As filed with the Securities and Exchange Commission on June 24, 201023, 2011

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR
þ
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2011

OR

¨For the fiscal year ended March 31, 2010
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR
o
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Date of event requiring this shell company report

Commission file number: 1-31221

Kabushiki Kaisha NTT DOCOMO

(Exact name of registrant as specified in its charter)

NTT DOCOMO, INC.

(Translation of registrant’s name into English)

Japan 
Japan

Sanno Park Tower

11-1, Nagata-cho 2-chome

Chiyoda-ku, Tokyo 100-6150

Japan

(Jurisdiction of incorporation or organization) (Address of principal executive offices)

Yuko Nakamura or Natsuki Wajima,Shuri Yamashita, Investor Relations

TEL: +81-3-5156-1111 / FAX: +81-3-5156-0271

Sanno Park Tower, 2-11-1 Nagata-cho, Chiyoda-ku, Tokyo 100-6150 Japan

100-6150 Japan

(Name, Telephone,E-mail and /or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

 

Name of each exchange on which registered

Common Stock*Stock* New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

 (Title(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31, 2010, 41,605,7422011, 41,467,601 shares of common stock were outstanding, comprised of 41,450,31741,287,197 shares and 15,542,50018,056,400 ADSs (equivalent to 155,425180,564 shares).

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þx    No  o¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.     Yes  o¨    No  þx

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þx    No  o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þx    No  o¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þAccelerated filer oNon-accelerated filer o

Large accelerated filer    x             Accelerated filer    ¨            Non-accelerated filer    ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAPþx International Financial Reporting Standards as issued by the International Accounting Standards Boardo¨    Othero¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17o¨            Item 18o¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).     Yes  o¨    No  þx

*Not for trading, but only in connection with the listing of the American Depositary Shares.


TABLE OF CONTENTS

     Page
 
 PART I

Item 1.

Identity of Directors, Senior Management and Advisers

   23  

Item 2.

 

Offer Statistics and Expected Timetable

   23  

Item 3.

 

Key Information

   23  

Item 4.

 

Information on the Company

   1215  

Item 4A.

 

Unresolved Staff Comments

   5144  

Item 5.

 

Operating and Financial Review and Prospects

   5144  

Item 6.

 

Directors, Senior Management and Employees

   7874  

Item 7.

 

Major Shareholders and Related Party Transactions

   9184  

Item 8.

 

Financial Information

   9285  

Item 9.

 

The Offer and Listing

   9386  

Item 10.

 

Additional Information

   9588  

Item 11.

 

Quantitative and Qualitative Disclosures about Market Risk

   107100  

Item 12.

 

Description of Securities Other Than Equity Securities

   109102  
PART II
 PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

   109104  

Item 14.

 

Material Modifications to the Rights of Security Holders and Use of Proceeds

   109104  

Item 15.

 

Controls and Procedures

   109104  

Item 16A.

 

Audit Committee Financial Expert

   110104  

Item 16B.

 

Code of Ethics

   110105  

Item 16C.

 

Principal Accountant Fees and Services

   110105  

Item 16D.

 

Exemptions from the Listing Standards for Audit Committees

   111106  

Item 16E.

 

Purchases of Equity Securities by Issuer and Affiliated Purchasers

   112107  

Item 16F.

 

Change in Registrant’s Certifying Accountant

   113107  

Item 16G.

 

Corporate Governance

   113107  

Item 17.

 

Financial Statements

   114109  

Item 18.

 

Financial Statements

   114109  

Item 19.

 

Exhibits

   115109  
EX-1.1 Articles of Incorporation of the registrant (English translation)
EX-1.2 Share Handling Regulations of the registrant (English translation)
EX-1.3 Regulations of the Board of Directors of the registrant (English translation)
EX-12.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-12.2 Certificatin of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-13.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
EX-13.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


Special Note Regarding Forward-looking Statements

This annual report contains forward-looking statements such as forecasts of results of operations, management strategies, objectives and plans, forecasts of operational data such as the expected number of subscription, and the expected dividend payments. All forward-looking statements that are not historical facts are based on management’s current plans, expectations, assumptions and estimates based on the information currently available. Some of the projected numbers in this report were derived using certain assumptions that are indispensable for making such projections in addition to historical facts. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those contained in or suggested by any forward-looking statement. Potential risks and uncertainties include, without limitation, the following:

1.Changes in the business environment in the telecommunications industry, such as intensifying competition from other service providers, businesses or other technologies caused by Mobile Number Portability, new market entrants and other factors, or the expansion of the areas of competition could limit our acquisition of new subscriptions and retention of existing subscriptions, or may lead to diminishing ARPU or an increase in our costs and expenses.

2.Current and new services, usage patterns, and sales schemes introduced by our corporate group may not develop as planned, which could affect our financial condition and limit our growth.

3.The introduction or change of various laws or regulations or the application of such laws and regulations to our corporate group could restrict our business operations, which may adversely affect our financial condition and results of operations.

4.Limitations in the amount of frequency spectrum or facilities made available to us could negatively affect our ability to maintain and improve our service quality and level of customer satisfaction.

5.Other mobile service providers in the world may not adopt the technologies that are compatible with those used by our corporate group’s mobile communications system on a continual basis, which could affect our ability to sufficiently offer international services.

6.Our domestic and international investments, alliances and collaborations may not produce the returns or provide the opportunities we expect.

7.As electronic payment capability and many other new features are built into our cellular phones/devices, and services of parties other than those belonging to our corporate group are provided through our cellular handsets/devices, potential problems resulting from malfunctions, defects or loss of handsets/devices, or imperfection of services provided by such other parties may arise, which could have an adverse effect on our financial condition and results of operations.

8.Social problems that could be caused by misuse or misunderstanding of our products and services may adversely affect our credibility or corporate image.

9.Inadequate handling of confidential business information including personal information by our corporate group, contractors and others, may adversely affect our credibility or corporate image.

10.Owners of intellectual property rights that are essential for our business execution may not grant us the right to license or otherwise use such intellectual property rights on acceptable terms or at all, which may limit our ability to offer certain technologies, productsand/or services, and we may also be held liable for damage compensation if we infringe the intellectual property rights of others.

11.NaturalEvents and incidents caused by natural disasters, social infrastructure paralysis such as power shortages, proliferation of harmful substances, terror or other destructive acts, the malfunctioning of equipment, or software bugs, deliberate incidents induced by computer viruses, cyber attacks, hacking, unauthorized access and other problems could cause failuresfailure in theour networks distribution channelchannels and/or other factors requirednecessary for the provision of service, disrupting our ability to offer services to our subscribers, and may adversely affect our credibility and/or corporate image.image, or lead to a reduction of revenues and/or increase of costs.

12.Concerns about adverse health effects arising from wireless telecommunication health risksmay spread and consequently may adversely affect our financial condition and results of operations.

13.Our parent company, NIPPON TELEGRAPH AND TELEPHONE CORPORATION (NTT), could exercise influence that may not be in the interests of our other shareholders.

Our actual results could be materially different from and worse than as described in the forward-looking statements. Important risks and factors that could cause our actual results to be materially different from as described in the forward-looking statements are set forth in Item 3.D. and elsewhere in this annual report.


1


PART I

As used in this annual report, references to “DOCOMO,” “the Company,” “we,” “our,” “our group” and “us” are to NTT DOCOMO, INC. and its subsidiaries except as the context otherwise requires.

“The year ended March 31, 2010”2011” refers to our fiscal year ended March 31, 2010,2011, and other fiscal years are referred to in a corresponding manner.

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A.
Item 1.Selected Financial DataIdentity of Directors, Senior Management and Advisers
Not applicable.
Item 2.Offer Statistics and Expected Timetable
Not applicable.
Item 3.Key Information
A.  Selected Financial Data

The following tables include selected historical financial data as atof and for each of the years ended March 31, 20062007 through 2010.2011. The data as at and for the years ended March 31, 20062007 through 20102011 in the table is derived from our audited consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated balance sheets for the years ended March 31, 20092010 and 2010,2011, the related consolidated statements of income and comprehensive income, changes in equity and cash flows for each of the years ended March 31, 20082009 through 2010,2011, and Notes thereto appear elsewhere in this annual report.

Selected Financial Data

                     
  As of and for the year ended March 31, 
  2006  2007  2008  2009  2010 
     (in millions, except per share data)    
 
Income Statement Data
                    
Operating revenues:
                    
Wireless services ¥4,295,856  ¥4,314,140  ¥4,165,234  ¥3,841,082  ¥3,776,909 
Equipment sales  470,016   473,953   546,593   606,898   507,495 
                     
Total  4,765,872   4,788,093   4,711,827   4,447,980   4,284,404 
Operating expenses
  3,933,233   4,014,569   3,903,515   3,617,021   3,450,159 
                     
Operating income
  832,639   773,524   808,312   830,959   834,245 
Other income (expense)(1)
  119,664   (581)  (7,624)  (50,486)  1,912 
                     
Income before income taxes and equity in net income (losses) of affiliates
  952,303   772,943   800,688   780,473   836,157 
Income taxes
  341,382   313,679   322,955   308,400   338,197 
                     
Income before equity in net income (losses) of affiliates
  610,921   459,264   477,733   472,073   497,960 
Equity in net income (losses) of affiliates, net of applicable taxes(2)(3)
  (364)  (1,941)  13,553   (672)  (852)
Net Income  610,557   457,323   491,286   471,401   497,108 
Less: Net (income) loss attributable to noncontrolling interests  (76)  (45)  (84)  472   (2,327)
                     
Net income attributable to NTT DOCOMO, INC. 
 ¥610,481  ¥457,278  ¥491,202  ¥471,873  ¥494,781 
                     


2


  Millions of yen, except per share data 
  As of and for the year ended March 31, 
  2007  2008  2009  2010  2011 

Income Statement Data

     

Operating revenues:

     

Wireless services

 ¥4,314,140   ¥4,165,234   ¥3,841,082   ¥3,776,909   ¥3,746,869  

Equipment sales

  473,953    546,593    606,898    507,495    477,404  
                    

Total

  4,788,093    4,711,827    4,447,980    4,284,404    4,224,273  

Operating expenses

  4,014,569    3,903,515    3,617,021    3,450,159    3,379,544  
                    

Operating income

  773,524    808,312    830,959    834,245    844,729  

Other income (expense)

  (581  (7,624  (50,486  1,912    (9,391
                    

Income before income taxes and equity in net income (losses) of affiliates

  772,943    800,688    780,473    836,157    835,338  

Income taxes

  313,679    322,955    308,400    338,197    337,837  
                    

Income before equity in net income (losses) of affiliates

  459,264    477,733    472,073    497,960    497,501  

Equity in net income (losses) of affiliates, net of applicable taxes (1) (2)

  (1,941  13,553    (672  (852  (5,508

Net Income

  457,323    491,286    471,401    497,108    491,993  

Less: Net (income) loss attributable to noncontrolling interests

  (45  (84  472    (2,327  (1,508
                    

Net income attributable to NTT DOCOMO, INC.

 ¥457,278   ¥491,202   ¥471,873   ¥494,781   ¥490,485  
                    

Per Share Data

     

Basic and diluted earnings per share attributable to NTT DOCOMO, INC.

 ¥10,396   ¥11,391   ¥11,172   ¥11,864   ¥11,797  

Dividends declared and paid per share

 ¥4,000   ¥4,400   ¥4,800   ¥5,000   ¥5,200  

Dividends declared and paid per share (3)

 $34.03   $44.07   $48.41   $53.53   $62.83  

Weighted average common shares Outstanding—Basic and Diluted (shares)

    43,985,082      43,120,586      42,238,715      41,705,738      41,576,859  

Balance Sheet Data

     

Working capital(4)

 ¥568,988   ¥533,465   ¥679,293   ¥872,816   ¥1,032,131  

Total property, plant and equipment, net

  2,900,653    2,834,607    2,691,485    2,607,590    2,523,319  

Total assets

  6,116,215    6,210,834    6,488,220    6,756,775    6,791,593  

Total debt(5)

  602,965    478,464    639,233    610,347    428,378  

Total liabilities

  1,953,748    1,933,050    2,144,912    2,094,329    1,913,999  

Common stock

  949,680    949,680    949,680    949,680    949,680  

Total NTT DOCOMO, INC. shareholders’ equity

  4,161,303    4,276,496    4,341,585    4,635,877    4,850,436  

Total Equity

  4,162,467    4,277,784    4,343,308    4,662,446    4,877,594  

Other Financial Data

     

Depreciation and amortization expenses and loss on sale or disposal of property, plant and equipment

  801,046    830,784    847,463    733,881    720,999  

Net cash provided by operating activities

  980,598    1,560,140    1,173,677    1,182,818    1,287,037  

Net cash used in investing activities

  (947,651  (758,849  (1,030,983  (1,163,926  (455,370

Net cash used in financing activities

  (531,481  (497,475  (182,441  (260,945  (421,969

Margins (percent of operating revenues):

     

Operating income margin

  16.2  17.2  18.7  19.5  20.0

Net income margin

  9.6  10.4  10.6  11.5  11.6

                     
  As of and for the year ended March 31, 
  2006  2007  2008  2009  2010 
     (in millions, except per share data)    
 
Per Share Data
                    
Basic and diluted earnings per share attributable to NTT DOCOMO, INC. ¥13,491  ¥10,396  ¥11,391  ¥11,172  ¥11,864 
Dividends declared and paid per share ¥3,000  ¥4,000  ¥4,400  ¥4,800  ¥5,000 
Dividends declared and paid per share(4)
 $25.54  $34.03  $44.07  $48.41  $53.53 
Weighted average common shares                    
Outstanding — Basic and Diluted (shares)  45,250,031   43,985,082   43,120,586   42,238,715   41,705,738 
Balance Sheet Data
                    
Working capital(5)
 ¥558,459  ¥568,988  ¥533,465  ¥679,293  ¥872,816 
Total property, plant and equipment, net  2,777,454   2,900,653   2,834,607   2,691,485   2,607,590 
Total assets  6,365,257   6,116,215   6,210,834   6,488,220   6,756,775 
Total debt(6)
  792,405   602,965   478,464   639,233   610,347 
Total liabilities  2,312,120   1,953,748   1,933,050   2,144,912   2,094,329 
Common stock  949,680   949,680   949,680   949,680   949,680 
Total NTT DOCOMO, INC. shareholders’ equity  4,052,017   4,161,303   4,276,496   4,341,585   4,635,877 
Total Equity  4,053,137   4,162,467   4,277,784   4,343,308   4,662,446 
Other Financial Data
                    
Depreciation and amortization expenses and loss on sale or disposal of property, plant and equipment  774,137   801,046   830,784   847,463   733,881 
Net cash provided by operating activities  1,610,941   980,598   1,560,140   1,173,677   1,182,818 
Net cash used in investing activities  (951,077)  (947,651)  (758,849)  (1,030,983)  (1,163,926)
Net cash used in financing activities  (590,621)  (531,481)  (497,475)  (182,441)  (260,945)
Margins (percent of operating revenues):                    
Operating income margin  17.5%  16.2%  17.2%  18.7%  19.5%
Net income margin  12.8%  9.6%  10.4%  10.6%  11.5%
(Notes)
(1)Includes an aggregate gain on the sales of Hutchison 3G UK Holdings Limited and KPN-Mobile N.V. shares of ¥101,992 million for the year ended March 31, 2006.
(2)Includes impairment of investments in affiliates. See Note 5 of Notes to Consolidated Financial Statements.
(3)(2)Net of deferred taxes of ¥(1,653) million, ¥850 million, ¥(9,257) million, ¥567 million, ¥1,271 million and ¥1,271¥5,032 million in the years ended March 31, 2006, 2007, 2008, 2009, 2010 and 2010,2011, respectively.
(4)(3)The dividends per share were translated into U.S. dollars at the relevant record date.
(5)(4)Working capital was computed by subtracting total current liabilities from total current assets.
(6)(5)Total debt includes total short-term debt (including commercial paper and current portion of long-term debt) and long-term debt.

3


Exchange Rate Data

The following table shows the exchange rates for Japanese yen per $1.00 based upon the noon buying rate in New York City for cash transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York:

                 
Fiscal Year Ended March 31, High Low Average* Period-end
 
2006  120.93   104.41   113.15   117.48 
2007  121.81   110.07   116.92   117.56 
2008  124.09   96.88   114.31   99.85 
2009  110.48   87.80   100.62   99.15 
2010  100.71   86.12   92.93   93.40 
Calendar Year 2009
                
                 
December  93.08   86.62   89.95   93.08 
Calendar Year 2010
                
                 
January  93.31   89.41   91.10   90.38 
February  91.94   88.84   90.14   88.84 
March  93.40   88.43   90.72   93.40 
April  94.51   92.03   93.45   94.24 
May  94.68   89.89   91.97   90.81 
June (through June 11, 2010)  92.33   91.04   91.68   91.72 

Fiscal Year ended March 31,

  High   Low   Average *   Period-end 

2007

   121.81     110.07     116.92     117.56  

2008

   124.09     96.88     114.31     99.85  

2009

   110.48     87.80     100.62     99.15  

2010

   100.71     86.12     92.93     93.40  

2011

   94.68     78.74     85.71     82.76  

Calendar Year 2010

                

December

   84.23     81.67     83.34     81.67  

Calendar Year 2011

                

January

   83.36     81.56     82.63     81.97  

February

   83.79     81.48     82.54     81.94  

March

   82.98     78.74     81.65     82.76  

April

   85.26     81.31     83.18     81.31  

May

   82.12     80.12     81.13     81.29  

June (through June 9, 2011)

   80.98     79.87     80.36     80.07  

*For fiscal years, calculated from the average of the exchange rates on the last day of each month during the period. For calendar year months, calculated based on the average of daily closing exchange rates.

B.
B.  Capitalization and Indebtedness

Not applicable.

C.
C.  Reasons for the Offer and Use of Proceeds

Not applicable.

D.
D.  Risk Factors

Risks Relating to Our Business

Changes in the business environment in the telecommunications industry, such as intensifying competition from other service providers, businesses or other technologies caused by Mobile Number Portability, new market entrants and other factors, or the expansion of the areas of competition could limit our acquisition of new subscriptions and retention of existing subscriptions, or may lead to diminishing ARPU or an increase in our costs and expenses.

Market changes such as the introduction of Mobile Number Portability (“MNP”) and the emergence of new service providers are resulting in increasing competition from other service providers in the telecommunications industry. For example, other mobile service providers have introduced new products and services including 3G handsets, music player handsets, music distribution services, and flat-rate services for voice communications ande-mail, limited to specified recipients, and installment sales methods for handsets. There are also providers that now offer or may in the future offer services such as combined billing, aggregated point programs, and services offering free calls between fixed-line and cellularmobile phones in conjunction with fixed-line communications, which may be more convenient for customers.

At the same time, therecompetition may be increased competitionincrease, resulting from the introduction of other new services and technologies, especially low-priced and flat-rate services, such as fixed-line or mobile IP phones, high-speed broadband Internet service and digital broadcasting, public wireless LAN, and so on or convergence of these services.


4


In addition to competition from other service providers and technologies in the telecommunications industry, there are other factors increasing competition among mobile network operators in Japan such as saturation in the Japanese cellularmobile communications market, changes to business and market structures due to the expansion of the areas of competition arising from the entry of competitors in the market, including MVNOs*MVNOs* and competitors from other industries, changes in the regulatory environment, and increased rate competition.
With the use of smartphones and tablets becoming increasingly widespread, many businesses and others have entered the competition in service offerings on mobile phones and it is possible that those businesses, etc. may eventually launch services that are more convenient for customers, thus further intensifying rate competition.

Under these circumstances, the number of net new subscriptions we acquire may continue to decline in the future and may not reach the number we expect. Also, in addition to difficulty acquiring new subscriptions, we may not be able to maintain existing subscriptions at expected levels due to increased competition among cellular service providers in the areas of rates and services.competition. Furthermore, in order to capture new subscriptions and maintain existing subscriptions, we may need to incur higher than expected costs. In this fierce market environment, in order to provide advanced services and increase convenience to our customers, we have made various rate revisions, such asfor example: the introduction in June 2004 of “Pake-hodai,” which is a packet flat-rate service for FOMA i-mode, the introduction of a new unified rate planplans for FOMA services and mova services in November 2005 that users find simple and easy to understand, the introduction in March 2006 of a new rate plan that enables users to apply Pake-hodai to all FOMA services, the introduction in March 2007 of “Pake-hodai full,” a service that enables subscribers with full-browser handsets to view not only i-mode but also PC websites and video for a flat monthly rate, the introduction in August 2007 of “Fami-wari MAX 50” and “Hitoridemo Discount 50,” which give a uniform 50% discount on basic monthly charges, regardless of the length of the subscription period, the introduction in April 2008 of a new rate plan that allows users in the same “Family Discount” group to make free domestic calls to each other 24 hours a day, the introduction in October 2008 of the packet flat-rate service, “Pake-hodai double,” with monthly charges varying between the minimum and maximum rates, according to usage, and the introduction in December 2009March 2011 of “Mail Tsukai-hodai,“Pake-hodai FLAT” and “Pake-hodai double 2,our new packet flat-rate services suitable for customers who use a payment plan that allows userich variety of domestic i-modee-mail, free of charges, regardless of the destinatione-mail address or whether photos, videos or other files are attached.content on devices like smartphones and tablets. However, we cannot be certain that these measures will enable us to acquire new and maintain existing subscriptions. Furthermore,Also, although we forecast some decline in ARPU as a result of these rate revisions, are expected to lead to a certain decline in ARPU, but if the subscription ratio for various discount services or the trend of subscriptions of “Family Discount” and switchingin migration to flat-rate services increases more than we expect,are not in line with our expectations, our ARPU may decrease more than we expect.our forecast. Furthermore, if the market growth slows or the market shrinks, due to the economic downturn, APRUARPU may decrease even more than our forecast and we may not be able to capture new subscriptions or maintain the existing number of subscriptions at the level we expect. TheThese foregoing factors may have a material adverse effect on our financial condition and operating results.

*

Abbreviation of Mobile Virtual Network Operator. A business that borrows the wireless communication infrastructure of other companies to provide services.

Current and new services, usage patterns, and sales schemes introduced by our corporate group may not develop as planned, which could affect our financial condition and limit our growth.

We view increaseas important factors to our future growth increases in revenue, throughfor instance, the expansion of packet communication services and other data communication services from promotion of the use of various i-mode, servicessp-mode and throughother services, the development and expansion of new services, focused on i-mode FeliCa, such as credit services whichmainly associated with FeliCa, that are useful in everyday life and business, as important factors to our future growth.and the development of social support services in various areas, including the environment and ecology, health and medical care, finance and settlement and education. However, a number of uncertainties may arise to prevent the development of these services and constrain our growth.

Furthermore, if market growth slows or the market shrinks, due to the economic downturn, the services, forms of usage, and sales methods provided by us may not develop sufficiently, which could affect our financial conditions and limit our growth. In particular, we cannot be certain whether or not the following can be achieved:

We will be able to find the partners and content providers needed to provide the services and/or forms of usage that we are introducing and persuade a sufficient number of vendors and other establishments to install FeliCa readers;

We will be able to provide planned new services and forms of usage as scheduled and keep costs needed for the deployment and expansion of such services within budget;

The services, forms of usage, and installment sales and other methods that we offer and plan to offer will be attractive to current and potential subscribers and there will be sufficient demand for such services;

Manufacturers and content providers will steadily create and offer products including FOMA and Xi handsets, handsets compatible with services we provide, and content;

Our current and future data communication services, including i-mode and sp-mode services, and other services, including social support services, will be attractive to existing and potential subscribers and achieve continued or new growth;

Demand in the market for mobile handset functionality will be as we envision and as a result our handset procurement costs will be reduced, which will enable us to offer our handsets at appropriate prices; and

 We will be able to find the partners and content providers needed to provide the new services and forms of usage we are introducing and persuade a sufficient number of vendors and other establishments to install i-mode FeliCa readers;
 • We will be able to provide planned new services and forms of usage as scheduled and keep costs needed for the deployment and expansion of such services within budget;
• The services and installment sales and other methods we offer and plan to offer will be attractive to current and potential subscribers and there will be sufficient demand for such services;


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• Manufacturers and content providers will steadily create and offer products including handsets for our 3G system and handsets and programming for our 3G i-mode services at appropriate prices and on a timely basis;
• Our current and future data communication services including i-mode and other services will be attractive to existing and potential subscribers and achieve continued or new growth;
• Demand in the market for mobile handset functionality will be as we envision and as a result our handset procurement costs will be reduced, which will enable us to offer our handsets at appropriate prices; and
• 

We will be able to commence services with improved data communication speed enabled by HSDPA*HSDPA*, HSUPA*HSUPA** and LTE*LTE*** technology as planned.

If the development of our new services or forms of use is limited, it may have a material effect on our financial condition and results of operations.

*
*

Abbreviation of High Speed Downlink Packet Access. A technology for high-speed packet data transmission from base station to handset based on Wideband Code Division Multiple Access, or W-CDMA.

**

Abbreviation of High Speed Uplink Packet Access. A technology for high-speed packet data transmission from handset to base station based on W-CDMA.

***

Abbreviation of Long Term Evolution. A mobile communications protocol with specifications formulated by the 3rd Generation Partnership Project.

The introduction or change of various laws or regulations or the application of such laws and regulations to our corporate group could restrict our business operations, which may adversely affect our financial condition and results of operations.

The Japanese telecommunications industry has been undergoing regulatory reform in many areas including rate regulation. Because we operate on radio spectrum allocated by the Government,Japanese government, the mobile telecommunications industry in which we operate is particularly affected by the regulatory environment. Various

governmental bodies have been recommending or considering changes that could affect the mobile telecommunications industry, and there may be continued reforms including the introduction or revision of laws or regulations that could have an adverse effect on us. These include:

 

Regulations to increaseaccelerate competition in the handset competitionarea such as SIM* lock removalSIM* unlocking regulations;

• Revision of the spectrum allocation system such as reallocation of spectrum and introduction of an auction system;
• Measures to open up some segments of telecommunication platform functions such as authentication and payment collection to other corporations;
• Rules that could require us to open our i-mode service to all content providers and Internet service providers or that could prevent us from setting or collecting i-mode content fees or putting i-mode service on cellular phone handsets as an initial setting;
• Regulations to prohibit or restrict certain content or transactions or mobile Internet services such as i-mode;
• Measures which would introduce new costs such as the designation of mobile phone communication as a universal service and other changes to the current universal service fund system;
• Fair competition measures to promote new entry by MVNOs;
• Introduction of new measures to promote competition based on a review of the designated telecommunications facilities system (dominant carrier regulation);
• Review of the structure of the NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”) Group, which includes our Group; and


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Revision of the spectrum allocation system such as reallocation of spectrum and introduction of an auction system;


Measures to open up some segments of telecommunication platform functions such as authentication and payment collection to other corporations;

Rules that could require us to open functions regarding our services, such as i-mode and sp-mode services, to platform providers, Internet service providers, content providers, etc.;

Regulations to prohibit or restrict certain content, transactions or mobile Internet services such as i-mode or sp-mode;

Measures which would introduce new costs such as the designation of mobile phone communication as a universal service and other changes to the current universal service fund system;

• Other measures including competition safeguard measures directed toward us, NTT East and NTT West, revision of the rules of access charge between operators to enhance competition that would restrict our business operations in the telecommunications industry.

Fair competition measures to promote new entry by MVNOs;

Introduction of new measures to promote competition based on a review of the designated telecommunications facilities system (dominant carrier regulation);

Review of the structure of the NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”) group, which includes our group; and

Other measures including competition safeguard measures directed toward us, NTT East and NTT West, revision of the rules of access charge between operators to enhance competition that would restrict our business operations in the telecommunications industry.

In addition to the above proposed changes that may impact the mobile communications business, we may be impacted by a variety of laws, regulations and systems. For example, in response to an increase in the number of our subscribers,subscriptions or in the traffic volume per subscriber, we have proceeded with the enhancement of our telecommunications facilities in order to ensure and improve theour service we provide to our subscribers.quality. As a result, we are using an increasing amount of electricity. Moreover, we are implementing measures directed towards reducing greenhouse gas emissions, including deployment of low-power consumption devices and efficient power generators. However, with the implementation of regulations and other measures aimed at reducing greenhouse gas emissions, our cost burdens may increase, and this may have an adverse effect on our financial condition and results of operations.

Further still, we have entered into a wide variety of operations and areas of business by developing social support services in the environment, medical care, finance, and other fields and through equity participation and partnerships in an attempt to secure new sources of profit. Therefore, we are vulnerable to impacts from laws, regulations and systems specific to new services, operations and areas of business, in addition to laws, regulations and systems associated with the mobile communications business. If such laws, regulations, or systems are implemented, they may work as constraints on our group’s business operations, and this may have an adverse effect on our group’s financial condition and corporate performance.

It is difficult to predict with certainty if any proposed changes impacting the mobile telecommunications business or if any other relevant laws, regulations or systems will be drafted, and if they are implemented, the extent to which our business will be affected. However, if any one or more of the above proposed changes impacting the mobile telecommunications business occurs, or if laws, regulations or systems are introduced,

reformed, or become applicable to us, we may experience constraints on the provision of our mobile communication services and changes may arise in our existing revenue structure, and this may have an adverse effect on our financial condition and results of operations.

*

Abbreviation of Subscriber Identity Module. An IC card inserted into a handset on which subscriber information is recorded, used to identify user.

Limitations in the amount of frequency spectrum or facilities made available to us could negatively affect our ability to maintain and improve our service quality and level of customer satisfaction.

One of the principal limitations on a cellularmobile communication network’s capacity is the available radio frequency spectrum we can use. There are limitations in the spectrum and facilities available to us to provide our services. As a result, in certain parts of metropolitan Tokyo and Osaka, such as areas near major train stations, our cellularmobile communication network operates at or near the maximum capacity of its available spectrum during peak periods, which may cause reduced service quality.

With the number of subscriptions and traffic volume per subscriber increasing, our service quality may decline if we cannot obtain the necessary allocation of spectrum from the Japanese government for the smooth operation of our business.

We may not be able to avoid a reduced quality of services despite our efforts to improve the efficiency of our spectrum use through technology such as HSDPA, HSUPA and LTE and to acquire additional spectrum.

In addition, the quality of the services we provide may also decrease due to the limited processing capacity of our base stations and switching facilities during peak usage periods if our subscription base dramatically increases or the volume of content such as images and music provided through our networks significantly expands. Also, in relation to our FOMA services packet flat-rate service forand FOMA and our flat-rate service that enables subscribers to view full-browser PC websites and video,Xi packet communication services, an increase in the number of service subscriptions and traffic volume per subscriber, as a result of our subscribersthe increasingly widespread use of smartphones, tablets and data communication devices for PCs may go substantially beyond our projections such that we may not be able to process such traffic with our existing facilities, and our quality of service may decline. Furthermore, with an increasing number of subscriptions and traffic volume, our quality of service may decline if we cannot obtain the necessary allocation of spectrum from the Government for the smooth operation of our business.

We may not be able to avoid reduced quality of services despite our continued efforts to improve the efficiency of our use of spectrum through technology and to acquire new spectrum.

If we are not able to successfully address such problems in a timely manner, wethere may experiencebe constraints on the growth of our mobile communication services orand we may lose subscribers to our competitors, which may materially affect our financial condition and results of operations.

Other mobile service providers in the world may not adopt the technologies that are compatible with those used by our corporate group’s mobile communications system on a continual basis, which could affect our ability to sufficiently offer international services.

We are able to offer global roaming services on a worldwide basis, on the condition that a sufficient number of other mobile service providers have adopted technologies that are compatible with the technology we use on our mobile communications systems. We expect that our overseas affiliates, strategic partners and many other mobile service providers will continue to use technologies compatible with ours, but there is no guarantee of this in the future.


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If a sufficient number of mobile service providers do not adopt technologies compatible with ours, if mobile service providers switch to other technologies, or if there is a delay in the introduction of compatible technologies, we may not be able to offer international roaming or other services as expected and we may not be able to offer our subscribers the convenience of overseas services.

Also, we cannot be sure that handset manufactures or manufactures of network equipment will be able to appropriately and promptly adjust their products if we need to change the handsets or network we currently use due to a change in our standard technology, and the handsets or network we currently use need to be changed.

If such technologies compatible with the technologies we have adopted do not develop as we expect and we are not able to maintain or improve the quality of our overseas services or enjoy the benefits of global economies of scale, this may have an adverse effect on our financial condition and results of operations.

Our domestic and international investments, alliances and collaborations may not produce the returns or provide the opportunities we expect.

One of the major components of our strategy is to increase our corporate value through domestic and overseas investments, alliances and collaborations. We have entered into alliances and collaborations with other companies and organizations overseas which we believe could help us achieve this objective. We are also promoting this strategy by investing in, entering into alliances with and collaborating with domestic companies and investing in new business areas.

However, there can be no assurance that we will be able to maintain or enhance the value or performance of our past or future investments or that we will receive the returns or benefits we expect from these investments, alliances and collaborations. Our investments in new business areas outside of the mobile telecommunication business, such as broadcasting and home shopping, may be accompanied by challengesuncertain factors beyond our expectations, as we have little experience in such new areas of business.

In recent years, the companies in which we have invested have experienced a variety of negative impacts, including severe competition, increased debt burdens, worldwide economic recession, significant change in share prices and financial difficulties. To the extent that these investments are accounted for by the equity method and to the extent that the investee companies have net losses, our financial results will be adversely affected by our pro rata portion of these losses. If there is a loss in the value of our investment in any investee company and such loss in value is other than a temporary decline, we may be required to adjust the book value and recognize an impairment loss for such investment. Also, a business combination or other similar transaction involving any of our investee companies could require us to realize impairment loss for any decline in the value of investment in such investee company. In either event, our financial condition or results of operations could be materially adversely affected.

As electronic payment capability and many other new features are built into our cellular phones/devices, and services of parties other than those belonging to our corporate group are provided through our cellular handsets/devices, potential problems resulting from malfunctions, defects or loss of handsets/devices, or imperfection of services provided by such other parties may arise, which could have an adverse effect on our financial condition and results of operations.

Various functions are mounted on the mobile handsets we provide. In addition, services provided on the mobile handsets we provide and if we cannot appropriately deal withcome from not only our group, but also from a large number of parties other than those belonging to our corporate group. If any technological problems that may ariseproblem arises with respect to current or future handsets, or theif malfunction, defect or loss of handsets occurs, or if any issue arises as a result of, for example, a problem in the services provided by other parties, our credibility may decline and our corporate image may be damaged, leading to an increase in cancellations of subscriptionsubscriptions or an increase in expenses for indemnity payments to subscribers, and our financial condition or results of operations may be affected. New issues may arise which are different from those related to mobile communication services which we have been providing, especially with i-mode handsets with FeliCa capabilities that can be used for electronic payment and credit transactions. Events that may lead to a decrease in our credibility and corporate image, or an increase in cancellations of subscriptions and indemnity payments for subscribersor growing costs include the following:

Breakdown, defect or malfunction in any of the various functions built into our handsets;

Breakdown, defect or malfunction in our handsets resulting from, for example, a problem in the services provided by other parties;

• Breakdown, defect and malfunction

Loss of information, e-money, points, etc., due to a breakdown of handsets or other factors;

Illegal use of information, e-money, credit functions and points by third parties due to a loss or theft of our handsets;

• Loss of information,e-money or points due to a breakdown of handsets or other factors;


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Illegal access to and use of user records and balances accumulated on handsets by third-parties; and

Inadequate and inappropriate management of e-money, credit functions or points by companies with which we make alliances or collaborate.

• Illegal use of information,

e-money, credit functions and points by third parties due to a loss or theft of handsets;

• Illegal access to and use of user records and balances accumulated on handsets by third-parties; and
• Inadequate and inappropriate management ofe-money, credit functions or points by companies with which we make alliances or collaborate.
Social problems that could be caused by misuse or misunderstanding of our products and services may adversely affect our credibility or corporate image.

We may face an increase in cancellations of existing subscriber contracts and difficulty in acquiring new subscriptions due to decreased credibility of our products and services and damaged corporate image caused by inappropriate use of our products and services by unscrupulous subscribers.

One

For example, isthere are cases of unsolicited bulke-mail e-mails sent through oure-mail services, including i-mode mail, SMS and SMS.sp-mode mail. Despite our extensive efforts to address this issue caused by unsolicited bulke-mails including notifying our subscribers via various brochures, providing unsolicited bulke-mail filtering functions with our handsets and pursuing actions against companies which distribute large amounts of such unsolicited bulke-mails, the problem has not yet been rooted out. If our subscribers receive a large amount of unsolicitede-mail, it may cause a decrease in customer satisfaction and may damage our corporate image, leading to a reduction in the number of i-mode or sp-mode subscriptions.

Mobile phones have been used in crimes such as the “it’s me” fraud, whereby callers request an emergency bank remittance pretending to be a relative.billing fraud. To combat these misuses of our services, we have introduced various measures such as more strictstricter identification confirmation at points of purchase and ended new contracts for pre-paid mobile phones as of March 31, 2005 because pre-paid mobile phones are easier to use in criminal activities. However, in the event criminal usage increases, mobile phones may be regarded as a problem and lead to an increase in cancellation of contracts.

