, just done by NTT DATA alone. We will be working together, well, with them as the holding company.
Next, we will take questions from the online participants.
You can submit your questions via voice or chat. For voice questions, please press the Ask Question by Voice button on the right side of the screen, select your microphone device and then press the Raise Hand button. We will call on you, so please speak when Question OK is displayed. For chat questions, please press the Chat button on the right side of the screen, type your question and press the Send button. If you have any questions, please. Are we okay? Okay, we don't see any questions from online. We will come back to this venue again. Any questions? To my right. Yes, in short sleeve, please.
Toyo Keizai, Tama. Tama is my name. I have two questions. First is on your medium-term strategy. FY 2023, you announced the previous plan. The growth investment was JPY 8 trillion.
This time, I do not see the investment amount. What is the size you are thinking of? Or if you do not have the numbers, reason you are not mentioning numbers this time?
No particular reason. As I said at the outset, the overall FY 2026 to 2030, we are planning on JPY 12 trillion investment. In the value-added area, the growth area, JPY 7.5 trillion-JPY 8 trillion investment. In connectivity areas, we need to change the infrastructure platform, that will be JPY 4.5 trillion-JPY 5 trillion, that's total JPY 12 trillion. The domestic corporate AI implementation or new system build-out will require around JPY 2 trillion investment. In global, including data center, around JPY 3.5 trillion investment.
Consumer, financial institutions or security firms, we have acquired quite a few companies, so we have done pretty much, but around JPY 0.5 trillion , JPY 500 billion . Other growth areas, another JPY 1.5 trillion , which we will think flexibly. The investment in Hibiya Building is one. We will consider all these options as we move forward. That is the overall.
Thank you so much for the details. The other question is on your financial results. Your operating profit is flat and the profit, as you mentioned. What is the reason your profit goes down?
Because our liability is up, debt is up. The interest burden, interest payment is a big burden.
We will try to keep the profit flat, generate profit so that our final net profit will remain flat year- on- year. Our results forecast of the bottom-line profit is expected to be negative year- on- year, but we are making efforts to make it positive year- on- year. Thank you.
The person in the back.
Thank you for your presentation. Ito from NewsPicks. After the announcement and the early commercialization of the new businesses, I have a question. You have the optical quantum computing and also the space and the mobility. Something you can do on your own and something you need to work together in collaboration with others. I think it is quite challenging to really realize all this. What kind of collaboration are you considering to work together with some other players?
Already we have started out the collaboration. As for the, well, optical data relay and the, well, optical-based to communication, in order to really increase the capacity, we need to, well, introduce the optical communication and, well, SKY Perfect JSAT. We have really, well, developed or established the company. Not just two companies can do everything. Satellite related companies, in order to ensure the optical communication, we have to really have some equipment. We need to collaborate with the equipment vendors and others, so we have to really work in tandem with others.
As for the space, we have the observation satellite, we are working together with well, the player in this particular field. At any rate, well, in this whole space business, it is difficult for just for us to work in this area, so we are really, well, partnering and collaborating with others.
The next question, please.
To my left, to the back.
Miki Utsubo, my name. Domestic corporate business expansion is my question. Full stack and sovereign response, I think is for financial institutions, I think. The domestic corporate business expansion. What is your target financial institutions, if you have any?
Utsubo-san, the target for financial institutions, we don't really have a target there. Of course, we are thinking of financial institutions, government and public sector and local government, municipalities, and the private sector companies. There's a need where company specific data does not want to go out. The all covering sovereign response AI, we want to work on such AI.
Thank you. The other question is data center REIT. You talked about that. Transferring data center into REIT. Any other assets to be transferred to REIT? Anything on the plate?
The domestic data center will be added to Singapore REIT, which we launched. The REIT that we established last year is Singapore and the U.S. The data center in Singapore and U.S. are transferred to REIT. The Japanese market, European data centers will need to be added. This will, I think, please the investors too. That's our plan. We will continue transferring data center to REIT. The first year we did a lot because it was the first year, but we will gradually transfer to REIT vehicle. We will continue doing that. Thank you.
We are almost, well, running out of time, and we would like to take one more question if there are, if there is one. Thank you. With this, we would like to conclude the press conference of NTT, Inc. We will have the press conference of NTT DOCOMO after this. You are kindly requested to wait for a while. Thank you.