Earnings Call: Q3 2026

Feb 5, 2026

Quarterly report

Thank you for participating today. I am Shimada, President of NTT Inc. I will now explain the financial results for the 9 months ended December 31st, 2025. The consolidated financial results for Q3 FY 2025 show increased revenue and profit year-on-year. Operating revenue reached new record high levels in Q3. Although operating revenue was impacted negatively by approximately JPY 55 billion due to foreign exchange, as a result of expansion of enterprise business across group companies and increase in revenue by transferring data centers for REIT, operating revenue increased by JPY 371.3 billion year-on-year to JPY 10,421 billion. Regarding EBITDA, while there were cost investments at DOCOMO to reinforce its customer base and to implement measures to improve mobile network quality. Due to increased profits from the expansion of enterprise business at the grid companies and transferring data centers for REIT, EBITDA increased by JPY 104.8 billion year-on-year to JPY 2,657.3 billion. Operating profit increased by JPY 57.9 billion year-on-year to JPY 1,457.1 billion. Profit, driven by a rise in operating profit and other factors, increased by JPY 75.4 billion year-on-year to JPY 926.1 billion. As for operating revenue and operating profit by segment. In the integrated ICT business segment, consumer communications business declined due to factors including reduced mobile communication service revenue. However, growth in Smart Life business centered on finance services and enterprise business led to an increase in operating revenue year-on-year. Despite profit growth in Smart Life business and enterprise business, because of cost to reinforce a customer base and improve network quality, operating profit declined year-on-year. As a result of measures to reinforce customer base, sales capability is steadily improving, and MNP was positive during Q3. In the global solutions business segment, despite an approximately JPY 55 billion negative impact from foreign exchange rates, driven by business growth domestically and internationally and transferring data centers for REIT, operating revenue and operating profit increased year-on-year. In the regional communications business segment, although there was a decline in legacy business revenue, due to factors such as growth in enterprise business and fiber optic business revenue, operating revenue and operating profit increased year on year. Net adds in fiber optic service increased year on year, due to strengthened sales of 10 Gbps plan and comprehensive bundled service for condominiums. In other such as real estate, energy, et cetera, due to expansion in office, commercial and residential businesses within NTT Urban Solutions, operating revenue increased year on year. Next, I will explain the full year financial results forecast. In order to reflect the revised forecast of DOCOMO and NTT DATA Group, we have revised down with the consolidated forecast for NTT this fiscal year. Details will be explained later by each company. Regarding DOCOMO, amid intensifying and prolonged competition requiring greater than expected investment to reinforce its customer base, it is necessary to make sure to continue implementing key measures for future growth, such as measures to reinforce customer base and improve network quality. As a result, operating profit has been revised downward by JPY 83 billion. Particularly with respect to NTT DATA Group, reflecting the realized profits of gain on the transfer of data centers for REIT based on market environment exchange rate fluctuation, the operating profit was revised downward to JPY 26 billion. Particularly at DOCOMO, intensified competitive environment is expected to continue. In addition to the achievement of the results by strengthening of customer base and improvement of mobile network quality, we endeavor to recover performance by accelerating efforts through growth in Smart Life business, focusing on finance and enterprise business and cost reduction through fundamental review on organization and business processes. The summary of fiscal year 2025 financial result forecast by company is shown on the slide. Next, I would like to go over four topics. First, let me talk about the mass production of photonics-electronics convergence devices. The switches using photonics-electronics convergence devices through collaboration with supply chain partners including Broadcom and Acton Technology, will begin commercial provision within FY 2026. Furthermore, for the mass production of photonics-electronics convergence devices, NTT Innovative Devices is continuously preparing to increase production volume per line through automation of assembly, mounting and inspection processes to expand production lines in response to demand. Through these efforts, up to 30,000 units production per month will be feasible. We would like to proactively cater to the demands of hyperscalers and cloud operators. Next is social implementation of AI integrating digital and physical domain. Till now, NTT has been promoting introductory support to respond extensively to globally major LLM, in addition to the development and provision of genuinely Japan-made LLM, Tsuzumi. The order amount for our AI business for FY 2023 Q3 was JPY 147.8 billion for the entire group, far exceeding the pace of achieving annual target of JPY 150 billion. Currently, initiatives at Toyota Motors, Mujin, and TRIAL Holding are making progress. While we continue to collaborate with the leading companies of each industry domestically and overseas, we will accelerate the social implementation of AI that integrates digital and physical domains. Next, I will talk about exhibition at MWC Barcelona 2026. At MWC Barcelona 2026 to be held in Barcelona in March, Photonics Unlocks an Intelligent Power-Optimized Future is our key message. After seven years, we will jointly