TOKYO, Oct. 21, 2023—It came out of the blue so had caught this journalist’s curiosity: The CEO of NTT, the former Japanese telecom monopoly, nervously said at an Oct. 19 news conference: ‘The NTT law’s purpose has been mostly met; It will become irrelevant’ to the US$150 billion Japanese telecom industry. It’s clearly because the law’s repeal would spark a national furor of unpredictable kinds and could help the NTT group, including its mobile carrier unit NTT DoCoMo, terrestrial carriers of NTT East and West, and the scandal-plagued NTT Data, to try to reconsolidate into a single giant telecom monopoly.
Chronologically following, CEO Akira Shimada’s suddenly-sounding comments came a few months after prime minister Fumio Kishida’s cabinet decision to double Japan’s defense spending over the next 5 years to 2 percent of GDP from about 1 pct now to 43 trillion yen ($286 billion). Raising taxes alone to finance the increase is unrealistic given the Japanese private sector’s tax payment capacity and voter resistance. So, as the Japanese government has been doing over the past decades, disposing of government holdings of former state companies can be less stress-free for Kishida’s administration. And since the government sold off another tranche of its Japan Post Co. holdings, selling all or part of its remaining 30 percent NTT stock holdings became a logical next turn.
Barely an hour before the news conference, Shimada attended an Oct. 19 meeting of the governing Liberal Democratic Party’s project team discussing what to do about the NTT law that is chaired by the LDP strong-arm lawmakers Akira Amari and Koichi Hagiuda, a key protege of the gunned-down former PM Shinzo Abe. No wonder Shimada looked nervous, presumably having been told to disclose the NTT law overhaul intention representing the government and failing to show the independence of a publicly listed business company.
The NTT law article 4 mandates that the government hold no less than 33.3 percent of NTT stock for national security reasons. The current government holding is 34 percent. NTT was founded as a business corporation in 1985 from a state telecom entity and began placing its shares on the stock market in small installments over the past years. The last public share placement was in 1999.
The law certainly puts NTT under close government rules such as controversially demanding the company to provide its R&D results to competitors – KDDI, the former state-supervised international telecom, and Softbank, among them, as well as foreign entities – at reasonable values, and banning the appointment of non-Japanese nationals to its board and auditors. Plus it is required to offer ‘universal services’ to all Japanese regions, no matter whether a customer’s location is atop a steep mountain or a remote island.
NTT DoCoMo was separated as an independent mobile telecom at its inception but in recent years, it was merged fully as NTT parent company’s full subsidiary. Something similar may happen to its group companies and businesses. NTT East and/or West selling services jointly with DoCoMo and NTT Data offering business networks-related services with the terrestrial units.
NTT Data recently caused serious days-long disruptions of Japan’s vital commercial payment and settlement electronics system, Zengin-net. Money transfers such as salary payments were hampered. NTT West suffered a customer data leakage caused by the burglary of NTT West and DoCoMo customer personal data by an employee of its subcontractors – NTT Business Solutions Corp.
It’s doubtful whether the NTT group companies will/can be fully consolidated into the pre-privatization form. Likely to unfold are: Accommodating the government’s probe of telecom traffic of individuals, social and financial transactions, transmissions of political and business misinformation; deterioration of telecom technology R&D resulting from the reduction of competition among group companies and complacency and arrogance as being an unrivaled national telecom; deterioration of services and pricing owing to its dominance. Recently, NTT East sent a letter to landline users telling that it will reduce certain services and jack up prices sharply.
One more toxic effect would be that NTT workers from its CEO to lay employees probably act more like lowly bureaucrats, brushing off customer complaints and working only designated hours, such as 9-5 before 1985 when they told a customer: ‘Oh, it’s the business closing time. Please call us tomorrow!’
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