Redevelopment Value of Landholdings

03 June 2013 Asia Pacific/Japan Equity Research Integrated Telecommunication Services (Telecommunication Services (Japan)) / OVERWEIGHT

Nippon Telegraph and

Telephone (9432 / 9432 JP) Rating OUTPERFORM* Price (31 May 13, ¥) 5,050 INCREASE TARGET PRICE Target price (¥) (from 4,700) 6,000¹ Chg to TP (%) 18.8 Market cap. (¥ bn) 6,682.15 (US$ 66.48) Redevelopment value of landholdings with Enterprise value (¥ bn) 8,987.52 Number of shares (mn) 1,323.20 area 28x the size of Tokyo Dome Free float (%) 50.6 52-week price range 5,550 - 3,295 ■ Value of NTT’s landholdings: Based on our research, we calculate that *Stock ratings are relative to the coverage universe in each together, NTT East and NTT West own property covering roughly 400,000 analyst's or each team's respective sector. 2 ¹Target price is for 12 months. tsubo (around 1.34mn m , or 330 acres), 28x the size of Tokyo Dome and double the size of Disneyland in California. Assuming it is used for Research Analysts redevelopment into offices, we put the value of this land at approximately Hitoshi Hayakawa ¥5.4tn. We raise our target price from ¥4,700 to ¥6,000 (potential return 81 3 4550 9952 18.8%) to reflect changes in our estimates and valuation assumptions, and [email protected] maintain our OUTPERFORM rating. ■ Urging management to make use of idle land: NTT East and West own a number of vacant buildings, a consequence of branch office consolidation. Not all are suited to redevelopment, as in some cases these buildings still feature telephone exchange equipment and wireless antennae. We are amazed, however, to find that this volume of idle land exists. From a shareholder's perspective, we think management at both companies should take action to utilize these properties. ■ Catalysts/risks: Catalysts include utilization of idle assets, share buybacks, dividend hikes, and cuts in capex. The main risks, in our view, are deteriorating profits at NTT East and NTT West as a result of weak demand for optical fiber, and a setback in management policy on shareholder returns. ■ Valuation: Our ¥6,000 TP references: (1) the ¥5,070 theoretical share price based on FY3/14E EPS of ¥507 and a 10x fair-value P/E derived in turn by multiplying the 10.4x sector-average P/E for the past two years by the 0.95 average for NTT’s sector-relative P/E over the same period (10.4 × 0.95 = 10x); and (2) a ¥6,474 price derived by valuing the company’s real estate assets. Implied P/E is 12x FY3/14E EPS.

Share price performance Financial and valuation metrics

Year 3/13A 3/14E 3/15E 3/16E Price (LHS) Rebased Rel (RHS) Revenue (¥ bn) 10,700.7 10,817.5 10,869.1 10,914.9 6000 120 Operating profit (¥ bn) 1,202.0 1,205.7 1,216.1 1,260.6 5000 110 Pre-tax profit (¥ bn) 1,201.1 1,268.4 1,218.8 1,263.2 4000 100 Net income (¥ bn) 524.1 588.5 554.4 574.0 3000 90 EPS (¥) 432.4 507.1 503.8 562.6 2000 80 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Change from previous EPS (%) n.a. 16.4 15.6 IBES Consensus EPS (¥) n.a. 474.7 500.2 555.9 The price relative chart measures performance against the EPS growth (%) 17.9 17.3 -0.7 11.7 TOPIX which closed at 1135.78 on 31/05/13 P/E (x) 9.5 10.0 10.0 9.0 On 31/05/13 the spot exchange rate was ¥100.51/US$1 Dividend yield (%) 3.9 3.4 3.6 3.8 EV/EBITDA(x) 2.5 2.9 3.1 3.1 Performance Over 1M 3M 12M P/B (x) 0.51 0.62 0.62 0.62 Absolute (%) 5.9 17.4 49.2 ROE(%) 5.1 5.5 5.1 5.3

Relative (%) 7.4 2.6 -11.0

Net debt/equity (%) 22.1 21.4 23.1 25.3 Source: Company data, Thomson Reuters, IFIS, Credit Suisse estimates.

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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03 June 2013 What is the value of NTT's unrealized gains on property holdings? Amid mounting interest in how Abenomics will affect asset values, we have been bombarded by enquiries from investors around the world as to the value of NTT's property holdings. We could think of only two possible responses to this query: (1) market value, based on securities filings; and (2) an amount based on property tax evaluations, as per verbal disclosure by NTT's director of finance at the analyst meeting. The item "investment property" in the notes to NTT's Annual Securities Report cites a fair Based on securities filings, value of ¥1,433.4bn at end-FY3/12. As the end-FY3/12 book value of these properties was unrealized gains on property ¥801.8bn, unrealized gains on “investment property” owned by the entire NTT Group amount to ¥631.5bn amount to ¥631.5bn. As suggested by the wording, the fair value of “investment property” applies only to land held for the purpose of leasing out; unrealized gains on such property account for just a portion of gains on NTT's broader property portfolio. It would be remiss of us to use this data alone to draw conclusions about unrealized gains on property across the entire NTT Group. Furthermore, of the ¥631.6bn fair value of “investment property,” the fair value of NTT Urban Development “investment property” owned by NTT Urban Development amounts to ¥411.5bn. In short, accounts for roughly 80% of "investment property" owned by other NTT Group companies has a fair value of only group's unrealized gains ¥220bn. Both NTT East and NTT West have a number of idle properties used neither for Purpose of this report is to investment purposes nor business. Without taking into account these (effectively "hidden") smoke out value of NTT assets, we do not get the complete picture of asset value across the entire NTT Group. East and West's hidden assets, absent from These hidden assets constitute former NTT branch offices and telephone exchanges, securities filings scattered around the country. Under the structural reform program the company embarked on in 2001, NTT East and NTT West have undertaken progressive consolidation of their branch offices. This has left several former branch office buildings empty. Neither NTT East nor NTT West has disclosed exact locations for the buildings meeting this description; their addresses had remained a mystery. We conducted our own research using Google Maps to identify or estimate addresses in 376 cases. We then took up the challenge of nutting out values for these properties.

Nippon Telegraph and Telephone (9432 / 9432 JP) 2 03 June 2013

Figure 1: Number of properties owned in Tokyo, Nagoya, Osaka, Kyoto, Fukuoka, and elsewhere

Area No. of properties

Tokyo 23 wards 110

Nagoya 45

Osaka 89

Kyoto 34

Fukuoka 23

Others 75

Total 376

Total of 5 major areas 301

Source: Credit Suisse

Nippon Telegraph and Telephone (9432 / 9432 JP) 3 03 June 2013 Land owned by NTT would cover 28 Tokyo Domes Redevelopment value of ¥5.4tn Let us start with our conclusion. Our findings show that between them, NTT East and NTT Landholdings are 28x the West have idle land (former branch offices and the like) covering an estimated 400,000 size of Tokyo Dome, double tsubo (around 1.34mn m2, or 330 acres). This is 28x the size of Tokyo Dome and double the size of Disneyland in the size of Disneyland in California. If NTT were to redevelop all of this land and put it on California the market as investment property, we calculate the total value would be around ¥5.4tn.

Figure 2: Book value and market value assumptions for NTT’s real estate holdings (¥ bn) 8,000 6,869 7,000 6,000 1,433 5,000 4,000 3,000 5,436 2,000 1,384 1,000 802 0 582 Book value Market value Real estates for business Real estates for rent

Source: Company data, Credit Suisse

Figure 3: Overview of building areas and market value Site area Market value Monthly Site area CAP Rate (Tsubo = of properties rent fee (㎡) 3.3 m2/tsubo) (¥mn) (%) (¥/tsubo) Tokyo 23 wards 396,153 120,046 2,751,239 5.3 22,455

Nagoya 161,700 49,000 397,730 6.5 15,000

Osaka 319,400 96,788 785,622 6.5 15,000

Kyoto 63,661 19,291 135,707 6.0 12,000

Fukuoka 130,482 39,540 278,152 6.0 12,000

Others 267,849 81,166 570,979 6.0 12,000

Total 1,339,244 405,832 5,435,562 6.0 14,742 Total of major 5 areas 1,071,396 324,665 4,348,450 6.1 15,291

Source: Credit Suisse estimates Note: Rent fees are for rental as offices In calculating the market value of properties owned by NTT East and NTT West, we set individual cap rates and rents taking into account regional characteristics, with advice from Credit Suisse real estate analysts Masahiro Mochizuki and Atsuro Takemura. Properties in Tokyo’s 23 wards account for the bulk of total value, at ¥2.75tn. As shown in the lists on later pages, a large number of properties owned by NTT East and NTT West are in prime locations.

Nippon Telegraph and Telephone (9432 / 9432 JP) 4 03 June 2013

Not all are suitable for redevelopment There are a number of caveats to our approach for calculating the market value of these Some have role in properties, assuming they will be redeveloped. As some of these buildings still have maintaining existing telephone exchange equipment and wireless antennae, we cannot say that the entire communications network 400,000 tsubo would be suited to redevelopment. Moreover, a small minority of these idle facilities have tenants (such as convenience stores and supermarkets) occupying the first floor. Yet others may have been decommissioned as branch offices, but have since been partially occupied by subsidiaries of NTT East or NTT West. Our approach assumes that all of these tenants (which we believe are very few in number) vacate their premises, allowing the whole to be redeveloped. We note that doubling-up is the basic design concept for NTT East and NTT West branch Site area is double building offices. According to maps (Google Maps, etc.), NTT East and NTT West in many cases ground-floor space in many own sites adjacent—and on a similar scale—to the buildings we have been able to identify. cases Generally, this land was purchased for the purpose of relocating business premises when rebuilding the branch office in the future. When the branch offices were still operating, these sites were for the most part used for employee car parking. With no further need for rebuilding—as these branch offices have been scrapped—some of these sites are operated as metered parking facilities by NTT East subsidiary NTT Le-Perc. Monetization through metered parking We also looked into the scale of NTT Le-Perc. Most of Le-Perc’s parking lots are in Tokyo, NTT Le-Perc a metered although the company also has operations in Chiba, Saitama, Kanagawa, Nagoya, Sendai, parking provider Akita, Nagano, Osaka and Kagawa. It has 300 parking facilities, with spaces for 3,100 vehicles. In Japan, the largest parking lot operator is Park24, under the Times brand name. As Le- One-twentieth the size of Perc does not disclose financial statements, we looked at Park24's FY3/13 results for Park24 clues to Le-Perc's business scale. Park24 has 1,638 parking facilities—under either Standard Times (ST) or Times Partner Services (TPS)--and space for 60,000 vehicles. The company’s parking business generates sales of ¥111.2bn and ¥30.4bn in gross profit, for a gross margin of 27%. This translates to annual sales of ¥1.85mn for each parking space, and daily sales of ¥5,077. On this basis, we calculate that NTT Le-Perc generates sales of ¥5.7bn and ¥1.5bn in gross profit. Le-Perc is thus roughly one-twentieth the size of Park24.