exhibit as NTT Group. I will deliver keynote speech on March 4th, and speak about our efforts to reduce power consumption through optical technology centered on IOWN, such as photonics-electronics convergence devices, and optical quantum computers. Please come to the event. On the progress under medium-term management strategy, our efforts since November is shown on the slide. This concludes my presentation. Thank you for your attention. We will now respond to questions from the reporters. First, we will accept questions from people in this room. Please raise your hand if you have a question. After a staff bring a microphone to you, please state your name as well as your company or media name, and then pose your question. Because of time constraints, we kindly ask you to first limit it to 2 questions per person, please. Are there any questions? The person towards the left, in the back, as seen from my side. My first question is, fiscal year-end, DOCOMO 3G is going to end. So there's this milestone and before this milestone, are there any comments? On a related note, DOCOMO operating profit and for your guidance, they are to be revised downward. In the current fiscal year, customer base reinforcement is to be accelerated. Towards next fiscal year, do you think this trend will continue, this acceleration trend will continue? These are the two questions I have. Thank you for the questions. First of all, at fiscal year-end, there is the 3G milestone. Towards this, vis-à-vis 3G customers, we are making sure that we recommend the 4G or 5G to them. In addition, handset device discounts are also offered. We are making sure that these measures are certainly taken. Ultimately, about 2 million subscriptions, I think, will end up remaining. Most are IoT-related subscriptions are likely to remain. Therefore, to actual users, we would like to explain in detail, respond meticulously so that they can migrate as much as possible to 5G. DOCOMO, their most important mission now is to maintain and expand the customer base and quality improvement that has to be made further. These are the two main challenges of DOCOMO. This fiscal year, they are making utmost effort in this regard. Next fiscal year, this e-effort is to continue. 35% has to be met by all means, I may have mentioned. The message was not to reduce a share to below 35%. That was the message I wanted to get across to make it easy to understand. Maintaining DOCOMO's current share is important for the future, whether it be finance or service or entertainment. In order to offer value-added services, this kind of customer base should not be deteriorated any further. We have to be able to offer a value-added service to a variety of customers as much as possible. For that purpose, we have to expand our customer base. This concludes my response. Thank you. Next question, please. The person at the left. From The Yomiuri Shimbun. My name is Kobayashi. I have two questions. The first one is on IOWN. photonics-electronics convergence devices mass production will be commercialized. What is the scale of sales? That is what I would like to know. With AI The order amount will be JPY 148.7 billion. In terms of net sales, how would that translate to be? Starting from the photonics-electronics convergence devices, at this point in time, we cannot state net sales. That is because the price negotiation is ongoing at the moment. If I state figures, you will be able to arrive at the unit price. I would like to refrain from responding to that question. AI, JPY 148.7 billion, JPY 147.8 billion. Some of them are early processes, or some of the orders are in the order of JPY 10 billion, and the period will be slightly longer. In principle, within 6 months or so, they will be booked as sales. Some of them would require few years. Next fiscal year, we are anticipating to have the sales from there. We are already entering into the fiscal year, and some of them are order placed in the first quarter. Next question, the person in the middle, wearing blue shirt and navy jacket, please. Nishimoto is my name. I have two questions. First, downward revision of guidance. I take a look at the reason for revision and the DOCOMO's internal intensifying and the prolonged competition environment, as well as network improvement, the network quality improvement that there is incurring cost. I want to know a bit detail about the reason. Sales promotion, much more than expected, there's more cost incurred for sales promotion. What is that? The first network, work quality improvement, base station construction cost is increasing much more than expected. I want to know in more detail the reason for the revision. First, quality improvement. It's mainly investment. Of course, to a certain extent, there is cost incurred. Rather, we have a plan and about JPY 50 billion per year, there's increase in investment. That is how we will respond, mainly speaking. Cost is increasing because of mainly sales promotion costs. The point is, residual value is set when handsets are offered to customers. When it comes to customer percentage or customer rate, there are more customers than expected that return their handsets and we had to provision for that. There's that. In the case of DOCOMO, I think details will be explained by DOCOMO. Sales promotion is being conducted by competitors as well. Under such circumstance, in Q3, the three months, as well as in January, they are facing difficulty and they have to respond to the extent possible, and that is incurring cost. The second question, wage hike. Spring wage negotiation have started with the wage hike. Under such circumstances, a wage hike. Mr. Shimada, what is your thinking about the wage hike and price pass through, cost reduction? How are you intending to secure source of funds for wage increase? Basically, 12 years in a row, we have been conducting a wage hike already. It's important that