NTT Q1 FY2026: Revenue rises 10.9%, but full-year outlook unchanged

Revenue rose 10.9% year on year to a record ¥3,617.7 billion, while operating profit climbed 4.9% to ¥425.1 billion. Net income attributable to NTT increased 5.8% to ¥274.8 billion. The global solutions business led the growth with a 16.4% revenue surge, and the consumer mobile unit contributed through higher ARPU and steady optical broadband demand. However, margin expansion was capped by rising energy costs and personnel expenses. For the full year, the company maintained its forecasts: revenue of ¥15,060 billion (up 4.5% from the previous year) and operating profit of ¥1,710 billion (up 0.2%). First-quarter progress stood at 24.0% of the revenue target and 24.9% of the operating profit target, suggesting a conservative outlook.

NTT breaks down its operations into four segments. The Integrated ICT Business, which includes Docomo's consumer and enterprise services, posted external revenue of ¥1,542.2 billion (up 8.3% year on year) and segment profit of ¥246.2 billion (up 2.7%). Although smart-life services and recovering corporate demand boosted the top line, the profit margin dipped slightly to 16.0%.

The Global Solutions Business, anchored by NTT Data Group, recorded external revenue of ¥1,226.9 billion (up 16.4%) and segment profit of ¥63.4 billion (up 9.9%). Data center demand and cloud migration services continued to drive momentum, though the operating margin remained at 5.2%, leaving room for profitability improvement.

The Regional Communications Business, comprising NTT East and West, saw external revenue of ¥603.6 billion (up 1.9%) and segment profit of ¥98.5 billion (up 0.6%), as growth in fiber optic lines and ICT solutions offset the decline in fixed-line voice services.

The Other segment (real estate, energy, etc.) jumped to external revenue of ¥244.9 billion (up 27.6%) and segment profit of ¥23.3 billion (up 29.3%), helped by higher energy prices and favorable property market conditions.

Total assets as of June 30, 2026, reached ¥47,459.7 billion, up ¥738.4 billion from the end of March, driven by growth in banking loans and cash holdings. Net assets stood at ¥10,348 billion, with an equity ratio of 20.8%.

Operating cash flow amounted to ¥574.4 billion, an increase of ¥48.2 billion year on year, aided by higher banking deposits. Investment activities used ¥673.4 billion due to capital expenditures and M&A, resulting in a negative free cash flow of ¥99 billion. Financing activities, including bond issuance and borrowings, generated ¥557.1 billion, lifting cash equivalents to ¥2,387.3 billion.

For shareholder returns, NTT plans to raise its annual dividend by ¥0.1 to ¥5.4 per share (¥2.7 interim, ¥2.7 year-end). No share buyback was announced. In July 2026, the group issued unsecured bonds totaling $5.5 billion, €3.85 billion, and £400 million, a massive capital raise to accelerate growth investments.

NTT left its full-year consolidated forecasts unchanged: revenue of ¥15,060 billion (up 4.5% year on year), operating profit of ¥1,710 billion (up 0.2%), and net profit of ¥980 billion (down 5.5%). With first-quarter progress at 24.0% for revenue and 24.9% for operating profit, the company is tracking in line with normal patterns and appears on track to meet its targets.

However, management maintained a cautious view, citing exchange rate volatility, overseas economic uncertainties, intensifying domestic competition, and cost pressure. These factors could weigh on profitability in the coming quarters.

On July 1, 2026, NTT group raised a total of $5.5 billion, €3.85 billion, and £400 million through unsecured bond offerings in international markets. This marks one of the largest foreign-currency debt issuances by the company, aimed at funding global expansion including M&A and data center investments while taking advantage of lower borrowing costs and strengthening its financial base.

While the quarterly filing omitted detailed risk disclosures, key headwinds for NTT include:

• Intensifying competition in Japan's mobile market (from Rakuten Mobile and MVNOs)
• Declining fixed-line voice revenue and downward pricing pressure on broadband
• Geopolitical risks and currency swings affecting overseas operations
• Heavy capital investment burdens and rising depreciation costs
• Credit and interest rate risks through financial subsidiaries

Above all, securing adequate returns on massive investments remains a critical management priority as the company continues its capex and M&A drive.