NIPPON TELEGRAPH AND TELEPHONE CORPORATION

NTT Group's operating revenue may decline due to difficulties in maintaining its customer base amid new entrants and new pricing plans from competitors in the information and communications market, as well as intensifying global competition from information services companies in India, China, and elsewhere. In response, based on the medium-term management strategy "New value creation & Sustainability 2030 powered by AI\u00d7IOWN" announced in May 2026, the Group is working to simplify and streamline its network and reduce costs through its dedicated procurement company, NTT Global Sourcing, Inc.

AI-related businesses may not expand as anticipated due to delays in establishing internal implementation systems, delays in model development, delays in partner collaboration for ecosystem formation, and delays in addressing regulatory requirements amid the rapid evolution of AI. In addition, if the IOWN roadmap does not progress as planned, or if competitors accelerate their technology development, business expansion and energy efficiency improvements through technological innovation may not be achieved, potentially leading to a decline in competitiveness and the loss of growth opportunities. In response, the Group is securing and prioritizing resources to confirm progress on and achieve its IOWN business deployment and development roadmap.

If a security incident occurs due to cyberattacks or inadequate management of important information, resulting in degraded service levels or information leaks, NTT Group's reliability and corporate image may decline, potentially affecting its business performance and financial position. Given the increasing sophistication and cunning of criminal acts targeting personal information, the risk of confidential information leaks cannot be entirely eliminated. Countermeasures are disclosed separately as part of the resilience strategy.

Changes to regulations under the Telecommunications Business Act and the NTT Act may affect business performance and financial position. In May 2025, amendments to the Telecommunications Business Act and the NTT Act were promulgated, and revisions to the scope-of-business regulations for the East and West regional companies and strengthened prohibited conduct regulations (including expanded prohibitions on concurrent officer positions and additional transaction prohibitions) took effect in May 2026, which may impose certain constraints on collaboration within the NTT Group. In addition, the supplementary provisions of the NTT Act continue to stipulate ongoing consideration, including potential abolition or amendment, leaving a residual risk of future institutional changes.

The government, as the largest shareholder holding 35.83% of issued shares excluding treasury shares (35.83% of voting rights), has significant influence over decisions at shareholders' meetings. If the NTT Act is abolished in the future and the government's obligation to hold the Company's shares lapses, the government may sell its shares, which could affect the supply-demand balance and share price. NTT Group intends to request that the government take measures that do not adversely affect the market.

International situations such as terrorism, acts of force, and regional conflicts may threaten employee safety and destroy buildings and facilities, and concerns related to economic security may affect the supply chain and fund procurement, potentially making business continuity difficult. In addition, natural disasters such as earthquakes, tsunamis, and typhoons, as well as the outbreak of new infectious diseases, may damage communication networks and information systems, potentially affecting service provision. In response, the Group conducts employee safety confirmation drills, secures security for important facilities such as telecommunications buildings, strengthens emergency power supplies, and requests suppliers to formulate business continuity plans.

Large fluctuations in financial markets may constrain fund procurement through corporate bonds and borrowings, or increase fund procurement costs. In addition, if a stock market or financial market downturn caused by an economic recession leads to a decline in the value of held investment securities and other assets, valuation losses may occur, which could also affect the management of pension funds. In response, the Group secures liquidity through overdraft agreements and commitment line agreements, diversifies its fundraising methods, and hedges risk through derivative transactions such as forward foreign exchange contracts.

Group governance may not function as intended due to the increasing sophistication and complexity of business content, the expansion of overseas operations and new businesses, and the diversification of business relationships, including with outsourcing partners. If governance fails to function properly, smooth business operations may be hindered, requiring revisions to business plans and incurring additional costs, which could affect business performance and financial position. In response, the Group has established common Group-wide policies and regulations, clarified processes for deliberation and reporting on important matters concerning subsidiaries and affiliated companies, conducts regular internal audits, and has established an internal reporting system.

As NTT Group operates numerous locations domestically and internationally and handles a wide range of products and services, it is subject to a broad array of related laws and regulations, and the compliance burden may increase due to unexpected interpretations of laws overseas or the establishment or revision of laws and regulations. If compliance risks materialize, including personal misconduct by employees, reliability and corporate image may decline, potentially affecting business through the loss of customer acquisition opportunities or suspension of bidding eligibility. In response, the Group has established a contract review system, conducts internal training, and monitors litigation and other cases.

NTT Group provides numerous lifeline services that support social and economic activities, including communication networks and information systems, as well as financial and payment services that support daily life. If delays or malfunctions occur in the development of critical systems, or if large-scale network failures occur, service provision to customers may be affected, potentially damaging reliability and corporate image. The spread of negative information on the internet or delays in public relations responses could further damage brand image. Countermeasures are disclosed separately as part of the resilience strategy.