Total the operator subscriber base increased by 4

First operator of telecommunications services in the world in terms of turnover-97 billion for the fiscal year close on March 31, 2006-, NTT has managed to maintain strong positions on its national market while developing international activities, via subsidiaries and partnerships with foreign operators. The NTT Group is organized around five main subsidiaries: two entities regional services fixed voice, data and Internet (NTT East and NTT West), a subsidiary specializing in long distance and international communications (NTT Communications), a mobile subsidiary (NTT DoCoMo) and a subsidiary specialized in the integration of information (NTT Data) services.

FTTx marketed since August 2001

NTT has held a monopoly on the market of local fixed telephone and long distance Japanese until 1985 and entered the market of international communications in 1999 (1). Its market share declined from regularly but NTT holds approximately 69 of the market for local calls and 63 of the market for long distance calls. There is still majority market access. The Japanese historical operator however faces competition significantly strengthened since 2005. In addition to competition from mobile services, it is confronted with the development of IP telephony and the introduction of direct offers by alternative operators, which use non-active lines of NTT East and West. NTT records and since 2001 a regular decrease in the number of its access lines, which amounted to 46 million in March 2006 (down nearly 8 from March 2005), and a decrease in sales of fixed telephony (-5,5 in 2005), which represents more than 31 of its total turnover. NTT has played a leading role in the development of the DSL to the Japan, first to his body defending supplying unbundled loops in many alternative operators, and then developing intensively its own bid to counter competition from alternative operators. NTT East and NTT West began marketing of their ADSL services in 1999. Offers very high speed (8 Mbps) appeared at the end of 2001 in 15 major cities of the country. In 2004, NTT has launched offers 47 Mbps in receipt and 5 Mbps transmit in response to the 45 Mbps 3 Mbps offer launched by Yahoo! BB in the same period. Access FTTx, NTT East and West began the actual marketing of their services under the name "B-FLET's" in August 2001. The two operators have proposed aggressive pricing and have developed a wide portfolio of services using this technology to target different types of client groups (families, SoHo, Enterprise, collective habitat and individual habitat). NTT is now player leader of broadband access to the Japan with 5.7 million DSL lines and 3.4 million FTTH connections in the country in March 2006. NTT is however face very strong competition, including Softbank/Yahoo!! BB. NTT West and East, which are not allowed to act as providers of Internet access, have only 38 of DSL lines. Market access, FTTx, NTT East and NTT West share is significantly higher (62). In a market of broadband reaching saturation, the arrival of new ADSL customers strongly slowed since 2004 after the quarterly growth rate in double digits in 2002 and 2003. Growth remains however very high for FTTx access (with a quasi-doublement of the number of lines in 2005).

Optical investment by 2010

NTT Docomo is the first Japanese mobile operator with 51 million subscribers at the end of March 2005 and a 56 market share. More than 90 of its subscribers agreed to his offer of mobile Internet, i-mode, which offers tariffed services on the basis of the volume of data transmitted and not time spent online. DoCoMo is the first operator in the world to have launched its 3 G service in October 2001 (service "foma", based on the WCDMA). It's from 2004 that these services have really taken off. With a total of 22 million 3 G subscribers accounted for 45 of the base of subscribers in March 2006 (23 in March 2005). 2 G services have experienced a decline in parallel with a subscriber base increased from 44 million in June 2003 to 23 million in March 2006. Total the operator subscriber base increased by 4.7 in 2005. Competition in the Japanese mobile market significantly increased since 2004, as evidenced by the decrease in the ARPU (2) of the operator (including data services). While the Japanese mobile market is already mature, the next introduction of portability of numbers, the entry of new operators following the granting of new licences at the end of 2005, the resumption of Vodafone KK by Softbank should still enhance the competitive pressure on the Japanese mobile market. While the number of its regular customers is declining, NTT announced in November 2004 a programme of 5 trillion yen (... billion euros) to deploy a network of 30 million optical lines by 2010. This investment should stimulate the commercialization of its fixed telephony and access services to allow broadband, by promoting the development of new products (including telephony and IPTV). The operator also announced the first tests of its new generation for December 2006. Since 2004, NTT has already developed the content of its offerings by launching new services reserved to customers DSL and FTTX: voice over IP, video on demand, video terminal. NTT and NTT DoCoMo mobile branch also plan to launch fixed/mobile converged services with terminal mobile dual-mode WiFi and FOMA. NTT activity remains largely focused on its national market. After the transfer of its interests in KPN Mobile and AT & T Wireless in 2004, NTT investment abroad are largely concentrated in Asia. NTT owns stakes in operators in the Viet Nam, Sri Lanka, the Philippines and Hong Kong.

I - mode on an Asia-Europe route

NTT also expanded its presence in international markets by concluding strategic alliances with mobile operators for the dissemination of its i-mode service. In November 2004, the conclusion of an agreement with O2, also present in Germany and Ireland, has again extended the presence of the i-mode, now available in all major markets Europeans. In the Asia-Pacific, NTT DoCoMo has also concluded agreements with the Telstra Australian and Taiwanese FarEasTone.

(1) - See letter of telecommunications No. 5, p. 8 and n 44, p. 7.

(2) - Average Revenue Per User (ARPU).