In addition, there was an issue occurredproblems arose from the fact that subscribers were charged fees for packet communication at higher levels than they were aware of as a result of using mobile phones without fully recognizing the increased volume and frequencies to use packet communication, as our handsets and services became more sophisticated. Also, there are issues concerning manners for phone usage in public places such as in trains and aircraft and the occurrence of car accidents caused by the use of mobile phones while driving. Further, there are a variety of issues concerning the possession of mobile phones by children in elementary and junior high schools, and discussions concerning whether our access restriction service to harmful web sites (“Filtering service”), which applies basicallygenerally to subscribers under 20 years of age as the enforcement of the Act on Establishment of Enhanced Environment for Youth’s Safe and Secure Internet Use, is sufficient and accurate. These issues may similarly damage our corporate image.

We believe that we have properly addressed the social issues involving mobile phones. However, it is uncertain whether we will be able to continue addressing those issues appropriately in the future as well and if we fail to do so, we may experience an increase in cancellation of existing subscriber contracts or fail to acquire new subscribers as expected, and this may affect our financial condition and results of operations.

Inadequate handling of confidential business information including personal information by our corporate group, contractors and others, may adversely affect our credibility or corporate image.

We possess information on numerous subscribers in the telecommunications, credit, and other businesses, and to appropriately and promptly address the Law Concerning the Protection of Personal Information, we have put in place comprehensive company-wide security management such as thorough management of confidential information including personal information, employee education, supervision of subcontractors and by strengthening technological security.

However, in the event an information leak occurs despite these security measures, our credibility and corporate image may be significantly damaged and we may experience an increase in cancellation of subscriber contracts, an increase in indemnity costs and slower increase in additional subscriptions, and our financial condition and results of operations may be adversely affected.


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Owners of intellectual property rights that are essential for our business execution may not grant us the right to license or otherwise use such intellectual property rights on acceptable terms or at all, which may limit our ability to offer certain technologies, products and/or services, and we may also be held liable for damage compensation if we infringe the intellectual property rights of others.

For us to carry out our business, it is necessary to obtain licenses and other rights to use the intellectual property rights of third parties. Currently, we are obtaining licenses from the holders of the rights concerned by concluding license agreements. We will obtain the licenses from the holders of the rights concerned if others have the rights to those intellectual property rights necessary for us to operate our business in the future. However, if we cannot come to an agreement with the holders of the rights concerned or a mutual agreement concerning the granted rights cannot be maintained afterwards, there is a possibility that we will not be able to provide our specific technologies, products or services. Also, if we receive claims of violation of intellectual property rights from others, we may be forced to expend considerable time and cost in reaching a resolution, and if such claims are recognized, we may be liable to pay damages for infringement of the rights concerned, which may adversely affect our financial condition and results of operations.

NaturalEvents and incidents caused by natural disasters, social infrastructure paralysis such as power shortages, proliferation of harmful substances, terror or other destructive acts, the malfunctioning of equipment or software bugs, deliberate incidents induced by computer viruses, cyber attacks, hacking, unauthorized access and other problems could cause failuresfailure in theour networks, distribution channelchannels and/or other factors requirednecessary for the provision of service, disrupting our ability to offer services to our subscribers, and may adversely affect our credibility and/or corporate image.image, or lead to a reduction of revenues and/or increase of costs.

We have built a nationwide network including base stations, antennas, switching centers and transmission lines and provide mobile communication service using this network. In order to operate our network systems in a safe and stable manner, we have various measures in place, such as multipleduplicative systems. However, despite these measures, our system could fail for various reasons, including malfunctioning of system hardware, natural disasters such as earthquakes, tsunamis, typhoons and floods, paralysis of social infrastructure such as power shortages and interruption of public transportation networks, terrorism, and similar phenomena and events and shortages in personnelincidents, and the inability to sufficiently operate and maintain network equipmentsfacilities due to, for example, the proliferation of harmful substances or the spread of a highly contagious and dangerous disease.an epidemic. These system failures can require an extended time for repair and, as a result, may lead to decreased revenues and increased repair costs,significant cost burdens, and our financial condition and results of operations may be adversely affected.

There have been instances in which tens of millions of computers worldwide were infected by viruses through the Internet. Similar incidents could occur on our mobile communication network.networks. If such a virus entered our network or handsets through such means as hacking, unauthorized access, or otherwise, our system could fail and our mobile phones become unusable. In such an instance, the credibility of our network and customer satisfaction could decrease significantly. Although we have enhanced our security measures including systems to block unauthorized access and remote downloading for mobile phones, in order to provide for unexpected events, such precautions may not make our system fully prepared for every event.contingency. Moreover, our network could be affected by software bugs, incorrect equipment settings and human errors whichthat are not the result of malfeasance but also cause system failures or breakdowns.

In addition, aevents or incidents caused by natural disaster or thedisasters, social infrastructure paralysis, proliferation of harmful substances, spread of a highly contagious and dangerous diseasean epidemic or any other event could force the temporary closure ofour offices or critical business partners including sales outlets.agencies to suffer constraints on business operations or to temporarily close their offices or stores. In such a case, we would lose the opportunity to sell or provide goods and services and we mightalso may not be able to respond appropriately to subscription applications and requests from subscribers, includingsuch as after-sales service and this might damage our corporate image and credibility and lower customer satisfaction.

In the eventrequests.

If we are unable to properly respond to any such events, our credibility or corporate image may be reduced,decrease, and we may experience a decrease in revenues as well as significant repair costs, whichcost burdens, and if the market growth slows

or the market shrinks due to any such event, ARPU may decrease below our forecast, or we may not be able to gain new subscriptions or maintain the existing number of subscriptions at the level we expect. All of these factors may affect our financial condition and results of operations.

The Great East Japan Earthquake that struck on March 11, 2011, caused interference with business activities of both our group and our business partners: for instance, our group suffered physical damage to networks and service interruption due to power outages, and our business partners, including sales agencies, were forced to temporarily close their stores. Should any further unforeseeable incident, including the disruption of social infrastructure due to aftershocks and diminished power supply, the proliferation of harmful substances and other impacts of damaged nuclear power plants, economic downturn, or market contraction, occur in the future in relation to the Great East Japan Earthquake, we may face increased costs required for network recovery and other such spending, or shrinking profits, and our group or our business partners may be subject to constraints in conducting business operations. All of these factors may affect our financial condition and results of operations.

Concerns about adverse health effects arising from wireless telecommunication healthtelecommunications risks may spread and consequently adversely affect our financial condition and results of operations.

Media

Reports by the World Health Organization (WHO), other organizations and other reportsvarious media have suggested that electric wave emissions from wireless handsets and other wireless equipmenttelecommunications devices may adversely affect the health of mobile phone users and others by causing cancer and vision loss and interferinginterfere with various electronic medical devices including hearing aids and pacemakers or may adversely affect the health of their users and also may present increased health risks for users who are children. While these reports have not been conclusive, and although the findings in such reports are disputed, theothers by causing cancer or vision loss. The actual or perceived risk of wireless telecommunication devices to the


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health of users could adversely affect our corporate image, financial condition and results of operations through increased cancellation by existing subscribers, reduced subscriber growth, reduced usage per subscriber and introduction of new regulations, restrictions, or litigation. The perceived risk of wireless telecommunications devices may have been elevated by certain wireless carriers and handset manufactures affixing labels to their handsets showing levels of electric wave emissions or warnings about possible health risks. Research and studies are ongoing and we are actively attempting to confirm the safety of wireless telecommunication, but there can be no assurance that further research and studies will demonstrate that there is no interrelation between electric wave emissions and health problems.

Furthermore, although the electric wave emissions of our cellular handsets and base stations comply with the electromagnetic safety guidelines of Japan, including guidelines regarding the specific absorption rate of electric waves, and the International Commission on Non-Ionizing Radiation Protection, the guidelines of which are regarded as an international safety standard, the Electromagnetic Compatibility Conference Japan has confirmed that some electronic medical devices are affected by the electromagnetic interference from cellular phones as well as other portable radio transmitters. As a result, Japan has adopted a policy to restrict the use of cellular services inside medical facilities. We are working to ensure that our subscribers are aware of these restrictions when using cellular phones. There is a possibility that modifications to regulations, new regulations or restrictions could limit our ability to expand our market or our subscription base or otherwise adversely affect us.

Our parent company, NIPPON TELEGRAPH AND TELEPHONE CORPORATION (NTT), could exercise influence that may not be in the interests of our other shareholders.

As of March 31, 2010,2011, NTT owned 66.43%66.65% of our outstanding voting shares. While being subject to the conditions for fair competition established by the Ministry of Posts and Telecommunications (“MPT,” currently the Ministry of Internal Affairs and Communications, or “MIC”) in April 1992, NTT retains the right to control our management as a majority shareholder, including the right to appoint directors. Currently, although we conduct our day-to-day operations independently of NTT and its other subsidiaries, certain important matters are discussed with, or reported to, NTT. As such, NTT could take actions that are in its best interests whichbut may not be in the interests of our other shareholders.

Risks Relating to the Shares and the ADSs

Future sales of our shares by NTT or by us may adversely affect the trading price of our shares and ADSs.

As of March 31, 2010,2011, NTT owned 66.43%66.65% of our outstanding voting shares. Under Japanese law, NTT, like any other shareholder, generally is able to dispose of our shares freely on the Tokyo Stock Exchange or otherwise. Additionally, our board of directors is authorized to issue 144,340,000144,480,000 additional shares generally without any shareholder approval. The sale or issuance or the potential for sale or issuance of such shares could have an adverse impact on the market price of our shares.

There are restrictions on your ability to withdraw shares from the depositary receipt facility.

Each ADS represents the right to receive 1/100th of a share of common stock. Therefore, pursuant to the terms of the deposit agreement with our depositary, The Bank of New York Mellon, in order to withdraw any shares, a holder of ADSs must surrender for cancellation and withdrawal of shares, ADRs evidencing 100 ADSs or any integral multiple thereof. Each ADR will bear a legend to that effect. As a result, holders of ADSs will be unable to withdraw fractions of shares from the depositary or receive any cash settlement in lieu of withdrawal of fractions of shares. In addition, although the ADSs themselves may be transferred in any lots pursuant to the deposit agreement, the ability to trade the underlying shares may be limited.

Holders of ADRs have fewer rights than shareholders and have to act through the depositary to exercise those rights.

Holders of ADRs do not have the same rights as shareholders and accordingly cannot exercise rights of shareholders against us. The Bank of New York Mellon, as depositary, through its custodian agent, is the registered shareholder of the deposited shares underlying the ADSs, and therefore only it can exercise the rights of shareholders in connection with the deposited shares. In certain cases, we may not ask The Bank of New York


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Mellon to ask holders of ADSs for instructions as to how they wish their shares voted. Even if we ask The Bank of New York Mellon to ask holders of ADSs for such instructions, it may not be possible for The Bank of New York Mellon to obtain these instructions from ADS holders in time for The Bank of New York Mellon to vote in accordance with such instructions. The Bank of New York Mellon is only obliged to try, as far as practical, and subject to Japanese law and our Articles of Incorporation, to vote or have its agents vote the deposited shares as holders of ADSs instruct. In your capacity as an ADS holder, you will not be able to bring a derivative action, examine the accounting books and records of the Company, or exercise appraisal rights.

U.S. investors may have difficulty in serving process or enforcing a judgment against us or our directors, executive officers or corporate auditors.

We are a limited liability, joint stock corporation incorporated under the laws of Japan. Most of our directors, executive officers and corporate auditors reside in Japan. All or substantially all of our assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon us or these persons or to enforce against us or these persons judgments obtained in U.S. Courts predicated upon the civil liability provisions of the Federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgment of U.S. courts, of liabilities predicated solely upon the federal securities laws of the United States.

Rights of shareholders under Japanese law may be different from rights of shareholders in jurisdictions within the United States.

Our Articles of Incorporation, Regulations of the Board of Directors and the Corporation Law of Japan (Kaishaho) govern our corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and officers’ fiduciary duties and liabilities, and shareholders’ rights under Japanese law

may be different from those that would apply to a company incorporated in a jurisdiction within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in a jurisdiction within the United States.

Our shareholders of record on a record date may not receive the dividend they anticipateanticipate.

The customary dividend payout practice and relevant regulatory regime of publicly listed companies in Japan may differ from that followed in foreign markets. Our dividend payout practice is no exception. While we may announce forecasts of year-end and interim dividends prior to the record date, these forecasts are not legally binding. The actual payment of year-end dividends requires a resolution of our shareholders. If the shareholders adopt such a resolution, the year-end dividend payment is made to shareholders as of the applicable record date, which is currently specified as March 31 by our Articles of Incorporation. However, such a resolution of our shareholders is usually made at an ordinary general meeting of shareholders held in June. The payment of interim dividends requires a resolution of our board of directors. If the board adopts such a resolution, the dividend payment is made to shareholders as of the applicable record date, which is currently specified as September 30 by our Articles of Incorporation. However, the board usually does not adopt a resolution with respect to an interim dividend until after September 30.

Shareholders of record as of an applicable record date may sell shares after the record date in anticipation of receiving a certain dividend payment based on the previously announced forecasts. However, since these forecasts are not legally binding and resolutions to pay dividends are usually not adopted until after the record date, our shareholders of record on record dates for year-end or interim dividends may not receive the dividend they anticipate.

Item 4. Information on the Company

A.
Item 4.Information on the Company
A.  History and Development of the Company

We are a joint stock corporation under the Corporation Law of Japan. We were incorporated and registered under the Japanese Law in August 1991 under the name of NTT Mobile Communications Planning Co., Ltd., and, in April 1992, we were renamed NTT Mobile Communications Network, Inc. We changed our name to NTT DoCoMo, Inc. on April 1, 2000 (NTT DOCOMO,


12


INC. since June 2010). Our corporate head office is at Sanno Park Tower,11-1, Nagata-cho 2-chome, Chiyoda-ku, Tokyo100-6150, Japan. Our telephone number is81-3-5156-1111. We have no agent in the United States in connection with this annual report.

Our parent company is NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”), the holding company of NTT group. NTT group constitutesis one of the world’s leading telecommunications operators. We were incorporated as a subsidiary of NTT in August 1991 and took over NTT’s wireless telecommunication operations in July 1992. In July 1993, in accordance with the agreement between NTT and the Ministry of Posts and Telecommunications, we transferred wireless telecommunication operations (other than those in theKanto-Koshinetsuregion which remained with us) to our eight regional subsidiaries. However, the other eight regional subsidiaries were merged into our company as the surviving company in July 2008.

The following list shows our corporate organization and includes our subsidiaries and affiliates as of March 31, 2010.

2011.

Name

Percentage
Voting
Interest

Service Subsidiaries*: 26

DOCOMO Business Net Inc.

   100%  
Percentage
Namevoting interest
Service Subsidiaries*; 26

DOCOMO Engineering Chugoku Inc.

   100%  

DOCOMO Business NetEngineering Hokkaido Inc.

   100100%%

DOCOMO Engineering ChugokuHokuriku Inc.

   100100%%

DOCOMO Engineering Hokkaido Inc.

   100100%%

DOCOMO Engineering HokurikuKansai Inc.

   100100%%

DOCOMO Engineering Kyushu Inc.

   100100%%

DOCOMO Engineering KansaiShikoku Inc.

   100100%%

DOCOMO Engineering KyushuTohoku Inc.

   100100%%

DOCOMO Engineering ShikokuTokai Inc.

   100100%%

DOCOMO Engineering TohokuI Kyushu Inc.

   100100%%

DOCOMO Engineering TokaiMobile Inc.

   100100%%
DOCOMO I Kyushu Inc. 100%
DOCOMO Mobile Inc. 100%
DOCOMO Mobile Tokai Inc. 100%

DOCOMO Mobile Media Kansai Inc.

   100100%%

DOCOMO Service ChugokuMobile Tokai Inc.

   100100%%

DOCOMO Service HokkaidoChugoku Inc.

   100100%%

DOCOMO Service HokurikuHokkaido Inc.

   100100%%

DOCOMO Service Hokuriku Inc.

   100100%%

DOCOMO Service Kansai Inc.

   100100%%

DOCOMO Service KyushuKansai Inc.

   100100%%

DOCOMO Service ShikokuKyushu Inc.

   100100%%

DOCOMO Service TohokuShikoku Inc.

   100100%%

DOCOMO Service TokaiTohoku Inc.

   100100%%

DOCOMO SupportService Tokai Inc.

   100100%%

DOCOMO Systems,Support Inc.

   100100%%

DOCOMO Technology,Systems, Inc.

   100100%%
Other Subsidiaries; 99

DOCOMO Technology, Inc.

   100%  

Other Subsidiaries: 101

DOCOMO.COM, INC.

   100100%%

DOCOMO Communications Laboratories Europe GmbH

   100100%%

DOCOMO Communications Laboratories USA, Inc.

   100100%%

DOCOMO interTouch Pte. Ltd.

   100100%%


13


DOCOMO PACIFIC, INC.

   100%  
Percentage
Namevoting interest
DOCOMO PACIFIC, INC. 

D2 Communications Inc.

   10051.0%%
D2 Communications Inc. 

net mobile AG

   51.081.5%%
net mobile AG81.5%

NIPPON DATA COM Co., Ltd.

   66.266.2%%

NTT DOCOMO USA, Inc.

   100100%%

OAK LAWN MARKETING, INC.

   51.051.0%%
and other subsidiaries
Affiliates; 25

PacketVideo Corporation

   100%  

and other subsidiaries

Affiliates: 27

Avex Broadcasting & Communications Inc.

   30.030.0%%
Axiata (Bangladesh) Limited

FeliCa Networks, Inc.

   30.038.0%%

Hutchison Telephone Company Ltd.

   24.124.1%%
FeliCa Networks, Inc. 38.0%

Nippon Telecommunications Network Co., Ltd.

   37.437.4%%

NTT Resonant Inc.

   33.333.3%%

Philippine Long Distance Telephone Company

   14.314.3%%

Sumitomo Mitsui Card Company, Limited.

   34.034.0%%
Tower Records Japan Inc. 

Robi Axiata Limited

   42.130.0%%
Tata Teleservices Limited

Tower Records Japan Inc.

   26.542.1%%

Tata Teleservices Limited

26.3%

ZENRIN DataCom CO., LTD.

   20.620.6%%

and other affiliates

*These service subsidiaries provide operational services such as engineering and support services to NTT DOCOMO, INC.

For a discussion of recent and current capital expenditures, please see “Capital Expenditures” in Item 5.B. We have had no recent significant divestitures or any significant divestitures currently being made.

B.
B.  Business Overview
1.  Overview

1. Business Overview

We are a world-leading mobile telecommunication services provider belonging to NTT group whose parent company is NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”).operator in Japan. The total number of subscriptions to our cellular services (FOMA(LTE, W-CDMA and mova)PDC) was approximately 56.0858.01 million and our domestic market share was 50.0%48.5% as of March 31, 2010.

As2011.

We belong to the JapaneseNTT group under our parent company, NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”). We, our 127 subsidiaries, and our 27 affiliates operate as the NTT DOCOMO group.

Our business segments are classified into two segments: the mobile communication market has continued to mature in line withphone business and miscellaneous businesses. Operating revenues from the rise in penetration rate, wemobile phone business include those from wireless services for mobile phones and those from equipment sales, which combined accounted for almost our entire operating revenues for the fiscal year ended March 31, 2011. Major examples of operating revenues sources from our miscellaneous businesses are shifting from a strategy that emphasizes the acquisition of new subscribers to one that prioritizescredit business, sales by our relationship with existingsubsidiaries such as home shopping, system integration business for corporate customers and are working to raise the brand loyaltypublic wireless LAN services.

We operate our business mainly in Japan, and do not generally experience significant seasonality.

Breakdown of those customers and to secure a base for stable income. In addition, with the diversification of the sense of values and sophistication of the needsOperating Revenues

   Millions of yen 
   Year ended March 31, 
   2009   2010   2011 

Mobile phone business

   4,381,254     4,167,704     4,090,659  

Miscellaneous businesses

   66,726     116,700     133,614  

For more details of our customers,business segment information, please see “Operating and Financial Review and Prospects” in April 2008Item 5.

Business Strategy

Since we unveiledannounced our new corporate brand and the “New DOCOMO Commitments,” which sets forth four commitments for reforming our company.

New DOCOMO Commitments
• We will revamp our brand and strengthen our ties with our customers
• We will actively seek out the voices and opinions of our customers so that we can continue to exceed their expectations
• We will continue to drive innovations so that we can earn the respect and admiration of people worldwide

14


• We will become an organization whose energetic staff is capable of overcoming all challenges in pursuit of our corporate vision
Going forward, we will continue to work to offer high-quality, value-added mobile services and technologies to each customer.
Under our newmedium-term action plan, established in October 2008, “DOCOMO’s Change and Challenge to Achieve New Growth,”Growth” in October 2008, we have been carrying out actions to improve customer satisfaction, an endeavor that earned us the No. 1 ranking in the consumer satisfaction study conducted by J.D. Power Asia Pacific for the fiscal year ended March 31, 2011.

To promote further growth, we have been directing our efforts to a broader use of data communications through the promotion of musicsubscriptions to packet flat-rate services, the promotion of migration to smartphones, acquisition of second subscriptions through tablet PCs and other data communications devices, the popularization of video services directedand a smooth introduction of LTE services.

Furthermore, we are working towards expanded subscribers’ usage of packet communications; the personalization of services and functions to match customers’ lifestyles and needs; the provision of social support services directed towards sustainable growth of society, such as environment and ecology, and safesafety and security; and the provision of convenient and easy-to-use services tailored to customer needs through the convergence between mobile phones and a variety of life tools, and other services that take advantage of mobile phone characteristics. We provide handsets that are compatible with this extensive range of services and contents, and we provide a handset lineup tailored to diversifying customer values and lifestyles.

We are putting effortsaiming to evolve into improving the qualitya “provider of comprehensive services centered on mobility,” which we set in our new corporate vision, “Pursuing Smart Innovation: HEART” (announced in July 2010) and are working to achieve growth through, among other things, exploring new areas of business.

Operating Data

Cellular Subscribers

The number of our subscriptions including Xi (LTE), FOMA (W-CDMA), and mova (PDC) services has increased by approximately 1.93 million in the most recent fiscal year to approximately 58.01 million as of March 31, 2011, which represents a market share of 48.5%, a 1.5 point decrease from March 31, 2010. Our cellular subscriber growth has been attributable primarily to (i) our consistently low churn rate as a result of our efforts to improve customer satisfaction, (ii) an attractive lineup of terminals that we offer, including smartphones, (iii) our high-quality networks, the foremost example being our LTE network that delivers faster communications, (iv) our efforts to ensure that customers can use the services we provide comfortably and stably. In addition to quality improvements of FOMA network, we made efforts in expanding FOMA coverage areas, and in December 2008 achieved 100% population coverage of high-speed FOMA. We are also making efforts so that customers can utilizestimulate demand for a maximum download speed of 7.2 Mbps*, to enjoy a rich variety of contentsecond device, such as musicdata communications, (v) our competitive rates, and video.

We conduct cutting-edge research(vi) the introduction of new services, including docomo Market and development both in and outsidean electronic book reader. Further, we successfully maintained our churn rate at the low level of Japan in fields such as network, wireless and multimedia. The DOCOMO R&D Center, established in Yokosuka Research Park to assist us in our research and development of advanced technology, is striving to further expand mobile communication services and is engaging0.47 % in the developmentfiscal year ended March 2011.

The number of LTE,cellular subscriptions for the fiscal years ended March 31, 2009, 2010 and 2011 are as well as in fundamental research for 4G.

follows:

   Thousands 
   Year ended March 31, 
           2009                  2010                  2011         

Cellular subscriptions(1)

   54,601    56,082    58,010  

Xi (LTE) subscriptions

           26  

FOMA (W-CDMA) subscriptions(1)

   49,040    53,203    56,746  

mova (PDC) subscriptions(1)

   5,560    2,879    1,239  

i-mode subscriptions

   48,474    48,992    48,141  

sp-mode subscriptions

           2,095  

Estimated market share of total subscriptions

   50.8    50.0    48.5  % 

Subscription growth rate

   2.3    2.7    3.4  % 

Average monthly churn rate(1) (2)

   0.50  0.46  0.47% 

(1)The maximum downlink datanumber of cellular subscriptions includes FOMA, mova, and communication module services subscriptions.
(2)

In general, the term “churn rate” is defined as the percentage of customers who disconnect their service relative to the total subscription base. Our measurement of churn rates includes voluntary terminations in connection with handset upgrades or changes. The average monthly churn rate for each fiscal year is calculated by adding the number of 7.2 Mbps representscellular subscriber contract terminations in each month of that fiscal year and dividing that number by sum of the maximum data rate based on technical standards, and is not the actual data rate achievable.active cellular subscriptions* from April to March.

2.  *Wireless Communication Servicesactive cellular subscriptions = (number of subscriptions at the end of previous month + number of subscriptions at the end of current month) / 2

MOU and ARPU

We offer wireless voicetrack subscriber usage of our cellular services (Xi, FOMA, and datamova services) with two measures, minutes of use (“MOU”) and average monthly revenue per unit (“ARPU”). MOU measures the average monthly communication time per subscription. ARPU measures the average monthly operating revenues attributable to designated services on networks that are accessiblea per subscription basis. ARPU is calculated by the entire populationdividing various revenue items included in Japan. We offer a variety of services to supportoperating revenues from our subscribers’ needs for wireless voice and data communications. In addition to the cellular voice services, we are increasingly focusing on mobile multimedia services, such as i-mode. Further, wemonthly charges, voice communication charges and packet communication charges from designated services which are aimingincurred consistently each month, by the number of active subscriptions to enhance the personalizationrelevant services. Accordingly, the calculation of services, our social support services and convergence services leveraging unique mobile propertiesARPU excludes revenues that are not representative of monthly average usage such as real-time immediacy, personal authentication,activation fees. We believe that our ARPU figures provide useful information to analyze the average usage per subscription and location capabilities.

Forthe impacts of changes in our billing arrangements. Additional discussions of MOU and ARPU are included in Item 5.A. of this annual report.

MOU decreased slightly to 134 minutes per month for the year ended March 31, 2011 from 136 minutes in the prior fiscal year. Billable MOU decreased to 114 minutes in the year ended March 31, 2011 from 118 minutes in the prior fiscal year, which was due to increased calls using free communication allowance caused by the penetration of the Family Discount plan.

Aggregate ARPU, which was ¥5,350 in the year ended March 31, 2010, fell by ¥280 to ¥5,070 for the year ended March 31, 2011. Aggregate ARPU continues to decline moderately because of rate reductions and changes in usage patterns. During the period from the beginning of the year ended March 31, 2010 to the end of the year ended March 31, 2011, voice ARPU declined while packet ARPU increased slightly. The reasons for the decline in voice ARPU include rate reductions (expansion of basic charge discounts as a result of expansion of Family Discounts, the introduction of a handset purchase method “Value Course” and the expansion of “Long-Term Subscriber Discount”) and changes in customer usage patterns (declining MOU and optimization of rate plans). Meanwhile, usage of data communication services, contributed by smartphones and data communications devices, is increasing, and packet ARPU is increasing steadily.

MOU and ARPU

   Year ended March 31, 
   2009   2010   2011 

MOU (minutes)

   137     136     134  
               

Billable MOU (minutes)

   124     118     114  
               

Aggregate ARPU

  ¥  5,710    ¥  5,350    ¥  5,070  

Voice ARPU

   3,330     2,900     2,530  

Packet ARPU

   2,380     2,450     2,540  

Aggregate ARPU: 

Voice ARPU + Packet ARPU

Voice ARPU:

Voice ARPU Related Revenues (basic monthly usage charges, voice communication charges) / number of active subscriptions

Packet ARPU:

Packet ARPU Related Revenues (basic monthly usage charges, packet communication charges) / number of active subscriptions

No. of active subscriptions used in ARPU/MOU calculations is as follows:

FY Results: Sum of number of active subscriptions* for each month from April to March

*  Active subscriptions for each month = (number of subscriptions at the end of previous month + number of subscriptions at the end of current month) / 2

2. Networks

We currently provide our cellular services including associated equipment sales,mainly on LTE, W-CDMA, and PDC networks.

LTE

On December 24, 2010, we launched a new service called Xi (“Crossy”), which applies LTE (Long Term Evolution) technology, on our 3.9G network for use with data communications devices. Featuring high speed, high capacity and low latency, LTE also excels in frequency use efficiency and delivers a faster and more comfortable mobile environment. As we are expanding its service area while overlapping it with the W-CDMA network, customers are able to use the W-CDMA network outside the LTE area. In this way we are able to provide area coverage which does not compromise our core business, accounted for approximately 97.3% of our consolidated operating revenues. customers’ convenience.

W-CDMA

We offer FOMA services based on W-CDMA technology on our 3G network, with voice and high-speednetwork. We thus deliver data communications and an international roaming service that are faster than those in the traditional PDC network.

After working on expanding population coverage of the FOMA high speed areas, we achieved 100% coverage in December 2008. To further strengthen our network quality, we are making proactive efforts to enhance our network quality and communication speed based on requests from customers and network quality surveys.

PDC

Our mova services based on PDC technology on our 2G network, currently offered nationwide, is expected to terminate in March 2012. We are actively moving ahead on the migration of our customers from our PDC network to our W-CDMA network.

Spectrum Use Status

3.9G/3G networks:

The Japanese government has allocated a total bandwidth of 335MHz as radio frequencies available for use for 3.9G/3G networks (including frequencies that are planned to be used in the future). Of this, we use three frequency bands—2GHz, 800MHz and 1.7GHz—to operate our networks.

We use 20MHz x2 (for uplink and downlink) in the 2GHz band across Japan for use for our 3G network. In the 800MHz band, which is in the process of reallocation, we currently use up to 10MHz x2 in regions where interference with existing systems can be avoided. Further, in the 1.7GHz spectrum, we use 20MHz x2 in the Kanto, Kansai, and Tokai areas. Of the 20MHz x2 allocated in the 2GHz band, we also use 5MHz x2 (10MHz x2 in some indoor locations) in the Kanto, Kansai and Tokai areas for use in the 3.9G network.

2G:

The Japanese government has currently allocated 21MHz x2 (uplink and downlink) for the use of our 2G Network. We are compatibleusing 8MHz x2 in the 800MHz band for 2G network.

We are moving ahead with utilizing common antennas and transmission lines for our LTE, W-CDMA and PDC networks in our efforts to reduce network costs. Furthermore, in order to establish and maintain our high-quality network economically and efficiently, we purchase high-quality network equipment at low cost from suppliers inside and outside Japan in accordance with our procurement policies, which emphasize openness and fairness.

3. Services

Voice Services

In our FOMA (W-CDMA) and mova (PDC) services, we offer voice services and a range of value-added service options such as a voice mail service. Most subscribers subscribe on a postpaid basis.

Data Communication Services

Data Communication Services for Smartphones

In our FOMA (W-CDMA) services, we offer a series of data services, such as sp-mode and “docomo Market” for smartphones.

ISP for smartphones: sp-mode

sp-mode is the Internet service provider (“ISP”) for our smartphones. In addition to Internet connection, our smartphone users can use various services, such as videophonea mail service using a mail address with the same domain name as i-mode, “@docomo.ne.jp”. Also, services including a content fee settlement service for purchasing applications on Android MarketTM and videodocomo Market, a phonebook backup service, a “Disaster Message Board” service and, as a fee-based option, a public wireless LAN service are also available.

Portal for smartphones: docomo Market (smartphones)

“docomo Market” is a portal site for introducing content downloading. We also offer mova services on our 2G network, compatible with voice and data communications.

In order to improve convenience for our subscribers and to expand usage and increase profits, we are providing various additional services and features.
Cellular Services
• Cellular (FOMA) Services
FOMA services are our third generation, or 3G, wireless voice and data communication services. FOMA services use advanced technology which allows us to offer faster and higher quality servicesapplications to our customers. As of March 31, 2010, subscriptions have become approximately 53.2 million. Moving towardsmartphone users. In addition to recommended applications, users can obtain popular content such as news, video, electronic books and games, as well as DOCOMO’s original content. In the scheduled termination date of mova services in March 2012,electronic book store, we will promote further migration ofoffer an e-book service provided by 2Dfacto, our mova subscribers to FOMA services.


15

joint venture with the Dai Nippon Printing Group.


Data Communication Services for Feature Phones

Our basic strategy is to expandIn our FOMA services. We believe that our FOMA(W-CDMA) and mova (PDC) services, are well-suited for both individual users and business users because of FOMA’s advanced features, including clear voice quality, high data communication speed, video communication capabilities, and diversified billing plans for packet communication.
In December 2008, we achieved 100% population coverage nationwide in the FOMA high-speed area with maximum downlink transmission speed of 7.2Mbps. We will continue to enhance the FOMA high-speed areas, and build coverage areas that meet our customers’ expectations.
The maximum downlink data rate of 7.2 Mbps represents the maximum data rate based on technical standards, and is not the actual data rate achievable.
• Cellular (mova) Services
Our 2G mova services are still offered on our nationwide 800 MHz digital network. However, given that mova subscriptions have been steadily decreasing, we have decided to discontinue mova services on March 31, 2012 and concentrate on our popular 3G service, FOMA. We ceased accepting new mova subscriptions on November 30, 2008. Further, we terminated our cellular services using the 1.5 GHz radio band (City Phone services) on June 30, 2008.
• Revenues and Tariffs for Cellular Services
Our cellular revenues are generated primarily from basic monthly plan charges, usage charges for outgoing calls (in Japan the caller is usually charged), revenues from incoming calls and charges for optional value-added services and features. We set our own rates in accordance with the Telecommunications Business Act and government guidelines, which currently allow mobile network operators to set their own tariffs without government approval.
Over the past few years, as the competition for acquiring subscribers has increased, tariff rates have been significantly reduced. Currently, our cellular subscribers pay (i) an activation fee of ¥3,150 (including tax), (ii) a fixed monthly plan charge based upon the “plan” chosen, (iii) usage or per call charges which vary according to duration and the particular plan chosen and (iv) additional monthly service fees for miscellaneous value-added services, etc.
One of our basic strategies has been to focus on offering subscribers simple and easy-to-understand rate plans and discount services tailored to their usage patterns. As a result, we offer a varietyseries of different monthly plans targeted at different segments of the market. These plans include basic usage plans for ordinary usage and heavy usage plans. In addition, almost all plans include a certain amount of free minutes per month for fixed rates. The amount of free minutes can be applied to FOMA and mova subscribers with the “Two-Month CarryOver” service, which allows automatic carryovers of up to two months, and can be credited against telephone calls, packet communication, video phone (FOMA), SMS (FOMA), short mail (mova), and international communications. Additionally, we offer various discountdata services, including discountsi-mode services and “docomo Market” for families and heavy-volume user discounts. The amount of free minutes will not change even afterfeature phones.

ISP for feature phones: i-mode service

i-mode is the discounts are applied to monthly charges.

In November 2007, in conjunction with the introduction of the new handset purchase method “Value Course,” we began offering the new “Value Plan,” which applies to subscribers who have chosen the “Value Course.” In exchange for payment of initial handset costs, a subscriber will be eligible to select the less expensive “Value Plan” under which basic monthly charges (prior to application of other discounts) will be ¥1,680 lower (including tax) with the exception of certain plans than standard plans. In March 2010, the number of subscribers of the “Value Plan” exceeded 30 million.
We offer a “Family Discount” service, which is available for families with two to 10 subscriptions. In August 2007, we began offering “Fami-wari MAX 50,” which offers subscribers who commit to a two-year contract of a “Family Discount” service of an immediate 50% discount to basic monthly charges, regardless of period of continuous usage. In addition, in April 2008, for FOMA subscribers who have contracted for the “Fami-wari MAX 50” service, domestic call among members of the same “Family Discount” group, which had been subject to a 30% discount, became free of charge for 24 hours a day.


16


In August 2007, we also launched “Hitoridemo Discount 50,” a discount service for subscribers who do not use the “Family Discount” but have a single subscription. With this service, subscribers committing to a two-year contract will immediately receive a 50% discount on basic monthly charges.
In June 2007,ISP for our corporate customers, we began offering the “Office Discount” service. Corporate customers which have between two and 10 subscriptions under the same corporate name are eligible for a 25% discount on basic monthly charges and a 30% discount on intra-group communication charges. In September 2007, for subscribers contracting under a corporate name who commit to a two-year subscription, we began offering a new discount service called “Office-wari MAX50,” which offers an immediate 50% discount on basic monthly charges. In June 2008, we expanded discounts for corporate customers subscribing to FOMA services with the “Office Discount” and “Office-wari MAX 50” services. Under the expanded discounts, domestic calls among “Office Discount” group employees are free (formerly discounted by 30%) for 24 hours a day.
We believe that our various and comprehensive plans, prices and discounts have helped us remain competitive in retaining existing subscribers and attracting new subscribers. Going forward, we will continue to provide simple and comprehensive fee structures for customers.
feature phones. Directly through their handsets, i-mode Services
i-mode services are our wireless Internet access services based on a data transmission system that organizes data into bundles called packets prior to transmission. Our i-mode handsets allow subscribers tousers can send and receive datae-mail, use the “iMenu” portal through our i-mode server to and from the Internet in addition to providing them with the full range of cellular voice services. i-mode is an optional service available to mova and FOMA subscribers which allows users to send and receivee-mail, access online services such as banking services and airline and ticket reservations,they can access an array of information from i-mode servers andcontent providers, execute and settle retailvarious commercial transactions directly throughin an environment in which a certain level of security is ensured, and pay content fees together with their handsets. Almost all cellular handsets which we currently sell are i-mode compatible, thus allowing our customers to choose whether or not to subscribe to i-mode service.
mobile phone bills.

