Communication Companies

The communication companies covered in this section are:

• Nippon Telegraph and Telephone Corporation (NTT)
• Deutsche Telekom
• Verizon Communications

Nippon Telegraph and Telephone Corporation (NTT)

In 1889, the Japanese Ministry of Communications started a telephone service, which it operated as a monopoly until after 1900. In 1952, the Ministry formed Nippon Telegraph and Telephone Public Corporation (NTT). The company was privatized in 1985 and NTT Corporation was incorporated.

The company's landline operation is struggling to cope with fierce price competition and dwindling voice traffic, as customers migrate to mobile communications and Internet calling, using Voice over IP (VoIP) technology.

Operating revenues in the fiscal year 2004 increased by 1.6 percent. This was due to several factors; an increase in data transmission revenues, resulting from the growing popularity of IP related services such as FLETS ADSL, B FLETS and i-mode services, as well as from strong sales in systems integration and telecommunications equipment. These offset a continuing decline in revenues from fixed-voice transmission services and leased circuit services due to the shift from voice to IP related services and a drop in revenues from mobile communication services.

For the nine months ending 31 December 2004, revenues totalled JPY7,987,506 million (USD76,944 million) which is 2.6 percent lower than the same period the previous year. Net income stood at JPY698,450 million (USD6,759 million) for the same period.

Deutsche Telekom

Deutsche Telekom was initially founded as the state-owned Deutsche Bundespost   Telekom in 1990 after the first phase of the national postal and telecommunications reform. This was transformed into a private law stock corporation at the beginning of 1995.

Regulatory decisions and a weak economic environment resulted in a decrease in revenue at T-Com. The deconsolidation of the cable telecom companies has further contributed to the fall in revenues. Sustained high growth in subscriber numbers was again the driving force behind the increased revenue at T-Mobile. Changes in the composition of the consolidated group, T-Mobile Netherlands, also had a positive effect on revenue growth.

Positive developments in the telecommunications sector increased revenue at T-Systems, more than offsetting the slight decline in the IT business. Revenue growth at T-Online was driven primarily by an expanded customer base, especially for broadband services, coupled with stronger demand for content and services and the resulting increase in time spent online.

Moving into 2004, the first nine months’ net revenue at Deutsche Telekom totalled EUR42,922 million, up 4 percent over same period in 2003. Revenue growth was subdued due to exchange rate effects relating to translation of US dollars into euros.

Verizon Communications

Verizon Communications, formerly known as Bell Atlantic, was incorporated in 1983, in Delaware. The company began doing business as Verizon Communications in 2000, when Bell Atlantic merged with GTE.

Verizon recorded revenues of USD67.8 billion during the fiscal year ending December 2003, an increase of 0.7 percent over 2002. This increase was primarily the result of higher revenues from the domestic wireless segment, which increased by USD3,016 million, or 15.5 percent as a result of five million net customer additions and higher revenue per customer per month.

Domestic Telecoms revenues in 2003 were lower than 2002 by USD1,237 million, or 3.0 percent, primarily due to lower local and network access services. This was due to the lower demand and usage of the company’s local exchange. It was also driven by the effects of competition from other communication companies, regulatory pricing rules for unbundled network elements (UNEs) and technology substitution, including switching from traditional landline to wireless industry services and a shift from basic business access lines to high-speed, high-volume special access lines.

Verizon reported consolidated revenue growth of 6.7 percent in the third quarter of 2004 compared to the third quarter of 2003, led by 23 percent higher revenue at Domestic Wireless. Verizon added 1.7 million wireless customers, 309,000 DSL lines, 525,000 long distance lines and more than 700 Enterprise Advance sales in the third quarter of 2004.

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