we continue this wage hike. When it comes to the level of a wage hike, we have to negotiate with the unions. It depends on the outcome of negotiation. It's true that cost, there's various kind of cost increasing and labor cost is increasing as well. The services that we offer, conducting a price hike, might have to be necessary. As I mentioned, particularly in mobile, intensified competition continues. In that sense, in various ways, we have to try to reduce cost and increase efficiency, and we have to introduce AI. By taking these various measures, we have to absorb increasing costs. Yeah, that is what we have to do for the time being. If possible, with understanding of customers, if we can increase unit price in various ways, that will be desirable. To my right, the person in the second row. Kawashima from Kyodo News. I have two questions. The first question is about Rapidas. There's additional investment, I would like to confirm the fact. What is the expectation to Rapidas? The second one is TEPCO. They are requesting for external partners and data center and AI. There are some areas you excel, but do you have the intention to participate, or do you have interest? Starting from Rapidus investment, I would like to refrain from making comment. Please ask the question to Rapidus. On the other hand, with Rapidus, we have much expectation. Photonics-electronics convergence device, as you saw in the materials at around PEC-3, we should be able to work together. Together with our president of Koike, we have been speaking. Rapidus has a front-end process and a back-ender process, and they want to have the full initiative. In the back-ender process, something like a PEC-3 will be embedded so that the product value will be enhanced. We would like to participate in that effort. About TEPCO, we do not know the details at all, so we would like to refrain from making comment. My apologies for that. Next question. The person behind the previous person. Yes, please. Thank you for the explanation. NHK, Toma is my name. About DOCOMO. DOCOMO has a finance service. They're trying to strengthen finance business. Mr. Shimada, in your interview and so forth, you talked about the concept of setting up a holding company. What is the progress of this concept? The aim, timing, et cetera, at this point in time, what is the status? Thank you for the question. Holding company or holding company and operating company for a finance service, I've wanted to set up this kind of company, and I've said that in various occasions. If possible, and if the environment allows, from around April of this year, we want to set up this company. Of course, our M&A partner, DOCOMO, SMBC, Sumishin Bank, Monex, DOCOMO Finance. These M&A partners will belong to the holding company, and there's d CARD and d barai, d payment. A company that can handle all kinds of finance services we want to set up. For one thing, FSA, a dialogue with FSA, finance-related governance and matters would have to be clarified, and that's one purpose. MIC, Ministry of Internal Affairs and Communications, have been our regulatory authority. Finance business will be within the realm of JFSA. We have to be able to respond sufficiently to JFSA-related matters. If things proceed as scheduled, in around the summer, we do want to change this kind of a structure. By the way, DOCOMO, as you explained, there's the competitive environment and there are cost-related matters. A finance related business, bringing them together. By so doing, do you think the company, the group can recover and grow further? First we have to reinforce customer base. In order to do that, a finance business is important, as well as entertainment, as well as new venue business, as I mentioned in my explanation. We want to offer these kinds of services as value-added service to the customers. Of course, for that, we have to be able to collaborate well. Details? If you ask Mr. Maeda, he may not be available to respond in detail, but at some kind of a timing, we do want to get an opportunity so that we can explain about the DOCOMO is intending to do. At a certain timing, I think we'll be able to explain in detail. Thank you. We would like to entertain 1 more question from the floor. The person at the front row, please. Free writer, Sano. I have 1 question. The other day, NEC announced a withdrawal from the existing base station business. You made the investment in 2020, and you have been trying to expand to now. I understand that the business would continue, but NEC is going to downsize this business. What is the perception of NTT as a shareholder of the company? Well, NEC, on the existing base stations, I have been speaking with President Morita, and he will continue to do that. What is used for the services, such as the equipments and the software of NEC, we do not have any concern over that. On the other hand, from that perspective, in 5G, domestic vendors are not so competitive, which is unfortunate. In the next V plan, or for the new service deployment, domestic vendors to produce good product, so that it will be desirable for us to use again. We would like to look forward to that. Specifically, are you considering to have any actions? Specific actions we do not have from our side. Thank you. We will now respond to questions from reporters participating online. We can accept questions either by voice or chat. In the case of voice questions, please click the Ask Question via Voice button on the right side of the screen. After selecting the microphone device, please click the Raise Hand button and wait. We will designate you, and when you see the message, "Question is possible," please start to mention your question. In the case of chat, please click the Chat button on the right side of the screen, type in your question, and click the Send button. Are there any questions? Are there any questions? No questions? Since there are no