As of March 31, 2010,2011, the number of i-mode subscriptions reached 48.9948.14 million and the number of i-mode portal menu sites had reached 20,76523,580 (FOMA only).

Services on i-mode
Typical services that may be accessed through an i-mode handset include:
• e-mail;
• games and other entertainment;
• music distribution/video clips/e-books;
• social network services;
• online shopping (CDs, books, tickets, others)/auctions;
• news, weather and sports information;
• mobile banking;
• other financial services, such as “DCMX,” “iD” and other credit card services and information and online stock quotes and trading;
• maps and travel information;
• community guides, living information, safety and healthcare information; and
• telephone directories.
For FOMA subscribers with i-mode services, we offer “i-channel”, a

i-channel:

A service that automatically delivers and displays the latest information such as news, weather, entertainment, sports, horoscopes, and more. The number of subscribers to this service reached 16.8216.23 million in March 2010.


17

2011.


i-concier:

A service that supports users’ daily lives according to their lifestyle. An auto-GPS function delivers information useful for daily life in accordance with the time and user’s location. The number of subscribers to the “i-concier” service, which was launched in November 2008 and which enables cellular handsets to act as a concierge by assisting customers in their daily lives, reached 4.2approximately 6.22 million at the end of March 2010. In November 2009,2011.

Portal for feature phones: iMenu

“iMenu” is a portal that appears first when a phone connects to i-mode. To make i-mode more user-friendly, we are working on making improvements in the “i-concier” service became compatible withview ability of the “Auto-GPS” handset function, which regularly measures a subscriber’s position“iMenu” page, refining the search engine and enhancing general usability.

Typical services that may be accessed through iMenu include:

games and other entertainment;

music distribution/video clips/e-books;

social network services;

online shopping (CDs, books, tickets, others)/auctions;

news, weather and sports information;

mobile banking;

other financial services, such as “DCMX,” “iD” and other credit card services and information and provides itonline stock quotes and trading;

maps and travel information;

community guides, living information, safety and healthcare information; and

telephone directories.

Content market for feature phones: docomo Market (i-mode)

There are three stores in “docomo Market (i-mode)”: Application, Music and Book Stores. The Application Store not only offers high-quality content provided by businesses, but also allows individual content developers to us and service providers automatically, enabling the provision of information linked to the subscriber’s location. In this and other ways “i-concier” service has become more convenient for subscribers.

We have been working on enhancing video services with the aim to further expand the mobile videooffer their content market. We formed the joint venture Avex Broadcasting & Communications Inc. with Avex Entertainment Inc. in April 2009, and launched the video service “BeeTV” in May 2009.
Improvement of i-mode convenience
We are directing efforts towards facilitating the visualization of menu pages as well, as enhancingmaking the Store’s product lineup extensive and improving the usability of search services in order to provide even greater convenienceunique.

Data Communication Services for i-mode customers.

PCs and Other Devices

In May 2009, we launched “My Link,” an online bookmark functionour Xi (LTE), FOMA (W-CDMA) and “My News,” a web-based RSS reader that displays updated information of certain iMenu sites according to subscribers’ requests. In March 2010, “My Menu” and “My Box” of iMenu services were merged into “My Page,” where personalized information of subscribers could be accumulated. These advances in personalization of services offer subscribers greater convenience in use.

We plan to further personalizemova (PDC) services and features to match the lifestyles and needspublic wireless LAN service, we offer a series of individual customers and to continue adding new and attractive i-mode services in the future.
We are proactively engaging in the creation of a secure and comfortable environment where customers can use i-mode services.
With respect to access restriction services (filtering services)*, from November 2009, we began offering “Web Restricted Menu” primarily to subscribers of “Web Restrictions” targeted for young elementary school children, which replaces the standard iMenu and offers only a minimal number of links, such as the “Disaster Message Board” and “My Page.” In addition, we decided to enhance the functions of “Access Restriction Customize” from April 1, 2010, by providing a “Time Settings” function that allows children’s use of their phones to be restricted byone-hour units. Moreover, in response to the implementation of the Law to Promote a Healthful Internet Environment for Youth, on April 1, 2009, we are actively promoting new subscribers for i-mode services to use this access restriction services when they sign up.
Services that restrict access to harmful sites, including “Kids i-mode Filters” which allows access only to i-mode menu sites, other than “gravure picture” sites and community sites, and “i-mode Filters” which allows access to public sites other than the sites such as dating sites, illegal sites and community sites.
• i-mode Revenues and Fees
i-mode users are charged according to the volume of data they transmit, not for the length of airtime or the distance over which the data are transmitted. Our billing plans for i-mode services include a usage-based plan with no upper limit on charges and flat rate plans that offer unlimited access to i-mode services with a certain upper limit.
The use of i-mode incurs a monthly fee of ¥315 (including tax), in addition to the standard monthly charges of voice services for FOMA and mova. Besides communication charges, subscribers are required to pay information charges to content providers when they subscribe certain i-mode sites. We bill subscribers on behalf of content providers for content provider fees together with communication charges, and we charge content providers for a commission of our billing and collection services.
In order for customers to use the services without worrying about the monthly charges, and to provide new value and expand the usage of i-mode, since June 2004 we have been providing a packet flat-rate service called “Pake-hodai,” which offers unlimited access to i-mode Internet service and i-mode mail for a flat monthly charge of ¥4,095 (including tax), for users of our FOMA i-mode service.


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In October 2008, to expand subscribers’ usage of packet communications, we introduced the new “Pake-hodai double,” a two-tiered flat-rate services that feature variable monthly fees based on usage volume. “Pake-hodai double” is an unlimited domestic i-mode communication service with fees starting at ¥1,029 per month (including tax). While the monthly fee varies according to usage volume, the maximum fee is ¥4,410 (including tax). With the introduction of these flat-rate services, we stopped accepting new subscriptions for the “Pake-hodai” services in December 2008. Also, in August 2009, we reduced the minimum monthly fee to ¥390 (including tax) so that customers who rarely use packet communications will be able to use “Pake-hodai double.” Moreover, in December 2009, we launched “Mail Tsukai-hodai”, whereby users, by subscribing to a special payment plan “Type Simple (value)” and “Pake-hodai simple” and paying i-mode usage charges, can send i-modee-mails in Japan free of charge regardless of the destinatione-mail address or whether photos, videos, or other files are attached.
• Data Communication Services
We are also making efforts in data communication services for PCs. Because of the increasedPCs and other devices. Considering that they lead to a broader market representing demand for second subscription from PC data cards, indevice purchases, we are working on the enrichment of our product lineup and sales promotion. In addition to our lineup ofUSB-type and card-type and USB-type terminals, we are enhancing our lineup of PCs with built-in modules with the cooperation of PC manufacturers.
• Fees for Data Communication Services
We introduced two flat-rate plans, “Flat-rate Data Plan 64K” and “Flat-rate Data Plan HIGH-SPEED” in October 2007, so that our subscribers could use in mobile data communication without worrying about over communication charges. “Flat-rate Data Plan HIGH-SPEED” offers at monthly charges starting at ¥4,200 (including tax) and going up to ¥10,500 (including tax), unlimited domestic mobile data communication. “Flat-rate Data Plan HIGH-SPEED” is capable of data communication at a speed of up to 7.2Mbps for downlink, and provides a better environment for mobile data communication.
In addition, in March 2008, we began applying a new handset purchase method “Value Course” to exclusive devices for FOMA data communication, and offering a new rate plan “Value Plan” for use with the “Value Course.” Under this purchase method, when a subscriber purchases a FOMA N2502 HIGH-SPEED, exclusive FOMA data communication handset, or later model, that subscriber is eligible to select the “Value Plan,” under which basic monthly charges (prior to application of other discounts) is ¥735 lower (including tax) than in standard data plans. In September 2008, for subscribers of “Flat-rate Data Plan HIGH-SPEED” and “Flat-rate Data Plan HIGH-SPEED with Value Course,” we launched the “Flat-rate Data Discount” service which allows subscribers who commit to a two-year contract to receive a discount of up to ¥3,780 on basic monthly charges, with a maximum monthly charge of ¥5,985 when the “Value Plan” is applicable. Further, starting in July 2009, we offer a new plan called “Flat-rate Data Plan Standard” and a discount service “Flat-rate Data Standard Discount.” When the “Value Plan” is applied, subscribers are able to use this plan at monthly charges, starting at ¥1,000 (including tax). With such plans and services, we believe we have achieved a customer-friendly rate structures for mobile data communications, as well as rates for our cellular phone servicesPCs with a built-in communication module, we sold mobile Wi-Fi routers and i-mode services.
• Feesbook readers in the case of using combination of i-mode Services and Data Communication Servicesfiscal year ended March 31, 2011.

ISP for data communications: mopera

From June 2010,

We reduced the maximum monthly charge for packet communications, which includes the usage in Wi-Fi access-point mode*, with a PC or other device, under “Pake-hodai double” and “Pake-hodai simple” flat-rate dataalso offer an ISP service to ¥10,395 (including tax), down from ¥13,650 (including tax).

A capability to allow mobile phones to be used as mobile Wi-Fi routers.
• Smartphone Services
We are aware that the smartphone market is expected to expand moving forward. To widen the user base, we implemented easy-to-use payment plans and enhanced the terminal lineup. In April 2010, we launched the “DOCOMO Market” portal site for smartphones that showcases appealing content and applications, to enable even novice users to use smartphones with more convenience and ease.


19


• Fees for Smartphone Services
In April 2007, we launched “Biz-hodai,called “mopera U,” which enables smartphone usersprovides an Internet connection for data communication services in our Xi (LTE) and FOMA (W-CDMA) services as well as our public wireless LAN service. In addition to use packet communications at a flat rate. In October 2008, we launched “Biz-hodai double,” a new packet flat-rate service in which the monthly flat fee changes accordingproviding easy access to the usage amount to enable customers to use the service without worrying about the charges. “Biz-hodai double,” starting at ¥490 (including tax)Internet by connecting a month, is a flat-rate packet service for smartphones offering unlimited non-i-mode packetdocomo data communications in Japan (excluding communications using PCs) with a monthly upper limit of ¥5,985 (including tax). In August 2009, we lowered the minimum flat-rate monthly charge to ¥390 (including tax).
In April 2010, we merged “Biz-hodai double” with “Pake-hodai double.” Accordingly, flat-rate packet services that differed depending on the handsets used now have a simplerdevice and easier-to-understand fee structure, and customers using both i-mode compatible mobile phones and smartphones can use them without worrying about the charges.
• ISP Services
We offer the “mopera U” Internet connection service for data cards and smartphones. WithPC, the “mopera U” service users can easily access theoffers an Internet by connecting their FOMA handsets to their PCs, with one subscription covering everythingconnection and mail service, from mobile phones to broadband, under a single contract.

Public wireless LAN service

We offer a public wireless LAN service for high speed, high capacity Internet access at the maximum speed of 54 Mbps. It is available with the mopera U or sp-mode service and enabling usealso for customers without a mobile phone contract with us by subscribing to it at docomo Shops. As of InternetMarch 31, 2011, we have approximately 6,800 access points and are expanding service areas in line with our customers’ needs.

e-mail.Mobile communication module service

Digital photo delivery service for digital photo frames:

We sell a digital photo frame embedded with our Ubiquitous Module, the “Otayori Photo Panel,” and offer the “Otayori Photo Service,” which enables users, by simply mailing a photo, to display it on the digital photo frame.

Driver navigation service:

In November 2009,2010, we loweredbegan offering a service called “docomo Drive Net,” which supplies drivers with real time information, such as information on tourist facilities and vacant parking spaces based on the rateslatest map information and the location of the car, by using a communication module built into a Portable Navigation Device (PND).

Communication module services for subscriberscorporate customers:

For corporate customers, we offer a series of mobile communication module services, such as a vehicle management system using a built-in module, a wireless credit card settlement system and a telemetering system to flat-rate data plans, to ¥525 (including tax) a month.

Our subscribers can choose a “DOCOMO Public Wireless LAN” service that provides high-speed large-capacity communication at speeds of up to 54Mbps as an option underenable automatic stock checks between vending machines and the “mopera U” service. With respect to area development, ascenter. As of the end of March 2010,2011, the number of access points increased toFOMA Ubiquitous service subscribers is approximately 6,660, and we will continue to develop areas to meet the needs of customers. Subscribers to the “DOCOMO Public Wireless LAN” service can easily browse streaming videos and transfer FTP files in the coverage areas such as in airports, train stations, and cafes.
• Module Services
As part of our endeavor to promote mobile multimedia services, we have provided the module services since July 2004 to address the increase in machine communication services. Embedded modules will lead to a broad range of uses such as automobile fleet management, wireless credit card settlement systems, and telemetric systems enabling automatic inventory checks between vending machines and service centers. These modules contribute to our strategy of broadening the scope of mobile communication. FOMA ubiquitous modules are used mainly in machine communications. We offer a ubiquitous plan for low-rate services for users with low-traffic needs.
In July 2009, we launched a digital photo frame (“OTAYORI PHOTO PANEL”), which uses a FOMA ubiquitous module. At the same time, we launched the “Otayori Photo services,” which allows users, just by sending ane-mail with a photo attached from a mobile phone or PC, to display the photo in a OTAYORI PHOTO PANEL even from a remote location.
As of March 31, 2010, there were approximately 1.08 million subscriptions to the FOMA ubiquitous services and approximately 0.52 million subscriptions to DoPa services. In order to focus management resources on FOMA services (our 3G communication services), we ceased accepting new subscriptions for DoPa single packet services for 2G communication services in September 2008. We have determined to terminate DoPa services in March 2012.
• MyArea Services
In November 2009, we launched the “MyArea” service that, with the installation of compact femtocell base transceiver stations in homes and the building of dedicated home use FOMA area, provides stable and high-speed packet communication, and the “Imasuka” function. The “MyArea” service is ¥980 (including tax) a month. The “Imasuka” function sends notifications to a selected email address when entrance into or exit from a subscriber’s personal FOMA area is detected.


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1.36 million.


Other Services

• International Calling Service and International Roaming Service

“WORLD CALL,” our international calling service, is a service that allows customers to make international phone calls to 240241 countries and regions (as of March 31, 2010)2011) from their mobile phones. As of March 31, 2010,2011, FOMA subscribers were able to make international videophone calls via our 3G network to 3G subscribers in 5053 countries and regions.

With “WORLD WING,” our international roaming service, customers are able to use the DOCOMO mobile phones that they use in Japan, with the same phone numbers and i-mode mail addresses, in the service areas of overseas mobile network operators with which we have partnerships. Most of the handsets we currently offer are 3G + GSM compatible or 3G compatible, enabling customers to use their phones overseas. As of March 31, 2011, “WORLD WING” users are able to make and receive phonevoice calls with the same FOMA phone numbers in 207213 countries and regions, and use FOMA handsets as well as Xi-compatible handsets to access i-mode packet communicationcommunications in 156177 countries and regions as of March 31, 2010.

regions.

In April 2006, we formed an alliance with mobile network operators in the Asia-Pacific region with a totalto boost business cooperation in the areas of six mobile network operators, including Far EasTone Telecommunications Co Ltd. (operating region: Taiwan), Hutchison Telecommunications (Hong Kong) Limited (operating region: Hong Kong and Macao), KT Corporation (operating region: South Korea), PT Indosat Tbk (operating region: Indonesia), and StarHub Ltd. (operating region: Singapore), to enhance each member’s competitiveness in international roaming and corporate mobilecustomer services. In December 2006, Smart Communications, Inc. (operating region: the Philippines) joined the alliance, and it was officially named the Conexus Mobile Alliance (“Conexus”). In addition, with Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited (operating region: India, both) joining the alliance in November 2007 and True Move Company Limited (operating region: Thailand) doing so in June 2008, and Vietnam Telecom Services Company (operating region: Vietnam) in November 2009, Conexus became oneConsisting of the largest mobile network operator alliances in the Asia-Pacific region with approximately 260 million subscribersoperators in 13 countries and regions including Guam andserving approximately 310 million subscribers, this alliance, named the Northern Mariana Islands.

“Conexus Mobile Alliance,” is currently one of the largest alliances of mobile network operators in the Asia-Pacific region.

• Services for Corporate Customers

We consider the corporate market as a field in which we have substantial room for growth. We have achieved solid resultsare focusing on suggesting attractive solutions and established strong reputation in the corporate market to date. We have been bolstering initiatives, by drawing on the strength that make up the foundation ofexpanding our progress such as the diversity of our services, our robust security management structure and our reliable infrastructure.

We provide “Business mopera Access Series” services to corporate customers, to enable them to link to office information systems outside the workplace. “Business mopera Access Pro” provides extremely high-security access to corporate LANs from remote terminals such as notebook PCs and PDAs via closed networks. This service makes it possible under a contract for a single dedicated line to provide access to office information systems through wireless networks such as FOMA, mova, DoPa, i-mode and Wide Star (satellite packet communication only).
In August 2006, we launched the “Business moperaAnshinManager” service which is a remote control service for mobile phones and expanded the Business mopera network lineup ofB-to-B-to-C business, including offering network services for corporate customers. We addedcustomers that deliver high-security access to an internal system from outside the office, and developing an internal phone system to enable internal and external phone calls using an IP phone through an IP centrex device in our network without requiring a browser use restriction function and simultaneous transmission function in January 2007, expandedprivate branch exchange, such as an IP-PBX, on the number of browser restricted URLs in September 2007, added subgroup settings and common manager settings in March 2008, and added remote initialization and remote customization functions in November 2008. In January 2009, we began the “Business mopera Command Direct” service so that mobile phones can be directly managed and restricted by customers.
In June 2007, as a part of the “OFFICEED” service menu, an internal communication servicecorporate customer. As a result, we earned the highest ranking for corporate customers, we launched the “OFFICEED-PBX Connection Service,” which achieves communication between FOMA handsets and internal telephone lines by connecting “OFFICEED” and the PBX, enabling FOMA handsets to serve as cordless internal telephones.
In April 2007, for the “Business mopera IP Centrex” service, which is a service for corporate customers that enables users to make internal or outbound IP telephony calls via IP Centrex devices on DOCOMO networks without the need for an in-houseIP-PBX, we began providing new plans and expanded functions, including soft phone and fixed IP phone compatibility. In addition, in June 2008, we launched “IP Centrex One Number,” a Fixed


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Mobile Convergence (“FMC”) service which enables users to make and receive calls with a single number (090 or 080) in both FOMA and Office areas (IP Centrex area).
We have been establishing structure that ensures contact with every customer, proposing of attractive solutions, and expanding B2B2C businesses. We achieved the No. 1 rankingtwo consecutive years in the “J.D. Power Asia Pacific 2009“2010 Japan Business Mobile Telephone/PHSPhone Service Customer Satisfaction Index StudySMsm*.
Disclaimer: which was conducted by J.D. Power Asia Pacific 2009 Japan Business Mobile Telephone/PHS Service Customer Satisfaction Index StudyPacific.

*

J.D. Power Asia Pacific 2009-2010 Japan Business Mobile Phone Service StudiesSM. 2010 Study based on a total of 3,222 responses from 2,345 companies with 100 or more employees (up to two responses from one company) about telecommunications firms who supply a mobile telephone / PHS service. http://www.jdpower.co.jp/

sm. Study based on a total of 3,309 responses from 2,632 companies with 100 or more employees (up to two responses from one company) about telecommunications firms who supply a mobile telephone/PHS service. (www.jdpower.co.jp)

• Satellite Mobile Communication Services

We provide satellite mobile communication services for communications in case of emergencies, in mountainous areas and aboard ships. The service area covers the entire territory of Japan and its surrounding waters for roughly up to 200 nautical miles from theJapan’s coastline. Currently theIn April 2010, we launched “WideStar II,” a new satellite mobile communication network uses two communication satellites, N-STARc and N-STARd.service. Satellite mobile communication servicesphone service can be used for voice, fax and packet communication. We had approximately 39,500 subscriptions to the services as of March 31, 2010. The services can be used for high-speed packet communication (maximum 64 Kbps downlink and 4.8 Kbps uplink) and a variety of communication services are offered including Internet connectivity and telemetering.

In April 2010, we launched a new satellite communication service (WideStar II), as well as a portable satellite terminal, the 01. WideStar II is a new and faster satellite transmission system, that enables an expanded range of usage for data transmission, including video image transmission, Internet and telemetry, by offering packet communication (maximum uplink 144 kbps, and maximum downlink 384 kbps) far faster than standard packet communication.
• PHS Services
Our PHS (Personal Handyphone System) services were wireless voice and data communication services similar to our cellular services but offered using different technology and a different network. However, with the subsequent popularity of inexpensive ADSL and optical fiber fixed-line flat rate data communication services, the introduction of packet flat-rate services using mobile phones, and the increasingly fast data transfer rates, the business environment changed rapidly, and on April 30, 2005, we stopped accepting new subscriptions to PHS services, and we terminated PHS services on January 7, 2008.
• Cellular Subscribers
The number of our subscriptions including FOMA and mova services has grown by approximately 1.48 million in the most recent fiscal year to approximately 56.08 million as of March 31, 2010, which represents a market share of 50.0%, a 0.8 point decrease from March 31, 2009. We believe that our cellular subscriber growth has been attributable primarily to (i) nationwide growth and popularity of cellular services, (ii) marketing from the customers’ perspectives, (iii) enhanced customer service, (iv) significant declines in tariffs and our competitive pricing, (v) our reputation for quality products and services and (vi) the introduction of new, value-added cellular services such as i-mode. As a result, the number of FOMA subscriptions increased and was approximately 53.2 million as March 31, 2010. Further, we successfully maintained our churn rate at the low level of 0.46% in the fiscal year ended March 2010.


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Subscription growth for i-mode services in the four fiscal years ended March 31, 2010 was approximately 2.63 million. The DOCOMO cellular subscription numbers, including i-mode subscription numbers, for the fiscal years ended March 31, 2007, 2008, 2009 and 2010 are as follows:
                 
  Year ended March 31,
  2007 2008 2009 2010
    (in thousands)  
 
Cellular subscriptions(1)
  52,621   53,388   54,601   56,082 
FOMA subscriptions  35,529   43,949   49,040   53,203 
mova subscriptions  17,092   9,438   5,560   2,879 
i-mode subscriptions  47,574   47,993   48,474   48,992 
FOMA subscriptions  34,052   41,213   44,853   47,330 
mova subscriptions  13,522   6,780   3,621   1,661 
DOCOMO estimated market share of total subscriptions  54.4%  52.0%  50.8%  50.0%
DOCOMO subscription growth rate  2.9%  1.5%  2.3%  2.7%
Average monthly churn rate(2)
  0.78%  0.80%  0.50%  0.46%
(1)The number of cellular subscriptions includes Communication Module Services subscriptions.
(2)In general, the term “churn rate” is defined as the level of customers who disconnect their service relative to the total subscription base. Our measurement of churn rates includes voluntary terminations in connection with handset upgrades or changes. The average monthly churn rate for each fiscal year is calculated by adding the number of cellular subscriber contract terminations in each month of that fiscal year and dividing that number by sum of the active cellular subscriptions* from April to March.
*active cellular subscriptions = (No. of subscriptions at the end of previous month + No. of subscriptions at the end of current month)/2
• Cellular Phone Service Usage
We track subscriber usage of our cellular services with two measures, MOU and average monthly revenue per unit (“ARPU”). MOU measures the average monthly amount of connection time per subscription basis. ARPU measures the average monthly operating revenues attributable to designated services on a per subscription basis. ARPU is calculated by dividing various revenue items included in operating revenues from our wireless services, such as monthly charges, voice communication charges and packet communication, charges from designated services that are charged consistently each month, byand “WideStar II” enables high-speed packet communications at the numbermaximum of active subscriptions to the relevant services. Accordingly, the calculation of ARPU excludes revenues that are not representative of monthly average usage such as activation fees. We believe that our ARPU figures provide useful information to analyze the trend of monthly average usage of our subscribers over time384 kbps downlink and the impacts of changes in our billing arrangements. Additional discussions of MOU and ARPU are included in Item 5.A. of this annual report.
MOU (FOMA+mova) slightly decreased to 136 minutes per month for the year ended March 31, 2010 from 137 minutes in the prior fiscal year. Billable MOU (FOMA+mova) decreased to 118 minutes in the year ended March 31, 2010 from 124 minutes in the prior fiscal year, which is due to the increased calls in using free communication allowance caused by the penetration of the Family Discount plan.
The average monthly ARPU for one subscriber (FOMA + mova), which was ¥5,710 in the year ended March 31, 2009, fell by ¥360 to ¥5,350 for the year ended March 31, 2010.
Aggregate ARPU (FOMA + mova) continues to decline moderately because of rate reductions and changes in usage patterns. During the period from the beginning of the year ended March 31, 2009 to the end of the year ended March 31, 2010, voice ARPU declined while data ARPU increased slightly. The reasons for the decline in voice ARPU include rate reductions (expansion of basic charge discounts as a result of expansion of family discounts, the introduction of new handset purchase methods, and the expansion of “Long-Term Subscriber Discount”) and changes in customer usage patterns (declining MOU and optimization of rate plans). Meanwhile, usage of data services such as i-mode is increasing, and the data ARPU is increasing steadily.


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The following tables set forth selected information concerning MOU and ARPU data for our cellular services in three categories, (FOMA + mova), (FOMA) and (mova):
MOU and APRU (FOMA + mova)
             
  Year ended March 31, 
  2008  2009  2010 
 
MOU (FOMA+mova) (minutes)  138   137   136 
             
Billable MOU (FOMA+mova) (minutes)     124   118 
             
Aggregate ARPU (FOMA+mova) ¥6,360  ¥5,710  ¥5,350 
Voice ARPU (FOMA+mova)  4,160   3,330   2,900 
Packet ARPU (FOMA+mova)  2,200   2,380   2,450 
i-mode ARPU (FOMA+mova)  2,170   2,340   2,380 
Aggregate ARPU (FOMA+mova): Voice ARPU (FOMA+mova) + Packet ARPU (FOMA+mova)
Voice ARPU (FOMA+mova): Voice ARPU (FOMA+mova) Related Revenues (basic monthly usage charges, voice communication charges)/No. of active cellular phone subscriptions (FOMA+mova)
Packet ARPU (FOMA+mova): {Packet ARPU (FOMA) Related Revenues (basic monthly usage charges, packet communication charges) + i-mode ARPU (mova) Related Revenues (basic monthly usage charges, packet communication charges)}/No. of active cellular phone subscriptions (FOMA+mova)
i-mode ARPU (FOMA+mova)(2): i-mode ARPU (FOMA+mova) Related Revenues (basic monthly usage charges, packet communication charges)/No. of active cellular phone subscriptions (FOMA+mova)
No. of active subscriptions used in ARPU/MOU calculations is as follows:
FY Results: Sum of No. of active subscriptions* for each month from April to March
Active subscriptions for each month = (No. of subscriptions at the end of previous month + No. of subscriptions at the end of current month)/2
MOU and ARPU (FOMA)
             
  Year ended March 31,
  2008 2009 2010
 
MOU (FOMA) (minutes)  156   148   142 
             
Aggregate ARPU (FOMA) ¥6,990  ¥6,010  ¥5,480 
Voice ARPU (FOMA)  4,340   3,360   2,900 
Packet ARPU (FOMA)  2,650   2,650   2,580 
i-mode ARPU (FOMA)  2,610   2,590   2,500 
Aggregate ARPU (FOMA): Voice ARPU (FOMA) + Packet ARPU (FOMA)
Voice ARPU (FOMA): Voice ARPU (FOMA) Related Revenues (basic monthly usage charges, voice communication charges)/No. of active cellular phone subscriptions (FOMA)
Packet ARPU (FOMA): Packet ARPU (FOMA) Related Revenues (basic monthly usage charges, packet communication charges)/No. of active cellular phone subscriptions (FOMA)
i-mode ARPU (FOMA)(2): i-mode ARPU (FOMA) Related Revenues (basic monthly usage charges, packet communication charges)/No. of active cellular phone subscriptions (FOMA)
No. of active subscriptions used in ARPU/MOU calculations is as follows:
FY Results: Sum of No. of active subscriptions* for each month from April to March


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Active subscriptions for each month = (No. of subscriptions at the end of previous month + No. of subscriptions at the end of current month)/2
MOU and ARPU (mova)
             
  Year ended March 31,
  2008 2009 2010
 
MOU (mova) (minutes)  82   63   51 
             
Aggregate ARPU (mova) ¥4,340  ¥3,750  ¥3,460 
Voice ARPU (mova)  3,590   3,090   2,870 
i-mode ARPU (mova)  750   660   590 
Aggregate ARPU (mova): Voice ARPU (mova) + i-mode ARPU (mova)
Voice ARPU (mova): Voice ARPU (mova) Related Revenues (basic monthly usage charges, voice communication charges)/No. of active cellular phone subscriptions (mova)
i-mode ARPU (mova)(2): i-mode ARPU (mova) Related Revenues (basic monthly usage charges, communication charges)/No. of active cellular phone subscriptions (mova)
No. of active subscriptions used in ARPU/MOU calculations is as follows:
FY Results: Sum of No. of active subscriptions* for each month from April to March
Active subscriptions for each month = (No. of subscriptions at the end of previous month + No. of subscriptions at the end of current month)/2
(1)Communication Module services subscriptions and the revenues thereof are included in neither the ARPU nor MOU calculations.
(2)The denominator used in calculating i-mode ARPU (FOMA+mova, FOMA, mova) is the aggregate number of cellular subscriptions to each service (FOMA+mova, FOMA, mova, respectively), regardless of whether i-mode service is activated.
• Billing and Collection
We bill each of our subscribers on a monthly basis and subscribers may pay their bills by automatic withdrawal from a bank or other financial institution account, by credit card, or in person at any number of locations such as “docomo Shops” or convenience stores.144 kbps uplink. As of March 31, 2010, approximately 84%2011, the number of subscribers paid by financial institution account transfer or by credit card. In June 2008, we introduced a system, which allows applications for these payment methods to be registered online, to mass merchandisers and general distributors to increase convenience of customers. We also provide the“e-billing” service that sends the bills to customers using electronic media instead of paper invoices, which contributes to the environmental preservation.
As of March 31, 2010, the rate of collection for issued bills within 60 days from the payment due date was 99%. To limit the ratio of nonperforming receivables, we closely monitor subscribers with large outstanding amounts or in arrears, and if outstanding amounts exceed a certain level within a billing cycle, we send the subscribers frequent notices or take measures for earlier billing. Further, we suspend the services to subscribers who do not pay within 20 to 30 days after the initial due date and also cancel the contracts of customers who do not pay within 60 days.
Other Revenues
• Revenues at Subsidiaries
We are taking the initiative to create new businesses which we can create synergies with. As a part of this strategy, we invested in the home shopping services company OAK LAWN MARKETING (“OLM”) in April 2009.
OLM has broad knowledge and strong product procurement capabilities in home shopping businesses in the US market, product development and improvement know-how, video production know-how and marketing ability for generating a high response rate; whereas we have the mobilesatellite phone service technology and know-how. Our


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was approximately 40,000.


Credit Settlement Services

affiliation with OLM enables us to utilize the know-how and the spread and expansion ofe-commerce and home shopping businesses.
• Mobile Phone Protection & Delivery Service
To enable our subscribers to use our services comfortably, we are making efforts to further enhance and strengthen our after-sales services.
As part of these efforts, we now offer to docomo Premier Club members who use FOMA, the Mobile Phone Protection & Delivery Service. If a mobile handset is lost, stolen or damaged by water or otherwise becomes unusable, a replacement handset will be delivered directly to the customer. The Mobile Phone Protection & Delivery Service, which requires payment of ¥5,250 (including tax) each time the service is used in addition to the monthly fee of ¥315 (including tax), has been extremely popular with subscribers, who can use their mobile phones comfortably.
• Credit Business
Many of our mobile phones come equipped with the Osaifu-Keitai“Osaifu-Keitai” (Mobile Wallet) function, which uses cards with contactless IC chips.
iD
The We offer credit brand “iD,” which enables users to make credit card payments using the settlement services utilizing this function.

iD:

Osaifu-Keitai” service,iD” is a settlement platform that enables a user, simply by holding the Osaifu-Keitai“Osaifu-Keitai” over a specialized terminal installed in stores (reader/writer), to make a speedy credit settlement without the need for signing on a creditsettlement. Credit card slip. It can be used for both small and large purchases, and comes with a number of security features to prevent unauthorized use, so that it can be used with peace of mind and safety.

We are promoting the “iD” as a settlement platform to credit card issuers who can offer card members credit settlement services combining conventional plastic cards and use of iD“iD” with the Osaifu-Keitai.“Osaifu-Keitai.
The number of subscribers exceeded 10 million in December 2008 and reached 14.2 million at the end of March 2010. The number of stores where “iD” can be used continues to increase steadily, as we give priority to the installment in shops that play an important role in customers’ day-to-day lives. As of the end of March 2010,2011, the number of subscribers reached 15.84 million and the number of the readers/writers reached 440,000510,000 units. Going forward, we intend to continue providing an open “iD” platform to

DCMX:

“DCMX” is a credit card issuers.

In February 2007, we agreed to establish a new company with McDonald’s Holdings Company (Japan), Ltd. (“McDonald’s”) to jointly promotee-marketing with a focus on “Osaifu-Keitai.” In conjunction with thistie-up, we jointly formed a new company, The JV, Ltd., in July 2007 to plan and implement promotional activities targeting members of McDonald’s new membership club. This company, which merged McDonald’s and DOCOMO’s respective customer bases, brands, and business know-how in the restaurant andservice for mobile phone businesses, provides customers with “Value,” “Convenience,” and “Fun,” by proposing new lifestyles to be achieved throughe-marketing focusing on the “Osaifu-Keitai.” As a result of these efforts, in August 2009, “iD” was introduced and installed at all McDonald’s shops throughout Japan.
With a goal of further increasing customer convenience, we have formed business alliancesphones equipped with the LAWSON and Family Mart convenience store chains. As part of this operational alliance, all stores“Osaifu-Keitai” function. This includes “DCMX mini,” ideal for use in these chains have introducedsmall payment services that use “iD” mobile credit. We also reached agreement on having “iD” available at Seven-Eleven stores across Japan starting in July 2010. Now “iD” will be available in virtually all major convenience stores in Japan.
We aim to expand the range of locations in which the “Osaifu-Keitaineeds, “DCMX,through the “iD” is used and bring up mobile phones as “Seikatsu Keitai,” that is, even more fully integrated into the daily lives of our subscribers.


26


DCMX
In April 2006, as the credit issuer using mobile credit “iD,” we launched “DCMX mini” and “DCMX” as services adequate for small purchases in order to further enhance the convenience providedenabling payments by the “Osaifu-Keitai.” In April 2007, we further enhanced our menu of credit services tailored to customers’ spending styles, with the launch of “DCMX GOLD,” which allows for purchases in greater amounts and provides a higher level of customer benefits and rewards. In June 2007, in addition to the DCMX Visa card that we have offered since the launch of the services, we started to issue thecards and DCMX MasterCard, allowing customers, to choose a card from VisaMastercards, and MasterCard when they sign up for services.“DCMX Gold” cards, which come with attractive membership privileges. As of March 31, 2010,2011, the number of subscriptions reached 11.26to our credit settlement service exceeded 12.32 million.
By enhancing these credit businesses, we aim to expand the credit market and acquire a portion of this market, leading to growth in our corporate value.

• System Integration for CorporateServices by Subsidiaries

We are directing efforts towardsstriving to create new areas of business that will generate effective synergies with our operation. Examples include investments in subsidiaries, such as OAK LAWN MARKETING, INC. (a home shopping business), D2 Communications Inc. (a mobile advertisement business), DOCOMO interTouch Pte. Ltd. (a high speed Internet connection service for hotels) and net mobile AG (a mobile content distribution platform business). Another subsidiary of ours, mmbi, Inc., is currently preparing to launch a multimedia broadcasting business in 2012.

4. Tariffs

Our cellular services revenues are generated primarily from fixed basic monthly charges, usage charges for outgoing calls (in Japan the SI business,caller is usually charged), revenues from incoming calls and charges for optional value-added services and features. We set our own rates in accordance with the Telecommunications Business Act and guidelines set by the Japanese government, which offers corporate customers greater operational efficiencycurrently allow mobile network operators to set their own tariffs without approval.

Currently, monthly charges that our cellular subscribers pay consist mainly of (i) a fixed basic monthly charge based upon the “plan” chosen, (ii) packet communication charges, (iii) call charges which vary with airtime, billing plan, etc., (iv) a mobile ISP fee, and expanded business opportunities. These solutions can be applied to(iv) other additional monthly service fees for miscellaneous value-added services.

Basic Monthly Charges

We offer a variety of business scenarios,different basic monthly plans targeting different segments of the market. These plans include those tailored to common usage patterns and those for frequent users. In addition, almost all of our plans include a certain amount of free minutes in the applicable basic monthly rates. Free minutes are automatically carried over for up to two months, and can be credited against voice calls, packet communication, video calls (FOMA), SMS, and international communications.