Figure 4: Comparison of Park24 and NTT Le-Perc Park 24 Park 24 NTT Le-Perc / NTT Le-Perc (lot) (lot) (times) No. of parking lots 60,000 3,100 19.4 Source: Company data, Credit Suisse estimates If we assume an area of 33m2 (10 tsubo) for each parking space (includes central laneway), then of the 1.34mn m2 (400,000 tsubo) of land in question, the area used for metered parking by Le-Perc is only 7.6% (3,100 vehicles ÷ (1.34mn m2 ÷ 33 m2)). Even on the premise that only half of the 1.34mn m2 is usable for car parking in the first place, Le- Perc would still only be utilizing 15.2%.

Nippon Telegraph and Telephone (9432 / 9432 JP) 5 03 June 2013

Investors want management to make better use of land and buildings While we understand that some sites and buildings are being put to use by subsidiaries, we were truly astounded to discover that this volume of property is not being used effectively and has been left in limbo. From a shareholder's perspective, we think management at both companies should take action to utilize these properties. If redeveloped, these idle assets (especially those in prime locations) could be transformed virtually overnight into very attractive assets. With NTT’s fixed-line communication network remaining as a shared asset of the people of Need for stable operation of Japan, redevelopment of some of these buildings could be problematic from the fixed-line communication standpoint of the company providing a reliable communication service. It may be, though, network a convenient that management is using this as a reason (in fact, a convenient excuse) not to utilize real excuse for not proceeding estate that is perfectly usable. with redevelopment Amount needed to fund redevelopment We calculated the cost in each case of demolishing the existing structure and constructing a new building in reinforced concrete (Figure 5). Based on advice received from our real estate analysts, we put the cost of razing a property in Tokyo’s 23 wards at ¥50,000 per tsubo and estimate a rebuilding cost of ¥1mn per tsubo. Assuming that all 376 buildings are rebuilt, and that the plot ratio is 1,300% in parts of central Tokyo and 600% elsewhere, we put the cost of redevelopment at around ¥2,280bn.

Figure 5: Redevelopment cost Area Costs

Tokyo 23 wards 996,157

Nagoya 234,489

Osaka 463,178

Kyoto 80,778

Fukuoka 165,567

Others 339,869

Total 2,280,038 Total of 5 major areas 1,940,169

Source: Credit Suisse estimates Approach based on property tax evaluations Using the alternative approach mentioned earlier—that based on property tax evaluations, as per verbal disclosure by NTT's director of finance at the analyst meeting—the value for the properties in question is ¥1,500bn. According to the director of finance, ownership of these building is spread across four companies: the holding company, NTT East, NTT West, and NTT Communications. We think this figure of ¥1,500bn is the sum of appraised values for the investment and non-investment properties owned by the four companies, prepared by prefectural tax offices for the purpose of calculating property tax payable. According to our real estate analysts, dividing property taxes by roughly 30% delivers a number broadly equivalent to market value, in the case of residential properties. If we apply this model unaltered to commercial properties, ¥1,500bn divided by 30% equals ¥5tn. Intriguingly, this number is not far off the ¥5.4tn figure established earlier.

Nippon Telegraph and Telephone (9432 / 9432 JP) 6 03 June 2013 Valuation We now turn to valuing NTT shares, based on the aforementioned figures for property value and cost of redevelopment. For a sum-of-the-parts valuation model, we have one basic concept, with two possible variations. The basic concept is as follows:

1. Value of investment securities

a. Total market value for NTT DoCoMo, NTT Data, and NTT Urban Development

2. Value of NTT’s fixed-line communication business (total of “a” and “b”)

a. FY3/15E EV/EBITDA ratio of 4x for NTT's fixed-line system integration business

b. Unrealized gains on land holdings

3. Net interest-bearing debt

a. Net interest-bearing debt from normal operations

b. Increase in interest-bearing debt from redevelopment

4. 1,105mn shares outstanding in FY3/15E, after share buybacks

5. 30% of property in question is redeveloped The difference between the two variations lies in whether the value of investment securities (1) is post-tax (tax rate of 41%, assuming securities are deemed sold). Below, we conduct a sum-of-the-parts valuation for each of the two variations.

Nippon Telegraph and Telephone (9432 / 9432 JP) 7 03 June 2013 Variation 1 (with after-tax investment securities)

Figure 6: SOTP with after-tax investment securities (¥mn) (¥ Per Share)

Investment securities values After Tax 3,253,630 2,957 - - - - A NTT Docomo 2,702,866 2,456 NTT Data 346,940 315 NTT Urban Development 203,824 185

Value of NTT Fixed Line and SI Business 6,428,963 5,843 - - - - B

NTT East West and Communications 4,394,030 3,993 - - - - C NTT East EBITDA 470,882 NTT West EBITDA 370,990 NTT Communications EBITDA 219,635 NTT Com Group EBITDA 15,000 Dimantions Data EBITDA 22,000 Japan business EBITDA Total 1,098,507 Japan business EV/EBITDA ratio 4.0

Land Asset Value 2,034,933 1,849 - - - - D PV of non commercial lease properties 1,403,375 PV of commercial lease properties 631,558.0

Net Debt 3,551,736 -3,228 - - - - E Debt for redevelopment 546,363

Market Capitalization 6,130,857 - - - - F

Diluted number of shares outstanding (million) 1,100 - - - - G

Theoretical share price (¥) 5,572 - - - - I = F / G

Key Assumptions Redevelopment ratio 30 % Tax for selling Investment Securities 41 % Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 8 03 June 2013 Variation 2 (with pre-tax investment securities)

Figure 7: SOTP with pre-tax investment securities (¥mn) (¥ Per Share)

Investment securities values Before Tax 5,514,627 5,012 - - - - A NTT Docomo 4,581,129 4,163 NTT Data 588,033 534 NTT Urban Development 345,465 314

Value of NTT Fixed Line and SI Business 6,428,963 5,843 - - - - B

Land Asset Value 2,034,933 1,849 - - - - D PV of non commercial lease properties 1,403,375 PV of commercial lease properties 631,558.0

Net Debt 3,551,736 -3,228 - - - - E Debt for redevelopment 546,363

Market Capitalization 8,391,854 - - - - F

Diluted number of shares outstanding (million) 1,100 - - - - G

Theoretical share price (¥) 7,626 - - - - I = F / G

Key Assumptions Redevelopment ratio 30 % Tax for selling Investment Securities 0 % Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 9 03 June 2013 Sensitivity In both variation 1 and variation 2, we fixed the redevelopment rate for property holdings at 30%. Using this as the variable, NTT’s theoretical share price changes as follows.

Figure 8: Variation 1 (after tax)

% of redevelopment 15% 30% 40% 60% 75% 100%

Theoretical share price (¥) 5,120 5,447 5,664 6,100 6,427 6,972

Source: Credit Suisse estimates

Figure 9: Variation 2 (before tax)

% of redevelopment 15% 30% 40% 60% 75% 100%

Theoretical share price (¥) 7,174 7,501 7,719 8,155 8,482 9,027

Source: Credit Suisse estimates

Figure 10: Average of variation 1 and variation 2

% of redevelopment 15% 30% 40% 60% 75% 100%

Theoretical share price (¥) 6,147 6,474 6,692 7,128 7,455 8,000

Source: Credit Suisse estimates We set our ¥6,000 TP based on (1) EPS of ¥507 and a 10x fair-value P/E derived in turn by multiplying the 10.4x telecom sector average P/E for the past two years by the 0.95 average for NTT’s sector-relative P/E over the same period (10.4 × 0.95 = 10); and (2) a ¥6,474 price premised on 30% redevelopment (average of variation 1 and variation 2, see Figure 10), derived from our calculation of property value. We reiterate our OUTPERFORM rating.

