| 1997-010 | February 28, 1997 |
The Japanese economy showed signs of a gradual economic recovery in fiscal year 1996 due to a surge in exports fueled by the weaker yen and an increase in capital investment. While the slowdown in personal spending and other negative factors may be a reason for concern, the economy appears to be on track toward recovery and the gradual economic upturn should continue in fiscal year 1997.
Asia is likely to lead the way as the global economy continues its expansion, despite the possibility that the U.S. economy may weaken. The Japanese international telecommunication market is expected to grow even larger as deregulation stimulates the marketplace, more economic and social exchanges transcend its borders, and multimedia assumes a more important role in communications.
Regulations are being alleviated around the world and customers' telecommunication needs are becoming increasingly diverse and advanced. Against such a background, in fiscal year 1997, KDD will strive to support communications between Japan and hundreds of countries and regions around the world by providing a wide range of services to contribute to the development of international economy and society.
To this end, KDD, by working with telecommunications carriers overseas, will broaden and improve services and offer global sales activities that are fine-tuned to the needs of customers. At the same time, KDD will push ahead with the construction of large-capacity networks and aggressively pursue research and development activities to gain the leading edge in advanced technologies in new fields.
KDD will also continue to streamline its operations by cutting expenses, for example, and make cost-efficient capital investments. KDD will also make aggressive expansion into promising telecommunications-related fields to establish its business base as a global, full-service telecommunication carrier.
These measures are intended to further improve KDD's international competitiveness and make the company's services more attractive to customers.
Based on these basic concepts, KDD will put priority on the following policies in fiscal year 1997:
1. Provide more convenient, advanced services including business IP service to respond to the rapid growth in the demand for multimedia
(1) Launch Business IP service (name is subject to change).
(2) Launch high-speed Internet international gateway service.
(3) Launch international ATM service (name is subject to change).
(4) Launch international telephone service from PHS.
(5) Launch long-term international television service using optical submarine cables.
2. Construct the JIH cable that will make Japan a telecommunication hub and further improve its telecommunication infrastructure. Also construct large-capacity, high-quality networks that are essential to multimedia-related services.
| (1) | Construct the JIH cable that connects international cables to the domestic network and also connects international cables to each other. |
| (2) | Construct FLAG and SEA-ME-WE3 cables to expand the economical and dependable large-capacity optical submarine cable network in the Asia-Pacific region. |
| (3) | Expand and improve the Internet network to provide multimedia-related services. |
| (4) | Replace international relay switching facilities in telephone and ISDN switching networks and introduce next-generation service processing facilities and next-generation service support systems. |
3. Carry out following pioneering research and development to support tomorrow's large-capacity, very high speed telecommunication technology.
| (1) | Fundamental technologies for next-generation networks such as the development of large-capacity optical communication technology and optical device that enables very high speed optical transmission. |
| (2) | Leading-edge technology that will become necessary in multimedia applications and next-generation radio communication networks. |
| (3) | Network planning, management, and operation technologies to make network administration even more efficient and advanced. |
5. The revenues and expenditure plan is as follows:
| Operating revenues | 323 billion yen | ||
| Of which is from telephone | 261 billion yen | ||
| Operating expenses | 310 billion yen | ||
| Operating income | 13 billion yen | ||
| Ordinary income | 17 billion yen | ||
| Net income | 9 billion yen | ||
Fiscal Year 1997 Capital Investment Plan
(Unit: 100's of millions of yen)
I. Telecommunication facilities........................1,033
1. Telecommunication facilities specific to services.....200
2. Common telecommunication facilities...................665
International switching offices and sales facilities...87
International transmission channel facilities.........137
Domestic transmission channel facilities..............441
3. Research and development of new technologies...........69
4. Other common telecommunication facilities..............99
II.Non-telecommunication facilities........................7
Total 1,040
Note: Figures are rounded to the nearest 100 million yen.
(Reference)(Unit: 100's of millions of yen)
| FY 1996 Estimates | FY 1997 Forecasts | Increase/ decrease | |
| Operating Revenues (Sales) | 3,300 | 3,230 | -70 |
| Operating Revenues of which is from telephone | 2,730 | 2,610 | -120 |
| Operating Expenses | 3,160 | 3,100 | -60 |
| Operating Income | 140 | 130 | -10 |
| Ordinary Income | 210 | 170 | -40 |
| Net income | 110 | 90 | -20 |