In November 2007, in conjunction with the introduction of the “Value Course” handset purchase method, we began offering the new “Value Plan,” which applies to subscribers who have chosen the “Value Course.” In exchange for payment of initial handset costs, a subscriber will be eligible to select the less expensive “Value Plan” under which basic monthly charges*1 (prior to application of other discounts) will be ¥1,680 to ¥ 1,823*2 lower (including tax) than standard plans. In March 2011, the number of subscribers of the Value Plan exceeded 40 million.

*1Charges before discounts
*2Some plans not included

Discount Services

Family Discount Service

As a popular option among our discount services, we offer a family discount service which gives a discount to families, meaning those within third-degree kinship, who subscribe to at least two and up to 10 mobile phones.

Under our “Fami-wari MAX 50” service, subscribers who commit to a two-year contract receive, regardless of the period of continuous usage, an immediate 50% discount on basic monthly charges and, in addition, FOMA subscribers also benefit from free domestic calls among members of the same “Family Discount” group 24 hours a day and a 60% discount on charges for domestic video calls to family members.

Corporate Discount Service: Business Simple

“Business Simple” is a service which combines “Business Discount 50” and “Business Call Discount” services. “Business Discount 50” gives a 50% discount on basic mobile phone charges on the condition of a

two-year contract, and “Business Call Discount,” which is offered to corporate customers having a contract on 2 to 1,000 lines, allows employees in the same “Business Call Discount” group to call each other 24 hours a day for a flat rate or, as the case may be, free of charge and also gives a 10% to 30% discount on domestic calls to non-group numbers and packet communication charges.

Charges for Data Communication Services

Data communication services are billed according to the volume of data sent and received without regard to the airtime or transmission distances. Billing plans for our data communication services include both pay-as-you-go services with no maximum charges and flat-rate services. Our major flat-rate services are as follows:

Packet Flat-Rate Services for Smartphones

Pake-hodai FLAT:

As “Pake-hodai FLAT” gives unlimited data volume for smartphones in Japan at a flat monthly rate of ¥5,460 (including tax), it is a packet flat-rate service for customers whose smartphone use is constantly substantial every month.

Pake-hodai double 2:

“Pake-hodai double 2” is a two-tiered packet flat-rate service. Monthly charges start at ¥2,100 (including tax), and customers pay for data according to their usage up to ¥5,985 (including tax), past which domestic data communications using smartphones are unlimited.

Packet Flat-Rate Services for Feature Phones

Pake-hodai double:

“Pake-hodai double” is a two-tiered packet flat-rate service. Monthly charges start at ¥390 (including tax), and customers pay for data according to their usage up to ¥4,410 (including tax), past which domestic i-mode communications are unlimited.

Flat-Rate Services for PC and Other Devices

Most of our offerings are two-tiered flat-rate services and completely flat-rate services. In two-tiered flat-rate services, a certain amount of minimum charges apply and customers pay for data according to their usage but only up to a certain amount of maximum charges, at which point domestic data communications become unlimited. For our Xi service, we are currently running a campaign offering a ¥1,575 monthly discount that applies until April 30, 2012.

<Main Price Scale of Flat-Rate Services for PCs and Other Devices>

Type

FOMA(W-CDMA)Xi(LTE)

Flat-rate data

communication service

Flat-rate Data Standard
Wari 2 Value
Flat-rate Data Plan
Flat Value
Flat-rate Data Plan
Standard Value
Xi Data Plan Ninen

Flat-rate

¥  2,500*1

(free minutes up to ¥2,500)

¥       5,460*1¥  1,000*1

(free minutes up to ¥1,000)

¥  1,000

(free minutes up to ¥1,000)

Maximum charge

¥  5,985*1

(Slope rate ¥0.0315/Packet)

¥       5,460*1¥  5,985*1

(Slope rate ¥0.042/P)

¥  6,510*2

(¥0.315/KB)

*1Above rates available with subscription to the “Flat-Rate Data Standard Discount” or “Flat-Rate Data Standard Discount 2.”
*2Once use exceeds 5GB, ¥2,625 is additionally charged per 2GB. Promotional offer at flat-rate ¥4,935 per month until April 30, 2012 (no extra charge for use exceeding 5GB).

Mobile ISP Fees

ISP Fee for Smartphones

sp-mode:

There is a ¥315 monthly fee (including tax) required as monthly sp-mode service charges.

ISP Fee for Feature Phones

i-mode:

There is a ¥315 monthly fee (including tax) required as monthly i-mode service charges.

ISP Fee for PCs, Smartphones and Other Devices

mopera U:

We offer the “U Light Plan” for ¥315 per month (including tax) and the “U Standard Plan” for ¥525 per month (including tax). “U Standard Plan” allows customers to use mail in addition to Internet access services.

5. Products

We develop products compatible with our service offerings in cooperation with handset vendors, purchase the products from the vendors and then sell them to our sales agencies who sell these products to our subscribers. We have a diverse line of handsets and devices including remote accesssmartphones, feature phones and data communication devices; in the fiscal year ended March 2011, we introduced 13 smartphone models, 39 feature phone models and 5 data communication device models, and sold approximately 19.06 million units.

Smartphones

In the fiscal year ended March 2011, in addition to global models, we introduced smartphones from Japanese vendors. This enriched our lineup and led to an enterprise networkexpansion of smartphone sales, and, security measures.

as a result, smartphone sales exceeded 2.50 million in the fiscal year ended March 2011.

We arehave proactively introduced highly popular global models into the Japanese market, such as the XperiaTM and the GALAXY S. We have also directingsold smartphones that come with functions familiar to our efforts towards international solutions for corporate customers. We established DOCOMO China Co.customers using feature phones, including “Osaifu-Keitai” (Mobile Wallet), Ltd. (“DOCOMO China”) in Shanghai, China in June 2008 to perform marketing activities directed towards corporate customers in China. DOCOMO China provides mobile phone collaborative business solutions“One-Seg” (mobile TV), waterproof and solutions relating to information distribution services for corporate customersinfrared functions, as well as supportbuilt-in, state-of-the-art added values, such as 3D liquid crystal displays and an imaging engine for enhancing customer operating efficiency and business activities in China, the world’s largest mobile communication market.

• Social Platform Servicesbetter video viewing, thus suggesting whole new smartphone experiences.

In addition, with a view towards sustainable social growth, we are developing businesses in fields that have a potential for strong synergy with mobile phones,released tablet-type devices, such as the environmentGALAXY Tab, that are handy to enjoy the Internet and ecology, safety and security, and healthcare management, and are aiming to create value in new areas. Atvideos while on the current time, however, none of these businesses is of a scale that would have a significant impact on revenues.

3.  Equipment Sales
We offer a widego.

As smartphones broaden the range of handsetsuse for customers with their extensive array of applications and other advantages, they are expected to have the effect of boosting packet ARPU as a result of customers switching from feature phones. With our subscribers.

In the year ended March 31, 2010, equipment developmentfull line of smartphones from many different makers that run on AndroidTM OS and sales accounted for 11.8% of consolidated operating revenue. We consider the development and sale of handsetsWindows Mobile® OS, we are working to be critical for our service development and securing of market share.
Manufacturers of our handsets have met our strict quality standards. We also offer a one-year warranty period for all handsets and provide free repairs during this period, except for cases whenencourage customers are at fault. Further, software can be updated thorough our network, to enhance customer convenience and operational efficiency.
• Mobile Phone Handsets (FOMA)
We had previously offered a lineup that included the 90X series, which came equipped with the latest functions, the 70X series, which focused on key functions, and concept models, which featured unique characteristics. So that customers can choose accordingswitch to their values and lifestyles, our handset lineup was renewed insmartphones.

Feature Phones

Since November 2008, to the “docomowe have been offering a range of feature phones, with four series of terminals—”docomo STYLE series,” “docomo PRIME series,” “docomo SMART series,”series” and “docomo PRO series”as well as lines catered to seniors and children.

In our feature phone offerings in the “Raku-Raku PHONE series.”

Further,fiscal year ended March 2011, we had offeredplaced particular focus on diversity and launched terminals with built-in functions such as high performance cameras and projectors. On the smartphonedesign front, we collaborated with brands such as one of the handset lineups of “docomo PRO series.” However, given the rapid growth of the market, we created products that are acceptable toEMILIO PUCCI, popular with female consumers, and added a greater rangevariety of userscolors. Also as a new endeavor, we launched the TOUCH WOOD™ mobile phone made from the surplus wood of trees culled during forest-thinning operations.

Data Communications Products

Data Cards

Because we can expect new demand for second devices with data cards, we have actively engaged in their sales promotion. Thus we have offered a wide array of data cards, including USB data cards and have a separate brand category for “docomo smartphones”ExpressCard-type data cards. We also began selling data communication devices compatible with Xi, our LTE service, in MayDecember 2010.


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Mobile Wi-Fi Routers

docomo STYLE series
Starting in November 2008, docomo STYLE series handsets were released, and inIn the fiscal year ended March 31, 2010, 17 models were launched, including the “N-08A” and “SH-05A.” The series was developed under the concept of “distinctive mobile phones, designed like accessories and offered in a wide variety of fashionable designs and colors for individuals who want to project the latest ‘look’.”
docomo PRIME series
Beginning in November 2008, docomo PRIME series handsets were released, and in the year ended March 31, 2010, 11 models were launched, including the“P-07A” and “N-06A.” The concept for the series is “full-feature mobile phones for the maximum enjoyment of video, games and other entertainment by people who love to explore the latest multimedia.” The series features a number of entertainment functions, including videos and games, and lets users fully enjoy the latest mobile entertainment.
docomo SMART series
Starting in January 2009, docomo SMART series handsets were released, and in the year ended March 31, 2010, four models were launched, including the “N-09A” and“P-09A.” The series was developed under the concept of “sophisticated mobile phones for busy people who want to live productively and enhance the management of their professional and private lives.” The series is designed for those who want to successfully balance work and private life. The phones are equipped with useful business tools and feature elegant designs.
docomo PRO series
docomo PRO series handsets have been released since November 2008 and five models were launched in the year ended March 31, 2010, including the i-mode models “SH-07A” and “SH-03B,” and smartphone “HT-03A.” The series was developed under the concept of “the most advanced high-spec mobile phones for those who love cutting-edge digital tools and can’t get enough of the newest, hottest technology.” The series allows customers to use mobile phones comfortably as cutting-edge mobile phones with their own specifications by resemblance to personal computers in terms of operations.
Raku-Raku PHONE series
The series was developed under the concepts of “user-friendliness,” “easy to use,” “easy to see,” and “peace of mind.” In the year ended March 31, 2010, two models were launched, “Raku-Raku Basic II” and “Raku-Raku PHONE 6.”
docomo Smartphones
We have various lineups of Windows OS and Android OS compatible smartphones from a wide range of manufacturers. In April 2010, we launched the Xperiatm handset made by Sony Ericcson Mobile Communications. In July 2009, we also launched the “T-01A,” a stylish and thin Windows Mobile handset. In July 2009, we launched the Googletm “HT-03A,” the first mobile phone in Japan with the Android OS, and in February 2010, “SC-01B,” a Windows Mobile handset for businesses.
Kids’ PHONE
In December 2007, we released “Kids’ PHONE F801i,” with improved reassuring functions such as waterproof and loss-prevention functions. In February 2009, we started selling “Kids’ PHONE F-05A,” with initial settings that are limited to the functions of a security buzzer, calling and GPS but with enhanced functions available to give families peace of mind.


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Concept Models
“FOMA D800iDS,” a two-screen handset equipped with a touch panel, was released in February 2007. In June 2008, we released “PRADA Phone by LG,” which was developed by the global brand Prada through collaboration with LG Electronics.
90X Series
In May 2007, the FOMA 904i series, which is compatible with “2in1,” “ChokkanGame” and “UtaHodai,” was released. In November 2007, the FOMA 905i series went on sale as an“all-in-one phone.” In June 2008, the FOMA 906i series, which is positioned as an all-around video phone, was released. The handset comes with such functions as “WORLD WING (3G+GSM)”; “FOMA high speed (HSDPA)”; “One-Seg”; “GPS”; “2in1”; “DCMX”; “iD”; “Full-wide VGA LCD,” and supports a variety of video services and contents.
70X Series
In January 2007, we released the FOMA 703i series, which pursue unique styles such as the world’s slimmest (as of January 16, 2007) handset and collaboration handsets. In July 2007, we released the FOMA 704i series, featuring not only “slim and compact,” but also “One-Seg,” “waterproof” and other functions. In January 2008,2011, we began selling the FOMA 705i series, which is the result of a new approach to design in addition to being slim. As part of this series, “PROSOLID µ (p705iCL)” — which comes installed with numerous business functions — was released in March 2008, and FOMA “SH705iII,” which features clear and audible calls and “One-Seg” and a 3.2 mega-pixel camera with clearly visible characters and screen, became available in April. In July 2008, we launched the FOMA 706i series, which was developed under the concept of individualism and slimness. It features not only a compact design but also functions supporting various customer needs and lifestyles, such as “Extreme Slim One-Seg Phone,” “Waterproof One-Seg,” “Wellness Phone” and “Friendly Phone for Everybody.” The performance of each of these handsets has been further improved.
SIMPURE Series
In June 2007, “SIMPURE L2,” developed in collaboration with a designer, was released as the latest model in the “SIMPURE” series.
Data Communication Devices
In the year ended March 31, 2010, we launched the USB-type data communication device “L-05A,” and the ExpressCard-type data communication device “L-07A,” which are compatible with HSDPA 7.2Mbps and HSUPA 5.7Mbps and achieve a high-speed Internet connection with a simpleset-up.
Mobile Wi-Fi Router
A new mobile Wi-Fi mini-router, co-developed by NTT Broadband Platform, Inc. and BUFFALO INC., has begun to be sold at a number of our outlets from June 2010.router. The mobile Wi-Fi router allows customers to connect devices with Wi-Fi enabled devices,capabilities such as handheld gaming consoles and tablet computers with wireless local area network (“WLAN”) capability, which only used to be used in WLAN coverage area, to connecttablets to the Internet anywhere on our W-CDMA network in addition to public wireless LAN coverage areas.

Digital Photo Frames

We offer a module-embedded digital photo frame, the “Otayori Photo Panel,” with communication functions whereby photos that subscribers have attached to e-mail or photos posted to the “Otayori Photo” site can be received by e-mail and displayed.

Book Reader

In January 2011, we launched a book reader called SH-07C. Compatible with our FOMA network.

FOMA Modules
To further promote the spread and developmente-book store, “2Dfacto,” customers can browse through a rich selection of electronic book content.

Modules

FOMA Ubiquitous Modules for the built-in market to the machine communication field, we released in March 2007 “FOMA UM01-F,” which supports both FOMA packet communication and voice/packet communication separation control. In June 2009, we launched the FOMA Ubiquitous Module “FOMA UM02-KO,” improving functions and expanding the lineup of FOMA Ubiquitous Modules. Currently, the FOMA Ubiquitous ModulesModules” are used for managing taxi and bus operations, monitoring and controlling power and gas facility devices, distributing content to information posting systems, managing inventory for vending machines and payment using mobile handsets. Further,

6. Sales and Marketing

Now that the Japanese mobile telecommunications market has entered a period of maturation, we have moved ahead with our business transformation programs from a customer-centric perspective in orderaccordance with our “Change and Challenge” action plan, ensuring a thoroughly hands-on approach to contributeserving customers and uniting the forces of the entire corporate group. We have constantly listened to the expansion of the machine communications market and to the further spread and development of the telematics field, we launched


29


“FOMA TM01-SA,” a FOMA telematics module in April 2009. This product can be used for packet communications as well as voice and video phone communications, and is designed for durability, with high vibration-resistance and temperature-resistance properties. Our goal for FOMA Ubiquitous Modules is to provide optimal solutions based on a full understandingvoices of our customers’ needs.
customers through various channels such as docomo Shops and call centers, and strived to respond to them in a steadfast manner. As a consequence, we were awarded the No. 1 ranking in the 2010 Japan Mobile Phone Service StudyDigital Photo FramesSM
, a consumer satisfaction study conducted by J.D. Power Asia Pacific*1.

We offer a digital photo frame (“OTAYORI PHOTO PANEL”) with communication functions whereby photos that subscribers have attached toe-mail or photos posted toalso received the Otayori Photo site can be receivedhighest marks among the mobile operators for our enterprise offerings in the 2010 Japan Business Mobile Phone Service StudySM by J.D. Power Asia Pacific for two consecutive years*e-mail2 and displayed.

We launched. In addition, we were awarded the “PHOTO PANEL 01”highest ranking in July 2009 and the “PHOTO PANEL 02” in December 2009.
Nikkei BP Consulting customer satisfaction survey of mobile data device users*3 for two consecutive years as well.

*1

4.  J. D. Power Asia Pacific 2010 Japan Mobile Phone Service StudySM. Study based on a total of 7,500 responses from mobile phone subscribers. http://www.jdpower.co.jp/

Marketing

• Sales Channels
*2

J.D. Power Asia Pacific 2009-2010 Japan Business Mobile Phone Service StudiesSM. 2010 Study based on a total of 3,222 responses from 2,345 companies with 100 or more employees (up to two responses from one company) about telecommunications firms who supply a mobile telephone / PHS service.

*3Nikkei BP Consulting Mobile data devices customer satisfaction survey. Results were based on responses to a web-based customer satisfaction survey of 1,600 data device users, conducted between March 10 and March 15, 2010. http://consult.nikkeibp.co.jp/consult/release/mobile100525.html

Sales Channels

We sell our products and services through a vast sales of network covering the entire country. The shops, which deal with our products and services, are operated by various distributors, and as of March 31, 2010,2011, there were 2,390 “docomo Shops”2,393 docomo Shops nationwide, which are specialized stores for which we have approved the use of the DOCOMO logo and other trademarks and service marks belonging to us, as well as the use of store exteriors and displays that provide immediate recognition as shops for DOCOMO.brand recognition. These “docomo Shops”docomo Shops are mainly operated by third party distributors who have no equity relationship with DOCOMO. In addition to “docomodocomo Shops, there are general distributors that handle the products and services of multiple operators such as mass merchandisers of consumer electronics and other stores that also sell our products. As of March 31, 2010,2011, the number of such shops was approximately 5,6005,400 (excluding “docomo Shops”)docomo Shops).

One of the major advantages of our large sales network is that it makes it easy for customers to subscribe to our services and purchase products, such as FOMA handsets. As the mobile communication market matures, it becomes more important to acquire and retain customers. To continue acquiring and retaining subscribers, we are engaged in the following sales and marketing strategies: (1) comprehensive brand enhancement from a customer-oriented perspective; (2) improvement of customer retention programs; (3) continuous expansion of service areas and improvement of network quality; (4) increase in traffic by promoting the use of services such as i-mode services; (5) improvement of the quality of our after-sales services; (6) provision of competitive tariffs; and (7) enhancement of handset lineups.
In order to enhance our business activities based on customer needs, we formed the Corporate Branding Division in August 2007 as an entity under the direct supervision of our president. Outside marketing experts were invited to participate in the Division, which directed its efforts towards brand marketing unbound by conventional values. In addition to seeking to further strengthen marketing functions, we also reviewed the role of the corporate brand in the light of the changing market environment. This led to the renewal of the DOCOMO brand and declaration of the “New DOCOMO Commitments,” for reforming our company in April 2008. Under these Commitments, we have thoroughly pursued our customer-based principles and provide each and every customer with the best service along with safety and security in order to transform ourselves to a corporation that exceeds expectations. The functions discussed above are succeeded by Strategic Marketing Department formed by structural reorganization in July 2008.
Moreover, we have employed a new brand statement and a new brand slogan, “Unlimited Potential, in Your Hand,” in an effort to enhance satisfaction of each and every customer and create deeper ties to bring customers continued enjoyment and satisfaction by using DOCOMO products and services. We also launched a new corporate brand logo and corporate color, “DOCOMO red,” which we have been using since July 2008.

Sales Methods

• Sales MethodsValue Course

In November 2007, we started offering new handset purchase methods. Under these purchase methods, customers can choose the “Value Course” or the “Basic Course” based on their needs. The “Value Course” offers lower basic monthly charges than inthe conventional model andmodel; instead, customers pay the initial handset purchase


30


costs on their own. The “Basic Course,” which is similar to the conventional model in that initial costs are reduced by our sales incentives to distributors, offers basic monthly charges unchanged from conventional basic monthly charges and lowers initial handset purchase costs, as we pay a portion of (give a discount on) handset purchases in exchange for two-year contracts. Nowadays most customers who purchase new handsets choose the “Value Course.”

Customers who purchased handsets with “Value Course” will receive lower basic monthly charges even after they finish the payment of handsets, so the longer customers use the same handsets, the more they can cut their spending. Under the “Value Course,” customers can choose from either 12- or24-month installments, in addition to a lump-sum payment.

In Japan, mobile handsets used

Monthly Support

We introduced the “Monthly Support” program in March 2011. Under this program, customers with new smartphones and tablets will be given certain levels of discounts, which will vary by model, on their monthly bills for up to be sold with sales incentives to reduce initial costs and make them more affordable24 months. We believe this program will create a foundation for customers, and this sales model contributed significantly tothe spread of smartphones, as we are now capable of flexibly addressing the growth of the mobile phonesmartphone market. However, as the market has matured, it was necessary to introduce a sales model suitable for the current situation to solve issues such as feelings of unfairness and the lack of transparency.

We feel strongly that the combined elements of our sales network, extensive advertising activities, strong branding power, network quality, competitive billing plans, and after-sales services will enable us to continue acquiring and retaining subscribers.
• Customer Support
In

Customer Support and Satisfaction

As Japan’s mature mobile communication market continues to mature, we have shifted from a strategy focusing on acquiring new subscriptions to one concentrating on the relationships with existing customers, and have strived to achieve high customer satisfaction. We consider customer support, including after-sales services, to be extremely critical in retaining subscribers and maintaining the high reputation and recognition of the DOCOMO brand. We provide fruitfulvaluable services to our customers from the time a subscription is made or a handset is purchased at a “docomo Shop”docomo Shop or at other sales channels, and such services are supported by our fully integrated

information system. In addition, our Internet site, accessible via mobile phones and personal computers, etc., allows customers to change their services, billing plans and addresses, as well as shop for mobile handsets and accessories 24 hours a day.

Our after-sales services are provided mainly through “docomo Shops”. All “docomo Shops” can deal with repairs. A toll-free number is available for inquiries on such matters as basic service contents and billing plans. In addition, we have a

24-hourCustomer Loyalty Program framework for responding to handset and network problems, including stolen or lost handsets.

To enhance the quality of after-sales services for existing subscribers, when our sales distributors provide certain after-sales services, including handset exchanges, billing plan changes, and diagnosis/repair work on products such as handsets, payments suitable for the services performed are paid to the distributors.
In July 2009, we began offering at all “docomo Shops” the “keitai tenken” service, acheck-up service for handsets designed to ensure that customers can use their mobile phones comfortably which have become an indispensible tool in their daily lives. With the “keitai tenken” service, to ensure that customers’ handsets are kept in the best possible condition, an expert staff checks for any problems in communication functions such as breakage and malfunction, and cleans the phones.
Further, in an effort to increase the number of users in customer segments where penetration rate is low, we have provided consultation for customers by holding seminars regularly to promote the understanding of how to use mobile phones.

As part of our efforts to provide enhanced customer services, we offer a membershipcustomer loyalty program called “docomo Premier Club.” This reward program consists of the rewarding program,a point accumulation service, complimentary services and after-sales services; depending on their monthly mobile phone usage, subscribers earn points, which can be applied to purchasing handsets, or exchanged tofor travel tickets, restaurant vouchers, or others. Customers are classified into four stages based on their usage during the previous year and years of continuous subscription, and the point-earning percentage increases with each stage level. Alletc.

By joining this program, members of the Club are entitled to the following services: services such as:

free repair services for three years from handset purchase;purchase (not applicable to damages resulting from customers’ negligence)

a discount on a battery pack or charger adapter with the “Battery PackAnshinSupport,” which offers markdowns


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on battery packs to customers who have useduse of the same FOMA handsetshandset for at least one year (the service was expanded in July 2009 to give customers an option to choose

a charger adapter in addition to the conventional battery pack); the “Repair FeeAnshinSupport,” which capscap on repair charges for non-insured phones at ¥5,250 (including tax); (any repairs for which the “Receive Anywhere Servicerequest was received on or after April 1, 2011 are covered for Repaired Mobile Phone,” which allows a repairedthree years from purchase only)

In October 2010, we partially revised our “Premier Club” services to adjust to changes in the mobile phone to be picked upusage patterns of customers, such as the increase in the length of the mobile phone replacement cycle. We announced the extension of the effective period of “docomo Points” and widened the scope of their application, and at any desiredthe same time we implemented changes in the “docomo Shop” or other locationPoint” award scale. We also made changes in Japan free of charge, and the Keitai-OsagashiService,” which confirms the approximate locations of phones free of charge. Moreover, FOMA customers may applymonthly fee for the “Mobile Phone Protection & Delivery Service,” which for a monthly fee of ¥315 (including tax) and ¥5,250 (including tax) each timeService”, changes to charges when the protection service is used, in case of water exposure, theft, loss or other trouble, and covers shipment ofalso announced a replacement handset. Further, Club members are entitled to other complimentary services from hotels, shops, restaurants, and other sponsor companies. Customersrevision in the Premier Stage are also entitled to get free battery packs (since July 2009, we have been giving customersperiod of application of the option to choose a charger adapter in addition to the conventional battery pack) to customers who have used the same FOMA handsets for more than one year.

“Repair Cost Support.” Following the introduction of new sales methods, theour customers’ replacement purchase cycle has been getting longer. Although thelengthened, and although we saw a rise in number of handsets requiring repair cases, after October 2010, this number has remained at levels near to the last fiscal year.

Other Support Services

Mobile Phone Protection & Delivery Service

We offer our Premier Club members with a Xi or FOMA subscription the “Mobile Phone Protection & Delivery Service,” under which customers, for a monthly fee and its corresponding costs has been increasing, we expectservice charges applicable each time the service is used, can have a replacement handset directly shipped with a single phone call in the event that this will result in a retention effect as can be seen from our low churn rate.

their handset becomes no longer usable due to water exposure, theft, loss or other trouble.

48-hour Area Quality Surveys and Coverage Improvement

Further, to promptly respond to customer opinionsconcerns regarding area quality, we offer a service under which, if a customer requests, we visit the customer’s home and perform area quality surveys, generally within 48 hours once our service staff contacts the customer making the request.

If an improvement in area coverage is possible immediately upon visiting the customer’s home, we swiftly take measures for improvement on the spot.

Overseas Support

We are also putting efforts into the support of customers overseas. In addition to our support desks in Honolulu, we expanded the number of overseas cities with support desks to 1314 in total, including London, New York, Paris, Singapore and Shanghai. These support desks offer free handset charging services and respond to inquiries regarding how to use and operate mobile handsets overseas.

5.  Investments and Affiliations

7. Investments and Affiliations in Japan

To expand our areas of business, we make investments in, enter into business alliances with and establish joint ventures with companies having resources and know-how that supplement our existing business. The primaryPrimary fields wherein which we make such investments and affiliations are social support which includes financial settlements, broadcasting, content social infrastructure and the Internet, research and development.

development and global fields.

Social Support

We engage in social support service offerings in various areas, including the environment and ecology, health and medical care, finance and settlement, and education. Currently, we are working aggressively to develop tie-ups with external partners in an attempt to secure new sources of profit by launching full-scale business endeavors.

In the financialfinance and settlement field, above all, we undertakeare undertaking business investment to expand the mobile e-commerce market, for i-mode, promote the spread of the Osaifu-Keitai,“Osaifu-Keitai” and promote the spread and expand of iD and DCMX services. In the broadcasting field, we have been investing in such targets as television stations to investigate new services and develop businesses through the convergence of telecommunications and broadcasting. In the content field, which includes video content, through investments in advertising companies and investments in and affiliations with companies that offer services to consumers, we are directing our efforts towards the expansion of the mobile content market. In the social infrastructure field, we are undertaking investments“iD” and affiliations in fields with strong potential synergy with our business to contribute the sustainable development of society by providing mobile solutions. And with regards to the research and development field, we are making investments and affiliations to ensure a stable procurement of our products, competitive pricing and quality for our products, and market superiority through technical synergies with our business partners.

OAK LAWN MARKETING
In April 2009, we reached an agreement on a capital alliance with the home shopping company OAK LAWN MARKETING, INC. (“OLM”), and acquired 51% of the common shares of OLM for ¥31 billion. With a view towards revitalization of thee-commerce market, we completed the transition of OLM’s three brands into official i-mode sites in September 2009, and in February 2010, OLM started to provide their contents using i-concierge service, which is the first introduction case for a home shopping company. The two companies plan to continue their


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“DCMX” services.


efforts to expand the home shopping businesses that utilize our services including video contents and platforms. OLM’s revenue is recorded in Other Revenue in our consolidated results. Please see Other Revenue in Item 4B.
Sumitomo Mitsui Card
On April 27, 2005, we entered into an agreement with Sumitomo Mitsui Financial Group, Inc., Sumitomo Mitsui Card Co., Ltd. (“Sumitomo Mitsui Card”) and Sumitomo Mitsui Banking Corporation (“SMBC”) to form a strategic business and capital alliance for the launch of a credit-payment service using ourOsaifu-KeitaiCompany, Limitedphones equipped with smart-card functions for cashless payments. As part of thetie-up,

In July 2005, we acquired 34% of the common stock of Sumitomo Mitsui Card Co., Ltd. (“Sumitomo Mitsui Card”), a major company in the credit card industry that was a pioneer as an issuer of Visa cards in Japan, for approximately ¥98.7 billion, including shares newly issued by Sumitomo Mitsui Card. Starting in December 2005, Sumitomo Mitsui Card began issuing the Sumitomo“Sumitomo Mitsui Card for iD. The current state

Broadcasting

In the broadcasting field, we have been investing in such targets as television stations to investigate new services and develop businesses through the convergence of telecommunications and broadcasting.

mmbi, Inc. (formerly Multimedia Broadcasting, Inc.)

In order to offer a whole new broadcasting service combining the features of broadcasting and communications for use in mobile terminals, we set up Multimedia Broadcasting, Inc. On September 9, 2010, we obtained approval of our plan to establish a designated base station that will use frequencies between 207.5 MHz and 222 MHz. Additionally, Japan Mobilecasting, Inc. was set up as a subsidiary to operate a broadcasting service business for multimedia broadcasting in mobile terminals. On April 1, 2011, Multimedia Broadcasting, Inc. changed its name to mmbi, Inc. Following the licensing of the creditcompany as a broadcasting operator, we are moving forward in preparations for service launch in the spring of 2012.

Content and Internet

In the content and Internet field, which includes video and e-books, through investments in advertising companies and investments in and affiliations with companies that offer services to consumers, we are directing our efforts towards the expansion of the mobile content and Internet market.

OAK LAWN MARKETING, INC.

In April 2009, with a view to vitalizing the mobile e-commerce market, we acquired 51% of the common shares of the home shopping company OAK LAWN MARKETING, INC. (“OLM”) for ¥31 billion. The two companies plan to continue their efforts to expand home shopping businesses that utilize our services and platforms, such as the “iMenu” portal and “docomo Market.”

Research and Development

In the research and development field, we make investments in and collaborate with companies that have technology essential for our products and services from the viewpoints of business is discussed in Other Revenue — Credit Business in Item 4B.

cooperation for enhanced technology development, more stable corporate management of the target company through equity participation and protection of applied technology.

ACCESS CO., LTD.

In December 2005, we purchased an additional 6,356 newly allocated shares of ACCESS CO., LTD. (“ACCESS”), a developer of software for mobile phones, for approximately ¥15 billion, bringing our total stake in ACCESS to 11.6%. ACCESS’s browser is widely used in our 3G FOMA handsets and we aim to further strengthen our relationship through this investment to support the development of browser technology.

• International Investments and Affiliations

Global

We make investments inand/or enter into agreements with mobile service providers providing mobile phone related services with the long-term aim of securing growth and revenue opportunities and strengthening our global competitiveness.

In regards to investments in mobile service providers, in order to capture growth in overseas markets, we support the businesses of our investment partners and achieve financial returns in the form of dividends and equity gains, and at the same time, we aim to achieve synergies with theour partners, including joint development of handsets, joint procurement and increased roaming revenues through introduction of W-CDMA technology.

In mobile phone-related business fields, as in our construction of an overseas platform business through our acquisition of net mobile AG, we are directing our efforts towards the provision of value-added services overseas, where synergy effects can be anticipated from our experience and know-how in the provision of sophisticated services in Japan.

Hutchison Telephone Company Limited/Hutchison 3G HK Holdings Limited

In December 1999, we acquired a 19% equity interest in Hutchison Telephone Company Limited (“HTCL”) in Hong Kong for approximately US$410 million (approximately ¥42 billion at the date of investment)billion) as part of our business alliance with Hutchison Whampoa Limited (“HWL”) with respect to the development of their mobile Internet services and 3G businesses in Hong Kong. In May 2001, we made an additional investment of US$30.44 million (approximately ¥3.7 billion at the date of investment) for a 6.4 point increase in our equity interest in HTCL.

In July 2001, we agreed with HWL to separate the 3G entity from HTCL, and acquired a 25.4% equity interest in Hutchison 3G HK Holdings Limited (“H3G HK”), for approximately HK$303,190 (approximately ¥5 million at the date of investment).
In November 2002, NEC Corporation (“NEC”) acquired a 5% equity interest in both HTCL and H3G HK. As part of this transaction, our interest in both HTCL and H3G HK decreased from 25.4% to 24.1%million). We currently hold a 24.1% equity interest in both HTCL and H3G HK.
HTCL launched its mobile Internet services in May 2000.

Philippine Long Distance Telephone Company

In addition, H3G HK acquired a 3G license in September 2001 and launched 3G services in January 2004. H3G HK’s 3G license was transferred to HTCL in June 2005 and 3G services are provided by HTCL at present.


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Far EasTone Telecommunications Co., Ltd.
In February 2001, we invested approximately NT$17.1 billion (approximately ¥61.3 billion at the date of investment) for a 20% equity stake in KG Telecommunications Co., Ltd. (“KG Telecom”). KG Telecom was a mobile network operator which operated in Taiwan. In July 2001, we purchased new shares of KG Telecom, thereby increasing our equity stake to 21.4%. The amount of our additional investment was NT$1.87 billion (approximately ¥6.7 billion at the date of investment).
In October 2003, KG Telecom became a wholly owned subsidiary of Far EasTone Telecommunications Co., Ltd. (“FET”), the third-ranked mobile network operator in Taiwan. We became an approximately 5.0% shareholder in FET, and received NT$2.5 billion (approximately ¥8.0 billion at the date of payment) in cash.
In March 2004, we signed a consulting agreement with FET. Under the agreement, we provided technical assistance including assistance for network field testing and coverage optimization2006, for the introductionpurpose of FET’s W-CDMA 3G service. FET launched 3G services based on W-CDMA technology in July 2005.
KT Corporation
In December 2005,business support and technological tie-up, including enhancing our international roaming service, we entered into an agreement with Korean mobile network operator KT Freetel Co., Ltd. (“KTF”) on a comprehensive strategic alliance including equity participation, under which we invested approximately KRW 564.9 billion (approximately ¥65.1 billion at the date of investment) to acquire a 10% stake in KTF through a third-party allotment of new shares and purchase of KTF treasury stock.
Through the partnership, we provided technical support to KTF to deploy a nationwide W-CDMA network successfully. Also, we have been working on initiatives such as improving convenience for the travelers in both countries through the joint development and the provision of roaming services, developing new business by taking advantage of the technical and marketing expertise of the worlds leading providers of cellular services and examining cost-saving opportunities, such as the joint handset procurements. In July 2007, as part of the companies’ joint handset procurement project, an announcement was made of the joint procurement of HSDPA compatible USB type terminals. In October 2007, as part of the joint activities in the Business & Technology Cooperation Committee (“BTCC”) established by the two companies, the companies agreed to investment in KT-DOCOMO Mobile Investment Limited Partnership, a fund having KTBnetwork Co., Ltd. (“KTB”) as the asset manager, which invests in South Korean venture companies in the mobile and IT related fields. In conjunction with this alliance, we invested KRW 13.5 billion (approximately ¥1.7 billion at time of investment decision, a 45% equity stake) in the fund. In 2009, we achieved certain results through the activity in BTCC, including the launch of jointly planned handsets in South Korea and the provision of a jointly developed “Local Number Roaming” service.
In addition, in January 2009, in conjunction with the merger between KTF and the Korean fixed-line carrier KT Corporation (“KT”), for the purpose of a strategic alliance with KT, we agreed to exchange 40% of our stake for KT common shares, and the remaining 60% for exchangeable bonds issued by KT. In June 2009, we acquired the above shares and exchangeable bonds, and our equity stake became approximately 2.2%. In December 2009, we exchanged the exchangeable bonds for KT’s US ADRs, making our stake in KT roughly 5.5%.
Philippine Long Distance Telephone Company
In January 2006, we entered into an agreement with three companies—NTT Communications Corporation (“NTT Com”), Philippine Long Distance Telephone Company (“PLDT”) and First Pacific Company Limited (“FPC”), which is PLDT’s largest shareholder, shareholder—on a share acquisition and businesstie-up. Under the agreement, we purchasedour purchase of approximately 7.0% of itsPLDT’s total outstanding common shares from NTT Com, for approximately ¥52.2 billion and established a comprehensive businesstie-up with PLDT and its mobile network operator subsidiary Smart Communications, Inc. (“SMART”).
Sincebillion.