Nippon Telegraph and Telephone (9432 / 9432 JP) 10 03 June 2013 List of properties in Tokyo’s 23 wards

Figure 11: Tokyo 23 wards Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 1 Senju Senju Nakai-cho, Adachi 604,000 2,400 1,740 4,568 548 9,966 2 Marunouchi Otemachi, Chiyoda 20,800,000 1,575 39,312 6,495 1,013 22,516 3 Kasumigaseki Uchisaiwaicho, Chiyoda 13,500,000 4,288 69,458 17,681 2,758 61,294 4 Ginza Ginza, Chuo 19,600,000 1,250 29,400 5,155 804 17,870 5 Kyobashi Ginza, Chuo 1,810,000 1,813 3,937 7,475 1,166 25,912 6 Higashi Ginza Ginza, Chuo 5,800,000 2,500 17,400 10,310 1,608 35,740 7 Akasaka Akasaka, Minato 1,000,000 1,188 1,425 4,897 764 16,977 8 Higashi Shibuya Shibuya, Shibuya 1,580,000 1,888 3,579 7,784 1,214 26,984 9 Shibuya Sarugakucho, Shibuya 1,100,000 2,438 3,218 10,052 1,568 34,847 10 Yoyogi Tomigaya, Shibuya 1,070,000 1,163 1,493 4,794 748 16,619 11 Shinjuku Kita Shinjuku, Shinjuku 503,000 4,000 2,414 16,495 2,573 57,184 12 Ikebukuro Higashi Ikebukuro, Toshima 1,060,000 3,488 4,436 6,638 797 14,483 13 Aoyama Kita Aoyama, Minato 6,380,000 1,238 9,474 5,103 796 17,691 14 Nishi Shinjuku Nishi Shinjuku, Shinjuku 5,180,000 938 5,828 3,866 603 13,403 15 Asakusa Kaminarimon, Taito 677,000 850 691 1,618 194 3,530 16 Harumi Harumi, Chuo 1,280,000 1,375 2,112 5,670 885 19,657 17 Mita Shiba, Minato 2,400,000 2,500 7,200 10,310 1,608 35,740 18 Ueno Ueno, Taito 2,490,000 1,400 4,183 2,665 320 5,814 19 Surugadai Kanda Surugadai, Chiyoda 1,040,000 1,650 2,059 6,804 1,061 23,589 20 Tsukiji Irifune, Chuo 1,340,000 1,250 2,010 5,155 804 17,870 21 Kayaba Kabuto Nihonbashi Tomizawacho, Chuo 938,000 2,088 2,350 8,609 1,343 29,843 22 Kanda Kanda Tsukasamachi, Chiyoda 1,690,000 1,500 3,042 6,186 965 21,444 23 Kudan Kudan Kita, Chiyoda 1,360,000 2,788 4,549 11,495 1,793 39,850 24 Denenchofu Denenchofu, Ota 905,000 1,238 1,344 2,355 283 5,139 25 Ota-Branch/Airport Haneda Airport, Ota 222,000 1,000 266 1,903 228 4,153 26 Hamacho Higashi Nihonbashi, Chuo 1,230,000 2,038 3,007 8,402 1,311 29,128 27 Okubo Okubo, Shinjuku 503,000 3,013 1,818 12,423 1,938 43,067 28 Koishikawa 1 Koishikawa, Bunkyo 1,040,000 2,125 2,652 4,045 485 8,824 29 Koishikawa Annex Koishikawa, Bunkyo 1,040,000 675 842 1,285 154 2,803 30 Yotsuya Shinjuku, Shinjuku 1,180,000 1,875 2,655 7,732 1,206 26,805 31 Ushigome Saikumachi, Shinjuku 798,000 1,275 1,221 5,258 820 18,227 32 Joto Ojima, Koto 425,000 3,738 1,906 7,114 854 15,521 33 Fukagawa Fukagawa, Koto 471,000 813 459 1,546 186 3,374 34 Tabata Ogu Tabata Shinmachi, Kita 417,000 3,625 1,814 6,900 828 15,054 35 Arakawa Arakawa, Arakawa 333,000 1,550 619 2,950 354 6,437 36 Yoshiwara Senzoku, Taito 418,000 1,838 922 3,497 420 7,631 37 Oji Main Oji, Kita 806,000 1,263 1,221 2,403 288 5,243 38 Oji 2 Toyoshima, Kita 806,000 1,513 1,463 2,879 345 6,281 39 Itabashi Itabashi, Itabashi 413,000 850 421 1,618 194 3,530 40 Minami Itabashi Saiwaicho, Itabashi 367,000 900 396 1,713 206 3,737 41 Ochiai Main Minami Nagasaki, Toyoshima 616,000 875 647 1,665 200 3,634 42 Ochiai Annex Minami Nagasaki, Toyoshima 616,000 1,063 785 2,022 243 4,412 43 Nerima Toyotamakita, Nerima 412,000 1,600 791 3,045 365 6,644 44 Koenji Koenji Kita, Suginami 427,000 1,050 538 1,998 240 4,360 45 Nogata Arai, Nakano 636,000 1,375 1,049 2,617 314 5,710 46 Suginami Umezato, Suginami 593,000 1,213 863 2,308 277 5,035 47 Nakano Honmachi, Nakano 702,000 1,213 1,021 2,308 277 5,035 48 Ogikubo Ogikubo, Suginami 1,110,000 1,650 2,198 3,140 377 6,852 49 Kugayama Miyamae, Suginami 423,000 1,250 635 2,379 285 5,191 50 Igusa Shimizu, Suginami 432,000 1,375 713 2,617 314 5,710

Nippon Telegraph and Telephone (9432 / 9432 JP) 11 03 June 2013

Tokyo 23 wards (cont’d) Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 51 Honjo Main Kikukawa, Sumida 382,000 1,238 567 2,355 283 5,139 52 Higashi Edogawa Mizue, Edogawa 319,000 1,738 665 3,307 397 7,215 53 Kinshicho Kinshi, Sumida 616,000 950 702 1,808 217 3,945 54 Ishihara Ishihara, Sumida 406,000 1,500 731 2,855 343 6,229 55 Mukojima Kyojima, Sumida 340,000 3,100 1,265 5,900 708 12,873 56 Katsushika Tateishi, Katsushika 298,000 1,413 505 2,688 323 5,866 57 Aoto Aoto, Katsushika 291,000 475 166 904 108 1,973 58 Koto Toyo, Koto 340,000 3,288 1,341 6,257 751 13,652 59 Shirokane Shirokanedai, Minato 797,000 3,500 3,347 14,434 2,252 50,036 60 Toranomon Toranomon, Minato 2,120,000 2,638 6,710 10,877 1,697 37,706 61 Sugamo Sugamo, Toyoshima 514,000 1,463 902 2,784 334 6,073 62 Otsuka Sengoku, Bunkyo 677,000 1,850 1,503 3,521 423 7,683 63 Kuramae, Kuramae, Taito 492,000 1,975 1,166 3,759 451 8,202 Kuramae Bridge 64 Ota-Branch/Futo Yashio, Shinagawa 430,000 1,625 839 3,093 371 6,748 65 Shin Ariake Ariake, Koto 928,000 4,000 4,454 7,613 914 16,611 66 Shiba Nishi Shinbashi, Minato 1,800,000 2,313 4,995 9,536 1,488 33,060 67 Ebara Nishinakanobu, Shinagawa 679,000 1,400 1,141 2,665 320 5,814 68 Magome Minami Magome, Ota 404,000 1,663 806 3,164 380 6,904 69 Magome Annex Higashi Magome, Ota 476,000 1,075 614 2,046 246 4,464 70 Haneda Haginaka, Ota 395,000 1,250 593 2,379 285 5,191 71 Yaguchi Shimomaruko, Ota 370,000 775 344 1,475 177 3,218 72 Tsurumaki Tsurumaki, Setagaya 528,000 1,888 1,196 3,593 431 7,838 73 Setagaya Taikodo, Setagaya 1,490,000 3,150 5,632 5,995 719 13,081 74 Koiwa Nishikoiwa, Edogawa 340,000 2,375 969 4,520 542 9,863 75 Osakai Nishigotanda, Shinagawa 526,000 2,163 1,365 4,116 494 8,980 76 Kinuta Seijo, Setagaya 590,000 1,813 1,283 3,450 414 7,527 77 Seijo Soshigaya, Setagaya 405,000 2,700 1,312 5,139 617 11,212 78 Kami Kitazawa Kami Kitazawa, Setagaya 540,000 1,438 932 2,736 328 5,970 79 Kamata Kamata Honcho, Ota 633,000 1,500 1,139 2,855 343 6,229 80 Edogawa Chuo, Edogawa 251,000 2,138 644 4,068 488 8,876 81 Kasai Kita Kasai, Edogawa 291,000 1,900 663 3,616 434 7,890 82 Tatsumi Tatsumi, Koto 354,000 1,425 605 2,712 325 5,918 83 Seta Seta, Setagaya 534,000 1,338 857 2,546 305 5,554 84 Omori Omori Kita, Ota 986,000 1,750 2,071 3,331 400 7,267 85 Jiyugaoka Nakane, Meguro 675,000 1,438 1,164 2,736 328 5,970 86 Meguro Nakamachi, Meguro 670,000 2,600 2,090 4,949 594 10,797 87 Meguro Annex Nakamachi, Meguro 670,000 538 432 1,023 123 2,232 88 Matsuzawa Annex Matsubara, Setagaya 629,000 1,275 962 2,427 291 5,295 89 Matsuzawa Main Matsubara, Setagaya 629,000 1,500 1,132 2,855 343 6,229 90 Karasuyama Minami Karasuyama, Setagaya 438,000 1,725 907 3,283 394 7,163 91 Yukigaya Ishikawacho, Ota 455,000 1,338 730 2,546 305 5,554 92 Tamagawa Nakamachi, Setagaya 553,000 3,200 2,124 6,091 731 13,289 93 Shinagawa Higashi Shinagawa, Shinagawa 570,000 1,013 693 1,927 231 4,205 94 Ikegami Kugahara, Ota 479,000 2,063 1,186 3,926 471 8,565 95 Kitamachi Kitamachi, Nerima 361,000 1,738 753 3,307 397 7,215 96 Narimasu Narimasu, Itabashi 357,000 1,625 696 3,093 371 6,748 97 Nishi Arai Nishiarai, Adachi 250,000 3,150 945 5,995 719 13,081 98 Takenotsuka Takenotsuka, Adachi 383,000 2,600 1,195 4,949 594 10,797 99 Kanamachi Kanamachi, Katsushika 299,000 1,725 619 3,283 394 7,163 100 Oizumi Higashi Oizumi, Nerima 397,000 1,913 911 3,640 437 7,942

Nippon Telegraph and Telephone (9432 / 9432 JP) 12 03 June 2013

Nippon Telegraph and Telephone (9432 / 9432 JP) 13 03 June 2013 List of properties in Nagoya City

