A Recent History Of NTT

NTT is majority-owned by the government, with 59.2 percent of its shares held by the Ministry of Finance. Needless to say, the powerful MOF's holdings have given it and NTT some common interests, historically superseding the opinions of the weaker MPT. NTT was a national body (like the post office) until 1985, when it was privatized (sort of) as part of a first deregulation effort; in '87 the government sold 1.95 million shares, for ¥2.5 million each. Then the bubble burst. Share prices plummeted to a low of ¥400,000: "So the government didn't want to sell any more shares," explains Takayuki Tsutsumi at Tokyo Securities. With all the clamor for change, though, this year's national budget includes the sale of another million shares, which these days go for around ¥1.5 million each.

According to the current NTT Law, also dating to '87, the government must hold more than one-third of the company's stock for reasons of national security; the administration has 3 million shares it could offload and still retain this minimum stake. After this year's deal, it will probably sell the same amount next year and again in 2002 to bring its holdings down to the one-third required by current law, says Tsutsumi.

Seeing the writing on the wall, in July '97 Japan's government split NTT into two companies -- NTT East and NTT West, the two local carriers -- and created long-distance and international carrier NTT Communications. Trying to limit the damage, the administration put all three under one holding company, NTT Corporation. While NTT East and West are still bound by the old NTT law, NTT Communications isn't, and it doesn't seem to be having any problems adjusting to its newfound freedom. In a short time, it has invested in communication networks in numerous foreign countries, especially in Asia and the US -- most notably the potent May acquisition of Verio for ¥600 billion, nearly two and a half times the amount NTT is claiming it will lose from lowered interconnect rates in the next two years.