Starting in March 2007, we havehad acquired PLDT shares in stages through the open markets, acquiring a total ofin securities exchanges, which totaled approximately ¥98.9 billion sharesor equivalent to approximately 7.5% of PLDT’s outstanding shares as of March 31, 2008; as a result,common shares.

The NTT group’s cumulative stake in PLDT, combined with NTT Com’s PLDT shares, reached 20.9% as at the NTT group achieved a 20.9% stake in PLDT. Pursuantend of March 2008. Due to the January 2006 agreement, we have the ability to exercise the voting rights of NTT Com, and since we obtained theour ability to exercise significant influence over PLDT by exercising voting rights on behalf of the NTT group pursuant to the aforementioned January 2006 agreement, we have consideredtreated PLDT as anour affiliate and accountedhave applied the equity method since March 2008.

Furthermore, in May 2011, we entered into an option agreement with JG Summit Holdings, Inc., the holding company of a conglomerate in the Philippines, to give the parties options through which we would acquire approximately 2% of the total issued and outstanding shares of PLDT, worth an estimated amount of about ¥21.6 billion (as of April 28, 2011). This transaction creates an opportunity for additional acquisition of shares following PLDT’s planned acquisition of a majority stake in Digital Telecommunications Philippines Inc. via a share swap, which would lead to a dilution of the NTT group’s cumulative stake. Once the trade based on the option agreement is completed, we would hold approximately 14% of PLDT’s outstanding common shares, and the NTT group’s cumulative stake would be approximately 20%.

KT Corporation

In December 2005, we entered into an agreement with Korean mobile network operator KT Freetel Co., Ltd. (“KTF”) on the formation of a comprehensive business alliance including equity participation, under which we invested approximately KRW 564.9 billion (approximately ¥65.1 billion at the date of investment), and acquired 10% of KTF’s outstanding shares.

Under this partnership, the two companies established the Business & Technology Cooperation Committee (“BTCC”) and DOCOMO provided technical support to KTF to deploy a W-CDMA network across Korea. Other successful outcomes of the BTCC’s active endeavors include launching jointly developed terminals in Korea, offering a jointly developed service called Kaigai Plus Number and, further still, examining the mutual use of the NFC service between Japan and Korea.

In January 2009, as a result of the merger of KTF with KT Corporation (“KT”), which was a fixed-line telecommunications operator, and for the investment by applying the equity method. We also have designated two directors each to


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PLDT and SMART. Going forward, we will further strengthen ourtie-uppurpose of a strategic partnership with PLDT and SMART and make efforts to increase their enterprise value through our operational support and technology cooperation such as advancement of network, introduction of value-added services and enhancement of international roaming services.
DOCOMO PACIFIC, INC.
In March 2006,KT, we agreed to fully acquire bothexchange 40% of our holdings for KT common shares and the remaining 60% for convertible bonds issued by KT. After we acquired the aforementioned shares and convertible bonds in June 2009, we had an approximately 2.4% stake in KT. In December 2009, we converted the aforementioned convertible bonds to KT’s American Depositary Receipts (ADRs), which made our stake roughly 5.9%.

DOCOMO PACIFIC, INC.

In December 2006, with a view to improving convenience for customers in Guam and the Northern Mariana Islands, a major destination for Japanese visitors, by enhancing the GSM network there and introducing packet roaming services by developing a GPRS network, we acquired Guam Cellular & Paging (“Guam Cellular”) and Guam Wireless Telephone Company, LLC (“Guam Wireless”), both of which were mobile network operators operating in Guam and the Northern Mariana Islands (including the island of Saipan), for a total amount of US$71.8 million (at the time of investment, approximately(approximately ¥8.4 billion). In December 2006, we transferred operations to Guam Cellular from Guam Wireless through a holding company and we integratedmerged the operations of the two companies. ThroughAs a result of this acquisition, Guam Cellular became our wholly-owned subsidiary. We have endeavored to improve convenience of international roaming services for the large number of Japanese travelers who visit Guam and the Northern Mariana Islands, by enhancing Guam Cellular’s GSM network and introducing packet roaming services by developing its GPRS network. In July 2008, we launched 3G services, based on W-CDMA technology. In October 2008, the company name was changed to DOCOMO PACIFIC, INC. (DOCOMO PACIFIC). Currently, under the DOCOMO brand, we are striving for further improvement in quality, and are directing our efforts to providing services offering high convenience to customers. In December 2009, we began providing to DOCOMO PACIFIC’s subscribers “MAX CHANNEL”,offering a push-type information distribution i-channel service. DOCOMO PACIFIC’s revenue is recorded in Cellular Services Revenue in our consolidated results.

service called “MAX CHANNEL.”

Robi Axiata (Bangladesh) Limited

In September 2008, we acquired a 30% equity interest inof the total outstanding shares of TM International (Bangladesh) Limited (“TMIB”), a mobile network operator based in Dhaka, Bangladesh, for approximately US$350 million (approximately ¥37¥37.5 billion). to facilitate the company’s business expansion in the fast-growing Bangladeshi mobile telecommunication market. In addition, in November of the same year, we made an additional investment of approximately US$30 million (approximately ¥3¥2.9 billion) on a pro-rata basis. In May 2009, thein proportion to our capital contribution. The company name was changed to Axiata (Bangladesh) Limited in May 2009 and was then changed again to Robi Axiata Limited (“AXB”Robi”). Through the investments, in August 2010. As of March 2011, we are participating in AXB’s management by actively drawing on our expertise to enhance the company’s business in the fast-growing Bangladesh mobile telecommunication market.

hold 30.0% of Robi shares.

Tata Teleservices Limited

In November 2008,March 2009, we reached agreement on a capital alliance with Tata Sons Limited (“Tata Sons”), the holding companyacquired common shares of Tata group, and the Indian telecommunication carrier Tata Teleservices Limited (“TTSL”), which is a unit of Tata group. Based on this agreement, we acquiredan Indian communication carrier, that amounted to an approximately 26.5% of TTSL’s stake in the company for approximately 128.1 billion rupees (approximately ¥252¥252.3 billion) in March 2009. We also made a tender offer for shares of Tata Teleservices Maharashtra Limited (“TTML”), a TTSL affiliate, and acquired approximately 12.1% of TTML shares for a price of approximately 5.7 billion rupees (approximately ¥11 billion) in March 2009. Through this strategic investment and alliance, the three companies are aimingmove to expand theirour business areas in the Indian market, which is expected to grow at a fast pace.achieve rapid economic growth in the coming years. In June 2009, weTTSL began offering the GSM services under the brand name “TATA DOCOMO”DOCOMO,” and also launched a 3G service in November 2010, outpacing competitors to become the first private company to offer such a service. In March 2011, we announced a plan to accept the rights offering for approximately 8 billion rupees (approximately ¥14.4 billion) in proportion to our capital contribution. This transaction was completed in May 2011, and our i-channel service, which isinvestment will be utilized to expand the coverage as well as strengthen the quality of the 3G network. As a push-type information distribution service. In January 2010,result of this transaction, we have also launched ahold approximately 26.5% of TTSL shares.

manga distribution service called “DOCOMICS.”

DOCOMO interTouch Pte. Ltd.

In December 2004, we investedacquired all of the shares of inter-touch (BVI) Limited, a Singapore-based holding company, for US$70 million (approximately ¥7.3 billion as of the date of investment) to fully acquire inter-touch (BVI) Limited, a Singapore-based holding company of Internet providers which supply high-speed broadband connections and applications for travelers at hotels across the Asia-Pacific region, Europe, the Americas and other regions.

In February 2007,, with a view towardto improving our groupthe convenience for overseas travelers by further expanding its business results and future business expansion,enhancing service offerings.

In January 2008, we decided to reorganize the structure for further operational efficiency. We decided to make INTER-TOUCH PTE LTD (currently DOCOMO interTouch Pte. Ltd.) (“interTouch”), oneacquired all of the inter-touch group’s operational companies in Singapore, a wholly owned subsidiary. The reorganization resulted in interTouch becoming a wholly-owned subsidiary of DOCOMO and the dissolution of three companies, inter-touch (BVI) Limited, INTER-


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TOUCH (MIDDLE EAST) LIMITED and inter-touch Holdings (Singapore) Pte Ltd. Inter-touch (BVI) Limited was dissolved in February 2008, and inter-touch Holdings (Singapore) Pte Ltd. was dissolved in March 2008.
In December 2007, interTouch reached an agreement with the primary shareholdershares of MagiNet Pte. Ltd. (“MagiNet”), a high-speed Internet service and video distribution service provider for hotels, to fully acquire the company for approximately US$150 million (approximately ¥16.5 billion). The acquisition was completed in January 2008. In conjunction with this acquisition, wethe view to improving its group business results and future business expansion and also carried out a capital increase in interTouch of US$191 million (approximately ¥21 billion). In April 2008, we changed its name to DOCOMO interTouch Pte. Ltd. Currently, DOCOMO interTouch is one of the largest providers of high-speed Internet service for hotels in the Asia-Pacific region, providing services in approximately 1,2001,100 hotels in 7057 countries across the world. In April 2008, we announced that the name of the company had been changed to DOCOMO interTouch Pte. Ltd. Currently, under the DOCOMO brand, the company is endeavoring to further expand its business, and by providing a full range of services, enhance convenience for overseas travelers. Please note that interTouch’s revenue is recorded in Other Revenue in our consolidated results.

net mobile AG

In November 2009, in order to establish an international mobile-content distribution platform, by means of a tender offer implemented by our wholly owned subsidiary DOCOMO Deutschland GmbH, we acquired, at a cost of roughly 38.9 million Euros (roughly ¥5.2 billion), approximately 79.6% of the outstanding common shares of net mobile AG (“net mobile”), a German mobile content distribution platform business. As a result of this tender offer, net mobile became our subsidiary. In December 2009, by subscribing to a private placement of new shares issued by net mobile at a cost of roughly 4.89 million Euros (roughly ¥600 million), our stake in the company increased to approximately 81.5% of the outstanding common shares. Please note

PacketVideo Corporation

In July 2009, we acquired 35% of the outstanding shares of PacketVideo Corporation (“PacketVideo”), a U.S. company, from NextWave Wireless Inc. (“NextWave”), also a U.S. company, for US$45.5 million (approximately ¥4.5 billion) to expand our music and video services. Then in October 2010, we acquired 65% of the outstanding shares of PacketVideo that net mobile’s revenue will be recordedhad been held by NextWave, at US$111.6 million (approximately ¥9.3 billion). As a result of this deal, PacketVideo became a wholly-owned subsidiary of DOCOMO.

PacketVideo is a leading company in Other Revenue in our consolidated results from the fiscal year ending March 31, 2011.

6.  Networks
We currently provide our services on several different networks including 3Gmusic and 2G networks. Each of these networks is composed of four basic components: base stations, antennas, switching centersvideo content player software and transmission lines. When a person uses acontent service platforms for mobile phone (or other portable device), an antenna on top of a base station receives the signal. The signal then travels via transmission lines to a switching center, which routes the signal to another base stationphones, and it also develops and provides its own cutting-edge solutions in the vicinityarea of the intended recipient of the signal. In general, our 2G networkservices that enable music and 3G network use separate base stations, antennasvideo content to be shared among home electronics devices, including televisions, digital photo frames, and switchboards, but we are moving ahead with providing common antennas and transmission lines for the 2G and 3G networks in our efforts to reduce network costs.
In order to establish and maintain our high-quality network economically and efficiently, we purchase high-quality networkaudio equipment, at low costs from approximately 90 suppliers inside and outside Japan in accordance with our procurement policies, which stress openness and fairness.
At new procurement opportunities, we obtain high-quality equipment at competitive prices by receiving a wide range of proposals from domestic and international suppliers through our website.
• 3G Network
We developed our 3G network based on the IMT-2000 standards of the International Telecommunications Union, or ITU, and launched commercial service of our 3G network in October 2001. IMT-2000 indicates a third-generation (“3G”) mobile communication system which offers data communication at a speed higher than the conventional second-generation (“2G”) system as well as international roaming services.
We are actively moving ahead on the migration ofpersonal computers and mobile phones.

8. Research and Development

In our customers from our 2G to our 3G network and adding equipment and infrastructure for our 3G network in addition to our existing 2G network. We have been constructing an IP router network based on an optical fiber relay network aiming to transmit huge volumes of data efficiently and less costly. The Japanese government has allocated a total bandwidth of 335MHz as radio frequencies available for usebase located in the 3G network (including frequencies that are planned to be used in the future). Of this, we use 20MHz x2 (for uplink and downlink) in the 2GHz band across Japan. In the 800MHz band, which is in the process of reallocation, we currently use up to 10MHz x2 in regions where interference with existing systems can be avoided.


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Further, in the 1.7GHz spectrum, we use 15MHz x2 in the Kanto, Kansai, and Tokai areas. Therefore, our 3G network operates on the three bands of 2GHz, 800MHz and 1.7GHz.
In the year ended March 31, 2010, we moved aggressively to improve area quality, based on quality surveys, for underground shopping areas, shopping facilities, and other places where customer needs are high. Also, we actively utilized low-cost repeaters to improve quality in small areas such as customers’ homes and offices.
We were the first company in the world to launch 3G services based on W-CDMA technology. Many foreign companies in which we have invested, including HTCL, FET, KT and PLDT, and many of our international strategic allies, including most of the Conexus Mobile Alliance member operators, have already launched 3G services based on W-CDMA.
By licensing our intellectual property with respect to W-CDMA under fair, reasonable and non-discriminatory terms and conditions, we have contributed to the spread of W-CDMA technology.
Furthermore, LTE (Long Term Evolution) has been discussed in 3GPP (3rd Generation Partnership Project), a standardization association of W-CDMA, and we have played a key role in the discussion. In response to specifications on LTE which were mostly finalized during the meeting of 3GPP held in March 2009, we launched the development of LTE for its commercialization. In tandem with these developments, we continue to vigorously participate in the 3GPP standardization activities in order to finalize LTE test specifications and investigate LTE-Advanced, a successor to LTE.
• 2G Network
Our 2G network, which is currently offered nationwide, is expected to terminate in March 2012.
The Japanese government has currently allocated 41MHz x2 (uplink and downlink) for the use of our 2G Network. We are using at 18MHz x2 in the 800MHz band for 2G network.
7.  Research and Development
In order to respond to swiftly growing demand for wireless telecommunication and to diversifying customer needs, we have upgraded our research and development capabilities and streamlined our research and development operations. As part of these activities, we built a center for research and development in Yokosuka Research Park, we engage in March 1998. This center is a highly advanced research and development center near Tokyo specializing in mobile telecommunication technology. With state-of-the-art testing facilities, the center is the base for research and development of basic technologies, 3G, 4G and othertechnology, mobile communication systems and a wide variety of new products and services.
Research and development is performed primarily at our own facilities. Research and development expenditures in the year ended March 31, 2010 were 109.9 billion yen. As part of our

ongoing research and development and in order to continue to improve our products, networks and services, each of our research and development departments collaborates with product development staff at other operating divisions. We are also working with major manufacturers of our handsets and network equipment.

In addition, outsideorder to address technology innovations overseas, we have established research centers in the R&D Center, the following other departments have joined development activities; Product Department, Frontier Services Department, Ubiquitous Services Department, Services Platform Department, Solution Business DepartmentU.S., Germany and Network Service Operation Department.

As to our overseas subsidiaries, we established DOCOMO Communications Laboratories USA, Inc., which engages in research and development of network technology, handset software and media encoding. In July 2005, we established DOCOMO Capital, Inc., whose purpose is to invest in venture businesses that have leading-edge and innovative technologies applicable to mobile communication.China. We also set up DOCOMO Communications Laboratories Europe GmbH, which primarily researches network technologies, wireless technologies, next-generation IC/USIM card technologies, security technologiesCapital, Inc. for the purpose of investing in ventures that boast advanced and standardization activities. In November 2003, we established DOCOMO Beijing Communications Laboratories Co., Ltd.innovative technology that can be applied to engage in the leading-edge research, in particular fourth-generation (“4G”) wireless technologies and beyond. We also established DOCOMO


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mobile communication services.


Technology, Inc., which primarily carries out research and development to enhance our PDC system, IMT-2000 system and other existing systems and supplements our fundamental research and development activities.
Furthermore, we also conduct research with various universities inside and outside of Japan. In the collaborative research field, we have been involved in technological exchange in connection with not only 3G research and development but also 4G mobile communication systems and other advanced technology research.
In April 2003,

Recent development results are as follows:

Development of Handsets and Services

To provide our customers with a more comfortable communication environment, in addition to the commercialization of our Xi network, we and other mobile network operators in Japan agreed to conduct a joint research on the possible biological effectsundertook development of exposure to radio waves from mobile phone systems. In April 2005 and January 2007, interim reports were issued, and at present research is still ongoing in collaborationdata communications devices compatible with the MIC.

• LTE
We have also undertaken the development of LTE. We began recruiting manufacturers for LTE equipment development in July 2006FOMA and commenced development geared towards commercial application. In September 2007, we succeeded to create a prototype of a Large Scale Integration (“LSI”) that uses our original technology to achieve high-performance signal separation of MIMO multiple signals at a downlink speed of 200 Mbps with low power consumption of under 100 mW. With this prototype, we are able to mount LTE high-speed signal transmission technology with power consumption suitable for use in portable devices. Indoor experiments started in July 2007 to confirm basic system performance and optimize the system. Outdoor trials with LTE systems began in February 2008 to determine the performance of actual wireless systems and further optimize the system, successfully achieving a downlink packet data transmission speed of 250 Mbps. In December 2008, we successfully created a prototype of low power consumption LSI that achieves a data reception processing speed of 100 Mbps, which is a requirement for LTE. Going forward, we will continue research and development of LTE and IMT-Advanced based on these prototype LSI chips and actively cooperate with the international standardization.
In September 2009, we developed remote radio equipment (“RRE”) unit for LTE base stations. The RRE are radio devices with radio wave modulating functions that can operate on the 2GHz band, and thus can be used with both LTE base stations and W-CDMA base stations. The deployment is a part of DOCOMO’s initial plan to layer a 2GHz LTE network over its existing 3G network to provide dual W-CDMA/LTE service, which will combine the benefits of LTE’s high transmission speeds with 3G’s wide-area coverage as the LTE network is expanded gradually.
In October 2009, together with NEC Corporation, Panasonic Mobile Communications Co., Ltd and Fujitsu Limited, we completed development of an LTE- PF chipset engineering sample. The platform’s technology is expected to be licensed in mobile phone markets worldwide, where its adoption as a common platform will free manufacturers of mobile phones and chipsets from developing proprietary technologies for basic functions. As a result, manufacturers will get products to market faster and at lower costs, and will be able to concentrate more resources on the development of enhanced lineups of unique products.
In January 2010, we developed a prototype multi-band power amplifier that accommodates eight frequency bands between 700 MHz and 2.5 GHz, paving the way for lightweight,all-in-one mobile phones capable of standalone wireless communications of different standards, including the forthcoming extra-fast LTE standard as well as existing W-CDMA and GSM. Once commercialized, this technology, because it does not require an increase in the number of power amplifiers used, will enable mobile phones to be used with virtually all of the mobile telephone services worldwide, including LTE, W-CDMA and GSM, without an increase in handset size.
Going forward, we will continue to build areas that will prove satisfactory to our customers, and as a member of this pioneering group, will continue with preparations for the launch of LTEXi services.
• 4G Mobile Communication System
We have conducted research regarding other advanced technologies, including fundamental research on a 4G mobile communication system aiming at further enhancement of cellular services. ITU has set forth as a requirement for 4G systems the ability to support transmission speed of up to 100Mbps for downlink at high-speed movement and 1Gbps at low-speed movement. If such a system is realized, high quality video equivalent to high-definition television will be provided and will allow high-speed transmission of large-capacity data on a


38


bandwidth of approximately 100MHz. We actively participate in the international standardization movement for 4G systems.
In the summer of 2002, we began practical evaluations of key technologies for our 4G mobile communication system, as well as implementing an experimental system to demonstrate their benefits. In October 2002, we successfully completed a 100Mbps downlink and a 20Mbps uplink transmission experiment in an indoor environment using an experimental 4G mobile communication system. In May 2003, the Kanto Bureau of Telecommunications granted us a preliminary license to conduct field trials of 4G mobile communication systems. In August 2004, we successfully completed experiments on real-time 1Gbps packet transmission in downlink. In May 2005, following the experiments in an indoor environment, we successfully realized outdoor experiments on real-time 1Gbps packet transmission in downlink, followed by 2.5Gbps packet transmission in downlink, in December 2005. In February 2007, we successfully tested packet transmissions with a maximum downlink speed of 5Gbps outdoors. Currently, we continue to evaluate and improve these high-speed transmission technologies through field trials.
• Development of Handsets
With respect to handset procurement costs, we continue to work to reduce the costs even though the enhancement of handset performance is driving up the costs. In the medium term, we will make further efforts to reduce handset procurement costs by simultaneously reviewing the handset development cycle, raising the efficiency of software development, and using shared components with an eye towards global deployment.
We also took the following measures to raise the efficiency of chip set and software development and for operating system standardization. By investing approximately ¥12.5 billion from the year ended March 31, 2005 to the year ended March 31, 2007 in the development of LSI technology relating to FOMA handset chipsets, having manufacturers incorporate our requirements from the LSI specification review stage and striving for one-chip LSI, we shortened development times and costs with the introduction of one-chip. In addition, in the second half of the year ended March 31, 2008, we jointly developed a mobile phone platform that integrates the baseband LSI, the application processor one-chip LSI, and core software including the OS platform. Even after the year ended March 31, 2008, we continue to work in the jointundertook development of a mobile phoneXi-compatible communications platform, compatible with HSDPA cat.8aiming for greater efficiency and having an even faster processor, achieving greater functionality and cost efficiency.
To promote greater global collaboration concerning Linux® platforms, welower costs in handset development.

We participated in the formation of the LiMo Foundation with six companies including Vodafone Group and Motorola, Inc. in January 2007 and we are a founding member of the Symbian Foundation, a non-profit organization that promotes the development of Symbian OStm-based software platforms for mobile handsets.

Further, we participate in the Open Handset Alliancetm, which includes Google, and in cooperation with Google, we released handsets loaded withusing Android, a software platform for mobile handsets. We moved forward with the realization of handsets including commercialization for us. By having a standardized platform for mobile handsets, we anticipate reductions of development costs and shortening of development terms, and this in turn will lead to the promotion and spread of W-CDMA services across the world, and for this reason we have been actively involved in these activities.
In February 2010, upon the formation of the NPO “Wholesale Applications Community,” which has the aim of promoting an open market for mobile telephone applications, we signed a memorandum of understanding to consider participation in this alliance. The “Wholesale Applications Community” aims to create an ecosystem for developing and providing applications that respond to the needs of the market by building a more open development environment for mobile phone applications and by providing a diverse range of appealing applications which are not limited to specific handsets.
In April 2008, we launched development of operator packs to be used innew fields, such as the development of FOMA10 smartphone models, including Android and BlackBerry® handsets. We also developed the sp-mode ISP for smartphones, enabling the use of sp-mode mail and the “Disaster Message Board Service.”

Furthermore, to answer customers’ demands for using SIM cards from other mobile operators with DOCOMO handsets, to achieve greater efficiency inwe worked on the development of FOMA handsets, encourage mobile handsets manufacturers to participate in FOMA handsetsvarious functions for SIM unlocking functions.

Development of Technology for Commercialization

We undertook development of technologies including the standardization of multimedia broadcasting, that combine the characteristics of broadcasting and improvecommunication. We also worked on the international competitivenessdevelopment of domestic handsets manufacturers.

The operator pack is an application software set for the Linux® and Symbian OStm operating systems that comply with LiMotm specifications for DOCOMO’s proprietary services including i-mode and i-appli. The operator


39


pack will make use of such properties as the middleware (MOAP*: Mobilephone Oriented Application Platform) and application software we have developed. The operator pack, combined withtranslator phone, which incorporates a global handset software platform containing a suite of basic functionsuser interface using technology such as calling, will enable usvoice recognition and a translation function.

Efforts Relating to Future Technologies

We continued our research on LTE-Advanced, a fourth-generation mobile communication standard, obtained extra base station licenses for conducting testing and made preparations to provide a variety of services for our cellular services. commence demonstration experiments.

We installed the operator packcontinued research on FOMA handsets starting in December 2009creating cutting-edge interfaces such as shoot, touch and recommend handsets manufacturersplay 3D technology. We also conducted research on “mobile space statistics*,” thought to use the operator pack.

MOAP is a software platform that was first used on some models in the FOMA 901i series handsets. The Linux®-version of MOAP was jointly developed with NEC Corporation and Panasonic Mobile Communications, Co., Ltd; the Symbian OStm version of MOAP was jointly developed with Fujitsu Limited. We continue to develop the standardization of platforms and extension of functions.
In the case that the rights for FOMA handset patented technologies and know-how, in which we invested development expenditures on handsets manufacturers, are used in handsets by the manufacturers and the handsets are supplied to other 3G operators, we will receive royalties from the manufacturers. In December 2005, in order to promote cooperation in technological development focusing on browser technology, we invested approximately additional ¥15 billion in Access. Also in December 2005, in an effort to strengthen our cooperation in handset middleware centered on Java technology, we invested approximately ¥13 billion in Aplix Corporation. In March 2008, with a view towards greater technical cooperationbe effective in the field of user interfaces and other terminal middleware, we invested approximately ¥1.8 billion in Acrodea, Inc., and received a distribution in kinddisaster prevention planning, for estimating the number of Acrodea, Inc. shares held by JAIC Advanced-Tech No. 1 Venture Capital Investment, LP of which we are a limited partner. Advanced handset capabilities and a wide variety of model choices play an important rolepeople who will have difficulty returning home in the successevent of 3G services. By investing in FOMA handset expansion, we expect to motivate manufacturers to produce advanced value-added 3G handsets, promoting the development of 3G servicesa natural disaster, and mobile multimedia as we have already seen with the popularity of our 90xi series.
Notes:
1: Linux® is a registered trademark of Linus Torvalds in the U.S.field of community development. Also, to promote environmentally-friendly homes and other countries.
electric vehicles, we tested interfaces to learn the status of household power consumption by wireless communications and utilize that information. We performed verifications aiming for the creation and standardization of such new communications technology platforms.

*
2: Symbian OS and all Symbian related trademarks and logos are trademarks or registered trademarksMobile space statistics refers to an estimate of Symbian Ltd.geographic population distribution compiled from operational data necessary for providing mobile phone services. Individual users cannot be identified from the statistical information.
8.  Competition

9. Competition

As Japan’s mobile phone market has continued to mature in line with the rise in the cellular penetration rate, competition among operators remains intense in such areas as acquisition of subscribers and further improvement of service offerings. We have responded to the gains madevied with our competitors, who have been gaining momentum in recent years, by competitors with aenhancing our comprehensive approach, including revisions in our billing plans, releases of attractive handsets, and improvement in network quality. In the meantime, competition in the network layer has intensified due to the increasing number of new MVNOs, with foreign companies also among them, in addition to existing mobile phone network operators. The arrival of global players, including Apple Inc., Google Inc., and Amazon.com, Inc., has also accelerated the shift from the vertical integration model led by existing mobile phone network operators to a model of horizontal division, and has given vigor to a new vertical integration model in which the key is the terminal layer as well as content, application, platform and other companies have also expressed their intention to enter the mobile phone market.

upper layers.

Furthermore, in addition to direct competition with other mobile network operators, we believe that the telecommunications industry in Japan is organizing itself into integrated groups of telecommunications service providers that will offer local, long-distance and international services as well as mobile and other services. While we believe that we have certain competitive advantages over these groups, including our current market leadership position, our research and development capability and our affiliation with NTT, the effect of industry consolidation is difficult to predict and no assurance can be given that we will be able to continue to protect our current market position.

• Competition in the mobile telecommunication market

Competition in the Mobile Telecommunication Market

There are presently four mobile network operators in Japan: DOCOMO, KDDI CORPORATION and its subsidiaries (“KDDI group”), SOFTBANK MOBILE Corp. (“SOFTBANK MOBILE”), and EMOBILE Ltd. (“EMOBILE”). As of March 31, 2010,2011, we had a market share of 50.0%48.5%, the KDDI group had a market share of 28.4%27.6%, SOFTBANK MOBILE had a market share of 19.5%21.3% and EMOBILE had a market share of 2.1%2.6%. These mobile network operators have all received permission and licenses from the Japanese government for the establishment of 3G services in Japan.


40


The KDDI group is the second largest mobile network operator in Japan with approximately 31.9 million subscriptions as of March 31, 2010. SOFTBANK MOBILE operates nationwide and is the third largest mobile network operator with approximately 21.9 million subscriptions as of March 31, 2010.
Competition in the mobile communication industry has led the three mobile network operators (excluding EMOBILE) to enact similar rate plans and promotions. For example, KDDI group and SOFTBANK MOBILE both offer plans and services that are similar to our “Family Discount,” “Two-Month CarryOver”Discount” and “Pake-hodai double” services. SOFTBANK MOBILE introduced a service called the “White Plan” service thatPlan,” which allows users to make unlimited free calls among SOFTBANK MOBILE subscribers between 1:00 a.m. and 9:00 p.m.

The rapid expansion of the smartphone market has prompted operators to focus on efforts to increase smartphone sales. Competition in the smartphone market has intensified due to growing sales of the iPhone from Apple Inc., and mobile phone companies are enhancing their handset lineups by offering a variety of features, including user interfaces and functions. We are working on providing product lineups, including AndroidTM handsets and BlackBerry® handsets, and introducing convenient payment plans. In March 2011, we introduced “Monthly Support,” thus creating an easier environment for customers to have a smartphone.

We also believe that the data communications market for PCs and other devices offers opportunities for secondary unit demand. In regard to competition in this market, although EMOBILE has captured a large number of new subscriptions, we also have been putting greater emphasis on sales and are seeing a steady increase in the number of sales.

Regarding potential competition with fixed-line telecommunication services companies, our management believes that fixed-line telecommunication services and cellularmobile communications services are not necessarily competitive with, but rather are primarily complementary to, each other — other—customers typically use fixed-line networks when they are at their homes or offices and cellularmobile networks when they are outside. However, with the expansion of services offered by both fixed-line and mobile network operators, improvements in fixed-line and cellular

mobile technology, rate reductions in cellularmobile services, deregulation, competition within the telecommunications industry and other developments (including technological developments that may enable us to lower the cost and further improve the capacity of cellularmobile communication), there may be direct or indirect competition or conflicts of interest between us and other NTT subsidiaries.

• Entry of other MVNOs

Trends of MVNOs

An MVNO is a mobile virtual network operator that (1) uses the mobile communication services provided by a mobile network operator (“MNO”) or connects with an MNO to provide mobile communications services, and (2) does not build or operate its own radio stations to provide such mobile communications services.

The MVNO system was introduced so that by means of MVNO’s utilizing the wireless network of an MNO to provide a diverse range of services, a diverse range of business models that are designed to meet the needs of users appear, thereby benefiting users through the provision of diverse and low-cost services in the mobile communications market. Another goal of the system is to ensure the fair and efficient use of radio waves.

In the saturated mobile phone market, the entry of MVNOs can be expected to lead the creation of new services, we are looking to build win-win relationships with MVNOs, and are taking a proactive approach to connection and collaboration with MVNOs.

• Competition in the Data Communication Market
In Japan’s mature mobile phone market, we believe that the data communication market is a particularly appealing market, offering opportunities for secondary unit demand. It is our goal to build a mobile data communication society, where a great many people can use mobile data communications easily and with convenience.
With respect to competition in the data communication market, EMOBILE has captured a large number of new subscriptions. We too have been putting greater emphasis on sales since the second half of FY2008, and have been seeing a steady increase in the number of sales.
• Competition in the Smartphone Market
Smartphone market is seen as a growth market with a substantial in the number of users, and an essential area for our future growth. Competition in the smartphone market has intensified since the launch of the iPhone from Apple, and mobile phone companies are enhancing their handset lineups, by offering a variety of forms, user interfaces and functions. We are working on providing product lineups including the Blackberry and Android handsets, and introducing easy-to-use payment plans.


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10. Regulations

9.  Regulation of the Mobile Telecommunication Industry in Japan
MIC is the primary regulatory body with responsibility for the telecommunications industry in Japan. We and other mobile telecommunication service providers are regulated by MIC primarily under the Telecommunications Business Act. We and other mobile telecommunication service providers are also subject to the Radio Act. We, however, are not subject to regulation under the Law Concerning Nippon Telegraph and Telephone Corporation, Etc.
• The Telecommunications Business Act

The Telecommunications Business Act

Under the Telecommunications Business Act, we are subject to a registration requirement as telecommunications operators.

The following table summarizes some of the major current regulatory requirements applicable to telecommunications carriers under the Telecommunications Business Act:

   

Regulation

a. Entry into Business

Registration with the Minister of MIC required for carriers that install large-size telecommunications circuit facilities. Notification to the Minister of MIC required for carriers other than the above.
b. Suspension and Discontinuation of businessNotification to the Minister of MIC and, in general, announcement to users are required.
c.    Tariff settings, service offerings, etc.

  

Unregulated in principle (excluding universal service and certain designated telecommunication services).

Accountability to users concerning outline of terms and conditions of telecommunications service and proper and swift processing of complaints and inquiries from the users are required.

d.

b.    Business improvement order

  The Minister of MIC may order a telecommunications carrier to improve business activities to protect the interests of the public and users with regard to the secrecy of communications, unreasonably discriminatory treatment, ensuring important communications, tariff and other service conditions, sound development of telecommunications, national convenience, etc.

e. Interconnection  

Regulation

c.    Interconnection

Obligation, in principle, for interconnection with other telecommunications carriers in principle, whichthat propose interconnection.

In the event a telecommunications carrier does not accept entering into a consultation despite the other carrier’s proposal to enter into an agreement to interconnect telecommunications facilities or if said consultation fails to come to an agreement, except for certain cases, the Minister of MIC may order such telecommunications carrier to start or resume consultation.

f. Rights-of-wayBased on a request by a telecommunications carrier, except for certain cases, the Minister of MIC may designate the telecommunications carrier as an approved carrier who has the privilege to act as a public utility.
g. Securing of Essential communicationsTelecommunications carriers are required to prioritize important communications when natural disaster, accident or any other emergency occurs or is on the verge of occurring.
h. Permission of agreement with foreign governments, etc.The Minister of MIC’s permission is required for conclusion, amendment or abolition of agreements/contracts on important matters relating to telecommunications business with foreign governments, nationals, or judicial persons/entities.


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The Asymmetric Regulation


Regulation
i. Self-Confirmation of Telecommunications FacilitiesTelecommunications carriers that install telecommunications circuit facilities are obligated to maintain their facilities in compliance with technical standards and to confirm conformity of such facilities to technical standards by themselves, and notify the outcome to the Minister of MIC.
The asymmetric regulation
Our telecommunications facilities have been designated as Category II-designated facilities. In interconnectingfacilities due to our market share which exceeds 25 percent in terms of the number of handsets with another mobile network operator,active subscriptions within the same service area. Consequently, in interconnection with other telecommunications carriers, we are obligated for notificationto specify in advance fees to be obtained and terms of connection, etc. in the form of articles of agreement, and report these to the Minister of MIC of the Articles of Agreement Concerning Interconnection, prior to implementation as well as toand make them available for public inspection. Anypublic. No agreements pertaining to the interconnection between Category II-designated facilities and other mobile network operators cannottelecommunications carriers may be entered into or amended without complying with those articles of agreement. Regarding fees charged to the Articlesconnecting carrier as a result of Agreement. Regarding the fees obtained from connecting mobile network operators in conjunction with interconnection (connection charges), we are obligated to charge an amount equivalent toconsisting of appropriate costs plus a reasonable margin.
margin and accordingly need to calculate such an amount by the method specified in the “Guideline relating to operation of the Category II-designated telecommunications facility system” (described later), and submit the basis of the calculation to the MIC. We are also under an obligation to assemble and make public accounting information about the connection in accordance with the MIC Ordinance.

In addition, we are designated as a mobile network operatortelecommunications carrier subject to the prohibition of anti-competitive behavior on the grounds that it is necessary to do so in consideration of the fact that our market share in terms of profits exceeds 25 percent, transitions in this share and other circumstances; and also, for the purpose of ensuring a fair environment of competition with other telecommunications carriers, we are accordingly prohibited from engaging in the anti-competitive behaviorsbehavior such as;

Use of information of other mobile network operators obtained from competitors through interconnection for other purposes;

Unduly favorable treatment of specific telecommunication carriers; and

Undue discipline imposed on or interference with other carriers, manufacturers or suppliers of telecommunications equipment.