Figure 12: Nagoya City

Market value Estimated Official land Estimated of limited market value NOI price land area proprietary of the right of land property No Building Address (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) 1 Sakae Shin Sakaemachi, Naka, Nagoya 1,670,000 4,800 9,619 767 11,806 2 Sasashima Meieki, Nishi, Nagoya 263,000 3,150 994 504 7,748 3 Naka Sakae, Naka, Nagoya 271,000 8,575 2,789 1,371 21,092 4 Kanayama Kanayama, Naka, Nagoya 311,000 2,500 933 400 6,149 5 Yada Yadaminami, Higashi, Nagoya 209,000 3,625 909 580 8,916 6 Kamimaezu Osu, Naka, Nagoya 550,000 5,000 3,300 799 12,298 7 Noritake Noritake, Nakamura, Nagoya 226,000 2,375 644 380 5,842 8 Kikui Shinmichi, Nishi, Nagoya 205,000 3,775 929 604 9,285 9 Nakamura Omiyacho, Nakamura, Nagoya 158,000 4,875 924 779 11,991 10 Itaka Yutakagaoka, Meito, Nagoya 158,000 2,325 441 372 5,719 11 Nakagawa Shinoharabashitori, Nakagawa, Nagoya 157,000 8,000 1,507 1,279 19,677 12 Shoken Shoken, Chikusa, Nagoya 209,000 6,975 1,749 1,115 17,156 13 Meieki Minami Meieki Minami, Nakamura, Nagoya 675,000 2,475 2,005 396 6,088 14 Joshin Koseitori, Nishi, Nagoya 178,000 1,875 401 300 4,612 15 Hirokoji Sakae, Naka, Nagoya 335,000 1,700 683 272 4,181 16 Chikusa Imaike, Chikusa, Nagoya 249,000 2,750 822 440 6,764 17 Chikusa 2 Imaike, Chikusa, Nagoya 388,000 5,000 2,328 799 12,298 18 Kakuozan Tashiro Hontori, Chikusa, Nagoya 268,000 2,800 900 448 6,887 19 Ajima Nakaajima, Kita, Nagoya 112,000 3,300 444 528 8,117 20 Midori Kyoten Narumicho, Midori, Nagoya 124,000 2,500 372 400 6,149 21 Omori Omori, Moriyama, Nagoya 133,000 4,175 666 667 10,269 22 Hirate Tokushige, Midori, Nagoya 145,000 3,000 522 480 7,379 23 Higashiyama Hoshigaoka Motomachi, Chikusa, Nagoya 395,000 5,575 2,643 891 13,713 24 Tenpaku Nakahira, Tenpaku, Nagoya 154,000 2,475 457 396 6,088 25 Daido Daidocho, Minami, Nagoya 104,000 2,000 250 320 4,919 26 Manba Yoshizu, Nakagawa, Nagoya 99,500 4,075 487 652 10,023 27 Sannomaru Sannomaru, Naka, Nagoya 275,000 6,025 1,988 963 14,820 28 Nunoike Daikancho, Higashi, Nagoya 401,000 4,250 2,045 679 10,454 29 Shinsakae Shinsakae, Naka, Nagoya 1,670,000 1,350 2,705 216 3,321 30 Shinmichi Shinmichi, Nishi, Nagoya 184,000 3,750 828 600 9,224 31 Meito Rikumaecho, Meito, Nagoya 183,000 2,550 560 408 6,272 32 Naruko Shikayama, Midori, Nagoya 147,000 7,475 1,319 1,195 18,386 33 Inokoishi Konan, Meito, Nagoya 152,000 1,625 296 260 3,997 34 Inabaji Inabajicho, Nakamura, Nagoya 131,000 7,250 1,140 1,159 17,833 35 Kasadera Yakushitori, Minami, Nagoya 133,000 3,100 495 496 7,625 36 Mizuhodori Mizuhotori, Mizuho, Nagoya 246,000 3,675 1,085 588 9,039 37 Nagoya Minato Koraku, Minato, Nagoya 169,000 2,525 512 404 6,211 38 Yagoto Tsukimigaoka, Yatomicho, Mizuho, Nagoya 223,000 3,025 809 484 7,441 39 Takiko Takigotori, Showa, Nagoya 196,000 1,700 400 272 4,181 40 Ozone Wakabadori, Kita, Nagoya 207,000 1,800 447 288 4,427 41 Dotoku, Himuro Himurocho, Minami, Nagoya 137,000 1,750 288 280 4,304 42 Shidami Futatsutsuka, Nakashidami, Moriyama, Nagoya 152,000 2,125 388 340 5,227 43 Moriyama Moriyama, Moriyama, Nagoya 136,000 3,200 522 512 7,871 44 Shimono Isshiki Miyawake Shimonoisshikicho, Nakagawa, Nagoya 107,000 2,100 270 336 5,165 45 Atsuta Media Wing Gohon Matsucho, Atsuta, Nagoya 192,000 2,750 634 440 6,764 Total 161,700 54,448 25,852 397,730 Source: Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 14 03 June 2013 List of properties in Osaka

Figure 13: Osaka Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 1 Keihan Takamiya Takamiya Sakaemachi, Nayagawa 123,000 4,800 708 6,961 767 11,806 2 Owada Kaminoguchicho, Kadoma 148,000 3,150 559 4,568 504 7,748 3 Oiwa Oiwa, Ibaraki 35,400 8,575 364 12,435 1,371 21,092 4 Ikeda Himemuro Himemurocho, Ikeda 196,000 2,500 588 3,625 400 6,149 5 Kitafuse Nishizutsumi Gakuencho, Higashi Osaka 178,000 3,625 774 5,257 580 8,916 6 Korioka Korigaoka, Hirakata 122,000 5,000 732 7,251 799 12,298 7 Bankokuhaku Senri Banpaku Koen, Suita 222,000 2,375 633 3,444 380 5,842 8 Mino Hyakurakuso, Minoo 217,000 3,775 983 5,474 604 9,285 9 Hoshimi Hoshimicho, Ibaraki 201,000 4,875 1,176 7,069 779 11,991 10 Hakushima Imamiya, Minoo 124,000 2,325 346 3,372 372 5,719 11 Shijonawate Kariya Kitamachi, Shijonawate 119,000 8,000 1,142 11,601 1,279 19,677 12 Torikai Torikai Honmachi, Settsu 113,000 6,975 946 10,115 1,115 17,156 13 Ibaraki Ekimae, Ibaraki 259,000 2,475 769 3,589 396 6,088 14 Kadoma Mukojimacho, Kadoma 139,000 1,875 313 2,719 300 4,612 15 Ankouji Ankoujicho, Takatsuki 124,000 1,700 253 2,465 272 4,181 16 Kori Kamigori, Ibaraki 136,000 2,750 449 3,988 440 6,764 17 Kawachi Inaba, Higashi Osaka 147,000 5,000 882 7,251 799 12,298 18 Hirata Hirata, Ibaraki 147,000 2,800 494 4,060 448 6,887 19 Kouri Koriencho, Hirakata 152,000 3,300 602 4,785 528 8,117 20 Yao 1 Konancho, Yao 157,000 2,500 471 3,625 400 6,149 21 Settsu Befu, Settsu 134,000 4,175 671 6,054 667 10,269 22 Shiki Shikicho, Yao 169,000 3,000 608 4,350 480 7,379 23 Keihan Honmachi Honmachi, Neyagawa 184,000 5,575 1,231 8,085 891 13,713 24 Hiraoka Toriicho, Higashi Osaka 162,000 2,475 481 3,589 396 6,088 25 Hirakata Okahigashicho, Hirakata 150,000 2,000 360 2,900 320 4,919 26 Takatsuki Akutagawacho, Takatsuki 298,000 4,075 1,457 5,909 652 10,023 27 Minami Takatsuki Kousaicho, Takatsuki 157,000 6,025 1,135 8,737 963 14,820 28 Daito Hino, Daito 130,000 4,250 663 6,163 679 10,454 29 Tonda Tondacho, Takatsuki 228,000 1,350 369 1,958 216 3,321 30 Osaka Moriguchi Keihan Hondori, Moriguchi 203,000 3,750 914 5,438 600 9,224 31 Saime Saimekita, Takatsuki 68,000 2,550 208 3,698 408 6,272 32 Senri Tsukumodai, Suita 214,000 7,475 1,920 10,840 1,195 18,386 33 Tsuda Tsuda Nishimachi, Hirakata 116,000 1,625 226 2,356 260 3,997 34 Nishisuita Deguchicho, Suita 182,000 7,250 1,583 10,514 1,159 17,833 35 Suita Asahimachi, Suita 366,000 3,100 1,362 4,495 496 7,625 36 Higashi Osaka Eiwa, Higashi Osaka 202,000 3,675 891 5,329 588 9,039 37 Katano Kisabenishi, Katano 142,000 2,525 430 3,662 404 6,211 38 Konoike Mishima, Higashi Osaka 113,000 3,025 410 4,387 484 7,441 39 Makino Shodai Hiranocho, Hirakata 117,000 1,700 239 2,465 272 4,181 40 Shonai Hinodecho, Toyonaka 160,000 1,800 346 2,610 288 4,427 41 Kanmaki Kajihara, Takatsuki 144,000 1,750 302 2,538 280 4,304 42 Yamazaki Annex Hirose, Shimamoto, Mishima District 182,000 2,125 464 3,082 340 5,227 43 Toyonaka Kitasakurazuka, Toyonaka 205,000 3,200 787 4,640 512 7,871 44 Hattori Hattori Minamimachi, Toyonaka 168,000 2,100 423 3,045 336 5,165 45 Ishibashi Hachizuka, Ikeda 196,000 2,750 647 3,988 440 6,764 46 Chizuka Chizuka, Yao 113,000 2,425 329 3,517 388 5,965 47 Kashiwara 1 Taisho, Kashiwara 113,000 2,425 329 3,517 388 5,965 48 Kokubu Kokubuhonmachi, Kashiwara 132,000 3,300 523 4,785 528 8,117 49 Sakai Kushiyacho Higashi, Sakai, Sakai 149,000 2,500 447 3,625 400 6,149 50 Kishiwada Minamimachi, Kishiwada 93,500 2,750 309 3,988 440 6,764 51 Fujiidera Fujiidera, Fujiidera 125,000 2,475 371 3,589 396 6,088 52 Higashi Kishiwada Nagaregicho, Kishiwada 84,500 3,475 352 5,039 556 8,547 53 Misaki Fuke, Misaki, Sennan District 18,300 1,900 42 2,755 304 4,673 54 Otori 2 Otori Higashimachi, Nishi, Sakai 131,000 3,000 472 4,350 480 7,379 55 Habikino Suichoen, Hibikino 166,000 6,200 1,235 8,991 991 15,250 56 Tanagawa Tanagawa Tanigawa, Misaki, Sennan District 18,300 2,825 62 4,097 452 6,949 57 Kawachi Nagano Nishidaicho, Kawachinagano 82,000 950 93 1,378 152 2,337 58 Otori 1 Otori Higashimachi, Nishi, Sakai 131,000 6,575 1,034 9,535 1,051 16,172 59 Senboku Wakamatsudai, Minami, Sakai 102,000 7,000 857 10,151 1,119 17,218 60 Hakotsukuri Hakotsukuri, Hannan 42,800 5,275 271 7,650 843 12,975

