Business Performance for the Interim Period and Forecast for the Fiscal Year Ending in March 1998

The following is a summary of the business performance for the interim period and forecast for the fiscal year ending in March 1998.

1. Business performance for the interim period

During the interim period under review, the Japanese economy remained stagnant due in part to the consumption tax rate hike, while overseas, Asian economies experienced a slowdown. Against such a backdrop, the growth in international telephone traffic was limited to some 4%.

KDD's operating revenues were down 8.1% to 153,000 million yen from the same period last year. Of this amount, 122,900 million yen, 11.6% less than the figure for the same period last year, came from telephone service. Higher Super World Card sales and increased international telephone traffic were offset by the November 1996 rate cut.

Operating expenses fell 5.2% from the same period last year to 148,000 million yen due to a further effort to streamline operations.

Consequently, ordinary income fell 36% to 9,200 million yen and net income for the term fell 45.1% to 4,500 million yen. KDD therefore experienced both lower revenues and profits from the same period last year.

2. Forecast for the fiscal year as a whole

KDD expects to see a 4% overall increase in international telephone traffic for the fiscal year as a whole.

During the fiscal year, KDD expects to see both its telephone revenues and operating revenues fall due to the weak economy. Meanwhile, the company will continue to reduce operating expenses by streamlining its operations. Based on these assumptions, KDD's performance forecasts for the fiscal year as a whole are 316,000 million yen in operating revenues, 254,000 million yen in telephone revenues, 17,000 million yen in ordinary income, and 8,000 million yen in net income. The forecasts show that both revenues and profits will be lower than those of last fiscal year.

3. Future Business Policies

KDD plans to further improve the seamless international-domestic telecommunication service to improve customer convenience and aggressively develop operations abroad. At the same time, the company will seek for further efficiency in its operations so it can keep pace with changes in the business environment and the growing competition.

[Summary of interim financial results for the fiscal year ending in March 1998]

(Unit: hundreds of millions of yen)

	This Term	Preceding term	Increase/Decrease(%)
Operating revenues	1,530	1,665	8.1
Telephone revenues	1,229	1,391	11.6
Other revenues	300	274	9.6
Operating expenses	1,480	1,560	5.2
Operating income	50	104	52.0
Ordinary income	92	144	36.0
Net income	45	83	45.1

Note: The figures are rounded off to the nearest hundred million yen
(the same applies to the tables below)

[Forecast for the fiscal year ending in March 1998]

(Unit: hundreds of millions of yen)

	This Term	Preceding term	Increase/Decrease(%)
Operating revenues	3,160	3,224	2.0
Telephone revenues	2,540	2,646	4.0
Ordinary income	170	208	18.3
Net income	80	101	21.3