Method of Connection Charges Calculation

To ensure a fair environment for competition in the telecommunications market, the MIC has, for quite some time, taken the initiative to reconsider the nature of the connection rules. In March 2010, the MIC announced the “Guideline relating to operation of the Category II-designated telecommunications facility system” to clearly define a connection charges calculation method and other matters.

The Guideline applies to telecommunications carriers that have Category II-designated telecommunications facilities (Category II-designated carriers) and to connection charges applicable in the fiscal year ended March 2010 and later, and clearly defines a connection charges calculation method, including the requirement that carriers exclude, in principle, sales costs as well as a certain amount of capital expenses from costs of connection charges.

In January 2011, we reported to the Minister of MIC on the connection charges applied in the fiscal year ended March 2011 calculated in accordance with the Guideline, which dropped by up to 35.6% (in voice connection charges, within the service area) from those applied in the fiscal year ended March 2010.

Mechanism for Unbundling

The aforementioned Guideline provides that, if certain function is associated with a highly required or important service, if another carrier requests this to be unbundled and if it is technically possible to do so, it is desirable that Category II-designated carriers unbundle the said function to an extent not causing excessive economic burdens. Specifically, the following are functions that should desirably be unbundled: (i) the voice connection function, (ii) the ISP connection function, (iii) the layer 3 connection function and (iv) the layer 2 connection function. We have been providing these functions stated as desirable for unbundling before the Guideline was made public.

Also, the MIC has positioned the following functions as those to be closely observed: (i) tariff information distribution, (ii) charging and collection agent for content information charges, (iii) bulk content distribution, (iv) continuous distribution of GPS information, (v) SMS connection, (vi) e-mail forwarding for mobile phones, (vii) packet inbound connection and (viii) handset information distribution. The MIC will closely observe discussions among operators for a certain period of time, and, if it determines that the discussions are unlikely to form an agreement among the operators, it will make a final decision on whether these functions should be positioned as desirably unbundled. Regarding these closely observed functions, we are responding to requests from other operators in an appropriate manner.

 • Use of information of other mobile network operators obtained from competitors through interconnection for other purposes;
• Unduly favorable treatment of specific telecommunication carriers; and
• Undue discipline imposed on or interference with other carriers, manufacturers or suppliers of telecommunications equipment.

The Radio Act

For other recent discussions concerning the Telecommunications Business Act, please see “Latest Proposals concerning the Telecommunications Business Act and the Radio Act” below.
• The Radio Act
Outline

The Radio Act was established to promote public welfare by ensuring the equitable and efficient utilization of radio waves. There are certain important provisions of the Radio Act applicable to us and other mobile phone service providers.

Article 4

The Act states that the MIC must, in order to ensure convenience for those planning to build a wireless base station, draw up and make available to the public a list of the Radio Act requiresfrequencies that any personare available for allocation. Anyone who intendswishes to establishbuild a radio station shall obtain a license from the Minister of MIC. This requires mobile network operators to obtain a license in connection with individualwireless base stations and handsets. However, with respect to increases in the number of base stations and sales of handsets within the already allocated spectrum, a technical standards verification system and other systems have been introduced to expedite the process by MIC. Under Article 6 of the Radio Act, persons wishing to obtain a license for a radio station must submit an application form to the Minister of MIC together with documents setting forthin which required matters such asare stated, including the purpose of and the reason for requiringbuilding a station, the establishment of a base station, communications counterparties, communications matters, locations where radio equipment are to be installed, and frequencies to be used. Under Article 7location of the Radiowireless facilities and its frequencies, and acquire a license. The Act the Minister of MIC, upon receiving an application foralso states that any telecommunications carrier who has obtained a license shall examine it to determine whether it satisfies, among others, the following criteria: conformity of the construction design to technical standards, the availability of the frequencies requested, and conformity with the fundamental standards for radio station establishment such as the applicant’s business need for the license. Generally, the Minister of MIC refers such important matters as spectrum allocation to new operators and new systems to the Radio Regulatory Council for consultation and will grant the license only after obtaining the Council’s reply thereto.

Article 17 of the Radio Act requires a licensee toshould obtain prior permissionapproval from the Minister of MIC forin advance of any operational changes, such as a change in recipients of wireless communications or the operations, including changeslocation of the person with whom radio communications is conducted and location of radio equipment, and forwireless facilities, or the initiation ofintention to start any construction to modify any radio equipment. As with licensing, regulatory

43

the wireless facilities.


Latest Proposals concerning the Telecommunications Business Act and the Radio Act

requirements with respect to the location of radio equipment and construction to change radio equipment for use within the allocated spectrum has been simplified by implementing a certification procedure.
Article 26 of the Radio Act also provides that a list setting out current frequency assignments and frequencies available for future assignment shall be made public for the convenience of any person that would like to establish a radio station. The frequency or spectrum allocated for a certain use, such as cellular or PHS is stipulated by a ministerial ordinance of MIC. From within the assigned frequency or spectrum for a certain service, MIC allocates a spectrum to the mobile network operators providing such services. In accordance with Article 4 of the Radio Act as noted above, the operators then apply for a license for radio stations (i.e. base stations and handsets) that use frequency from within their allocated spectrum.
Spectrum Allocation
Spectrum is allocated to mobile network operators by MIC, which is the regulation authority with respect to radio frequencies and the allocation of spectrum in Japan, pursuant to the Radio Act. As spectrum capacity is limited, spectrum is a highly valuable resource. MIC currently allocates 41MHz x2 for 2G network. From among these, we have been allocated a frequency spectrum of 18MHz x2 in the 800MHz band. Radio frequencies for 3G networks have been allocated as stated below:
On June 30, 2000, we obtained approval from MPT (currently MIC) allowing us to use 15MHz x2 of the 2GHz band. In May 2004, MIC announced its allocation policy allowing us to use an additional 5MHz x2 of spectrum in the 2GHz band. Thus in total, we have been allocated 20MHz x2 in the 2GHz band.
In February 2005, MIC announced its policy to allocate to us, from among the reorganized 800MHz band, 15MHz x2 of spectrum after completing the migration of existing systems currently operating in the 800MHz band to other frequency bands operated. Of this spectrum, we are presently using at most 10MHz x2 in the area where we can avoid interference with existing systems.
In August 2005, MIC announced guidelines for establishing specified base stations, describing its policy for new allocation of 35MHz x2 in the 1.7GHz band (of which, 15MHz x2 is nationwide, only for new businesses, and 20MHz x2 is for Tokyo, Nagoya and Osaka, for both new and existing businesses) and 15MHz x2 in the 2GHz band (nationwide, for new businesses only). In April 2006, we were authorized to carry out plans for establishing the specified base stations and were allocated 5MHz x2 for Tokyo, Nagoya and Osaka. Since we satisfied the conditions for the allocation of additional spectrum relating to the 1.7GHz band for use in Tokyo, Nagoya, and Osaka, as specified in the allocation guidelines, subsequently, 5MHz x2 were allocated for our use in these cities in July 2006 and June 2008. Currently, we have been allocated a total of 15MHz x2.
Furthermore, MIC announced guidelines for establishing specified base stations concerning the installation of new 3.9 generation mobile communication systems in April 2009, and 10MHz x2 in the 1.7GHz band (for nationwide use by new carriers only) which had not already been allocated as well as 35MHz x2 in the 1.5GHz band that had been used for 2G networks but were reorganized and available for allocation. We submitted a specified base station plan to the MIC in May 2009, as a result of the review, MIC approved the plan in June 2009, and we have been allocated spectrum of 15MHz x2 in the 1.5GHz.
Recent Amendments
Under partial amendments to the Radio Act that became effective in April 2008, a system for conciliation and mediation by the Telecommunications Dispute Resolution Committee for disputes relating to radio stations was established. The system promotes negotiations to solve the long-standing problems of mixing of signals between new entrants setting up radio stations and existing carriers.
Under amendments to the Radio Act that took effect in May 2008 and in October 2008, a review of usage and rates was undertaken with respect to charges for radio spectrum use. Radio spectrum use fees had been used as a source of funds to provide subsidies to support transmission line costs for “wireless system dissemination support businesses” which promote the bringing of services to hard to reach locations in depopulated regions, but subsidies have been expanded to include tower construction, and as “mobile phone, etc. area development support


44


businesses,” a system was introduced to subsidize costs for transmission lines to mobile phone base stations and tower construction.
Under partial amendments to the Radio Act that became effective in October 2008, a system was created allowing persons other than licensees to perform the operations of repairing or moving ultra-small base stations for mobile phones (femtocell base stations).
For other recent discussions concerning the Radio Act, please see “Latest Proposals concerning the Telecommunications Business Act and the Radio Act” below.
• Latest Proposals concerning the Telecommunications Business Act and the Radio Act
Besides the above-mentioned regulations of the Telecommunications Business Act and the Radio Act, several other changes have been recommended by various governmental bodies.

Radio Spectrum Use

The study group on policies concerning the effective radio spectrum use of MIC that was established in January 2002, published its first report in December 2002. Its proposals included the introduction of a compensation scheme for licensees who shoulder losses resulting from a short-term reallocation of spectrum or a shift to fiber-optic cables instead of an alternative spectrum. That proposal was reflected in the Amendments to the Radio Act that passed by the Diet in May 2003. The report also proposed that a comparative examination system based on market principles and licensing procedures is desirable instead of an auction system which could seriously hinder effective use of radio spectrums as shown by the extremely high bidding that occurred in various European countries. The report also proposed deregulation on experimental radio stations. In September 2003 and December 2003, the study group published its second and third reports, including discussion of such topics as an after-the-fact registration system (including exemption from prior licensing) primarily for public wireless LAN services, and discussions about cost burdens. They released a final report October 2004 proposing basic policyGuideline regarding amendment of the scheme for spectrum user fee. In this report, in order to secure the fairness of the burden for spectrum user fee imposed to every licensee, reexamination of the fee scheme for each type of radio station and imposition of spectrum user fee charged depending on areas and ranges of spectrum used as a radio spectrum exclusive for wide-range areas (a frequency mainly used in radio stations which are built considerably in wide-range area by same licensee) were incorporated. Also, in order to bridge the digital divide, a system to financially assist, with a certain criteria, the expense of the cable transmission line to the mobile base station in rural areas and allocation of funds for the research and development of effective use of spectrum are incorporated. The proposed measure was approved and materialized in the Diet in October 2005, and it was reflected in the amended Radio Act proclaimed and enforced in November of the same year (reexamination of the charging scheme was enforced in December of the same year).
Evaluation of Competition in the Telecommunications FieldMVNOs
MIC has performed analyses and evaluations in the telecommunications field intended for four areas; fixed-line phone, Internet access services, mobile communication, and corporate network services annually from the year ended March 31, 2004.
In October 2009, MIC announced evaluation of the mobile communication field “competition review in the telecommunications field for fiscal year 2008” as follows:
• DOCOMO’s share in the PHS/Mobile phone market was 48.7% as of March 31, 2009, and even though its market share has been declining gradually, the difference in market share with its competitors remains substantial. Given the oligopolistic structure of the market, DOCOMO is in a position to control the market. However, because of regulations on Category II-designated facilities and the fierce competition for market share among mobile network operators, the possibility is small that DOCOMO will actually exercise market control, whether acting independently or in concert with others.
• Regarding concerns that multiple carriers could collaborate in exercising the market control, the introduction of Mobile Number Portability has resulted in the provision of a variety of flat-rate billing


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plans and discounts. In addition, EMOBILE is acquiring users primarily in data communications services, and since the second half of the fiscal year 2007, a number of MVNOs have entered in the market. Thus competition is even greater than before, and given this, the possibility of such an exercise of the market control is remote.
Promotion of new entry by MVNOs
With a view toward a more dynamic mobile telecommunication market achieved by promoting new entry by MVNOs, MIC has formulated “guidelines regarding the application of the Telecommunications Business Act and the Radio Act to MVNO.” Under the guidelines, whether wholesale telecommunications services are to be provided by a Mobile Network Operator (“MNO”) to an MVNO, or whether there will be an interconnection between an MNO and MVNO are matters, in principle, to be decided by consultations between the parties, and when an MNO has had a request for connection from an MVNO, unless it has grounds to refuse, it must comply with such request.

AdoptionGuideline regarding SIM Unlocking Functions

While mobile network operators in the mobile phone market in Japan currently provide handsets and network services on the assumption that SIM locks are used, the MIC put together a guideline regarding SIM unlocking in June 2010. From the perspective of, Open Communications Platforms

In conjunctionfor instance, ensuring further improvement of user convenience and enhanced international competitiveness of Japan’s ICT industry, operators are expected to proceed, on their own initiative, to implement SIM unlocking functions, starting with handsets possible to do so. However, in view of the increased use of broadband and IP, wefact that there are reinforcing the collaboration among the authentication, billing and other functionsstill issues left unaddressed, it has been decided that are essentialdeliberations towards legislating this measure should be postponed for the efficienttime being.

In the meantime, in order to accommodate the wishes of customers to use our handsets with other companies’ SIM cards, we have decided, as a general rule, that all handsets launched on or after April 1, 2011, will have a SIM unlocking function and that we will accept customers’ requests for SIM unlocking. We also began offering SIM cards* for customers who wish to use SIM-unlocked handsets from other carriers on our network, on the condition that they enter into a contract with us.

*We offer three types of SIM cards: FOMA cards, docomo UIM cards and docomo mini UIM cards. Of these, docomo UIM cards and docomo mini UIM cards are also compatible with the Xi service in addition to the FOMA services.

Idea of a “Broadband Super Highway”

Acting on the idea of a “Broadband Super Highway,” which envisions covering every household in the broadband distributionnetwork by roughly 2015, in December 2010 the MIC announced a basic policy which summarizes plans for realizing the “Broadband Super Highway.” Issues regarding our company are the promotion of contentshared steel towers and applications. A reportspectrum auctions.

Basic Policy for Securing Frequencies for Wireless Broadband Networks

In November 2010, policy measures for securing frequencies for wireless broadband networks were put together under the working group set up by the Study Group onMIC to deliberate frequency issues. A basic policy is presented among those measures, which maintains that frequencies of over the Communications Platform that discussed relevant issues300MHz bandwidth should be secured by the year 2015 and addressedthose of over the direction of future policies concerning1,500MHz bandwidth by the developmentyear 2020.

Another basic policy is presented there as a result of the market environment for encouraging the creationdiscussion of new business was released in January 2009. Subsequently, a discussion group of private entities has been specifically examining the issues, and in lightspectrum allocation policy regarding part of the “Guidelines related700MHz and 900MHz bands slated to the provision of settlement meansbecome available for new allocation for mobile content” formulatedphones after July 2012: an appropriate allocation approach will be to use the 700MHz band and the 900MHz band separately with a view to ensuring compatibility with how frequencies are allocated in December 2009, weother countries. Further, another policy has also been put forward for transferring and reorganizing frequencies in order to have been working on the adoption of open platforms, including enhanced billing functions for i-mode non-official sites, while giving consideration to the comfort and security of our users.

Going forward, we plan to actively address this topic based on building win-win relationships and securing a common framework for the four mobile service providers.
Review of Interconnection Rules in Response to Changes in the Telecommunications Market Environment
In the mobile telecommunication market, the numberuse of mobile phone subscriptions has surpassed 100 millionsystems start in 2015 for the 700MHz band and in 2012 for the importance900MHz band.

As a step to implement the prompt reorganization of mobile phones asfrequencies, it is recommended that an essential infrastructureauction-type approach should be introduced to cover the costs required for businesstransferring frequencies, and day-to-day activities is increasing. In the fixed-line broadband market, the numbers of FTTH and DSL subscriptions switched positions in the first quarterpartial revision of the year ended March 31, 2009, with FTTH taking the dominant position. In conjunction with these developments, the business format of using the networks of other operators is accelerating, and further development of the communications platform market and the content distribution market can be expected in the future.

In response to these market changes, the MIC’s Telecommunications Council has received optimal interconnection rules from the perspective of maintaining a fair competitive environment in the telecommunications markets. They issued a response to the MIC in October 2009 and in light of this the MIC announced the “Guidelines relating to operation of the Category II-designated telecommunications facility system” in March 2010, clarifying the interconnection rules. The key issues that are particularly relevant for us, and our evaluation thereof, are as follows:
(1) “Interconnection Fee Computation Clarification and Rules” (concerning telecommunication facilities usage fees for interconnection) seeks to correct differences in the interconnection fees paid by mobile network operators, by bringing transparency and rules to the calculation of interconnection fees.
On the one hand, because the rules for calculation of interconnection fees exclude the operating expenses that are included in the interconnection fees, it is envisioned that the fall in interconnection fees will lead to a decrease in revenues, but because other mobile network operators will also be calculating interconnection fees based on the same calculation rules, the differences will narrow and payments will also decrease.
(2) The “Rules for Roaming etc.” (concerning mobile phone service area supplementation for other mobile network operators) assumes that roaming will be based upon an agreement between mobile network


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operators. We are pleased with the provision that failure by an MNO to keep its service area in proper order will constitute grounds for refusing interconnection.
(3) With respect to the “Adoption of Open Telecommunication Platforms” (concerning the provision of a variety of functions to content-based services), we are first of all pleased that agreements formed through negotiation between mobile network operators will be respected.
Review of the Legal System for Communications and Broadcasting
MIC recently concluded a review of the legal system for the convergence and collaboration between communications and broadcasting, and in August 2009 the Telecommunications Council announced its response, the foundation of which was a re-compilation and restructuring of current law. With the change in administrations, the details of this response were re-examined, and a bill was submitted to the Diet for amending the Telecommunications Act, Radio Act and Broadcast Act in March 2010.
The proposed amendments to the Telecommunications Act include (1) provisionsis being contemplated for the enhancement of the dispute resolution function (adding contents providers and tower sharingthat purpose. Further still, as areas eligible for dispute resolution) and (2) the formulation of an interconnection accounting system for mobile network operators installing Category II-designated facilities in light of the above-mentioned response regarding interconnection rules. The law is expected to be implemented within one year in the case that it is passed by the Diet and promulgated.
ICT Policy Task Force for a Global Era
As the Democratic Party of Japan administration took office in August 2009, a new task force was established at MIC in October 2009 for the purpose of investigating new ICT policies from a global perspective.
The task force subcommittees are expected to deliberate the following four issues for roughly a year.
(1) Past competition policy review
They will review the effects on fair trade in the telecommunications market brought about by deregulation and reform measures implemented since the liberalization of the telecommunications market in 1985 and the privatization of Nippon Telegraph and Telephone Public Corporation.
(2) Investigation of ways to address the environmental change in the telecommunications market
They will review measures from a global perspective to address the issues relating to further development, in light of the spread of IP, broadband and mobile networks and other recent and future changes to the market environment.
(3) Investigation of the strengthening of international competitiveness
With a view towards counterbalancing the contraction of the domestic market from the aging society and creating new employment, they will review measures to promote global development of fully Japan-based efforts by content providers, manufacturers and a wide range of other ICT-related companies.
(4) Investigation of global issues (e.g., environmental problems)
Based on the principles of business creation and cooperation, they will review measures to utilize ICT, including the distribution of content in order to address regional and global issues faced by countries across the world, such as environmental and medical issues, so that all persons can equally share the benefits of ICT.
On May 18, 2010, a report was issued indicating a basic policy regarding (i) establishingnew wireless systems, such as a “Hikari no Michi” (access network) and (ii) promoting ICT utilization. While there were no specific references to the4G mobile phone business, we may be expected to perform a certain role in strengthening the broadband infrastructure, but the impact this may have is currently unknown.
In addition, the subcommittee addressing environmental changes to the telecommunications market formed a working group to consider frequenciescommunications system, for the purpose of achieving wireless broadband, which is expected to formulate a policy for securing frequency allocation for broadband wireless around July 2010.


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Deliberations regarding removal of SIM lock
In Japan’s mobile phone market, handsets and network services are provided by mobile network operators on“Broadband Super Highway,”, the assumption that those mobile phones are locked with the operators. The MIC, however, with a view towards improving user convenience and reinforcing the international competitiveness of the ICT industry, indicated its intention to review the propriety of SIM lock, and held a public hearing for mobile network operators on April 2, 2010.
The MIC is expected to release the guidelines on the details including products and the timing SIM lock is removed.
Our basic views on the removal of SIM lock are as follows;
(1) In principle, we will comply with the needs of subscribers;
(2) It is essential that subscribers make their decisions upon the full understanding of the effects of removing the SIM lock;
(3) It is necessary the four mobile network operators will keep step with each other and address the issue; and
(4) The removal of SIM lock must proceed as an initiative voluntarily undertaken by mobile network operators.
We intend to move forward in a manner consistent with the guidelines and measures of other operators so that we can deal with the removal of SIM lock without impairing the convenience of subscribers.
• Information Security Management
In order to protect customer information, in conjunction with the full implementation of the Law on the Protection of Personal Information, we established the position of Chief Privacy Officer (CPO) and strengthened the system for protection of personal information, and we are making efforts to construct a company-wide information security system.
In addition, we agreed to take efforts to prevent personal information leaks by handling and managing all terminals and external storage devices containing personal information, periodically educating and training our employees, confirming matters for compliancespectrum auctions, held in information management with all entities to which we outsource services, instructing and supervising such entities, strengthening the security technology in all our systems, establishing system security standards and developing, operating and managing systems in compliance with such standards.
• Law to Prevent Unauthorized Use of Mobile Phones
In April 2006, with the enforcement of the Law to Prevent Unauthorized Use of Mobile Phones, we coped with imposition of identification and recording the documents verifying the customer’s proof of identity at the time of new contracts and reviewed an operative manual in order to comply with the law as a mobile network operator. In addition, we carry out the training for all the members performing duties such as identification and make an effort to ensure proper operation of such duties.
• Law to Promote a Healthful Internet Environment for Youth
In April 2009, with the enforcement of the Law to Promote a Healthful Internet Environment for Youth, we implemented a number of other countries, is under consideration. A “Conference for Spectrum Auctions” has been set up, and by around December 2011, it will examine the current trend in spectrum auctions and discuss tasks and other details regarding implementation.

Committee on Competition Policy for Promoting Broadband Networks

To promote the expansion of broadband networks, the MIC established a new “Committee on Competition Policy for Promoting Broadband Networks” in March 2011, since it is essential to comprehensively pursue policies required to stimulate active competition among carriers, such as promoting competition of facilities by opening up wiring infrastructures (such as power poles and conduit lines), promoting competition of services

arising from the open architecture of NGNs (Next Generation Networks) and promoting competition in the mobile communications market, in which changes in market environment has been significant. Discussions are to be held and the findings are to be reported in December 2011.

Committee on Secure Communications in a State of Crisis caused by Large-Scale Disasters

The Great East Japan Earthquake caused congestion and/or disconnection of communications in wide areas. Based on this fact, because maintaining basic and key communications, including those for emergency alerts or confirmation of safety and communications for the police as well as the distribution of disaster preparedness information, are essential for securing the lives and property of citizens and for maintaining a functional nation in the event of a disaster, the MIC newly established a “Committee on Secure Communications in a State of Crisis caused by Large-Scale Disasters” in April 2011.

The committee will discuss the following issues: (i) how to control communication congestion in the event of a crisis, (ii) how to ensure communication measures includingwhen a reviewbase or a relay station is damaged, (iii) appropriate network infrastructure based on the experience of the Great East Japan Earthquake and (iv) effective use of the Internet based on the experience of the Great East Japan Earthquake.

11. Efforts to Address Disasters

Mobile phones represent an operative manual for application of basic rules for filtering when subscribers under 18 years of age accessimportant communications infrastructure that is critical to the Internet usinglivelihood of people and they carry an expectation that they will play an extremely important role in the event of a disaster, such as an earthquake or wind or flood damage, by serving lifesaving purposes and providing communications functions of national agencies and local municipalities. We are working to develop communications networks that can withstand disasters, and it is also striving to ensure the security and reliability of our networks.

As a system to address the event of a disaster, a disaster response headquarters will be established in our head office or branch, etc. according to the scale of the disaster or damage. The disaster response headquarters will collect information hand in hand with unaffected branches, our group companies, NTT group companies and others and coordinate restoration work and support plans, etc. based on the information thus collected, and teams formed within the disaster response headquarters take command of their respective work. Depending on the scale of the disaster, we will work with the Cabinet Office, the MIC, the government’s emergency response headquarters, etc. to cooperate in reconstruction efforts of the government and others. We will also supply information to our customers by, for instance, explaining to the press specific information on the damage or the status of restoration.

Damages of the Great East Japan Earthquake

Following the Great East Japan Earthquake on March 11, 2011, some 6,700 base station equipment became inoperable due to physical damages to these facilities, disruption of commercial power supply and transmission lines and other factors. With regard to docomo Shops, in the immediate aftermath of the earthquake, 159 out of 195 shops in the Tohoku region were forced to close temporarily, and a total of 90 shops including those located in the Kanto region were either completely or partially destroyed.

Immediately after the earthquake, we established Disaster Countermeasures Offices in our headquarters and the Tohoku Regional Office to create an organizational structure capable of close collaboration 24 hours a day, and activated the “Disaster Message Board Service.” In cooperation with other NTT group companies and construction companies, we have worked to assess the damages and restore our communication facilities as quickly as possible and initiated support activities for disaster victims.

Restoration Activities

The specific actions undertaken by our group for the restoration of communication facilities and the support for disaster victims are as follows:

Restoration of Communication Facilities

In our efforts toward the restoration of damaged communication facilities, we mobilized a total of some 4,000 people, and deployed approximately 30 mobile base station vehicles, approximately 30 mobile power supply vehicles and approximately 400 units of portable power generators to supply electricity to base stations and other facilities where commercial power supply was disrupted. We also recovered the transmission lines through the use of optical fiber, micro-wireless circuits and satellite circuits, and deployed base stations employing a large zone scheme* on mountaintops and other locations to resume services as quickly as possible. In areas where access was restricted due to the accident at the Fukushima Daiichi Nuclear Power Plant, we used high-performance antennas to transmit signals from outside the 20-km exclusion zone and replaced the transmission lines inside exchange-office buildings within the 20-km exclusion zone. As a result of these efforts, most of the service areas near the nuclear power plant and along major trunk roads in its vicinity were restored, enabling the resumption of FOMA service.

*“Large zone scheme” is a method to cover areas normally covered by multiple stations by utilizing a single station.

Initiatives for Securing Means for Communication

To assist the restoration of disaster-stricken areas, we rented to local administrative institutions and installed at evacuation shelters approximately 900 satellite mobile phones, approximately 1,700 mobile phones and approximately 300 tablet devices. We also established approximately 300 stations where mobile phones can be recharged for free using multi-chargers, solar chargers and other means.

Provision of Disaster Message Board Service

We activated the “Disaster Message Board Service” immediately after the earthquake to provide disaster victims with a means of communication. To allow a greater number of people to use this service, we expanded the areas from which messages can be posted to cover the entire nation within one week after the quake, and also enabled its use through smartphones.

Reopening of docomo Shops

To offer assistance to customers whose mobile phones were damaged or lost due to the disaster, we strived to reopen our docomo Shops as quickly as possible. As of March 31, 2011, approximately 90% of our docomo Shops, excluding those in orderbuildings that were severely damaged or those within the exclusion zone around the Fukushima Daiichi Nuclear Power Plant, have reopened. For customers living in areas near shops which could not resume operations, nearby docomo Shops provided on-site services to comply withanswer to their needs.

Provision of Restoration Area Maps

For the lawthree prefectures of Iwate, Miyagi and Fukushima, which suffered the severest damages from the earthquake, we started providing the “Restoration Area Maps” (Japanese only) on our home page from March 20, 2011, to allow users to confirm on maps such details as aareas where FOMA service is available, areas that have been restored or planned to be restored through the use of mobile network operator.base station vehicles, locations where satellite mobile phones and free recharging services are available and information regarding docomo Shops.

Support for Disaster Victims

To support our customers affected by the disaster, we provided various services such as the extension of payment deadlines on phone bills, discounts on handset repair charges and free data restoration service for handsets damaged due to water exposure. In addition, for customers affected by the disaster, we moved forwarddecided to refund the basic monthly fees and other charges for the periods when services were not available.

Launch of Charity Drive Website for Affected Areas, etc.

To support the disaster-stricken areas, we launched a website to collect donations from customers through the “docomo Mobile Remittance Service,” “docomo Points” and other methods. We have donated ¥780 million, which was collected through March 30, 2011. We have also started accepting donations through the sale of charity applications and content from April 2011, and a total sum of ¥120 million collected by April 13, 2011 was donated. In a separate effort, the Company made a disaster-relief donation of ¥500 million.

12. Relationship with initiatives to protect youth, including mobile phone safety classes to help prevent youth from becoming involved in crimes through mobile phones.


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NTT


10.  Relationship with NTT
NTT is our parent company and owned 66.43%66.65% of our voting rights as of March 31, 2010.2011. The government of Japan, in the name of the Minister of Finance, owned 40.16%40.15% of the voting rights of NTT as of the same date. The government of Japan, acting through MIC, also regulates the activities of NTT.

The NTT group is the largest provider of fixed-line and wireless voice, data, Internet and related telecommunications services in Japan and operates one of the largest telecommunications networks in the world. The NTT group’s main business is providing nationwide telecommunications services including voice communication services, data communication services, leased circuit services, system integration services and other services. As a holding company, NTT is directly responsible for the overall strategy of the NTT group. NTT is also responsible for basic research and development for its group companies.

Although NTT owned 66.43%66.65% of our voting rights as of March 31, 2010,2011, we conduct our day-to-day business operations independently of NTT and its other subsidiaries. All transactions between us and each of NTT and its subsidiaries and affiliates are conducted on an arm’s length basis. In the year ended March 31, 2010,2011, we had sales of ¥46,880¥38,336 million to NTT and its subsidiaries and had cost of services, selling, general and administrative expenses and capital expenditures of ¥208,178¥210,446 million, ¥118,265¥113,023 million and ¥72,928¥76,214 million, respectively, to NTT and its other subsidiaries, compared to sales of ¥57,279¥46,880 million and cost of services, selling, general and administrative expenses and capital expenditures of ¥236,004¥208,178 million, ¥131,849¥118,265 million and ¥70,840¥72,928 million, respectively, in the year ended March 31, 2009.2010. We also had receivables of ¥11,164¥10,430 million from NTT and its subsidiaries and payables of ¥70,751¥70,542 million to NTT and its subsidiaries at March 31, 2010,2011, compared to ¥12,510¥11,164 million and ¥73,476¥70,751 million at March 31, 2009.

2010.

In order to ensure fair competition in the mobile telecommunication business, the MPT (currently the MIC) in April 1992 established the following conditions of separation on NTT, (whichwhich was then in operation of theoperating fixed line telephone services)services, and us, (whichwhich remain applicable):applicable:

To the extent possible, we must establish transmission lines for our network independent of NTT. In the event that we use NTT transmission lines, the terms and conditions for such use shall be the same as those for our competitors.

NTT must not favor us in any transactions between NTT and us. The terms and conditions for our use of NTT utility poles, access to NTT’s network, access to NTT research and development and similar matters should be the same as for our competitors.

• To the extent possible, we must establish transmission lines for our network independent of NTT. In the event that we use NTT transmission lines, the terms and conditions for such use shall be the same as those for our competitors.
• NTT must not favor us in any transactions between NTT and us. The terms and conditions for our use of NTT utility poles, access to NTT’s network, access to NTT research and development and similar matters should be the same as for our competitors.
• All former NTT employees transferred to us were required to be permanent employees, rather than being seconded from NTT.
• We were to plan to have our shares listed and NTT’s ownership in us reduced approximately five years after incorporation.
• We must not engage in joint procurement with NTT so as not to use NTT’s purchasing power with the objective of obtaining favorable treatment or pricing from its suppliers and manufacturers.

All former NTT employees transferred to us were required to be permanent employees, rather than being seconded from NTT.

We were to plan to have our shares listed and NTT’s ownership in us reduced approximately five years after incorporation.

We must not engage in joint procurement with NTT so as not to use NTT’s purchasing power with the objective of obtaining favorable treatment or pricing from its suppliers and manufacturers.

At the time of separation from NTT, all trademarks and service marks for our products developed by NTT, other than the “NTT DOCOMO”DoCoMo” trademark, the “DOCOMO”“DoCoMo” trademark and the “NTT DOCOMO”DoCoMo” service mark, were assigned to us. If NTT’s ownership of our shares is substantially reduced, we may not be able to continue to use the trademarks and service marks that include “NTT.” Patents, utility model rights and design rights are shared equally with NTT. While certain rights to programs concerning wireless telecommunication systems were assigned by NTT to us, NTT owns the rights to other programs concerning wireless telecommunication systems and grants us licenses to use such rights. Since the separation, NTT and we have each retained rights resulting from our own research and development. When we desire to use NTT’s technology, we are required to pay royalties equal to those other wireless telecommunication companies would pay for the use of such technology, and such technology is available equally to us and our competitors. We are also required to pay NTT certain basic research and development fees.


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Although we operate independently of NTT, the following matters, among other things, relating to us are discussed directly with or reported to NTT: matters that are required to be voted on at shareholders’ meetings, including amendments to the Articles of Incorporation, mergers and consolidations, assignments and transfers of business, election and removal of directors and corporate auditors, and appropriation of profits; increases in share capital; investments, including international investments; loans and guarantees; and establishment of businesses plans. In addition, Mr. Hiroshi Tsujigami, a full-time employee of NTT, serves part-time on our board of directors.

To date, with respect to the stake in us held by NTT, such documents as the Deregulation Committee 1998 report, the 2000 opinion of the Regulatory Reform Committee, and the government’s “Three-year Program for Promoting Regulatory Reform” of 2001 have concluded that, from the perspective of promoting completion among NTT Groupgroup companies, efforts should be made to further lower the stake. NTT has declared its view that its ownership of our shares does not have any adverse effects on fair competition and that it intends to maintain its ownership stake in us at 51% or above. Further, the Japanese government has not decided what action, if any, it will take with respect to NTT’s ownership of our shares.

NTT has entered into agreements with each of DOCOMO, NTT East and NTT West and certain other subsidiaries that provide for NTT to receive compensation for performing basic research and development and for providing management and administrative services. NTT also receives dividends when dividends are declared by its subsidiaries, including DOCOMO.

11.  Employees

13. Employees

As of March 31, 2011, DOCOMO and its subsidiaries had 22,954 employees representing a increase of 657 employees since March 31, 2010. As of March 31, 2010, DOCOMO2009 and its subsidiaries2008 we had 22,297, employees representing a increase of 466 employees since March 31, 2009. As of March 31, 2009, 200821,831, and 2007 we had 21,831, 22,100 and 21,591 employees, respectively. The average number of temporary employees for the year ended March 31, 20102011 was 6,969.

8,203.

Of our 22,29722,954 employees on March 31, 2010,2011, approximately 1,1102,151 were staff in departments such as human resources, general affairs, management planning, accounting and finance, while the rest were engaged in business operations, such as sales, research and development and related matters. Also, as of March 31, 2010,2011, approximately 1,3601,769 employees were working at overseas consolidated subsidiaries.

We consider our level of remuneration, non-wage benefits, including our employee share ownership program, working conditions and other allowances, including lump-sum payments and annuities to employees upon retirement, to be generally competitive with those offered in Japan by other large enterprises. We have an

extensive training program for new employees. To increase incentives, the NTT group has implemented a bonus plan based on overall business performance and personal results. The general retirement age has been 60.

Most of our non-management employees are members of ALL NTT WORKERS UNION OF JAPAN. We consider our relationship with such unions to be excellent. We have never had a strike.

12.  Legal Proceedings

14. Legal Proceedings

We have initiated normal actions relating to the collection of telecommunications charges and other legal proceedings in the ordinary course of business and are not involved in any litigation and have not been involved in other legal proceedings in the preceding 12 months from the date of this document that, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our financial position or profitability.

C.  Organizational Structure

C.    Organizational Structure

As of March 31, 2010,2011, NTT, our parent company, was our largest shareholder and owned 66.43%66.65% of our outstanding voting shares. We are the largest wireless telecommunication services provider in Japan based on the number of subscriptions.

There are no subsidiaries that are considered to be significant as of March 31, 2010.


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2011.


D.    Property, Plant and Equipment

D.  Property, Plant and Equipment
Our property includes buildings which contain wireless telecommunication equipment. As of March 31, 2010,2011, we and our regional offices owned 3,491,9363,445,356 square meters of land and 1,561,7881,560,661 square meters of office space, buildings containing switching centers, company dormitories and warehouses throughout Japan. In addition, as of March 31, 2010,2011, we leased 9,086,38511,223,067 square meters of land mainly for base stations and transmission facilities.
Item 4A.Unresolved Staff Comments

We do not, directly or indirectly through a subsidiary, operate a coal or other mine subject to the U.S. Federal Mine Safety and Health Act of 1977.

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5.Operating and Financial Review and Prospects

Item 5. Operating and Financial Review and Prospects

You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and the notes thereto included in this annual report.

This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this annual report.