questions from people participating online, we would like to ask if there are any questions among the people in the room. The person in the right-hand side, please. Toyokei Zaibatsu is my name. Downward revision of guidance, in relation to that, once again, I want to know that I think a substantial factor is concerning DOCOMO. In the, compared with the initial guidance, you made efforts for sales promotion, but the other companies were making effort in sales promotion as well. As a result, the competition intensified and things are not going as planned. What specifically was different, is different compared with the initial guidance? Bearing that in mind, next fiscal year, by segment, including integrated ICT segment and DOCOMO, what is your current prospect as much as you can share with us? What prospect? Performance forecast. For each segment. First, sales promotion. Concerning sales promotion, actually, Q2, DOCOMO lost in terms of MNP competition. Even though 0.5, we stopped that service. As a result, there was a decrease in volume. After that, we should not intensify competition too much. That is what we have to agree upon with our competitors. Still, our competition is not slowing down. Moderating, not moderating. Last year, from the second half of the year, we made a lot of effort towards the sales promotion. This year, we thought the competition will settle down. That was what I was expecting. In reality, the competition rather is intensifying further, not moderating. Which means we had to respond sufficiently in this kind of situation, and we should not be defeated. That is why this current situation is continuing. We've all spent a lot of cost, all main players in the industry. Next fiscal year onward, what is the situation likely to be? It's very difficult to forecast. If there is a competition, we have to win. We have to continue our effort. If there is competition, we have to continue our effort. By segment. DOCOMO segment, is that what you want to know? Microphone was not on. Next fiscal year. We have to prepare our next fiscal year's plan. It's not fully prepared. DOCOMO, at least, this year will be the bottom for DOCOMO. However, quality improvement, about 20% growth every year in number of chats, is increasing because of increased video usage. We have to respond to these needs so that we can ensure customer satisfaction. We do have to continue effort to improve communication quality. NTT East and West enterprise business and Soramade business of NTT West and so forth, they are recording solid performance and stable performance, we think we can stably continue these businesses. End of next fiscal year, or this year or next month or so, fixed channel reference, we would like to explain. I think there will be an opportunity for us to explain about what to do with our fixed phone business. NTT DATA Group, they are enjoying organic growth. Globally, in order to grow further, what should be done? NTT DATA's midterm plan is to be reviewed. When we announce our financial results for this fiscal year, we have to think about what to do with our midterm plan. We want to be able to use the NTT DATA so that we can enjoy synergy for the group as a whole. That is what we are considering to do going forward. Does that answer your question? Moving on to the next question. The person at the front row. My name is Sekiguchi. On DOCOMO's business, this is related to downward revision. What is the view on capital expenditure, especially next fiscal year? To what extent are you going to tolerate the increase of investment? Today, when I look at the materials from DOCOMO, the capital expenditure is going to increase by JPY 32.7 billion. Now, how do you evaluate JPY 56.5 billion? You mentioned that the performance is now bottoming out as an expression. This capital expenditure, how do you evaluate? After next fiscal year, how are you going to increase or decrease? Can you share your view? It may be better to ask that question to President Maeda. The increase of base stations, capital expenditure will continue. As I mentioned, quality will be secured. That is important. On the other hand, this year, venue-related investment is quite significant. Smart Life investment will not be so high next year. Basically, large venues have been established quite significantly this year. Totally, we're expecting to see the drop according to our understanding. Thank you. Next question. The person in the second row from the front. News, Nakao is my name. Thank you for the opportunity today. In the presentation material, AI, social implementation of AI, I have a question about this topic. In each industry, you want to collaborate with leading companies to implement AI. In general from this, what areas do you expect after this? Any future prospect, and do you want to work on the transportation and retail industries and so forth? In relation to that, AI, there are various use cases and social implementation is likely to proceed more and more. On the other hand, some companies seem to be taking a wait-and-see mood. How much money should they spend, and what part should they increase efficiency in? There are some companies who have not been able to make this decision, and that is what I actually feel. President Shimada, what is your perspective on this? In order to accelerate social implementation of AE in the NTT Group, is there anything that NTT will work on as in the group as a whole? What we explained today is for digital and the physical, connecting digital and the physical domain. A physical domain, as everything as to those Mujin and TRIAL LLM. Not the LLM foundation model, but rather the quantitative model, a numerical model. What a numerical model related to AI would have to be combined and not just foundational model because factories should not make any mistake in their manufacturing. LLM is a language model. Mistakes do tend to occur. However, what's