Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

NTT has finished a self-review “Special Investigations Committee” after meetings with Ministry of Industry Affairs and Communications (MIC, the regulator) officials were found to have violated government ethics rules. The key takeaways: over five years, the company found 29 instances where costs were not shared equally and 8 times when dining meetings were held but costs were shared. There were no material breaches of ethics rules (no improper requests, no influence of the regulator’s judgement) but four senior members of management including CEO Sawada Jun were fined and twelve board and executive officers were reprimanded. On that basis, there are no material impacts to the company or its finances and while we believe it gives its competitors like KDDI and Softbank Corp. modestly more leverage with the regulator it is probably not material.  We remain at Buy.

NTT has finished a self-review “Special Investigations Committee” after meetings with Ministry of Industry Affairs and Communications (MIC, the regulator) officials were found to have violated government ethics rules. The key takeaways: over five years, the company found 29 instances where costs were not shared equally and 8 times when dining meetings were held but costs were shared. There were no material breaches of ethics rules (no improper requests, no influence of the regulator’s judgement) but four senior members of management including CEO Sawada Jun were fined and twelve board and executive officers were reprimanded. On that basis, there are no material impacts to the company or its finances and while we believe it gives its competitors like KDDI and Softbank Corp. modestly more leverage with the regulator it is probably not material.  We remain at Buy.

NTT - Ethics Violation Review Ends with Management Fines and Promise to Do Better

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

In my previous article, I discussed the investment strategy of parent-subsidiary listing from the perspective of corporate governance, and Metrical covered this strategy in August last year. The parent company, NTT, has long been required by investors to present a robust growth strategy in terms of cash allocation and shareholder returns, so from NTT's perspective, making NTT DOCOMO a wholly owned subsidiary was a viable option. In the sense that the TOB was a success, the investment strategy worked, and researching the situation of the parent company confirmed that the investment strategy had a better chance of success. At the same time, however, I could guess that the integration of subsidiaries would not be easy for a former public company that had followed the path of divestiture and privatization, so I was somewhat surprised when the TOB was announced.

In my previous article, I discussed the investment strategy of parent-subsidiary listing from the perspective of corporate governance, and Metrical covered this strategy in August last year. The parent company, NTT, has long been required by investors to present a robust growth strategy in terms of cash allocation and shareholder returns, so from NTT's perspective, making NTT DOCOMO a wholly owned subsidiary was a viable option. In the sense that the TOB was a success, the investment strategy worked, and researching the situation of the parent company confirmed that the investment strategy had a better chance of success. At the same time, however, I could guess that the integration of subsidiaries would not be easy for a former public company that had followed the path of divestiture and privatization, so I was somewhat surprised when the TOB was announced.

Japan’s Governance: NTT DoCoMo TOB and Aftermath

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Japan Post Ins, Straits Trad., Invesco Office, Chong Hing, Toshiba, JD.com

Thematic (Sector/Industry)

Kyodo News reports that Apple is asking the Ministry of Industry Affairs and Communications (MIC, the regulator) to allow higher subsidies for iPhones to help promote the spread of 5G services. To be clear, it is the mobile operators that would offer these subsidies which were capped last year by the regulator at ¥20,000/device even as handset/service pricing was unbundled. We thought this would be a good opportunity to highlight how Apple has grown in Japan especially compared to the mobile operators.

Kyodo News reports that Apple is asking the Ministry of Industry Affairs and Communications (MIC, the regulator) to allow higher subsidies for iPhones to help promote the spread of 5G services. To be clear, it is the mobile operators that would offer these subsidies which were capped last year by the regulator at ¥20,000/device even as handset/service pricing was unbundled. We thought this would be a good opportunity to highlight how Apple has grown in Japan especially compared to the mobile operators.

Apple (Japan) Is Asking the Regulator to Allow Higher Subsidies for IPhone

Travis Lundy

<a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> announced in-line results, decent forecasts, yet another dividend hike (20 consecutive years of dividend hikes), and in something of a surprise, a big buyback. Smartkarma's resident expert Japan telecoms analyst <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920" rel="noopener">Kirk Boodry</a> discussed the results and the breakdown of KDDI's results in <a href="https://www.smartkarma.com/insights/kddi-q4-20-results-slightly-better-guidance-and-solid-shareholder-returns" target="_blank" data-smartkarma-citation="insights:51467" rel="noopener">KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns</a> Friday night. The very sharp move in the share price Friday appears to have anticipated the slight "surprise" to earnings and the forecast. I personally note that the strength in KDDI earnings in the corporate segment will face increasing competition as NTT gets its act together. More below.

KDDI Corp (9433 JP) announced in-line results, decent forecasts, yet another dividend hike (20 consecutive years of dividend hikes), and in something of a surprise, a big buyback. Smartkarma's resident expert Japan telecoms analyst Kirk Boodry discussed the results and the breakdown of KDDI's results in KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns Friday night. The very sharp move in the share price Friday appears to have anticipated the slight "surprise" to earnings and the forecast. I personally note that the strength in KDDI earnings in the corporate segment will face increasing competition as NTT gets its act together. More below.

Japan

Nippon Telegraph and Telephone Corporation provides a variety of telecommunication services, including telephone, telegraph, leased circuits, data communication, terminal equipment sales, and related services. The Company provides both local and long distance telephone services within Japan.

NTT (Nippon Telegraph & Telephone) (9432 JP)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

NTT (Nippon Telegraph & Telephone) (9432 JP)

NTT - Ethics Violation Review Ends with Management Fines and Promise to Do Better

NTT's self review on ethics violations with the regulator is over. Some senior managers including the CEO will have their pay docked but this...

Kirk Boodry

Japan’s Governance: NTT DoCoMo TOB and Aftermath

This article discusses NTT DoCoMo's TOB from two perspectives: corporate governance and the investment strategy regarding the parent-subsidiary...

Metrical Inc

Last Week in Event SPACE: Japan Post Ins, Straits Trad., Invesco Office, Chong Hing, Toshiba, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Apple (Japan) Is Asking the Regulator to Allow Higher Subsidies for IPhone

Apple Japan is asking the regulator to allow higher smartphone subsidies so it can sell more handsets. That's after 49% growth in Q4 and where it...

Kirk Boodry

KDDI Results and Yet Another Buyback

KDDI announced in-line earnings, better forecast, and a big buyback, in line with previous years. The company should be buying about 7% of ADV and...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)