Nippon Telegraph and Telephone (9432 / 9432 JP) 15 03 June 2013

Osaka (cont’d) Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 61 Mibayashi Murodocho, Izumi 67,600 2,925 237 4,242 468 7,195 62 Ishizu Hamadera Ishizucho Higashi, Nishi 134,000 3,700 595 5,366 592 9,101 63 Mizuma Mizuma, Kaizuka 39,500 3,950 187 5,728 632 9,716 64 Matsubara Ueda, Matsubara 199,000 3,250 776 4,713 520 7,994 65 Izumi Sano 2 Asahicho, Izumisano 59,200 8,000 568 11,601 1,279 19,677 66 Yamadai Komatsuricho, Kishiwada 116,000 4,625 644 6,707 739 11,376 67 Hineno Hineno, Izumisano 53,500 2,800 180 4,060 448 6,887 68 Ozaki Tottorinaka, Hannan 53,000 3,325 211 4,822 532 8,178 69 Kanan Shiraki, Kanan, Minami Kawachi District 43,000 2,150 111 3,118 344 5,288 70 Sennan Tarui, Sennan 56,000 2,500 168 3,625 400 6,149 71 Hamadera 1 Hamadera Minamimachi, Nishi, Sakai 161,000 1,550 299 2,248 248 3,813 72 Fukai Fukai Nakamachi, Naka, Sakai 110,000 3,775 498 5,474 604 9,285 73 Sabi Nanpudai, Tondabayashi 25,300 6,300 191 9,136 1,007 15,496 74 Osaka Sayama Handa, Osaka Sayama 112,000 4,750 638 6,888 759 11,683 75 Tomioka 1 Omino, Higashi, Sakai 78,400 4,325 407 6,272 691 10,638 76 Takasago Takasago, Takaishi 120,000 3,625 522 5,257 580 8,916 77 Yokoyama Butsunamicho, Izumi 24,600 5,400 159 7,831 863 13,282 78 Mihara Tajii, Mihara, Sakai 83,300 2,875 287 4,169 460 7,072 79 Izumi Otsu Ebisucho, Izumiotsu 99,000 3,000 356 4,350 480 7,379 80 Izumi Fuchucho, Izumi 97,700 4,275 501 6,199 683 10,515 81 Kongo Takabedai, Tondabayashi 106,000 3,800 483 5,511 608 9,347 82 Kumatori Ogaito, Kumatori, Sennnan District 18,300 2,850 63 4,133 456 7,010 83 Uchida Matsuojicho, Izumi 84,500 2,675 271 3,879 428 6,580 84 Tannowa Tannowa, Misaki, Sennan District 18,300 3,500 77 5,076 560 8,609 85 Mikkaichicho Oshiocho, Kawachinagano 51,800 2,875 179 4,169 460 7,072 86 Tajiri Minami Nakayasumatsu, Izumisano 52,900 5,200 330 7,541 831 12,790 87 Kanaoka Nagasonecho, Kita, Sakai 193,000 1,075 249 1,559 172 2,644 88 Hatsushiba Hikisho Nishimachi, Higashi, Sakai 111,000 2,550 340 3,698 408 6,272 89 Taishi Kasuga, Taishi, Minami Kawachi District 56,100 3,000 202 4,350 480 7,379 Total 319,400 47,770 463,178 51,065 785,622 Source: Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 16 03 June 2013 List of properties in Kyoto City

Figure 14: Kyoto City Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 1 Nishijin Aburanokoji, Kamigyo, Kyoto 309,000 2,450 908 3,109 313 5,223 2 Murasakino Shichiku Kurisucho, Kita, Kyoto 204,000 2,025 496 2,569 259 4,317 3 Kamo Takano Nishibirakicho, Sakyo, Kyoto 200,000 3,163 759 4,013 404 6,742 4 Oharano Oharano Minami Kasugacho, Nishikyo, Kyoto 77,300 2,150 199 2,728 275 4,583 5 Kyoto Yoshida Yoshida Konoecho, Sakyo, Kyoto 242,000 2,650 770 3,363 339 5,649 6 Sujaku Saiin Nakamizucho, Ukyo, Kyoto 202,000 3,250 788 4,124 416 6,928 7 Yamashiro Ohara Ohara Uenocho, Sakyo, Kyoto 35,000 525 22 666 67 1,119 8 Gion Komatsucho, Higashiyama, Kyoto 253,000 2,700 820 3,426 345 5,756 9 Mibu Nishinokyo Shokushicho, Nakagyo, Kyoto 361,000 3,500 1,516 4,441 448 7,461 10 Fukakusa Fukakusa Nishiuracho, Fushimi, Kyoto 202,000 2,375 576 3,014 304 5,063 11 Saga Sagaasahicho, Ukyo, Kyoto 188,000 1,275 288 1,618 163 2,718 12 Onmae Mibuhigashi Fuchidacho, Nakagyo, Kyoto 198,000 2,525 600 3,204 323 5,383 13 Kitano Hirano Haccho Yanagicho, Kita, Kyoto 269,000 2,200 710 2,792 281 4,690 14 Fushimi Shinmachi, Fushimi, Kyoto 219,000 3,125 821 3,965 400 6,662 15 Kyujo Nishikujo Higashi Hieijocho, Minami, Kyoto 202,000 2,450 594 3,109 313 5,223 16 Gojo Shimomanjujicho, Shimogyo, Kyoto 309,000 1,858 689 2,358 238 3,961 17 Yodo Yodomizucho, Fushimi, Kyoto 128,000 1,425 219 1,808 182 3,038 18 Katsura Katsura Shimomamedacho, Nishikyo, Kyoto 294,000 3,500 1,235 4,441 448 7,461 19 Shichijo Zaimokucho, Shimogyo, Kyoto 350,000 3,925 1,649 4,980 502 8,367 20 Kyoto Sanjo Karasumaru Sanjo, Nakagyo, Kyoto 1,880,000 10,500 23,688 13,323 1,343 22,383 21 Ukyo Uzumasa Idogajiricho, Ukyo, Kyoto 190,000 390 89 495 50 831 22 Daigo Godaigo Ryogashitacho, Fushimi, Kyoto 126,000 3,325 503 4,219 425 7,088 23 Yamashina Misasagi Otsubatacho, Yamashina, Kyoto 203,000 2,375 579 3,014 304 5,063 Total 63,661 38,516 80,778 8,142 135,707 Source: Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 17 03 June 2013 List of properties in Fukuoka City

Figure 15: Fukuoka City Market value Estimated New Official land Estimated of limited market value constraction NOI price land area proprietary of the cost No Building Address right of land property (¥/m2) (㎡) (¥mn) (¥mn) (¥mn) (¥mn) 1 Monji Hamamachi, Moji, Kitakyushu 108,000 6,000 778 7,613 767 12,790 2 Hakata Hakataeki Higashi, Hakata, Fukuoka 383,000 8,150 3,746 10,341 1,042 17,374 3 Tenjin Tenjin, Chuo, Fukuoka 3,680,000 11,200 49,459 14,211 1,433 23,875 4 Kita Kyushu Shigai Enamicho, Kokurakita, Kitakyushu 198,000 7,700 1,830 9,770 985 16,414 5 Furusenba Furusenbamachi, Kokurakita, Kitakyushu 265,000 4,800 1,526 6,091 614 10,232 6 Shin Hakata Hakataeki Higashi, Hakata, Fukuoka 383,000 4,350 1,999 5,520 556 9,273 7 Doimachi Kamikawabata Machi, Hakata, Fukuoka 413,000 1,200 595 1,523 153 2,558 8 Kashii Chihaya, Higashi, Fukuoka 137,000 4,050 666 5,139 518 8,633 9 Komemachi Komemachi, Kokurakita, Kitakyushu 433,000 3,663 1,903 4,647 468 7,807 10 Kyomachi Kyomachi, Kokurakita, Kitakyushu 433,000 2,212 1,150 2,807 283 4,716 11 Dairi Dairi Tonoue, Moji, Kitakyushu 98,300 4,300 507 5,456 550 9,166 12 Kokura Minami Higashi Shinozaki, Kokurakita, Kitakyushu 80,200 2,600 250 3,299 333 5,542 13 Tamachi Tamachi, Kokurakita, Kitakyushu 80,200 1,250 120 1,586 160 2,665 14 Kita Kyushu Nishi Kanada, Kokurakita, Kitakyushu 80,200 3,000 289 3,807 384 6,395 15 Saitozaki Saitozaki, Higashi, Fukuoka 36,800 500 22 634 64 1,066 16 Fukuoka Minami Kotobukimachi, Hakata, Fukuoka 131,000 4,500 707 5,710 576 9,593 17 Maidashi Maidashi, Higashi, Fukuoka 152,000 1,900 347 2,411 243 4,050 18 Hakozaki Hakozaki, Higashi, Fukuoka 170,000 2,150 439 2,728 275 4,583 19 Hirao Nanokawa, Chuo, Fukuoka 217,000 2,975 775 3,775 381 6,342 20 Chikushigaoka Mukaino, Minami, Fukuoka 131,000 2,610 410 3,312 334 5,564 21 Fukuoka Nishijin Josei, Sawara, Fukuoka 348,000 3,250 1,357 4,124 416 6,928 22 Meinohama Meinohama, Nishi, Fukuoka 136,000 2,750 449 3,489 352 5,862 23 Hie Higashihie, Hakata, Fukuoka 158,000 3,325 630 4,219 425 7,088 24 Kurume Umematsu Umemitsumachi, Kurume 65,300 7,200 564 9,136 921 15,348 25 Kurume Main Hiyoshimachi, Kurume 170,000 6,385 1,303 8,102 817 13,611 26 Kurume LMC Harankogamachi, Kurume 65,300 1,500 118 1,903 192 3,198 27 Chikugo Yamanoi, Chikugo 50,900 3,000 183 3,807 384 6,395 28 Omuta Shiranuhimachi, Omuta 53,800 4,288 277 5,440 548 9,140 29 Yahata Nishihonmachi, Yahata Higashi, Kitakyushu 110,000 3,750 495 4,758 480 7,994 30 Orio Komyo, Yahata Nishi, Kitakyushu 97,300 3,275 382 4,156 419 6,981 31 Kurosaki Tsutsuimachi, Yahata Nishi, Kitakyushu 89,400 4,225 453 5,361 540 9,007 32 Tobata Senbo, Tobata, Kitakyushu 109,000 3,650 477 4,631 467 7,781 33 Wakamatsu Hamamachi, Wakamatsu, Kitakyushu 74,700 2,825 253 3,585 361 6,022 34 Tokuriki Tokuriki, Kokuraminami, Kitakyushu 93,100 1,950 218 2,474 249 4,157 Total 130,482 74,677 165,567 16,689 278,152 Source: Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 18 03 June 2013 Earnings forecasts

