NTT looks at Internet consolidation


Wada took over as president and is outlining changes after NTT posted the largest loss in Japanese history

TOKYO, Japan -- Japan's biggest telco, Nippon Telegraph & Telephone Corp., is looking to consolidate its Internet operations into one company.

Norio Wada, the company's new president, said the plan may see NTT merge its six Internet-service companies into one.

NTT's mobile-phone subsidiary NTT DoCoMo on Tuesday said it will consolidate its "2.5G" and third-generation operations into a holding company, DoCoMo Europe Ltd., in September.

Wada told The Wall Street Journal that he hopes to unveil later this year a "vision" for NTT that will see it through the next five to 10 years.

The executive took the helm after NTT posted the largest loss in Japanese corporate history (full story).

Real-estate spinoff

The company is mulling an Internet combination, so the companies could share one brand or combine their networks, and cut costs.

Wada's long-term plan will also likely see it spin off stock in its NTT Urban Development Co., a wholly owned real-estate subsidiary. Wada said that would raise cash for the parent without going to banks or the bond market.

Wada took over at NTT in late June. NTT is Japan's former monopoly telecom and the largest telecom in the world by sales and assets.

The company has set its sights on new-media growth and is developing a high-speed broadband network to run over optical fibers to its customers in Japan.

The executive told the Journal that NTT is still on track to hit its targets for the year, despite the global telecom slump.

No big investments this year

But Wada said NTT isn't "hell bent" on keeping its 16 percent stake in AT&T Wireless. AT&T Wireless is in merger talks with VoiceStream Wireless, a subsidiary of Deutsche Telekom.


NTT is playing the pivotal role in the disputed sale of a major stake in the Philippines' main phone company

Wada went on to say that NTT is not looking to pick up distressed telecoms even after WorldCom's collapse. WorldCom, the second-largest U.S. telecom, became the largest bankruptcy in the world on Sunday.

NTT does not plan to make any big international investments this year, Wada said.

NTT expanded internationally by buying telecom stakes in the Pacific Rim and in the United States. It has the controlling interest over the sale of a stake in the Philippines main carrier, for instance (full story).

Wada believes that the investment world is skeptical about communications companies. "That trend is a major blow," he told the newspaper.

The president said he is looking at reorganizing NTT's corporate structure, which sees it act as a holding company for subsidiaries such as NTT DoCoMo.

Profit on track

NTT has forecast net profit of 361 billion yen ($3.1 billion) off sales of 12 trillion yen ($102 billion) for the year through March.

Wada said the numbers so far show NTT is on track and are somewhat better than the company's initial plan.

NTT stock is trading down 2.9 percent at 474,000 yen on Wednesday afternoon. That's on a day the Nikkei is down 2.6 percent.

NTT DoCoMo, the largest stock trading in Japan, is off 3.1 percent at 252,000 yen.