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Rating Action:

Moody's assigns Aa2 to NTT's domestic bonds

 The document has been translated in other languages

18 Apr 2013

JPY 100 billion of New Debt Securities Rated

Tokyo, April 18, 2013 -- Moody's Japan K. K. has assigned its Aa2 rating to the bonds issued by Nippon Telegraph and Telephone Corporation (NTT). The rating outlook is stable.

This is a takedown from the company's JPY1 trillion domestic shelf registration (effective October 17, 2011), which is rated (P)Aa2.

The specific bond issue rated is:

• JPY 100 billion Series 63 bonds, due 2023

RATINGS RATIONALE

NTT's Aa2 rating reflects the company's sound credit profile, given its dominant market position in Japan's telecommunications market, its advanced technological abilities, and its stable financial profile. Its rating, however, is constrained by its relatively high leverage for its rating. Additionally, the mature and competitive market in which it operates poses a challenge to grow revenue, improve margins and reduce debt. Offerings from smaller players continue to exert price pressures and we expect this to remain a key factor for NTT's rating over the next few years.

NTT is partly owned by the Japanese Government but at its high rating level it has no impact on its rating which reflects its standalone credit profile. If NTT's credit quality were to deteriorate we would reassess whether the rating should benefit from potential uplift reflecting the potential for government support but this would depend on its rating at the time, the governments rating and our assessment of the likelihood of support.

The mobile business accounts for about 70% of operating profits and is conducted by its listed subsidiary, NTT DOCOMO (Aa2 Stable). NTT owns 63% of NTT DOCOMO and holds 66% of its voting rights. Moody's assessment of NTT is based on the full consolidation of the mobile business because of NTT's strong control and influence over NTT DOCOMO. NTT DOCOMO has a superior financial profile relative to NTT, and this is providing support for the overall rating.

The outlook on the ratings is stable, reflecting Moody's expectation that NTT will retain its leading position in its core markets and that profitability and cashflow will remain stable. Moody's also believes the company will improve leverage at a very gradual pace.

The methodologies used in this rating were Global Telecommunications Industry published in December 2010, and Government-Related Issuers: Methodology Update published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Nippon Telegraph and Telephone Corporation, headquartered in Tokyo, is the leading integrated telecoms operator in Japan. NTT is 32.59%-owned by Japan's Ministry of Finance as of September 30, 2012 and is governed by the NTT Law.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Moody's Japan K.K. is a credit rating agency registered with the Japan Financial Services Agency and its registration number is FSA Commissioner (Ratings) No. 2. The Financial Services Agency has not imposed any supervisory measures on Moody's Japan K.K. in the past year.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Peggy Furusaka
VP - Senior Credit Officer
Corporate Finance Group
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Richard C Bittenbender
Associate Managing Director
Corporate Finance Group
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Releasing Office:
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Moody's assigns Aa2 to NTT's domestic bonds
No Related Data.
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