NTT to post biggest ever loss in Japan

TOKYO: Nippon Telegraph and Telephone Corp is likely to post a net loss of

about one trillion yen ($7.5 billion), a Japanese record, in its just-ended

business year as a result of massive write-downs on overseas investments and

restructuring costs, analysts said on Monday.

Analysts said they mostly agree with media reports that Japan's biggest

telecoms carrier will be hit by an extraordinary group loss of about two

trillion yen for the year ended Sunday. The Nihon Keizai Shimbun and Kyodo news

agency reported the losses over the weekend without citing sources.

NTT DoCoMo Inc, NTT's mobile subsidiary, will make up one trillion yen of

once off-losses due to appraisal writedowns on its overseas investments after

sky-high global telecoms valuations plummeted in 2001. "There's no mistake

in NTT's loss outlook if DoCoMo decides to write off its overseas

investments," said ING Barings telecoms analyst Hitoshi Hayakawa.

DoCoMo, which took a 263 billion yen appraisal charge in the April-September

first half on its investment in Dutch partner KPN Mobile NV, is also facing a

drop in about half the value of its 16 per cent, $9.8 billion stake in AT&T

Wireless Services Inc, the third-largest US wireless carrier, media said.

Parent NTT, facing lower telephone rates as competition intensifies, has

already committed 1.2 trillion yen to overhaul its workforce by shifting 100,000

employees into lower-paying jobs at subsidiaries. So far, NTT has said it

expects a special loss of 944 billion yen and a net loss of 331 billion yen for

2001/02 on a group basis.

NTT and DoCoMo have both said no decision has been made on any write-downs.

Analysts said they expect NTT and NTT DoCoMo to offer guidance on their earnings

outlook within a month, ahead of results announcements in mid-May.

Other losses loom



Apart from AT&T Wireless and the restructuring, the two biggest chunks
of the one-off losses, analysts say the two firms are also facing losses in

smaller businesses.

DoCoMo is also facing write-down stemming from KPN Mobile of 1.3 billion

euros ($1.14 billion), after the Dutch firm decided last month to take a 13.7

billion euro goodwill write-down on its stake in Germany's third-largest

wireless carrier, E-Plus. There are questions too over whether DoCoMo will have

to write down its investments in Hutchison 3G UK Ltd. and Taiwan's KG

Telecommunications Co, analysts said.

In addition, NTT Communications Corp, a wholly owned operator of

long-distance and Internet services, is expected to generate a further 100

billion yen loss on its US Internet unit, Verio Inc, which caused a 498 billion

appraisal loss in the first half.

In the 2000/01 business year DoCoMo's net profit was a record 365 billion

yen, which helped to shore up parent Nippon Telegraph and Telephone Corp's

sagging bottom line. Hayakawa of ING Barings said the share prices had largely

factored in the losses.

In the last three weeks, DoCoMo shares have climbed 33 per cent while NTT is

up 25 per cent. Over the same period, the tech-heavy Nikkei 225 average rose 17

per cent. "On the DoCoMo write-down, it wasn't a question of whether but

when," Hayakawa said.

"Since the share prices already reflect the losses, it's good that they

are getting them out of the way in one year," he said.