Figure 16: Consolidated earnings forecast summary Sales Operating profit Recurring profit Net profit EPS DPS P/E ¥mn YoY (%) ¥mn YoY (%) ¥mn YoY (%) ¥mn YoY (%) ¥ YoY (%) ¥ (x) Consolidated 3/12 A 10,507,362 1,222,966 1,239,330 467,701 367 140 13.8 3/13 A 10,700,740 1.8 1,201,968 -1.7 1,201,099 -3.1 524,071 12.1 432 17.9 160 11.7 3/14 CS E (new) 10,817,455 1.1 1,205,728 0.3 1,268,366 5.6 588,454 12.3 507 17.3 170 10.0 (prev) 10,842,848 1.3 1,208,251 0.5 1,202,549 0.1 542,323 3.5 436 0.8 170 11.6 CoE 11,000,000 2.8 1,230,000 2.3 1,280,000#ERR: Invalid6.6 time period:585,000 'Error 2023'11.6 503 16.4 160 10.0 IBES E 10,847,980 1.4 1,219,742 1.5 1,218,094 1.4 555,598 6.0 475 9.8 164 10.6 3/15 CS E (new) 10,869,060 0.5 1,216,146 0.9 1,218,784 -3.9 554,398 -5.8 504 -0.7 180 10.0 (prev) 10,967,422 1.1 1,244,672 3.0 1,238,970 3.0 542,433 0.0 436 0.0 180 11.6 3/16 CS E (new) 10,914,852 0.4 1,260,558 3.7 1,220,571 0.1 574,045 3.5 563 11.7 190 9.0 Source: Company data, I/B/E/S, Credit Suisse estimates

Figure 17: Consolidated earnings forecasts (¥bn) 3/10 3/11 3/12 3/13 3/14 E 3/15 E 3/16 E A A A A CoE CS CS CS NTT Consolidated (US GAAP) Operating Revenues 10,181.4 10,305.0 10,507.4 10,700.7 11,000.0 10,817.5 10,869.1 10,914.9 Operating Income 1,117.7 1,214.9 1,223.0 1,202.0 1,230.0 1,205.7 1,216.1 1,260.6 Income before Tax 1,120.1 1,175.8 1,239.3 1,201.1 1,280.0 1,268.4 1,218.8 1,263.2 Net Income 492.3 509.6 467.7 524.1 585.0 588.5 554.4 574.0 EPS (¥) 372.0 385.2 366.7 432.4 503.2 507.1 503.8 562.6 EBITDA 3,240.8 3,282.2 3,219.2 3,086.9 - 3,055.2 2,998.2 2,989.8 Depreciation (+amortization) 2,123.1 2,067.3 1,996.2 1,885.0 - 1,849.4 1,782.1 1,729.2 Capex 1,987.1 1,870.1 1,946.6 1,970.0 1,870.0 1,865.5 1,851.5 1,844.5 DPS (¥) 120 120 140 160 160.0 170 180.0 190.0

NTT East (JPN GAAP) Operating Revenues 1,928.7 1,957.1 1,851.5 1,831.8 1,783.0 1,784.4 1,767.7 1,756.3 Operating Income 47.6 77.2 50.3 65.1 65.0 67.2 68.7 69.6 Recurring Profit 71.8 96.1 75.2 88.9 80.0 82.2 83.7 84.6 Net Income 50.5 52.3 32.2 52.8 50.0 52.6 53.6 54.1

NTT West (JPN GAAP) Operating Revenues 1,780.8 1,758.1 1,676.3 1,628.0 1,592.0 1,591.0 1,559.7 1,536.3 Operating Income 18.5 49.6 37.0 19.2 20.0 19.9 20.4 21.7 Recurring Profit 30.3 63.1 42.4 28.4 28.0 27.9 28.4 29.7 Net Income 24.8 49.1 20.5 20.9 23.0 19.5 19.9 20.8

NTT Communications (JPN GAAP) Operating Revenues 1,079.3 1,033.4 981.0 944.8 925.0 924.9 911.0 913.2 Operating Income 97.5 93.3 105.7 118.1 112.0 117.6 113.3 114.9 Recurring Profit 108.5 103.7 119.0 129.7 122.0 127.6 123.3 124.9 Net Income 60.7 69.0 58.3 65.3 75.0 75.3 72.7 73.7

NTT Data Consolidated (JPN GAAP) Operating Revenues 1,142.9 1,162.0 1,251.2 1,301.9 1,330.0 1,340.0 1,366.0 1,393.0 Operating Income 81.7 78.3 80.4 85.7 90.0 86.0 90.0 94.0 Recurring Profit 75.7 75.8 75.6 81.9 82.0 78.0 82.0 86.0 Net Income 35.7 37.3 30.4 44.2 45.0 42.1 44.3 46.4

NTT DoCoMo Consolidated (US GAAP) Operating Revenues 4,284.4 4,224.3 4,240.0 4,470.1 4,640.0 4,545.1 4,632.6 4,683.9 Operating Income 834.2 844.7 874.5 837.2 840.0 835.0 843.7 880.3 Income before Tax 836.1 835.3 877.0 841.7 850.0 845.6 854.5 891.1 Net Income 494.7 490.5 463.9 495.6 510.0 516.2 521.7 544.4 Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 19 03 June 2013