We will discuss the following matters in this Item 5:

A. Operating Results

Overview

Trends in the Mobile Communications Industry in Japan

• Overview
• Trends in the Mobile Communications Industry in Japan
• Operating Strategies
• Operating Trends
• Operating Results for the years ended March 31, 2010 and 2009
• Segment Information
• Recent Accounting Pronouncements and Critical Accounting Policies
• Liquidity and Capital Resources
• Research and Development
• Trend Information
• Others

Operating Strategies

A.  Operating Results

Operating Trends

Operating Results for the year ended March 31, 2011

Operating Results for the year ended March 31, 2010

Segment Information

Recent Accounting Pronouncements

Critical Accounting Policies

B. Liquidity and Capital Resources

Cash Requirements

Sources of Cash

C. Research and Development

D. Prospects for Business Trends and Financial Performance

E. Off-Balance Sheet Arrangements

F. Tabular Disclosure of Contractual Obligations

A. Operating Results

Overview

We are the largest cellular network operator in Japan in termsproviding a wide array of both revenues and number of subscriptions.wireless communication services including cellular phone service. As of March 31, 2010,2011, we had approximately 56.0858.01 million subscriptions, which represented 50.0%48.5% of all cellular subscriptions in Japan. We earn revenues and generate cash primarily by offering a variety of wireless voice and data communicationscommunication services and products. In cellular services, which account for the majority of our revenues, we provide voice communication services as well as “i-mode”data communication services which enable our subscribers to exchangee-mails and to access various sources of information including the Internet via our nationwide packet communications network. In addition to cellular services, we presently provide wireless LAN services nationwide, credit payment services, and home shopping services, mobile advertisement sales, internet access services for hotels and various other services.

Now that the use of cellular phone has become widespread in Japan, it is difficult to duplicate the rapid growth we experienced in our earlier operations. However,Under these market conditions, we announced our new corporate vision of “Pursuing Smart Innovation: HEART” in orderJuly 2010. In view of the anticipated changes in society in the future, we aim to achieve sustainabledrive innovation by leveraging the unique properties of mobile devices and partnering with a broad range of companies to connect people and society in smart, innovative ways for enhanced quality of life, and thereby create new revenue sources with the aim of achieving further growth and createdelivering new sources of revenues, we are committedvalue to upgrading our cellular communications services from a telecommunication


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society.


infrastructure to an indispensable life-style infrastructure for everyday life that can bring abundance to the lives and business of users.
During the fiscal year ended March 31, 2010,2011, we strivedworked particularly to expand subscribers’ packet usage through the expansion and enrichment ofby enriching our video content services as well asportfolio and taking other measures aimed at boosting users’ data usage and promoting various initiatives to expand the user base of smartphones and PC data cards. In particular, to respond to the rapid expansion of the smartphone market, we significantly reinforced our product lineup, revised our billing plans and worked toward the enrichment of content and applications for mobile phones. We also accelerated the personalization of services with the launch of an upgraded behavior support services compatible with the Auto-GPS (Global Positioning System) locating capability and other initiatives. In addition, we have takencarried out various stepsinitiatives aimed at enhancing customer satisfaction includingon a continual basis from the enrichment of our handset lineup, billing plans and after-sales support.
previous fiscal year.

For the year ended March 31, 2010,2011, our operating revenues were ¥4,284.4¥4,224.3 billion, posting a decrease of ¥163.6¥60.1 billion from the prior fiscal year due primary to the decline in voice revenues. On the other hand, we recognized operating income of ¥834.2¥844.7 billion, achieving an increase of ¥3.3¥10.5 billion from the prior fiscal year through our continuous efforts to reduce our operating expenses including network-related expenses. Net income attributable to NTT DOCOMO, INC. increaseddecreased by ¥22.9¥4.3 billion from the prior fiscal year to ¥494.8¥490.5 billion. Cash flows from operating activity was ¥1,182.8activities were ¥1,287.0 billion, increasing by ¥9.1¥104.2 billion from the prior fiscal year due mainly to the increased amountdecrease of cash collections offund-provision in relation to installment receivablereceivables for handsets.subscribers’ handset purchases. Capital expenditures decreased by ¥51.1¥18.0 billion from the prior fiscal year to ¥686.5¥668.5 billion as we worked to improve our efficiency while enhancing the quality of our network.

On March 11, 2011, a magnitude 9.0 earthquake, the Great East Japan Earthquake, struck Japan with its epicenter located off the coast of Tohoku. The earthquake and the subsequent tsunami caused damage to our communication and other facilities, disruption of services due to power outage and other impacts. Immediately after the earthquake, we established the Disaster Countermeasures Offices in our Tokyo headquarters and the Tohoku Regional Office and worked toward early restoration of damaged facilities and resumption of services. As a result, by March 31, 2011, we resumed most of our FOMA service and reopened approximately 90% of our docomo Shops in the stricken area. In relation to the disaster, we recorded ¥7.1 billion in operating expenses for the fiscal year ended March 31, 2011, including write-downs of damaged facilities and equipment, and personnel and other expenses incurred in response for the disaster. However, there was no significant impact on our results for the fiscal year ended March 31, 2011.

Trends in the Mobile Communications Industry in Japan

According to an announcement by the Telecommunications Carriers Association, the mobile communications market in Japan saw a 4.707.35 million net increase in cellular subscriptions for the year ended March 31, 2010.2011. The total number of cellular subscriptions in Japan grew to 112.18119.54 million as of March 31, 2010,2011, which represented a market penetration rate of 88.1%approximately 93%. However,Although the total number of subscriptions expanded due to development of new markets such as smartphones, PC data cards and built-in communication modules, the annual growth rate of cellular subscriptions has slowed in line with the rise in penetration rate and the decrease in the future population, and was limited to 6.2%, 4.6%, 4.4% and 4.4%6.6% for the years ended March 31, 2008, 2009, 2010 and 20102011, respectively. We believe the growth rate of new cellular subscriptions in Japanthe coming years will also be limited to a similar level.

As of March 31, 2010,2011, cellular services were provided in Japan by four network operators in Japan including us and their group companies. In addition to providing cellular services, the network operators also develop mobile phones and other communications devices compatible with their communications services jointly with manufacturers, and subsequently sell them to agent resellers and other retailers for sale to subscribers. As for cellular services, after we launched our third-generation mobile communications (3G) services, FOMA, using the W-CDMA technology in 2001, other operator groups also introduced 3G services. In recent years, 3G services have become the mainstream service for all operator groups. As of March 31, 2010,2011, the number of 3G mobile communications service subscribers in Japan totaled 109.06118.13 million, accounting for 97.2%98.8% of the total number of mobile phone subscriptions.

Competition among In December 2010, we launched Japan’s first commercial service using LTE (Long-Term Evolution), a technical standard developed as an extension to the network operators3G system, in Japan remains intenseTokyo, Nagoya and Osaka under a new service brand called “Xi”. As of March 31, 2011, the total number of subscriptions to Xi service was approximately 26,000. Meanwhile, the sales of smartphones have recorded a remarkable increase in recent years. We expect this trend of expanded smartphone sales will continue going forward. According to our forecast, the total number of smartphones to be sold in the fiscal year ending March 31, 2012 is projected to increase by more than two-fold compared to the previous fiscal year and the size of the smartphone market is likely to become larger than that of the existing feature phone market within the fiscal year ending March 31, 2013.

While the growth prospects for Japan’s mobile phone market may be limited in terms of the number of subscriptions, data usage has been increasing owing to the expanded uptake of smartphones and growing

adoption of flat-rate billing plans for unlimited packet access and high-speed data services, and new market opportunities are beginning to emerge in such areas as the roomcontent and applications for growth became limited and user needs diversified.mobile devices. The network operators in Japan have been competing against one another for the retention ofto retain existing subscriptions, and acquisition ofto acquire new subscriptions and to capture revenues from new markets by addressing the following issues:

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Pricing strategy: Offering of free voice calls among family members subscribing to the same operator, free voice calls among phones subscribed under the same corporate subscription account, introduction of new discount services conditioned upon long-term subscriptions, and introduction of packet flat-rate services, and introduction of billing plans offering discounts to smartphone users, etc.;

• Handset sales promotion: Introduction of installment payment scheme for the purchase of a handset, and mobile phone protection service for lost or damaged handsets and delivery of a replacement phone, etc.;
• New service introduction: electronic payment using mobile phones, music and video distribution, automatic information delivery tailored to user’s preference, location information service, etc.;
• New handset development: Release of new handsets equipped with various features such as contactless IC (Integrated Circuit) chip, GPS, or security function as well as smartphones;
• Networks: Expansion of HSDPA area coverage and launch of LTE services, etc; and


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Handset sales promotion: Introduction of installment payment scheme for the purchase of a handset, and mobile phone protection service for lost or damaged handsets and delivery of a replacement phone, etc.;

New service introduction: Electronic payment using mobile phones, music and video distribution, automatic information delivery tailored to user’s preference, location information service, provision of applications for mobile phones, electronic book service, etc.;

New handset development: Release of handsets and smartphones equipped with various features such as contactless IC (Integrated Circuit) chip, GPS-based positioning, or security functions, etc.;

Networks: Improvement of communications quality and expansion of high-speed data service areas using HSPA and LTE, etc.; and

• Alliances: Collaboration with external partners in other industries, such as retailers, financial institutions, content holders, etc.

Alliances: Collaboration with external partners in other industries, such as retailers, financial institutions, content holders, etc.

Changes in the Japanese regulatory environment in recent years have accelerated competition among cellular network operators. Mobile Number Portability system, which enables subscribers to switch the network operator they subscribe to without changing the phone number, was introduced inIn October 2006. In September 2007, the Mobile Business Study Group, which was appointed by2009, the Ministry of Internal Affairs and Communications (MIC) published its final report, which contained proposals pertaining to (1) a review on the sales method of mobile phones, (2) promotion of new MVNO entrants to the market and (3) development of a market environment for the revitalization of the mobile business, and called for their implementation by the regulatory authority. In October 2009, MIC published a report entitled “Interconnection Rules in Response to Changes in the Telecommunications Market Environment.” The report addressedrecommended that (1) in terms of interconnection charges, appropriate rules should be established for interconnection charges and same rules should be applied to all cellular network operators, and (2) in terms of establishing rules for roaming, each cellular network operator should construct its own telecommunication networks in principle, because spectrum is scarce but allocated to cellular network operators in the mobile telecommunication business. In addition,the Japanese mobile phone market, operators have hitherto provided handsets and network services based on the premise of applying SIM lock to mobile devices. In April 2010, however, the MIC conducted a public hearing concerning the use of SIM locks in Aprilmobile devices, and established guidelines in June 2010 and showedpresenting a direction of establishing guidelines to remove SIM-lock based upon themove toward disabling SIM locks through voluntary actions of network operators. In response to this move, we decided to install a feature that can disable the SIM locks in principle to all mobile devices we release after April 2011.

In Japan, radio spectrum has been used in accordance with the “spectrum utilization fee system,” under which mobile phones and cellular services are currently offered by network operators basedor other parties operating a radio base station using the spectrum allocated by the government are charged fees for the use of such spectrum. In December 2010, the MIC’s Policy Making Platform, a task force for ICT policies in a global era, presented a direction to promptly start studies on the premises that mobile phones are SIM locked. introduction of an auction system for allocation of radio spectrum.

Further changes in the regulatory environment could significantly affect the revenue structures and business models of incumbent cellular network operators including us.

Innovations in Internetinternet technology may have a material impact on the mobile communications industry including ourselves. IP (Internet Protocol) telephony, which is a form of voice communications based on IP technology, has already become a popular means of communications in fixed-line services as a result of the broad penetration of local broadband access. If the application of IP telephony technology to mobile communications becomes widely accepted, it could cause a significant change in the revenue structure of the

mobile communications industry. Meanwhile, progress has been made in the development of convergence services, combining fixed-line and mobile communications with rise in the penetration of mobile phones and broadband services. This concept of fixed-mobile convergence has already been partially realized in the form of single-bill service for both fixed and mobile services, or content/e-mail address sharing between the two networks. The demand for seamless connectivity between fixed and mobile networks or composite devices supporting access to both fixed and mobile networks may increase in the future. In the field of high-speed wireless networks, WiMAX was approved as a standard of the Institute of Electrical and Electronic Engineers in the United States. In Japan, two network operators were awarded the license to operate broadband wireless access systems using the 2.5 GHz spectrum band in December 2007, and their commercial services were commenced in July 2009.

Thus, we expect that the competitive environment for the mobile communications market will remain intense in the future due to market, regulatory and technology changes.

Operating Strategies

We believe that the cellular market in Japan has already entered a mature phase with its total cellular subscriptions exceeding 100 million in December 2007. In a mature market, it is necessary to attract subscribers of competitors because it is difficult to drive the acquisition of new subscribers relying on potential subscribers who have never owned a cellular phone. It is also indispensable to minimize the loss of subscriptions to competitors as a result of heated competition. As a market leader with the largest market share, we attach priority to the retention of existing subscriptions.

In April 2008, we announced “New DOCOMO Commitments,” our vision for transformation and, taking this opportunity, renewed our corporate brand logo. In July 2008, we reorganized our group structure by integrating our former eight regional subsidiaries for the purpose of improving customer services and enhancing the speed and effectiveness of our operations. In October 2008, we announced our medium-term business directions based on a new action plan, “DOCOMO’s Change and Challenge to Achieve New Growth,” to be implemented through March 2013. “DOCOMO’s Change” includes concrete actions to revisit every aspect of the business from the customers’ perspective, from customer relations to handsets and networks based on a thoroughly hands-on approach to serving


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customers at all levels of our group underas pledged in our “New DOCOMO Commitments.”Commitments” proclamation. “DOCOMO’s Challenge” includes action plans to drive innovation in collaboration with a wide range of partners, committing us to take on the challenges of creating new value by leveraging the virtually unlimited potential of mobile phones by responding to further advancements and diversifications in the mobile market, where development of services that take advantage of unique mobile properties such as real time immediacy, personal authentication, and GPS capabilities in conjunction with the evolution of networks and handsets, as well as new services that transcend conventional boundaries through the increasing adoption of open-platform handsets and entry of new global players are taking place.
For

During the fiscal year ended March 31, 2010,2011, we have worked to enhanceimprove customer satisfaction through reviewby employing various measures such as reinforcement of our operations from the customers’ perspective. These efforts are beginning to deliver tangible results. For example, our churn rate for the fiscal year ended March 31, 2010 dropped to a record lowproduct lineup, enrichment of 0.46%.billing options and enhancement of after-sales support. We also acquired the largest market share of net addition in cellular phone subscribers for the fiscal year ended March 31, 2010. In addition, we received theranked No. 1 rating in the customera consumer satisfaction survey carried outstudy conducted by J.D. Power Asia Pacific, Inc. in the enterprise service segment, andPacific. We also received the highest scoreranking in the satisfaction study of business customers by J. D Power Asia as well as the survey ofon mobile data carddevice users conducted by Nikkei BP Consulting Inc.

Forfor two straight years. As shown by these achievements, we believe our endeavors toward improved customer satisfaction have delivered tangible results.

In the fiscal year ending March 31, 2011, as a part of the “Change” initiatives,2012, we will continue to review every aspect of our business operations, — such as products, from products/services to customer care, andresponsiveness to network construction, under the “DOCOMO’s Change” initiatives aiming to further improve customer satisfaction. We are determined not to be content with the aimacquisition of enhancing the satisfaction of customers. Our target is to receive the No. 1 rating in overall customer satisfaction as a result of these efforts.

With respectscores, and we are committed to the “Challenge” programs, we will positioncontinuing our all-out efforts to achieve further improvement in customer satisfaction.

We are positioning the fiscal year ending March 31, 20112012 as “thethe second year to embark onin the execution phase”phase of our challenge toward“DOCOMO’s challenge” programs, with the goal of providing services that are tailored to the lifestyle and individual needs of each customer and to contributecontributing to the sustained development of society by providing solutions to pressing issues,issues. We will promptly and steadily implementingimplement the following actions:

Expansion of packet usage: We will aim to increase packet ARPU by promoting subscriptions to flat-rate billing plans for packet access, accelerating subscribers’ migration to smartphones, acquiring more users through subscriptions to second mobile devices such as data communications devices or tablets, and proliferating the use of video services.

Proliferation of smartphones: We will move ahead with our endeavors to offer attractive devices, transplant to smartphones “i-channel”, “i-concier” and various other services that have so far been provided only on i-mode phones, and introduce new services that take advantage of the unique properties of smartphones. We will also put in place organizational structures and systems, etc., to respond to the full-scale proliferation of the smartphone market.

• Achieve growth through expansion of packet usage: We will aim to increase packet ARPU by proliferating the use of video services and data communications devices, and growing the subscriptions to flat-rate billing plans for packet access.
• Roll-out of LTE and network evolution: Toward the commercial launch of LTE scheduled for December 2010, we will move ahead with the development of network, devices and services, to establish a foundation for promoting a wide array of advanced mobile broadband services.
• Promotion and further advancement of service personalization: By further advancing the “i-concier” service, which automatically delivers useful information for subscribers’ daily lives tailored to their lifestyles, areas in which they live, and time/location information collected via Auto-GPS functions, we will expand service personalization and offer a greater array of content tailored to the individual needs of customers.
• 

Roll-out of the Xi service and network evolution: To further enrich the Xi service launched in December 2010, we will move ahead with the development of network, devices and services to establish a foundation for promoting a wide array of advanced mobile broadband services. We will also work to further expand network coverage.

Promotion and further advancement of service personalization: We will further advance “i-concier” and introduce this service on smartphones to support the daily life of each customer, and offer a rich portfolio of content tailored to each customer’s needs or usage opportunities.

Deployment of social-support services: We will continually strive to create new businesses with the full-scale launch of social-support services in fields such fields as environment, health management and finance, while seeking alliances with external partners to secure new revenue sources.

• Introduction and promotion of converged services: Through the expansion of “MyArea,” Japan’s first Femto BTS-based home area service, and “Otayori Photo service,” with which subscribers can send and display photos to a digital photo frame at a distant location from mobile phones or PCs, we will aim to provide more convenient services and comfortable usage environments to users.
• Further advancement of handsets: We will enrich the lineup of our products including smartphones to cater to the needs of broader customer segments.
• Collaboration of handsets and networks: We will aim to realize advanced services by optimizing the allocation of functions between handsets and networks, leveraging the high-speed, large-capacity and low-latency properties of LTE network.


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• Basic research aimed at new value creation: We will work on the verification of our research so that we can create businesses that contribute to the development of society and industries, aiming to realize a more affluent society that fully leverages the advantageous characteristics of mobile communications.
• Expansion of international businesses: We will strive to expand the revenue streams from international businesses by further enriching our international service offerings and expanding our overseas service counters. We will also seek revenue expansion and sustained growth through overseas business deployment allying with partners.
• Domestic investments and alliances: We will endeavor to grow revenues and achieve sustained growth by creating new business and reinforcing core business through the pursuit of investments and alliances in Japan.
By working to raise our packet ARPU even further and promoting measures aimed at creating new revenue sources while actively seeking reductionalliances with external partners to secure new revenue sources.

Introduction and promotion of converged services: We will aim to provide more convenient services which are comfortable to use, such as the “Otayori Photo Service,” “docomo Drive Net” navigation and electronic books, and to further expand machine-to-machine businesses which connect devices not incorporated into a network.

Further advancement of devices: We will strengthen the lineup of our smartphones and other products to cater to the needs of broader customer segments. We also plan to add more variety to the lineup of Xi-enabled mobile devices.

Collaboration of devices and networks: We will aim to realize advanced services by optimizing the allocation of functions between devices and networks, leveraging the high-speed, large-capacity and low-latency properties of the LTE network.

Basic research aimed at new value creation: We will work on the verification of our research for creating businesses that contribute to the development of society and industries, and aim to realize a richer society that takes advantage of the characteristics of mobile communications. In particular, we will further advance our joint research on “Mobile Spatial Statistics.”

Expansion of international businesses: We will strive to expand the revenues streams from international businesses by further enriching our international services and enhancing our overseas service counters. We will also seek revenue expansion and sustained growth through overseas business deployment by allying with partners.

Domestic investments and alliances: We will endeavor to expand revenues and achieve sustained growth by creating new businesses and reinforcing our core business through the pursuit of investments and alliances in Japan. We will also drive innovation jointly with our partners and aim to create new value.

Taking the actions mentioned above as well as pursuing further operational efficiency by particularly focusing on cost reduction in such areas as network-related costs and other general expenses, we aim to achieve an operating income of over ¥900 billion for the fiscal year ending March 31, 2013.

We will also strive to further expand our business by cultivating new business opportunities as well as becoming a “comprehensive service provider” centered around mobile communications, which we envisioned in our new corporate vision, “Pursuing Smart Innovation: HEART.”

Operating Trends

This section describes our operating trends from the perspectives of revenues and expenses.

Revenues

Revenues

Wireless Services

We earn our wireless services revenues primarily from basic monthly charges, calling charges for outgoing calls, revenues from incoming calls including interconnection charges and charges for optional value-added services and features. Cellular services, which earn the majority of our overall revenues, consist of the third generation FOMA services, the second generation mova services and other services. We have decided to discontinue mova services on March 31, 2012 to more efficiently concentrate our business resources on FOMA services.resources. We have been promoting the migration of mova subscribers to FOMA services, and the total number of FOMA subscriptions reached 53.2056.75 million or 94.9%97.8% of our total number of cellular subscriptions as of March 31, 2010.2011. We will continue our efforts to induce existing mova subscribers to migrate to FOMA services toward the scheduled termination of mova services on March 31, 2012.

Cellular services revenues include voice revenues and packet communications revenues. Voice revenues are derived from a combination of basic monthly charges for service and additional calling charges depending onbilled by connection time. OurThe main source of our packet communications revenues which are currently dominated by i-mode revenues, accounted for a greater portionbut smartphones and other new data services have become the largest drivers behind their growth. The contribution of packet communications revenues to our wireless services revenues has increased every year and accounted for 45.2% of wireless service revenues for the year ended March 31, 2010, representing 42.1% of wireless services revenues,2011, as compared to 39.4%42.1% and 33.0%39.4% for the years ended March 31, 2010 and 2009, and 2008, respectively.

Our top operational priorities include maintaining our current subscribers and the level of our average monthly revenue per unit (“ARPU”) despite the increasingly competitive market environment in which we are operating, after the introduction of Mobile Number Portability.. Our cellular services revenues are essentially a function of our number of active subscriptions multiplied by ARPU.

Our number of subscriptions continues to grow, while thebut its growth rate of subscriptions has declined.been confined to a limited level. Our subscription churn rate, or contract termination rate, is an important performance indicator for us to achieve retentionour important goal of retaining our current subscriptions. The churn rate has an impact on our number of subscriptions and in particular affects our number of net additional subscriptions for a given period. Efforts to reduce our churn rate through discount services and other customer incentive programs can increase our revenues by increasing our number of net additional subscriptions, but they can also have an adverse impact on our revenues by decreasing the amount of revenues we are able to collect from each subscriber on average. In order to keep our churn rate low, we have focused on subscriber retention by implementing certain measures including offering discounts for long-term subscribers. During the fiscal year ended March 31, 2010,2011, we employed various measures aimed for improving customer satisfaction on a continual basis from the previous fiscal year, including communications quality enhancement initiatives, revamping of after-sales support, and


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introduction of attractive billing plans. To improve our communications quality, we offered a service in which we dispatch our field staff to customers’ premises within 48 hours, in principle, after setting up an appointment based on an inquiry from customers, and implemented various other measures aimed at enhancing our area coverage and network quality. To revamp our after-sales support, we launchedcontinued to offer the “Mobile Phone Checking Service,” which provides users with free basic checkups and cleaning of handsets, and also continued the program to provide a free battery

pack or FOMA portable charger. In order to offer attractive billing plans, we revisedfocused mainly on the revision of our ratesbilling structure for data communications services in view of the rise in demand for data services, introducing new flat-rate billing options for smartphones, “Pake-hodai flat” and “Pake-hodai double 2”, as well as the “Monthly Support” discount program, under which eligible subscribers purchasing a certain product such as a smartphone or a tablet device will be able to make it easierreceive certain levels of discounts, which will vary by each model, on their monthly phone bill for up to 24 months. We also started offering a flat-rate billing plan for unlimited packet access for users to switch to a smartphone, and introduced a number of new plans, such as the “Mail Tsukai-hodai” package, which offers free unlimited domestic i-mode mail, and the “Type Simple Student Discount” plan, a discount service for students and their family members.traveling abroad, “Overseas Pake-hodai.” As a result of these endeavors, our churn rate for the fiscal year ended March 31, 2010, dropped to2011 was maintained at a very low levelrate of 0.46%0.47%.

ARPU is calculated by dividing various revenue items included in operating revenues from our wireless services, such as basic monthly charges, calling charges and packet communications charges, from designated services by the number of active subscriptions to the relevant services. ARPU is another important performance indicator for us to measure average monthly revenues per subscription. Accordingly, the calculation of ARPU excludes revenues that are not representative of monthly average usage such as subscription activation fees. We believe that our ARPU figures calculated in this way provide useful information to analyze the trend of monthly average usage of our subscribers over time and the impact of changes in our billing arrangements. The revenue items included in the numerators of our ARPU figures are based on our U.S. GAAP results of operations. The ARPU calculation is described in “Item 4. Information on the Company — B. Business Overview — Cellular Phone Service Usage.” In August and September 2007, we introduced the “Fami-wari MAX50,” “Hitoridemo Discount50” and “Office-wari MAX50” discount packages (hereinafter collectively referred to as “new discount services”) which offer a 50% discount on basic monthly charges on condition of two-year usage of our service. The percentage of users subscribing to these new discount services to our total subscriptions reached over 60% as of March 31, 2010.

In November 2007, we introduced a new handset sales method called “Value Course.” “Value Course” is a sales method, where the purchase of a handset is not discounted by a certain type of sales commission which had previously been paid to agent resellers, specifically designed for providing discounts on handset sales. As this handset sales method requires customers to pay full price to purchase a new handset, it awards the subscribers with a subscription to a billing plan with discounted basic monthly charges called “Value Plan.” While we simultaneously introduced another sales method more similar to the conventional method called “Basic Course,” where a subscriber purchases a handset discounted by our direct subsidy and undiscounted billing plans are applied, so far more than 95% of subscribers have opted for the “Value Course,” and the number of “Value Plan” subscriptions reached approximately 32.7041.25 million, or 58%71% of our total subscriptions, as of March 31, 2010.2011. Our aggregate ARPU (FOMA+(Xi+FOMA+mova) has been on a constant decline, and the drop of voice ARPU, in particular, has accelerated in recent years. This is due largely to the impact from the expanded uptake of “Value Plan” and the new discount services (becausebecause basic monthly charges are included in the calculation of voice ARPU),ARPU and the impact from the drop of billable MOU resulting from the growing utilization of free communicationcalling allowances.

Our cellular services revenues for The revisions made to the calculation method of our interconnection fees (access charges) have also contributed to the decline in voice ARPU. From the fiscal year ended March 31, 2008 recorded a decline compared to2011, in accordance with the “Guidelines for the Operation of the Type II Specified Telecommunications Equipment Systems” published by the Ministry of Internal Affairs and Communications in March 2010, our interconnection fees are calculated excluding operating expenses (with the exception of some expense items) from the cost of interconnection.

For the fiscal year ended March 31, 2007, owing2011, although we achieved an increase in packet communications revenues as a result of our intensive efforts to boost the widespread adoptionusage of video and other data services and strengthen the new discount services we introduced for the retentionsales of existing subscribers. Oursmartphones and other devices, our total cellular servicesservice revenues for the fiscal year ended March 31, 2009, continued to post ayear-on-yeardecline due mainly to the broad adoption of “Value Plan,” growth in the percentage of users subscribing to the new discount services and a decrease in inter-carrier settlement (access charge) revenues we receive from other carriers. In the fiscal year ended March 31, 2010, cellular services revenues dropped from the previous fiscal year mainly because of the expansion of “Value Plan” subscriptions and the impact of reduced billable MOU. For the fiscal year ending March 31, 2011, we project a decline in cellular services revenues from the fiscal year ended March 31, 2010, because the negative impact onincrease of data revenues fell short of completely offsetting the drop in voice revenues resulting from the expanded uptake of “Value Plan” and further decline ofreduced billable MOU is likely to remain greater than the revenue-boosting effect owing to the increase inMOU.

Raising packet communications revenues and the moderate growth of subscribers. Although ARPU has been on a declining trend, we set a target to halt the decline of ARPU in the fiscal year ending March 31, 2012 when the effect of an increase in packet ARPU overtakes the effect of a decrease in voice ARPU. Raising the packet ARPU is one of the top priorities in our business strategy, and we have employed various measures aimed at expanding subscribers’ packet usage, such asusage. Such measures include expanding user base of smartphones, PC data cards and mobile Wi-Fi routers, encouraging subscribers to join flat-rate packet billing plans, expansion of video usage, enrichment of everyday life-oriented content, improving the ease of use and


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convenience of our products and services, and expansion of the user base of PC data communications and smartphones.products. Through the execution of “DOCOMO’s Change and Challenge” action plan, we will strive to retain our existing subscriber base by enhancing the level of customer satisfaction, and achieve growth by increasing our packet ARPU.

Equipment Sales

We collaborate with handset manufacturers to develop handsets compatible with our cellular services, purchase the handsets from those handset manufacturers and then sell those handsets to agent resellers for sale to our subscribers. Starting from November 2008, we started offering handsets in newly organized four series — “docomo STYLE series,” “docomo PRIME series,” “docomo SMART series” and “docomo PRO series.”

• “docomo STYLE series”: Distinctive mobile phones designed like accessories and offered in a wide variety of fashionable designs and colors.
• “docomo PRIME series”: Full-feature mobiles phones for the maximum enjoyment of video, games and other entertainment.
• “docomo SMART series”: Sophisticated mobile phones for busy people who want to live productively and enhance the management of their professional and private lives.
• “docomo PRO series”: Most advanced high-spec mobile phones for those who love cutting-edge digital tools.

As described in the section of Wireless Services above, in November 2007, we introduced a new handset sales method, “Value Course.” Payment in installments is made available for a subscriber to purchase a handset from agent resellers inunder this “Value Course.”Course” purchase scheme. If a subscriber chooses to make installment payments,pay in installments, under the agreement entered into among the subscriber, the agent reseller and us, we provide funds by paying for the purchased handset to the agent resellers and include the installment charge for the purchased handset in the monthly bill for network usage for the installment payment term. This agreement is separate from the telecommunications service contract entered into between the subscriber and us, or the equipment sales contract concluded between the agent reseller and subscriber. Because the revenues from equipment sales are recognized upon the delivery of handsets to agent resellers, cash collection of the installments receivable for the purchased handset from subscribers do not have an impact on any of our revenues, including equipment sales revenues.

Revenues from equipment sales, primarily sales of handsets and other telecommunications equipment to agent resellers, accounted for 11.8%11.3% of total operating revenues for the year ended March 31, 2010.2011. We account for a portion of the sales commissions that we pay to agent resellers as a reduction in equipment sales revenues and selling, general and administrative expenses in accordance with U.SU.S. GAAP. As a result, structurally, the cost of equipment sold has exceeded equipment sales revenues. However, with the introduction of “Value Course” in November 2007 and accompanying reduction of sales commissions, the amount of sales commissions deducted from equipment sales revenues decreased significantly, and the effects of the excess amount of cost of the equipment sold over equipment sales revenues has also weakened. During the year ended March 31, 2010,2011, equipment sales revenues decreased by ¥30.1 billion or 5.9% compared to the prior fiscal year due mainly to the decrease in the numberwholesale price per unit achieved as a result of handsets sold to agent resellers (down more than 10% compared to the prior fiscal year) affected mainly by the economic downturn. For the year ending March 31, 2011, we expect only a slight decrease in the number of handsets to be sold to agent resellers in anticipation of an increased demand for handset upgrade by those subscribers who purchased a handset upon the introduction of “Value Course” more than two years ago. We also expect to lower our equipment sales price per unit reflecting our efforts to reduce equipment procurement cost per unit to strengthen our competitiveness in equipment sales. As a result, we expect equipment sales revenues to decrease from the prior fiscal year. unit.

Because the trend of handset sales is closely interrelated with the cost of handsets sold, please refer to the “Cost of Equipment Sold” section below.


57


Creation of New Revenues Sources

As the Japanese mobile phone market continues to mature, the competition among carriers has intensified in such areas as rate reductions. Against this backdrop, with the aim of achieving a sustained growth, we have worked to diversify our revenue sources while stepping up our efforts to reinforce our wireless services business.

Following the launch of our credit brand “iD” in December 2005, we commenced a proprietary mobile credit payment service “DCMX” in April 2006. Through these services, which enable credit payment using mobile phones with the contactless IC chips embedded inside the handset, we would like to transform mobile phones into a tool that serves various needs in everyday life. With the subscriber base of “DCMX” reaching 11.2612.32 million and the number of “iD” reader/writer machines installed growing to 440,000approximately 510,000 as of March 31, 2010,2011, the amount of credit transactions handled has also been rising.

In April 2009, to invigorate the mobilee-commerce market that offers great potential for growth in the future, we acquired a majority stake in OAK LAWN MARKETING, INC., a leading TV and home shopping firm in Japan which subsequently became our consolidated subsidiary.

Our subsidiary for multimedia broadcasting service, Multimedia Broadcasting, Inc., which changed its name to mmbi, Inc. on April 1, 2011, received approval from the Ministry of Internal Affairs and Communications for setting up stations for commissioned broadcasting business in September 2010. To prepare for the commercial launch of multimedia broadcasting business scheduled for April 2012, the commissioned broadcasting business was spun off to an operating subsidiary, Japan Mobilecasting, Inc. in January 2011. Multimedia broadcasting

service is a new type of broadcast media based on the ISDB-Tmm standard, which can offer both storage-type broadcasting services that allow users to view a wide variety of content such as videos, music, newspapers, magazines and electronic books after automatically storing the content in mobile devices, as well as a high-quality streaming service that delivers high-quality, high-resolution broadcasting content in real time.

We will continue to strive to expand these credit and home shopping businessesbusiness fields going forward. We intend to pursue investments and alliances with the aim of strengthening our operations, without distinction as to core or new business, to expand our revenues and achieve sustained growth. We will continually seek opportunities of investment and alliance that will benefit our business management.

Expenses

Expenses

Cost of Services

Cost of services represents the expenses we incur directly in connection with providing our subscribers with wireless communication services and includes the cost for usage of other operators’ networks, maintenance of equipment or facilities and payroll for employees dedicated to the operations and maintenance of our wireless services. Cost of services accounted for 26.1%26.5% of our total operating expenses for the year ended March 31, 2010.2011. Major components of cost of services include facility maintenance expenses, which are incurred to maintain our network facilities, and communication network charges, which we pay for the usage of other operators’ networks or for access charges, accounting for 33.1%33.5% and 31.3%29.1% of the total cost of services, respectively. The amount of our communication network charges is dependent on the number of our base stations installed and rates set by the other operators. In recent years, our communication network charges have steadily declined as a resultCost of our buildup of our own back-bone network to replace circuits leased from NTT. Communication network charges decreasedServices for the year ended March 31, 2010 as well due mainly2011 decreased by ¥4.1 billion or 0.5% to ¥896.5 billion from the discount in charges of NTT’s leased circuits and decrease of access charges payable to other operators. We expect that the downward trend will continue and the communication network charges will decrease for the year ending March 31, 2011.

prior fiscal year.

Cost of Equipment Sold

Cost of equipment sold arises mainly from our procurement of handsets for sale to our new or current subscribers through agent resellers, which is basically dependent on the number of handsets sold to agent resellers and the purchase price per handset. Cost of equipment sold represented 20.2%19.6% of our operating expenses for the year ended March 31, 2010.2011. The total numbercost of handsetsequipment sold to agent resellersfor the fiscal year ended March 31, 2011 decreased fromby ¥35.7 billion, or 5.1%, compared to the prior fiscal year due mainly to overall sluggish consumer spending. The purchase price per handset also decreased as a result of the growing popularity of middle- and low-end handsetsreduction in our product portfolio and reduction of license fees included in handset price for which we own intellectual property rights while we pay part of the development costs incurred by handset manufactures. As a result,per-unit cost of equipment sold decreased fromprocurement, which was achieved through the prior fiscal year. For the year ending March 31, 2011, we expect costpreparation of equipment sold will decrease from the current fiscal year duea product lineup consisting mainly of low-price handsets featuring stylish designs in response to a slight decrease in the number of handsets to be sold to agent resellers and our continued efforts to reduce the handset procurement costs.

We have taken some measures to control the cost of equipment sold. We have saved on FOMA handset development cost by introducing a single-chip LSI and common platforms for the handset operating system. We have provided packaged software dedicated to our handsets to handset manufacturers to facilitate development of


58

customers’ orientation toward less expensive products.


FOMA handsets to hold down cost of equipment sold. For the year ended March 31, 2010, we facilitated efficiency improvements accompanied by a review of handset logistics, such as integration of handset logistics contractors. We are planning to optimize the level of equipment inventories through further efficiency improvement efforts.
Depreciation and Amortization
We expense the acquisition cost of a fixed asset such as telecommunications equipment, a network facility and software during its estimated useful life as depreciation and amortization.

Depreciation and amortization accounted for 20.3%20.5% of our operating expenses for the year ended March 31, 2010.2011. In order to respond attentively to demand from our subscribers, we invested inmade capital investments primarily for the FOMA services network during the period through March 31, 2011. The principal actions undertaken during the fiscal year ended March 31, 2010. Our investments in2011, included the following:

Further enhancement of FOMA network included:service area quality to respond attentively to customers’ requests;

Reinforcement of network facilities in response to the traffic growth resulting from the increased adoption of smartphones, etc.; and

• further enhancement of FOMA network service area quality to respond attentively to customers’ requests;
• further expansion of HSDPA service coverage, offering high data transmission speed; and
• buildup of network facilities in response to an increase in traffic.

