NTT to Spend $2.6B on FTTP

Japanese giant earmarks ¥280 billion on expansion of fiber access networks in next financial year

March 1, 2004

2 Min Read
NTT to Spend $2.6B on FTTP

Japan's national incumbent operator NTT Group (NYSE: NTT) is to spend ¥280 billion (US$2.56 billion) on expanding its fiber access networks in its next financial year, according to plans submitted by the operator to the government today (see NTT Submits 2005 Biz Plan).

This will account for more than one third of the carrier's total planned capex outlay for the year of ¥800 billion ($7.33 billion), a slight increase on the expected ¥780 billion outlay in the current fiscal, which ends on March 31.

The investment indicates a dramatic step up in fiber-to-the-premises activity for NTT. The carrier had about 200,000 fiber access customers at the end of its 2002-2003 financial year and stated then that it aimed to have five million more by the end of March 2006.

Japanese newspaper Nihon Keizai Shimbun reported that NTT had 650,000 fiber access customers at the end of 2003 and was aiming for 2 million by the end of March 2005. The carrier couldn't be reached to verify these figures.

NTT sees high-speed data services as crucial to its long-term survival, as it loses customers to rivals and traditional voice revenues wane. It has a number of internal technology and service development programs dedicated to exploiting fiber access.

One of them includes the development of "holey fiber." Such fiber contains holes that run the entire length of the fiber, giving it markedly different properties from standard transmission fibers. One of the useful properties is a significantly reduced bending loss compared to standard fibers, which makes holey fiber easier to handle, cheaper, and more flexible to lay, according to NTT (see NTT Investigates Holey Fiber). (For more background, see Hollow Fiber: No Pipe Dream and Holey Fibers!).

NTT also formed a new company late last year called NTT Resonant Inc., which has 600 staff dedicated to the development of new broadband services, applications, and business models.

NTT has been scouting the wider market for leading-edge vendors (see NTT Calls for Ethernet PON and Chip Startup Claims NTT Coup).

The money to be spent by NTT is almost evenly split between its two main fixed network operating subsidiaries. NTT West will spend ¥150 billion of its total ¥390 billion capex on fiber access deployments, predicting annual revenues for 2004-2005 of ¥2,118 billion. This gives it a capex-to-revenues ratio of 18.4 percent.

NTT East will spend ¥130 billion of its total ¥410 billion capex on its optical access network, and predicts total revenues for the year ending March 31, 2005, of ¥2,202 billion. This gives it a capex-to-revenues ratio of 18.6 percent.

This compares with a capex-to-revenue ratio for Asia/Pacific carriers of about 22 percent during 2003, according to Infonetics Research Inc. (see Carrier Capex Set for 2004 Rebound).

NTT returned to net profit in its last full financial year that ended on March 31 2003. It made $1.95 billion, compared with a $6.28 billion loss a year earlier.

— Ray Le Maistre, International Editor, Boardwatch

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