Figure 18: Consolidated profit and loss statements (¥mn) FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 FY3/14E FY3/15E FY3/16E Operating revenues 10,416,305 10,181,376 10,305,003 10,507,362 10,700,740 10,817,455 10,869,060 10,914,852 NTT Holdings NTT East 1,952,991 1,928,652 1,957,146 1,851,526 1,831,797 1,784,397 1,767,651 1,756,335 NTT West 1,824,320 1,780,821 1,758,058 1,676,347 1,627,980 1,591,009 1,559,736 1,536,336 NTT Communications 1,127,189 1,079,268 1,033,415 981,020 944,811 924,920 910,989 913,245 NTT DoCoMo 4,447,980 4,284,400 4,224,273 4,240,003 4,470,122 4,545,085 4,632,641 4,683,892 NTT Data 1,139,092 1,142,940 1,161,962 1,251,177 1,301,941 1,340,000 1,366,000 1,393,000 Telecommunications revenues 8,282,437 8,097,592 7,988,782 7,815,796 7,659,466 7,420,923 7,421,298 7,453,091 NTT East 1,825,790 1,790,369 1,776,084 1,719,239 1,689,238 1,641,838 1,625,092 1,613,776 NTT West 1,670,002 1,622,163 1,597,362 1,537,887 1,482,982 1,446,011 1,414,738 1,391,338 NTT Communications 945,565 908,160 868,467 817,556 775,217 763,286 751,355 753,610 NTT DoCoMo 3,841,080 3,776,900 3,746,869 3,741,114 3,712,029 3,569,788 3,630,114 3,694,367 Auxiliary business revenues 2,209,135 2,118,489 2,146,071 2,184,277 2,517,145 2,764,487 2,815,718 2,829,717 NTT East 127,201 138,283 181,061 132,287 142,559 142,559 142,559 142,559 NTT West 154,318 158,658 160,696 138,460 144,998 144,998 144,998 144,998 NTT Communications 181,624 171,108 164,948 163,464 169,594 161,634 159,634 159,635 NTT DoCoMo 606,900 507,500 477,404 498,889 758,053 975,296 1,002,527 989,525 NTT Data 1,139,092 1,142,940 1,161,962 1,251,177 1,301,941 1,340,000 1,366,000 1,393,000 Operating expenses 9,306,553 9,063,683 9,090,094 9,284,396 9,498,772 9,611,727 9,652,914 9,654,294 NTT Holdings 170,425 165,491 156,895 153,665 154,174 161,917 165,676 169,544 NTT East 1,916,293 1,881,018 1,879,991 1,801,202 1,766,726 1,717,148 1,698,935 1,686,734 NTT West 1,816,553 1,762,345 1,708,411 1,639,305 1,608,775 1,571,106 1,539,299 1,514,595 NTT Communications 1,026,315 981,753 940,146 875,273 826,674 807,299 797,716 798,374 NTT Data 1,040,546 1,061,251 1,083,656 1,170,761 1,216,245 1,254,000 1,276,000 1,299,000 NTT DoCoMo 3,617,021 3,450,111 3,379,544 3,365,570 3,632,942 3,710,130 3,788,921 3,803,547 SG&A (excluding depreciation costs) 7,046,453 6,940,583 7,022,794 7,288,196 7,613,819 7,762,277 7,870,852 7,925,081 Operating income 1,109,752 1,117,693 1,214,909 1,222,966 1,201,968 1,205,728 1,216,146 1,260,558 NTT Holdings 193,334 213,525 233,478 257,686 278,610 258,188 254,429 250,561 NTT East 36,697 47,634 77,155 50,324 65,071 67,249 68,716 69,601 NTT West 7,767 18,475 49,646 37,043 19,205 19,902 20,437 21,741 NTT Communications 100,874 97,513 93,268 105,748 118,137 117,621 113,273 114,871 NTT Data 98,546 81,689 78,306 80,416 85,696 86,000 90,000 94,000 NTT DoCoMo 830,959 834,200 844,729 874,460 837,180 834,955 843,720 880,344 Others 34,909 38,182 71,805 74,975 76,679 80,000 80,000 80,000 Non-operating revenues Interest income 26,629 24,004 21,600 19,298 17,638 17,638 17,638 17,638 Others 27,669 33,524 -5,445 53,392 35,832 100,000 40,000 40,000 Sub total 54,298 57,528 16,155 72,690 53,470 117,638 57,638 57,638 Non-operating expenses Interest expenses 58,887 55,150 55,267 56,326 54,339 55,000 55,000 55,000 Others 0 0 0 0 0 0 0 0 Subtotal 58,887 55,150 55,267 56,326 54,339 55,000 55,000 55,000 Recurring profit 1,105,163 1,120,071 1,175,797 1,239,330 1,201,099 1,268,366 1,218,784 1,220,571 NTT Holdings 196,438 215,534 227,837 259,316 274,429 258,188 254,429 250,561 NTT East 65,383 71,750 96,066 75,230 88,893 82,249 83,716 84,601 NTT West 19,518 30,338 63,069 42,361 28,382 27,902 28,437 29,741 NTT Communications 113,575 108,526 103,685 118,994 129,728 127,621 123,273 124,871 NTT Data 95,552 75,722 75,779 75,588 81,870 78,000 82,000 86,000 NTT DoCoMo 780,473 836,112 835,338 876,958 841,658 845,555 854,520 891,144 Others 30,662 -2,377 1,860 50,199 30,568 107,038 46,838 4,213 Income before taxes 1,105,163 1,120,071 1,175,797 1,239,330 1,201,099 1,268,366 1,218,784 1,263,196 Taxes 370,083 447,001 475,592 587,793 481,229 469,295 450,950 467,382 Minority interests 194,485 189,598 192,246 180,850 185,668 208,617 211,437 219,769 NTT DoCoMo net profit 471,873 494,736 490,485 463,912 495,633 516,160 521,717 544,420 NTT DoCoMo minority interests 38.4% 38.4% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% NTT Data net profit 48,360 35,662 37,313 30,446 43,517 41,800 43,500 45,600 NTT Data minority interests 45.9% 45.9% 45.9% 45.9% 45.9% 45.9% 45.9% 45.9% Others 0 0 0 0 0 0 0 0 NTT Docomo + NTT Data 203,396 206,347 197,135 184,230 182,121 196,932 211,437 219,769 Profit from equity method -1,916 8,794 1,670 -2,986 -10,131 2,000 2,000 2,000 Net profit (attributable to NTT) 538,679 492,266 509,629 467,701 524,071 588,454 554,398 574,045 Tax rate 33.5% 39.9% 40.4% 47.4% 40.1% 37.0% 37.0% 37.0% EPS(¥) 400 372 385 367 432 507 504 563 EBITDA 3,369,852 3,240,793 3,282,209 3,219,166 3,086,921 3,055,178 2,998,208 2,989,771 Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 20 03 June 2013

Figure 19: Consolidated balance sheet (JPY mn) FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 FY3/14E FY3/15E FY3/16E Current assets 4,068,051 4,245,699 4,770,297 4,711,931 4,669,288 4,775,533 4,799,301 4,792,761 Cash and cash equivalents 1,052,777 911,062 1,435,158 1,020,143 961,433 1,106,713 1,020,481 903,941 Short-term investments 20,264 382,227 167,175 306,921 53,753 50,000 50,000 50,000 Notes and accounts receivable, trade 1,947,765 1,948,467 2,072,011 2,287,986 2,428,099 2,528,099 2,628,099 2,728,099 Allowance for doubtful accounts -45,208 -41,092 -45,907 -48,356 -44,961 -45,000 -45,000 -45,000 Accounts receivable, other - 210,262 265,668 277,277 357,255 250,000 250,000 250,000 Inventories 313,494 278,869 314,983 329,373 350,721 360,721 370,721 380,721 Prepaid expenses and other current assets 512,479 298,111 316,328 315,566 338,794 300,000 300,000 300,000 Deferred income taxes 266,480 257,793 244,881 223,021 224,194 225,000 225,000 225,000 Property, plant and equipment (Net) 10,201,519 10,057,546 9,900,640 9,806,356 9,776,687 9,894,488 9,925,050 9,909,763 Telecommunications equipment 14,705,383 14,708,053 14,606,718 14,425,252 13,432,047 13,015,997 12,546,559 12,031,272 Telecommunications service lines 13,968,838 14,285,962 14,527,349 14,830,873 15,143,239 15,343,239 15,543,239 15,743,239 Buildings and structures 5,770,337 5,789,511 5,855,282 5,915,743 5,993,215 6,000,000 6,000,000 6,000,000 Machinery, vessels and tools 1,755,854 1,790,366 1,806,355 1,820,648 1,868,972 1,880,000 1,880,000 1,880,000 Land 1,111,734 1,122,797 1,133,675 1,133,077 1,139,636 1,140,000 1,140,000 1,140,000 Construction in progress 305,167 269,149 312,480 363,201 334,326 350,000 350,000 350,000 Subtotal 37,617,313 37,965,838 38,241,859 38,488,794 37,911,435 37,729,236 37,459,798 37,144,511 Accumulated depreciation -27,415,794 -27,908,292 -28,341,219 -28,682,438 -28,134,748 -27,834,748 -27,534,748 -27,234,748 Investments and other assets 4,526,818 4,635,810 4,994,659 4,871,412 5,207,714 5,140,000 5,140,000 5,140,000 Investments in affiliated companies 622,735 634,950 581,073 543,273 411,371 400,000 400,000 400,000 Marketable securities and other investments 277,375 301,270 276,178 295,254 660,823 600,000 600,000 600,000 Goodwill 453,617 499,830 747,526 771,420 824,216 830,000 830,000 830,000 Software 1,406,991 1,316,021 1,330,085 1,344,356 1,340,682 1,350,000 1,350,000 1,350,000 Other intangibles - 137,920 287,400 263,964 278,272 260,000 260,000 260,000 Other assets 894,828 916,884 885,444 863,852 997,989 1,000,000 1,000,000 1,000,000 Deferred income taxes 871,272 828,935 886,953 789,293 694,361 700,000 700,000 700,000 Total assets 18,796,388 18,939,055 19,665,596 19,389,699 19,653,689 19,810,020 19,864,350 19,842,524

Current liabilities 3,694,199 3,588,310 3,689,072 3,494,253 3,499,389 3,465,098 3,465,098 3,465,098 Short-term borrowings 388,028 310,597 341,567 83,507 77,455 77,455 77,455 77,455 Current portion of long-term debt 603,041 781,323 698,476 656,963 703,304 700,000 700,000 700,000 Accounts payable, trade 1,302,607 1,301,944 1,379,279 1,482,594 1,436,643 1,436,643 1,436,643 1,436,643 Current portion of obligations under capital leases 0 0 21,353 18,709 16,368 17,000 17,000 17,000 Accrued payroll 454,575 442,295 475,226 476,442 437,609 440,000 440,000 440,000 Accrued interest 12,481 11,309 12,189 9,832 8,971 9,000 9,000 9,000 Accrued taxes on income 288,803 258,178 208,363 198,281 228,736 200,000 200,000 200,000 Accrued consumption tax 28,326 33,433 37,835 46,255 54,667 50,000 50,000 50,000 Advances received 114,934 152,619 206,572 189,007 183,723 185,000 185,000 185,000 Other 501,404 296,612 308,212 332,663 351,913 350,000 350,000 350,000 Long-term liabilities: 5,956,559 5,579,866 5,895,592 5,847,717 5,527,675 5,571,631 5,621,631 5,671,631 Long-term debt 3,691,688 3,376,669 3,494,198 3,509,820 3,234,631 3,334,631 3,434,631 3,534,631 Obligations under capital leases 47,394 41,032 34,818 36,919 36,254 37,000 37,000 37,000 Liability for employees'retirement benefits 1,639,785 1,447,781 1,535,964 1,534,885 1,505,571 1,450,000 1,400,000 1,350,000 Accrued liabilities for point programs 0 0 211,306 187,432 156,233 150,000 150,000 150,000 Deferred income taxes 0 0 183,810 169,591 198,824 200,000 200,000 200,000 Other 577,692 714,384 435,496 409,070 396,162 400,000 400,000 400,000 Equity 9,145,630 9,770,879 10,080,932 10,047,729 10,626,625 10,773,291 10,777,621 10,705,795 Common stock, no par value 937,950 937,950 937,950 937,950 937,950 937,950 937,950 937,950 Additional paid-in capital 2,841,037 2,838,927 2,834,029 2,832,165 2,827,612 2,827,612 2,827,612 2,827,612 Retained earnings 5,066,637 5,406,726 5,155,596 4,888,746 5,229,407 5,620,597 5,976,927 6,357,101 Accumulated other comprehensive income (loss) -341,917 -189,606 -303,708 -357,843 -107,476 -100,000 -100,000 -100,000 Treasury stock, at cost -1,205,597 -1,205,844 -603,133 -418,431 -568,459 -818,459 -1,168,459 -1,618,459 Total NTT shareholders'equity 7,298,110 7,788,153 8,020,734 7,882,587 8,319,034 8,467,700 8,474,030 8,404,204 Noncontrolling interests 1,847,520 1,982,726 2,060,198 2,165,142 2,307,591 2,305,591 2,303,591 2,301,591 Total liabilities and equity 18,796,388 18,939,055 19,665,596 19,389,699 19,653,689 19,810,020 19,864,350 19,842,524

