NTT poised to swallow huge loss

The i-mode has yet to take off in Europe

Japan's biggest telecoms firm, NTT, has forecast that it will rack up one of the worst losses ever recorded by a Japanese firm.

The group has predicted it will report a net loss of 865bn yen ($6.5bn; £4.5bn) in the year which ended last month.

NTT in November forecast the loss would reach only 331bn.

The high-profile telecoms group has invested heavily in increasing its global reach and promoting in Asia and Europe its i-mode mobile phone, which allows users to surf the internet.

But the expansion has yet to pay off, and the group has booked a loss of 1,400bn yen on overseas investments.

Troubled expansions

While the i-mode marketing drive represents recent promotion, much of the investment was made during the height of the technology boom which inflated the price of telecoms and internet firms.

The biggest loss - 538bn yen - comes from NTT's investment in US internet hosting company Verio.

NTT bought Verio in 2000 for $5bn.

NTT has also swallowed a loss on an investment in US telecoms giant AT&T Wireless.

The investment of NTT's wireless arm, DoCoMo, in Dutch mobile firm KPN has cost the parent firm 359bn yen.

Previous success

The group reaped profits of 464bn yen during the previous financial year, largely thanks to the popularity of the i-mode in Japan.

NTT is already in the process of shifting thousands of its workers into lower paying jobs in an attempt to secure long term cost savings.

NTT has the lion's share of fixed-line customers in Japan, and a majority stake in mobile firm NTT DoCoMo.

Shares in NTT rose 0.8% before the earnings revision was announced.

The stock has risen 21% so far this year.