written here, everything that's written here should not make any mistakes. If there are mistakes, there will be accidents and incidents. We have to be able to create a model that does not make any mistakes. For that, we need both technologies, and that's why we decided to share this example. Globally, and before globally, in Japan, there's Tsuzumi. There are about 2,000 inquiries for Tsuzumi from our customers, and mainly speaking, local governments, finance, and medical and health industries. Because there's data that cannot be made open, cannot be made into OpenAI. These are the entities that are inquiring and showing interest in Tsuzumi. The private and sovereign related aspects, we think are likely to increase going forward. In that sense, in Europe, NTT Data in Europe, there's Mistral AI. There's a lot of demand there. In that sense, sovereign-related AI, we think we'll see an increase in demand. What's selling most is Azure OpenAI in our case as well. Rather, we want to be multifaceted and open. The AI that can be applied by customers that we want to offer consulting on and support implementation, that is what's desirable for us. Depending upon how customers use AI, there are different kinds of features of AI that can be used. I think various kinds of evolution will take place in the future. In particular, private related demand, I think will increase in particular. The person who asked the questions earlier may raise questions as well. We would like to take 1 to 2 more questions to my right. Nikkei, a financial or trade magazine. With respect to Tsuzumi, domestically, domestic LLM, and you mentioned about the increase of private, and there may be increase in finance. With the 3 mega banks, rather than domestic companies, they may be using large scale AI from overseas. The regional banks who do not want to employ cost, are you planning to stress small and midsize financial institutions, including regional banks? Do you have any thoughts? I would assume that the financial institutions and as to where the AI will be provided, the choices will be different. Large financial institutions, with LLM, with large parameters, some will be introducing them or it may be more closed area where they would like to cater to their needs. The real large LLM will be used in certain locations and a relatively smaller scale in the closed data environment. There may be both opportunities. Rather than scale, it's how it's going to be used that would determine the choice. We do have inquiries, after the local government's financial institution is next. We have the inquiries, and we are receiving quite extensively. There are many sections and by section, I believe the inquiries are being made. Does that answer your question? The person in the back, with the dark colored jacket, please. This is Tatsuki from Nikkei Shinbun. Sorry for the second time. First about the interest rate environment. On a year-on-year basis, interest bearing debt, in order to expand businesses, increase in interest bearing debt and the CapEx in the case of a company, I think, will be costly. From these two perspectives, interest rate hike, how will that impact your company's business? That's my first question. My second question is the depreciation of the Japanese yen and the foreign exchange rate, how will your group be affected by the foreign exchange rate? NTT Data, a data center reach, because of Japanese yen depreciation, there might be more business coming in. From both positive and negative perspective, how will you be impacted by depreciation of the Japanese yen? If you could please comment on these points. Thank you. What do you personally think and what I think as a company happen to be different. My personal perspective is different from company's perspective. Interest rate in Japan, how should I say? Gradually is increasing, and I think that that's taken for granted. As a person with common sense, I expect that to happen. Of course, I'm responsible for company's business, and from that perspective, the lower the interest rate, the better. On the other hand, data center business. Thanks to people's cooperation, there's lots of return. Even if we bear interest rates, there's a growth potential, we'll be able to absorb that. We are not so worried there. Depreciation of the Japanese yen. Or foreign exchange rate impact ends up being positive, which is helpful for us. The foreign exchange rate, minimum of foreign rate, exchange rate volatility is the best. The U.S. dollar and the Japanese yen and the U.S. dollar and euro relationship, the relationship among various currencies is becoming more complicated. When it comes to currency or foreign exchange rate, it's best to maintain a stable situation without so much fluctuation. We would like to take one last question. Does anyone have any questions? The person over there. Nikkei Crosstech. My name is Morioka. NTT DATA Group is now wholly owned subsidiary, and you spoke about the synergy. Currently, I believe it is under review. Compared to the initial stage, are you expecting to see more synergy? Is there anything that you can share with us? Yes. Thank you for the question. As I have been mentioning initially, synergy is something that we need to anticipate. More than that, data's growth will be even more important. This is both organic and inorganic. Within NTT Group, SI business accounts for roughly 40%. Substantively rather than the synergy, inorganic would have an even greater effect. Midterm plan is something that we need to review. Data's midterm strategy will be considered as a large positioning. Of course including synergy, but rather than synergy, non-synergy will be greater. This is as I have been mentioning from the outset. Thank you. It is now time to close the NTT, Inc. press conference. Next, there will be NTT DOCOMO Group's press conference, if we could please wait awhile. Thank you very much