BPS (JPY) 5,515 5,886 6,062 6,441 7,018 7,458 7,954 8,616 Interest-bearing debt 4,682,757 4,468,589 4,534,241 4,250,290 4,015,390 4,112,086 4,212,086 4,312,086 Net interest-bearing debt 3,629,980 3,557,527 3,099,083 3,230,147 3,053,957 3,005,373 3,191,605 3,408,145 Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 21 03 June 2013

Figure 20: Consolidated statement of cashflow (JPY mn) FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 FY3/14E FY3/15E FY3/16E Cash flows from operating activities 2,514,100 2,817,836 2,830,872 2,508,299 2,453,682 2,627,520 2,528,896 2,504,026 Net income 733,164 681,864 701,875 648,551 709,739 801,071 769,834 797,813 Depreciation and amortization 2,139,175 2,012,064 1,962,534 1,910,698 1,899,245 1,849,450 1,782,062 1,729,213 Impairment losses 4,340 4,582 1,094 9,555 5,416 5,000 5,000 5,000 Deferred taxes -102,217 -47,471 26,779 136,571 19,733 20,000 20,000 20,000 Goodwill and other intangible assets impairments 9,204 3,916 2,773 5,470 31,341 5,000 5,000 5,000 Loss on disposal of property, plant and equipment 120,893 111,024 104,730 85,452 106,215 100,000 100,000 100,000 Gains on sales of property, plant and equipment -78,171 -14,940 -4,716 -31,083 -18,469 -20,000 -20,000 -20,000 Equity in (earnings) losses of affiliated companies 1,916 -8,794 -1,670 2,986 10,131 -2,000 -2,000 -2,000 (Increase) decrease in notes and accounts receivable, trade -69,928 -16,641 24,299 -175,606 -119,381 -100,000 -100,000 -100,000 (Increase) decrease in inventories 30,330 27,818 -11,745 -13,353 -2,139 -10,000 -10,000 -10,000 (Increase) decrease in other current assets -53,711 -11,026 -53,605 -9,877 -90,565 -50,000 -50,000 -50,000 Increase (decrease) in accounts payable, trade and accrued payroll -204,483 -49,722 -28,533 23,499 -81,297 -40,000 -40,000 -40,000 Increase (decrease) in accrued consumption tax -7,735 4,898 512 7,975 7,236 5,000 5,000 5,000 Increase (decrease) in accrued interest 701 -1,176 841 -973 -1,089 -1,000 -1,000 -1,000 Increase (decrease) in advances received 16,764 37,613 26,392 -17,330 -9,770 20,000 20,000 20,000 Increase (decrease) in accrued taxes on income 55,247 -31,409 -56,536 -10,883 28,449 20,000 20,000 20,000 Increase (decrease) in other current liabilities -30,722 -21,318 -12,355 17,873 4,489 10,000 10,000 10,000 Increase (decrease) in liability for employees'retirement benefits -27,049 28,274 -32,312 -19,382 26,476 15,000 15,000 15,000 Increase (decrease) in other long-term liabilities 63,490 117,864 68,856 -36,923 -50,234 25,000 25,000 25,000 Other -87,108 -9,584 111,659 -24,921 -21,844 -25,000 -25,000 -25,000

Cash flows from investing activities -2,269,658 -2,308,908 -2,052,212 -1,971,246 -1,776,253 -1,775,500 -1,761,500 -1,754,500 Payments for property, plant and equipment -1,411,979 -1,370,923 -1,410,827 -1,395,087 -1,538,115 -1,492,400 -1,481,200 -1,475,600 Payments for intangibles - -545,397 -484,159 -458,176 -446,588 -373,100 -370,300 -368,900 Proceeds from sale of property, plant and equipment 102,170 41,288 13,445 64,789 38,929 40,000 40,000 40,000 Payments for purchase of non-current investments -393,454 -89,656 -43,017 -59,400 -35,309 -40,000 -40,000 -40,000 Proceeds from sale and redemption of non-current investments 50,693 20,611 23,921 14,756 19,812 20,000 20,000 20,000 Acquisitions of subsidiaries, net of cash acquired - -382,780 -47,632 -38,490 -50,000 -50,000 -50,000 Payments for purchase of short-term investments -37,549 -443,195 -768,594 -1,181,657 -682,359 -600,000 -600,000 -600,000 Proceeds from redemption of short-term investments 37,467 86,306 988,780 1,048,024 936,211 700,000 700,000 700,000 Other -617,006 -7,942 11,019 43,137 -30,344 20,000 20,000 20,000

Cash flows from financing activities -353,339 -651,297 -249,578 -948,058 -745,181 -467,264 -568,067 -663,871 Proceeds from issuance of long-term debt 907,601 450,378 801,185 680,055 402,271 600,000 600,000 600,000 Payments for settlement of long-term debt -659,634 -538,026 -782,512 -719,232 -675,295 -500,000 -500,000 -500,000 Proceeds from issuance of short-term debt 4,067,859 3,466,397 2,554,569 1,261,125 3,015,099 3,000,000 3,000,000 3,000,000 Payments for settlement of short-term debt -4,248,234 -3,544,696 -2,524,709 -1,520,909 -3,029,279 -3,000,000 -3,000,000 -3,000,000 Dividends paid -135,338 -152,177 -158,783 -167,980 -183,405 -197,264 -198,067 -193,871 Proceeds from sale of (payments for acquisition of) treasury stock, net -200,503 -296 -234 -381,869 -150,033 -250,000 -350,000 -450,000 Acquisition of treasury stocks by subsidiary -136,846 -20,174 -30,092 -2,914 -15,558 -20,000 -20,000 -20,000 Other 51,756 -312,703 -109,002 -96,334 -108,981 -100,000 -100,000 -100,000 Source: Company data, Credit Suisse estimates

Nippon Telegraph and Telephone (9432 / 9432 JP) 22 03 June 2013

Companies Mentioned (Price as of 31-May-2013) NTT Data (9613.T, ¥345,500) NTT DoCoMo (9437.T, ¥149,800) NTT Urban Development Corporation (8933.T, ¥118,400) Nippon Telegraph and Telephone (9432.T, ¥5,050, OUTPERFORM, TP ¥6,000) PARK24 (4666.T, ¥1,875) NTT East (Unlisted) NTT West (Unlisted) NTT Communications (Unlisted) NTT Le-Perc (Unlisted)

Disclosure Appendix

Important Global Disclosures I, Hitoshi Hayakawa, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for NTT Data (9613.T)

9613.T Closing Price Target Price Date (¥) (¥) Rating 08-Oct-10 255,200 0 OUTPERFORM

20-Oct-11 259,500 260,000 N 08-May-12 274,800 * 09-May-12 242,400 * 31-Jul-12 238,000 260,000 N 12-Apr-13 306,500 260,000 U 22-May-13 383,500 280,000 * Asterisk signifies initiation or assumption of coverage.

SU SPEN D ED NEUTRAL UNDERPERFORM

3-Year Price and Rating History for NTT DoCoMo (9437.T)

9437.T Closing Price Target Price Date (¥) (¥) Rating 20-Feb-12 136,900 150,000 N 29-May-12 125,100 150,000 O 01-Nov-12 117,200 120,000 N 10-Dec-12 123,200 120,000 U 22-May-13 164,700 150,000 * Asterisk signifies initiation or assumption of coverage.

NEUTRAL OUTPERFORM UNDERPERFORM

Nippon Telegraph and Telephone (9432 / 9432 JP) 23 03 June 2013

3-Year Price and Rating History for Nippon Telegraph and Telephone (9432.T)

9432.T Closing Price Target Price Date (¥) (¥) Rating 01-Jun-11 3,835 4,700 O * Asterisk signifies initiation or assumption of coverage.

OUTPERFORM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

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Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 42% (53% banking clients) Neutral/Hold* 39% (48% banking clients) Underperform/Sell* 15% (38% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Nippon Telegraph and Telephone (9432 / 9432 JP) 24 03 June 2013

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for Nippon Telegraph and Telephone (9432.T) Method: Our ¥6,000 TP references: (1) the ¥5,070 theoretical share price based on FY3/14E EPS of ¥507 and a 10x fair-value P/E derived in turn by multiplying the 10.4x sector-average P/E for the past two years by the 0.95 average for NTT’s sector-relative P/E over the same period (10.4 × 0.95 = 10x); and (2) a ¥6,474 price derived by valuing the company's real estate assets. Implied P/E is 12x FY3/14E EPS.

Risk: Risks to our ¥6,000 target price for NTT, in our view, are deteriorating profits at NTT East and NTT West as a result of weak demand for optical fiber, and setback of management's policy on shareholders' returns.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names The subject company (9432.T, 9437.T, 9613.T) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (9432.T, 9437.T, 9613.T) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (9432.T) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (9432.T, 9437.T, 9613.T) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (9432.T, 9437.T, 9613.T) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (9432.T, 9437.T, 9613.T) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (9432.T) within the past 12 months As of the date of this report, Credit Suisse makes a market in the following subject companies (9432.T). Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (9432.T, 9437.T, 9613.T) within the past 12 months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse Securities (Japan) Limited ...... Hitoshi Hayakawa

Nippon Telegraph and Telephone (9432 / 9432 JP) 25 03 June 2013

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