NTT expected to post $1.6B loss


NTT's telecom investments have suffered a sharp turn for the worse this year

By staff and wire reports

TOKYO, Japan -- Japan's biggest telecom, Nippon Telegraph and Telephone Corp., will lose about 200 billion yen ($1.6 billion) this business year, according to a report.

That will be only the second net loss in the company's history, since it started reporting as a group in 1989.

NTT will book around 900 billion yen ($7.3 billion) in extraordinary charges for the year, which runs through March 2002, the Nihon Keizai Shimbun said Tuesday, without quoting sources.

The loss stems from the slowdown in telecommunications spending worldwide, and the slump in its telecommunications holdings.

Verio deal contributing to huge loss

Its NTT DoCoMo subsidiary booked a 301 billion yen ($2.4 billion) loss on its holding in the Dutch mobile-phone company KPN Mobile NV when it reported earnings earlier this month for the half-year through September.

That saw DoCoMo post profits that were down 50 percent for the six months through September. It said on November 7 it earned 104 billion yen ($858 million) for the first half.

NTT owns 65 percent of DoCoMo. It is also expecting another hit from its investment in Verio, a U.S.-based telecom that it bought for 600 billion yen in September 2000.

But the company has been decimated by the telecom slump. NTT will take a 500 billion yen loss on goodwill, the acquisition price minus Verio's current assets, the Nikkei states.

Faced with losses, NTT, which used to have a monopoly on long distance calls in Japan, is pushing ahead with restructuring.

Restructuring details expected on Thursday

The company declined to comment on the Nikkei report, saying it was compiling a projection for this business year that it will announce at its half-year earnings on Thursday of this week.

It has been shifting employees into lower-paying jobs in an effort to cut costs. NTT is slated to give details on its restructuring efforts at NTT East Corp. and NTT West Corp. with its earnings on Thursday.

Those two subsidiaries have effective monopolies on local calls. NTT also includes long-distance carrier NTT Communications, which is facing mounting competition.

The restructuring is also expected to lead to extraordinary charges.

The company last ran red ink in fiscal 1999, when it posted a net loss of 67.8 billion yen ($550 million).

NTT stock was off 0.4 percent at 504,000 yen on Tuesday afternoon. But it was outperforming the benchmark Nikkei 225 index, which was down 1.26 percent at 10,592.98.