1QFY26: Earnings improved, but leverage remains elevated

Research evidence excerpt

FICC Research

Credit Research

11 August 2026

NTT, Inc.

1QFY26: Earnings improved, but

leverage remains elevated

Margin expansion lagged broad-based revenue growth.

Levearge remains high and increased further during the

quarter. We see limited scope for material spread tightening

absent a clearer deleveraging trajectory. Maintain MW against

EUR IG Wirelines sector.

Maintain Market Weight rating on NTT Finance Corp’s EUR-denominated bonds against the

EUR IG Wirelines sector. The S&P downgrade to BBB+ has now occurred which removes an

important near term event risk, while 1QFY26 earnings were directionally supportive. However,

we do not see sufficient evidence of balance sheet improvement to justify a more constructive

fundamental stance.

Continued heavy issuance and funding requirements could limit USD-denominated bond

performance, particularly versus scarcer Japanese corporate credits. We continue to prefer

SOBKCO (MW) USD bonds over NTT's, unless NTT's spreads widen sufficiently to compensate

for NTT’s high leverage and likely sustained financing needs.

1QFY26 earnings showed broad-based revenue growth, although margin expansion lagged

revenue growth. The earnings mix improved, led by Integrated ICT and real estate, while Global

Solutions performance remained comparatively weak. Consumer telecom profitability remains

under pressure despite stronger Smart Life earnings. Global Solutions showed top-line growth,

but profitability remained subdued.

Leverage remains high and increased during the quarter, as data center growth continues to

require substantial investments. Total capital investment rose 12.1% to JPY511.8bn, with Global

Solutions capex +25.9% to JPY168.0bn. We estimate LTM debt/EBITDA stood at approximately

4.94x during the quarter and that debt/EBITDA will be in the mid-to-low-4x range over the next

12-18 months.

Barclays ratings

Maintain Market Weight on NTT's EUR bonds against the EUR IG Wirelines sector

We maintain our Market Weight rating on NTT Finance Corp’s EUR-denominated bonds against

the EUR IG Wirelines sector. The S&P downgrade to BBB+ has now occurred and the outlook is

Stable.…