NTT posts record high profit in Q1 (thanks to DoCoMo)

Japan's NTT, which has a fair number of strings to its bow – including mobile business NTT DoCoMo, which is now fully reabsorbed into the NTT fold – posted a set of fiscal Q1 results that it claimed "progressed more strongly than expected" when it came to revenues and profits.

Profit for Q1 FY21 (ended June 30) was notably billed as a record high. At 340 billion Japanese yen ($3.1 billion) it was a hefty year-on-year increase of 24.7%. The giant stride forward, however, was mainly due to the one-off impact of including profit from the transaction to make NTT DoCoMo a wholly owned subsidiary.

Operating revenue, at JPY126.1 billion ($1.14 billion), was a 4.6% year-on-year increase. NTT attributed the rise to a jump in device sales at NTT DoCoMo, as well as a bump up in systems integration revenue at NTT Data, its multinational IT service and consulting operation, "as a result of capturing increased demand for digitalization."

Figure 1: Good call: Device sales at NTT DoCoMo – newly back in the fold at NTT – boosted earnings.
(Source: Tore F on Unsplash)

Operating income, on the other hand, fell by 2.3% year-on-year to JPY486.3 billion ($4.4 billion). 5G expenditure and expansion of NTT DoCoMo's Smart Life were among the reasons given by NTT for the contraction here.

Bullishness and buybacks

NTT reckons that from fiscal Q2 onwards it can increase operating income from both Smart Life and by achieving cost reductions through digitalization of NTT DoCoMo's sales channels.

The group expects, too, an increase in revenues and income from its overseas business through "structural reforms" at NTT Ltd – its long-distance and international arm – and NTT Data.

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Another potential fillip to NTT shareholders' spirits is that from August 10 to March 31 next year it has committed to a share buyback program totaling JPY250 billion ($2.3 billion).

Based on the share buyback commitment, NTT revised upwards its FY21 EPS target from JPY300 to JPY302.

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— Ken Wieland, contributing editor, special to Light Reading