Roll-out of service areas for the launch of Xi, which utilizes LTE system

Our annual capital expenditures in the FOMAhave been declining after FOMA-related network investments peaked in the fiscal year ended March 31, 2007, and although we plan to start making capital investments for LTE rollout in the fiscal year ending March 31, 2011, we expect that2007. Therefore, depreciation and amortization expenses will showhave also been showing a downward trend in the future.trend. In addition, we have been involved with cost saving efforts such as economized procurement, design and installment of low-cost devices and improvements in construction processes. DepreciationAs a consequence, depreciation and amortization expenses for the year ended March 31, 2010 decreased significantly from the prior fiscal year, since the depreciation and amortization expenses in the prior fiscal year included the effect of accelerated depreciation charges of mova-related assets through the changes in estimated useful lives accompanied by our decision to discontinue mova services on March 31, 2012. However, even without this effect, depreciation and amortization expenses would have2011 decreased from the prior fiscal year as a result of ongoing cost efficiency improvement efforts. Depreciation and amortization expenses are expected to decrease for the year ending March 31, 2011, following the recent downward trend. As foryear.

For more details concerning our capital expenditures, please refer to “Capital Expenditures” in this Item 5.B.

Selling, General and Administrative Expenses

Selling, general and administrative expenses represented 33.3%33.4% of our total operating expenses for the year ended March 31, 2010.2011. The primary components included in our selling, general and administrative expenses are expenses related to acquisition of new subscribers and retention of current subscribers, the most significant of which was commissions paid to agent resellers. While some of these commissions are linked to sales activities such as new subscriptions and handset upgrades, others result from non-sales activities such as processing of billing plan changes and handset repairs. In addition, we provide subsidies directly to our subscribers in the form of a discount to the handset price to be purchased subject to competition in the market.

In accordance with U.S. GAAP, in our accounting, a portion of the sales activities linked commissions paid to agent resellers is recognized as a deduction from equipment sales revenueswhile the rest of commissions, both sales activities linked and non-sales activities linked, as selling, general and administrative expenses. For the fiscal year ended March 31, 2010, the

Our total amount of sales commissions before the application of the aforesaid accounting treatment decreased compared to the prior fiscal year, as a result of a decline in the number of handsets sold and our efforts to reduce sales commissions. However, the decrease in the amount of sales commissions included in the selling, general and administrative expenses after the application of the aforesaid accounting treatment was limited to a slight decline compared to the prior fiscal year. On the other hand, due to the increase in expenses appropriated for customer satisfaction improvement initiatives and other factors, the selling, general and administrative expenses for the fiscal year ended March 31, 2010, posted an increase over2011 declined compared to the prior fiscal year. Foryear due to our efforts to decrease the year ending March 31, 2011, we expect further reductionsamount of the commissions included in sales commissions throughthe selling, general and administrative expenses and to other measures dedicated to more efficient usage.

use of operational expenses.

Operating Income

For the year ended March 31, 2010,2011, operating revenues decreased from the prior fiscal year since both wireless services revenues and equipment sales revenues decreased dueowing to a decline in wireless services revenues resulting from a drop in ARPU as well as the numberand a decrease of equipment sold.sales revenues caused by a reduction in the wholesale price per unit. On the other hand, athe decrease in operating expenses due mainly to a decreaseresulting from the decline in costs of equipment


59


sold and other expenses associated with the sales of equipment and our ongoing efforts to reduce costs, including reductions in network relatednetwork-related costs, exceededmore than offset the decrease in operating revenues. As a result, operating income increased.
The market environment remains very competitive after the introduction of Mobile Number Portability. We will be engaged in reinforcing our competitiveness by executing action plans of “DOCOMO’s Change and Challenge” in the area of customer satisfaction, actions to expand usage, creation of new revenue sources, and improvement of cost efficiency. For the year ending March 31, 2011, we expect operating income to increase despite the decline in operating revenues from the prior fiscal year for the following reasons:
• Cellular services revenues are expected to decrease, because the projected decline in voice revenues resulting from the impact of the expanded uptake of “Value Plan,” a billing plan that offers discounts on basic monthly charges, and reduction in billable MOU is expected to be larger than the growth in packet revenues, which we plan to achieve through boosting subscribers’ packet usage.
• Equipment sales revenues are expected to decline due to a decrease in the wholesale price of handsets and slight decrease in the number of handsets sold to agent resellers.
• Operating expenses are expected to decrease as a result of efficient use of sales commissions, a decrease in cost of equipment sold, ongoing reduction of network-related costs and other general costs, and other factors.
• Despite a decrease in operating revenues, operating income is expected to postrecorded a year-on-year increase.

year-on-year gains, as we plan to secure income by offsetting the decline in voice revenues through the increase in packet revenues and various cost-cutting measures.

Other income and expenses, Equity in net income (losses) of affiliates

As part of our corporate strategy, we have made investments in foreign and domestic companies in businesses that complement our mobile communications business. See “Item 4. Information on the Company — Company—B. Business Overview — 5Overview—7 Investments and Affiliations.” In accordance with U.S. GAAP, the investment is accounted for under the equity method and recognized under “Investments in affiliates” in our consolidated balance sheets when we are able to exercise significant influence over the investee, but do not have a controlling financial interest. In accordance with equity method accounting, we include our equity in the net income or losses of affiliates in our consolidated statements of income. Where we do not have an ability to exercise significant influence over the investee, we include the investment as “Marketable securities and other investments” in our consolidated balance sheets. Our results of operations can be affected by impairments of such investments and losses and gains on the sale of such investments. The impairment charges for “Marketable securities and other investments” and realized gains or losses from sales of “Investments in affiliates” and “Marketable securities and other investments” are recognized in “Other income and expenses,” whereas the impairment charges for “Investments in affiliates” are recognized in “Equity in net income (losses) of affiliates.” In the past, we experienced material impairments in the value of our investments in equity method affiliates that were included in “Equity in net losses of affiliates” in our consolidated statements of income and comprehensive income for relevant years. It is possible that we could experience similar impairments with respect to our investments“Investments in affiliatesaffiliates” and marketable“Marketable securities and other investmentsinvestments” again in the future. Please refer to “- Critical“Critical Accounting Policies — Policies—Impairment of investments.” We may also experience material gains or losses on the sale of our investments. As of March 31, 2010,2011, the total carrying value of our investments“Investments in affiliatesaffiliates” was ¥578.1¥525.5 billion, while the total carrying value for investments in “Marketable securities and other investments” was ¥128.1 billion.

Operating Results for the year ended March 31, 2011

The following discussion includes analysis of our operating results for the year ended March 31, 2011. The tables below describe selected operating data and income statement data:

Key Performance Indicators

   Years ended March 31 
   2010   2011   Increase
(Decrease)
  Change (%) 

Cellular

       

Subscriptions (thousands)

   56,082     58,010     1,928    3.4

Xi services (thousands)

        26           

FOMA services (thousands)

   53,203     56,746     3,542    6.7

mova services (thousands)

   2,879     1,239     (1,640  (57.0)

i-mode services (thousands)

   48,992     48,141     (851  (1.7)

sp-mode services (thousands)

        2,095           

Market Share (%) (1) (2)

   50.0     48.5     (1.5    

Aggregate ARPU (Xi+FOMA+mova) (yen/month/subscription)(3) 

   5,350     5,070     (280  (5.2)

Voice ARPU (yen/month/subscription)(4)

   2,900     2,530     (370  (12.8)

Packet ARPU (yen/month/subscription)

   2,450     2,540     90    3.7

MOU (Xi+FOMA+mova) (minutes/month/subscription)(3) (5)

   136     134     (2  (1.5)

Churn Rate (%) (2)

   0.46     0.47     0.01      

(1)Source for other cellular telecommunications operators: Data announced by Telecommunications Carriers Association
(2)Data calculated including Communication Module Services subscriptions.
(3)Data are calculated excluding communication module services-related revenues and communication module services subscriptions, and Phone Number Storage and Mail Address Storage services-related revenues and those subscriptions.
(4)Inclusive of circuit switched data communications.
(5)MOU (Minutes of Use): Average communication time per month per subscription

Breakdown of Financial Information

   Millions of yen 
   Years ended March 31 
   2010  2011  Increase
(Decrease)
  Change (%) 

Operating revenues:

     

Wireless services

  ¥  3,776,909   ¥  3,746,869   ¥    (30,040  (0.8)%  

Cellular services revenues

   3,499,452    3,407,145    (92,307  (2.6)%  

—Voice revenues(6)

   1,910,499    1,712,218    (198,281  (10.4)%  

Including: FOMA services

   1,785,518    1,658,863    (126,655  (7.1)%  

—Packet communications revenues

   1,588,953    1,694,927    105,974    6.7 %  

Including: FOMA services

   1,558,284    1,679,840    121,556    7.8 %  

Other revenues

   277,457    339,724    62,267    22.4 %  
                 

Equipment sales

   507,495    477,404    (30,091  (5.9)%  
                 

Total operating revenues

   4,284,404    4,224,273    (60,131  (1.4)%  
                 

Operating expenses

     

Cost of services

   900,642    896,502    (4,140  (0.5)%  

Cost of equipment sold

   698,495    662,829    (35,666  (5.1)%  

Depreciation and amortization

   701,146    693,063    (8,083  (1.2)%  

Selling, general and administrative

   1,149,876    1,127,150    (22,726  (2.0)%  
                 

Total operating expense

   3,450,159    3,379,544    (70,615  (2.0)%  
                 

Operating income

   834,245    844,729    10,484    1.3 %  

Other income (expense)

   1,912    (9,391  (11,303    
                 

Income before income taxes and equity in net income (losses) of affiliates

   836,157    835,338    (819  (0.1)%  

Income taxes

   338,197    337,837    (360  (0.1)%  
                 

Income before equity in net income (losses) of affiliates

   497,960    497,501    (459  (0.1)%  

Equity in net income (losses) of affiliates (net of applicable taxes)

   (852  (5,508  (4,656  (546.5)%  
                 

Net Income

   497,108    491,993    (5,115  (1.0)%  

Less: Net (income) loss attributable to noncontrolling interests

   (2,327  (1,508  819    35.2 %  
                 

Net income attributable to NTT DOCOMO, INC.

  ¥494,781   ¥490,485   ¥(4,296  (0.9)%  
                 

(6)Inclusive of circuit switched data communications.

Analysis of operating results for the year ended March 31, 2011 and comparison with the prior fiscal year

The total number of our cellular (Xi+FOMA+mova) subscriptions as of March 31, 2011 was 58.01 million, up 1.93 million, or 3.4%, compared to 56.08 million as of the end of the prior fiscal year. As of March 31, 2011, the number of FOMA subscriptions reached 56.75 million, which equaled 97.8% of our total cellular subscriptions, posting an increase of 3.54 million, or 6.7%, compared to 53.20 million as of March 31, 2010. On the other hand, the number of mova subscriptions has decreased constantly since the fiscal year ended March 31, 2004 as a result of our efforts to migrate subscribers to the FOMA network. As of March 31, 2011, the total number of mova subscriptions was 1.24 million, decreasing by 1.64 million, or 57.0%, from 2.88 million as of the end of the prior fiscal year. Our subscriber market share as of March 31, 2011 was 48.5%, dropping by

1.5 points from 50.0% as of the end of the prior fiscal year. The number of i-mode subscriptions was 48.14 million as of March 31, 2011, recording a decrease of 0.85 million or 1.7% from 48.99 million as of March 31, 2010. On the other hand, the subscriptions to “sp mode”, our ISP service for smartphones launched in September 2010, reached 2.09 million as of March 31, 2011.

The total number of handsets sold in the fiscal year ended March 31, 2011 grew to 19.06 million, posting an increase of 1.02 million, or 5.6%, compared to 18.04 million for the prior fiscal year, driven by the surge in the sales of smartphones.

Aggregate ARPU for cellular (Xi+FOMA+mova) service for the fiscal year ended March 31, 2011 dropped to ¥5,070, down ¥280 or 5.2%, compared to ¥5,350 for the prior fiscal year. Voice ARPU decreased by ¥370 or 12.8% to ¥2,530, compared to ¥2,900 for the prior fiscal year. The primary factor behind this decline was the increase in the number of users subscribing to the “Value Plan” and decline in billable MOU. Packet ARPU, on the other hand, grew to ¥2,540, recording an increase of ¥90 or 3.7% from ¥2,450 for the prior fiscal year. The main reasons for the increase in packet ARPU include the impact of expanded data usage resulting from our efforts for boosting the usage of i-mode service, migrating existing subscribers to smartphones and acquiring new smartphone subscriptions, and cultivating new demand for mobile Wi-Fi routers and tablet devices. The MOU (Xi+FOMA+mova) decreased by 2 minutes or 1.5% to 134 minutes compared to 136 minutes for the prior fiscal year. The billable MOU, in particular, decreased from 118 minutes for the prior fiscal year to 114 minutes, posting a decline of 4 minutes or 3.4%, due mainly to the expansion of free communications allowances.

Our cellular churn rate was 0.47% and 0.46% for the fiscal years ended March 31, 2011 and March 31, 2010, respectively. The churn rate for the fiscal year ended March 31, 2011 maintained a level comparable to the previous fiscal year in which we saw a record low churn rate, owing to our customer satisfaction improvement initiatives. We have successfully maintained our churn rate lower than that of other carriers in Japan, which we believe was attained as a result of various factors, including among other things, introduction of competitive billing plans and gaining the confidence of customers in our network and services. However, no assurance can be given that we can maintain the churn rate at the current level or achieve a further reduction.

Our operating revenues for the fiscal year ended March 31, 2011, were ¥4,224.3 billion, a decline of ¥60.1 billion or 1.4% from ¥4,284.4 billion for the prior fiscal year. Wireless services revenues were ¥3,746.9 billion, decreasing by ¥30.0 billion or 0.8% compared to ¥3,776.9 billion for the prior fiscal year. Consequently, the contribution of wireless services revenues to our total operating revenues for the fiscal year ended March 31, 2011 increased to 88.7% from 88.2% for the prior fiscal year. The year-on-year decrease in wireless services revenues was primarily attributable to the drop of cellular services revenues, particularly voice revenues. The decline in cellular services revenues was the net result of the decrease in voice revenues (which dropped by ¥198.3 billion or 10.4% to ¥1,712.2 billion from ¥1,910.5 billion for the prior fiscal year), which was partially offset by the increase in packet revenues (which grew by ¥106.0 billion or 6.7% from ¥1,589.0 billion in the prior fiscal year to ¥1,694.9 billion). An analysis on the reasons for the decline in voice revenues and increase in packet revenues is provided in the section explaining the changes in ARPU. Of the cellular services revenues, the revenues generated by FOMA voice services decreased by ¥126.7 billion or 7.1% from ¥1,785.5 billion for the prior fiscal year to ¥1,658.9 billion for the fiscal year ended March 31, 2011. On the other hand, the revenues generated by FOMA packet services increased to ¥1,679.8 billion, up ¥121.6 billion or 7.8%, from ¥1,558.3 billion for the prior fiscal year. Equipment sales revenues decreased by ¥30.1 billion or 5.9% to ¥477.4 billion for the year ended March 31, 2011 from ¥507.5 billion for the prior fiscal year, due mainly to a reduction in the wholesale price per unit.

Operating expenses decreased by ¥70.6 billion or 2.0% from ¥3,450.2 billion for the prior fiscal year to ¥3,379.5 billion for the fiscal year ended March 31, 2011. This was mainly attributable to a decrease in cost of equipment sold, which dropped by ¥35.7 billion or 5.1% to ¥662.8 billion from ¥698.5 billion for the prior fiscal year as a result of a reduction in the handset procurement cost per unit: a reduction in selling, general and administrative expenses of ¥22.7 billion or 2.0% from ¥1,149.9 billion for the prior fiscal year to ¥1,127.2 billion for the fiscal year ended March 31, 2011 resulting from the decline in customer service-related expenses: and a

decrease in depreciation and amortization, which declined by ¥8.1 billion or 1.2% from ¥701.1 billion for the prior fiscal year to ¥693.1 billion for the fiscal year ended March 31, 2011

As a result of the foregoing, operating income for the fiscal year ended March 31, 2011 increased by ¥10.5 billion or 1.3%, from ¥834.2 billion for the prior fiscal year to ¥844.7 billion. Accordingly, the operating income margin improved from 19.5% for the prior fiscal year to 20.0%. The growth of operating income, despite a decrease in operating revenues, contributed to this improvement, which was attained by making up for the decline in operating revenues resulting mainly from the reduction of voice revenues by a reduction of network-related costs and other operating expenses.

Other income (expense) includes items such as interest income, interest expense, gains and losses on sale of “Marketable securities and other investments” and foreign exchange gains and losses. We accounted for ¥9.4 billion as other expense for the fiscal year ended March 31, 2011, increasing expenses by ¥11.3 billion compared to the prior fiscal year, during which we recorded other income of ¥1.9 billion. This is mainly because we recorded other-than-temporary impairment charges for marketable securities and securities accountedother investment in the fiscal year ended March 31, 2011, while we recognized only minimal other-than-temporary impairment charges in the prior fiscal year ended March 31, 2010.

Income before income taxes and equity in net income (losses) of affiliates decreased by ¥0.8 billion or 0.1% to ¥835.3 billion for under the cost method was ¥151.0 billion.


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fiscal year ended March 31, 2011, from ¥836.2 billion for the prior fiscal year.


Income taxes were ¥337.8 billion for the year ended March 31, 2011 and ¥338.2 billion for the year ended March 31, 2010, representing effective income tax rate of approximately 40.4% for both fiscal years. We are subject to income taxes imposed by various taxing authorities in Japan, including corporate income tax, corporate enterprise tax, corporate inhabitant income taxes and special local corporation tax, which in the aggregate amounted to a statutory income tax rate of 40.8% for both fiscal years ended March 31, 2011 and March 31, 2010. The Japanese government introduced various special tax benefits, one of which enabled us to deduct from our taxable income a portion of investments in research and development (“R&D investment tax incentive”). The difference between our effective tax rate and statutory income tax rate for the years ended March 31, 2011 and 2010 arose primarily from such special tax allowances.

For equity in net losses of affiliates (net of applicable taxes), we recognized our equity in the net losses of our affiliates of ¥5.5 billion for the fiscal year ended March 31, 2011 and ¥0.9 billion for the fiscal year ended March 31, 2010.

As a result of the foregoing, we recorded ¥490.5 billion in net income attributable to NTT DOCOMO, INC., posting a decrease of ¥4.3 billion or 0.9% from ¥494.8 billion for the prior fiscal year.

Operating Results for the year ended March 31, 2010

The following discussion includes analysis of our operating results for the year ended March 31, 2010. The tables below describe selected operating data and income statement data:

Key Performance Indicators

                 
  Years ended March 31
      Increase
  
  2009 2010 (Decrease) Change (%)
 
Cellular
                
Subscriptions (thousands)  54,601   56,082   1,481   2.7%
FOMA services (thousands)  49,040   53,203   4,163   8.5%
mova services (thousands)  5,560   2,879   (2,682)  (48.2)%
i-mode services (thousands)  48,474   48,992   518   1.1%
Market Share (%)(1)(2)
  50.8   50.0   (0.8)   
Aggregate ARPU (FOMA+mova) (yen/month/subscription)(3)
  5,710   5,350   (360)  (6.3)%
Voice ARPU (yen/month/subscription)(4)
  3,330   2,900   (430)  (12.9)%
Packet ARPU (yen/month/subscription)  2,380   2,450   70   2.9%
MOU (FOMA+mova) (minutes/month/subscription)(3)(5)
  137   136   (1)  (0.7)%
Churn Rate (%)(2)
  0.50   0.46   (0.04)   

   Years ended March 31 
   2009   2010   Increase
(Decrease)
  Change (%) 

Cellular

       

Subscriptions (thousands)

   54,601     56,082     1,481    2.7

FOMA services (thousands)

   49,040     53,203     4,163    8.5

mova services (thousands)

   5,560     2,879     (2,682  (48.2)% 

i-mode services (thousands)

   48,474     48,992     518    1.1

Market Share (%) (1) (2)

   50.8     50.0     (0.8    

Aggregate ARPU (FOMA+mova) (yen/month/subscription)(3) 

   5,710     5,350     (360  (6.3)% 

Voice ARPU (yen/month/subscription)(4)

   3,330     2,900     (430  (12.9)% 

Packet ARPU (yen/month/subscription)

   2,380     2,450     70    2.9

MOU (FOMA+mova) (minutes/month/subscription)(3) (5)

   137     136     (1  (0.7)% 

Churn Rate (%) (2)

   0.50     0.46     (0.04    

(1)Source for other cellular telecommunications operators: Data announced by Telecommunications Carriers Association
(2)Data calculated including Communication Module Services subscriptions.
(3)Data calculated excluding Communication Module Services-related revenues and Communication Module Services subscriptions.
(4)Inclusive of circuit switched data communications.
(5)MOU (Minutes of usage)Use): Average communication time per month per subscription


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Breakdown of Financial Information
                 
  Millions of yen 
  Years ended March 31 
        Increase
    
  2009  2010  (Decrease)  Change (%) 
 
Operating revenues :
                
Wireless services ¥3,841,082  ¥3,776,909  ¥(64,173)  (1.7)%
Cellular services revenues  3,661,283   3,499,452   (161,831)  (4.4)%
— Voice revenues(6)
  2,149,617   1,910,499   (239,118)  (11.1)%
Including: FOMA services  1,877,835   1,785,518   (92,317)  (4.9)%
— Packet communications revenues  1,511,666   1,588,953   77,287   5.1%
Including: FOMA services  1,449,440   1,558,284   108,844   7.5%
Other revenues  179,799   277,457   97,658   54.3%
                 
Equipment sales  606,898   507,495   (99,403)  (16.4)%
                 
Total operating revenues  4,447,980   4,284,404   (163,576)  (3.7)%
                 
Operating expenses
                
Cost of services  872,438   900,642   28,204   3.2%
Cost of equipment sold  827,856   698,495   (129,361)  (15.6)%
Depreciation and amortization  804,159   701,146   (103,013)  (12.8)%
Selling, general and administrative  1,112,568   1,149,876   37,308   3.4%
                 
Total operating expense  3,617,021   3,450,159   (166,862)  (4.6)%
                 
Operating income
  830,959   834,245   3,286   0.4%
Other income (expense)
  (50,486)  1,912   52,398    
                 
Income before income taxes and equity in net income (losses) of affiliates
  780,473   836,157   55,684   7.1%
Income taxes
  308,400   338,197   29,797   9.7%
                 
Income before equity in net income (losses) of affiliates
  472,073   497,960   25,887   5.5%
Equity in net income (losses) of affiliates (net of applicable taxes)  (672)  (852)  (180)  (26.8)%
                 
Net Income
  471,401   497,108   25,707   5.5%
Less: Net (income) loss attributable to noncontrolling interests  472   (2,327)  (2,799)   
                 
Net income attributable to NTT DOCOMO, INC.
 ¥471,873  ¥494,781  ¥22,908   4.9%
                 

   Millions of yen 
   Years ended March 31 
   2009  2010  Increase
(Decrease)
  Change (%) 

Operating revenues

     

Wireless services

  ¥  3,841,082   ¥  3,776,909   ¥    (64,173  (1.7)% 

Cellular services revenues

   3,661,283    3,499,452    (161,831  (4.4)% 

—Voice revenues(6)

   2,149,617    1,910,499    (239,118  (11.1)% 

Including: FOMA services

   1,877,835    1,785,518    (92,317  (4.9)% 

—Packet communications revenues

   1,511,666    1,588,953    77,287    5.1 % 

Including: FOMA services

   1,449,440    1,558,284    108,844    7.5 % 

Other revenues

   179,799    277,457    97,658    54.3 % 
                 

Equipment sales

   606,898    507,495    (99,403  (16.4)% 
                 

Total operating revenues

   4,447,980    4,284,404    (163,576  (3.7)% 
                 

Operating expenses

     

Cost of services

   872,438    900,642    28,204    3.2 % 

Cost of equipment sold

   827,856    698,495    (129,361  (15.6)% 

Depreciation and amortization

   804,159    701,146    (103,013  (12.8)% 

Selling, general and administrative

   1,112,568    1,149,876    37,308    3.4 % 
                 

Total operating expenses

   3,617,021    3,450,159    (166,862  (4.6)% 
                 

Operating income

   830,959    834,245    3,286    0.44 % 

Other income (expense)

   (50,486  1,912    52,398      
                 

Income before income taxes and equity in net income (losses) of affiliates

   780,473    836,157    55,684    7.1 % 

Income taxes

   308,400    338,197    29,797    9.7 % 
                 

Income before equity in net income (losses) of affiliates

   472,073    497,960    25,887    5.5 % 

Equity in net income (losses) of affiliates
(net of applicable taxes)

   (672  (852  (180  (26.8)% 
                 

Net Income

   471,401    497,108    25,707    5.5 % 

Less: Net (income) loss attributable to noncontrolling interests

   472    (2,327  (2,799    
                 

Net income attributable to NTT DOCOMO, INC.

  ¥471,873   ¥494,781   ¥22,908    4.9 % 
                 

(6)Inclusive of circuit switched data communications.

Analysis of operating results for the year ended March 31, 2010 and comparison with the prior fiscal year

The total number of our cellular (FOMA+mova) subscriptions as at March 31, 2010 was 56.08 million, up 1.48 million, or 2.7%, compared to 54.60 million as of the end of the prior fiscal year. We expect that the growth rate of our cellular subscriptions will decelerate in the future as the growth of the Japanese market slows due to maturity. As of March 31, 2010, the number of FOMA subscriptions reached 53.20 million, which equaled 94.9% of our total cellular subscriptions, posting an increase of 4.16 million, or 8.5%, compared to 49.04 million as of March 31, 2009. On the other hand, the number of mova subscriptions has decreased constantly since the fiscal year ended March 31, 2004, as a result of our efforts to migrate subscribers to the FOMA network. As of March 31, 2010, the total number


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of mova subscriptions was 2.88 million, decreasing by 2.68 million, or 48.2%, from 5.56 million as of the end of the prior fiscal year. We decided to terminate mova service on March 31, 2012, in order to concentrate our managerial resources on FOMA service. Our subscriber market share as of March 31, 2010 dropped by 0.8 points from 50.8% as of the

end of the prior fiscal year to 50.0%. The number of i-mode subscriptions reached 48.99 million as of March 31, 2010, recording an increase of 0.52 million or 1.1% from 48.47 million as of March 31, 2009.

Aggregate ARPU for cellular (FOMA+mova) service for the fiscal year ended March 31, 2010 dropped to ¥5,350, down ¥360 or 6.3%, compared to ¥5,710 for the prior fiscal year. Voice ARPU decreased by ¥430 or 12.9% to ¥2,900, compared to ¥3,330 for the prior fiscal year. The primary factorfactors behind this decline waswere the significant increase in the number of users subscribing to the “Value Plan” and decline in billable MOU. Packet ARPU, on the other hand, grew to ¥2,450, recording an increase of ¥70 or 2.9% from ¥2,380 for the prior fiscal year. The main reasons for the increase in packet ARPU include the growth in the number of users subscribing to flat-rate packet plans for unlimited i-mode access, and the widespread adoption of “i-channel” and other services designed to boost i-mode usage. The MOU (FOMA+mova) decreased by 1 minute or 0.7% to 136 minutes compared to 137 minutes for the prior fiscal year. The billable MOU, in particular, decreased from 124 minutes for the prior fiscal year to 118 minutes, posting a decline of 6 minutes or 4.8%, due mainly to the expansion of free communications allowances.

Our cellular churn rate was 0.46% and 0.50% for the fiscal years ended March 31, 2010 and March 31, 2009, respectively. The churn rate for the fiscal year ended March 31, 2010 dropped by 0.04 points to a record low, owing to our efforts to promote the adoption of new handset sales methods and customer satisfaction improvement initiatives. We have successfully maintained our churn rate lower compared to that of other carriers in Japan, which we believe was attained as a result of various factors, including among other things, introduction of competitive billing plans and gaining the confidence of customers in our network and services. However, no assurance can be given that we can maintain the churn rate at the current level or achieve a further reduction.

During the fiscal year ended March 31, 2010, we strived to expand subscribers’ packet usage through the expansion and enrichment of our video content services and other measures, and also accelerated the personalization of services with the launch of an upgraded behavior support service compatible with the Auto-GPS locating capability. In addition, we have taken various steps aimed at enhancing customer satisfaction, including the enrichment of our handset lineup, billing plans and after-sales support.

Our operating revenues for the fiscal year ended March 31, 2010, were ¥4,284.4 billion, posting a decline of ¥163.6 billion or 3.7% from ¥4,448.0 billion for the prior fiscal year. Wireless services revenues were ¥3,776.9 billion, decreasing by ¥64.2 billion or 1.7% compared to ¥3,841.1 billion for the prior fiscal year. The contribution of wireless services revenues to our total operating revenues for the fiscal year ended March 31, 2010 increased to 88.2% from 86.4% for the prior fiscal year. Theyear-on-year decrease in wireless services revenues was primarily attributable to the drop of cellular services revenues, particularly voice revenues. The decline in cellular services revenues was the net result of the decrease in voice revenues (which dropped by ¥239.1 billion or 11.1% to ¥1,910.5 billion from ¥2,149.6 billion for the prior fiscal year) and the increase in packet revenues (which grew by ¥77.3 billion or 5.1% from ¥1,511.7 billion in the prior fiscal year to ¥1,589.0 billion). An analysis on the reasons for the decline in voice revenues and increase in packet revenues is provided in the section explaining the changes in ARPU. Of the cellular services revenues, the revenues generated by FOMA voice services decreased by ¥92.3 billion or 4.9% from ¥1,877.8 billion for the prior fiscal year to ¥1,785.5 billion for the fiscal year ended March 31, 2010. On the other hand, the revenues generated by FOMA packet services increased to ¥1,558.3 billion, up ¥108.8 billion or 7.5%, from ¥1,449.4 billion for the prior fiscal year. Equipment sales revenues decreased by ¥99.4 billion or 16.4% to ¥507.5 billion for the year ended March 31, 2010 from ¥606.9 billion for the prior fiscal year, because our handset sales were negatively affected by the sluggish economic conditions and othersother factors.

Operating expenses decreased by ¥166.9 billion or 4.6% from ¥3,617.0 billion for the prior fiscal year to ¥3,450.2 billion for the fiscal year ended March 31, 2010. This was mainly attributable to (i) a decrease in cost of equipment sold, which dropped by ¥129.4 billion or 15.6% to ¥698.5 billion from ¥827.9 billion for the prior fiscal year, as a result of a decrease in the total number of handsets sold and the reduction in the handset procurement cost per unit, and (ii) a decrease in depreciation and amortization, which declined by ¥103.0 billion

or 12.8% from ¥804.2 billion (inclusive of accelerated depreciation charges of mova-related assets) for the prior fiscal year to


63


¥701.1 ¥701.1 billion for the fiscal year ended March 31, 2010. On the other hand, due to the increase in customer service-related expenses, cost of services increased by ¥28.2 billion or 3.2% from ¥872.4 billion for the prior fiscal year to ¥900.6 billion for the fiscal year ended March 31, 2010, while selling, general and administrative expenses grew to ¥1,149.9 billion, up ¥37.3 billion or 3.4%, compared to ¥1,112.6 billion for the prior fiscal year.

As a result of the foregoing, operating income for the fiscal year ended March 31, 2010 increased by ¥3.3 billion or 0.4%, from ¥831.0 billion for the prior fiscal year to ¥834.2 billion. Accordingly, the operating income margin improved from 18.7% for the prior fiscal year to 19.5%. The growth of operating income, despite a decrease in operating revenues, contributed to this improvement, which was attained by making up for the decline in operating revenues resulting mainly from the reduction of voice revenues by a reduction of network-related costs and other operating expenses, and performance improvements in miscellaneous businesses segment.

Other income (expense) includes items such as interest income, interest expense, gains and losses on sale of marketable“Marketable securities and other investmentsinvestments” and foreign exchange gains and losses. We accounted for ¥1.9 billion as other income for the fiscal year ended March 31, 2010, achieving an improvement of ¥52.4 billion compared to the prior fiscal year, during which we recorded other expenses of ¥50.5 billion. This is because we recorded only minimal other-than-temporary impairment charges for marketable“Marketable securities and other investmentinvestments” in the fiscal year ended March 31, 2010, while we recognized other-than-temporary impairment charges of ¥57.8 billion in the prior fiscal year ended March 31, 2009. The other-than-temporary impairment charges recognized in the prior fiscal year included an impairment of ¥26.3 billion, which resulted mainly from foreign currency fluctuation, for the common shares of KT Freetel Co., Ltd. (KTF) based on its fair market value as of March 31, 2009 in connection with the merger of KTF and KT Corporation (KT) in June 2009, under which KTF shares would be exchanged for KT common shares and KT exchangeable bonds.

Income before income taxes and equity in net income (losses) of affiliates increased by ¥55.7 billion or 7.1% to ¥836.2 billion for the fiscal year ended March 31, 2010, from ¥780.5 billion for the prior fiscal year.

Income taxes were ¥338.2 billion for the year ended March 31, 2010, and ¥308.4 billion for the year ended March 31, 2009, representing effective income tax rate of approximately 40.4% and 39.5%, respectively. We are subject to income taxes imposed by various taxing authorities in Japan, including corporate income tax, corporate enterprise tax, corporate inhabitant income taxes and special local corporation tax, which in the aggregate amounted to a statutory income tax rate of 40.8% for both fiscal years ended March 31, 2010 and March 31, 2009. The Japanese government introduced various special tax benefits, one of which enabled us to deduct from our taxable income a portion of investments in research and development (“R&D investment tax incentive”). The difference between our effective tax rate and statutory income tax rate for the years ended March 31, 2010 and 2009 arose primarily from such special tax allowances. In addition, for the year ended March 31, 2009, there was a tax refund of interests and penalties previously paid, which lowered the effective income tax rate for the year ended March 31, 2009.

For equity in net losses of affiliates (net of applicable taxes), we incurredrecognized our equity in the net losses of our affiliates of ¥0.9 billion for the fiscal year ended March 31, 2010 and ¥0.7 billion for the fiscal year ended March 31, 2009.

As a result of the foregoing, for the fiscal year ended March 31, 2010, we recorded ¥494.8 billion in net income attributable to NTT DOCOMO, INC., posting an increase of ¥22.9 billion or 4.9% from ¥471.9 billion for the prior fiscal year.


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Operating Results for the year ended March 31, 2009
The following discussion includes analysis of our operating results for the year ended March 31, 2009. The tables below describe selected operating data and income statement data:
Key Performance Indicators
                 
  Years ended March 31 
        Increase
    
  2008  2009  (Decrease)  Change (%) 
 
Cellular
                
Subscriptions (thousands)  53,388   54,601   1,213   2.3%
FOMA services (thousands)  43,949   49,040   5,091   11.6%
mova services (thousands)  9,438   5,560   (3,878)  (41.1)%
i-mode services (thousands)  47,993   48,474   481   1.0%
Market Share(%)(1)(2)
  52.0   50.8   (1.2)   
Aggregate ARPU (FOMA+mova) (yen/month/subscription)(3)
  6,360   5,710   (650)  (10.2)%
Voice ARPU (yen/month/subscription)(4)
  4,160   3,330   (830)  (20.0)%
Packet ARPU (yen/month/subscription)  2,200   2,380   180   8.2%
MOU (FOMA+mova) (minutes/month/subscription)(3)(5)
  138   137   (1)  (0.7)%
Churn Rate(%)(2)
  0.80   0.50   (0.30)   
(1)Source for other cellular telecommunications operators: Data announced by Telecommunications Carriers Association
(2)Data calculated including Communication Module Services subscriptions.
(3)Data calculated excluding Communication Module Services-related revenues and Communication Module Services subscriptions.
(4)Inclusive of circuit switched data communications.
(5)MOU (Minutes of usage): Average communication time per month per subscription


65


Breakdown of Financial Information
                 
  Millions of yen 
  Years ended March 31 
        Increase
    
  2008  2009  (Decrease)  Change (%) 
 
Operating revenues :
                
Wireless services
 ¥4,165,234  ¥3,841,082  ¥(324,152)  (7.8)%
Cellular services revenues  4,018,988   3,661,283   (357,705)  (8.9)%
— Voice revenues(6)
  2,645,096   2,149,617   (495,479)  (18.7)%
Including: FOMA services  2,084,263   1,877,835   (206,428)  (9.9)%
— Packet communications revenues  1,373,892   1,511,666   137,774   10.0%
Including: FOMA services  1,254,648   1,449,440   194,792   15.5%
Other revenues(7)
  146,246   179,799   33,553   22.9%
                 
Equipment sales  546,593   606,898   60,305   11.0%
                 
Total operating revenues  4,711,827   4,447,980   (263,847)  (5.6)%
                 
Operating expenses
                
Cost of services  811,133   872,438   61,305   7.6%
Cost of equipment sold  1,150,261   827,856   (322,405)  (28.0)%
Depreciation and amortization  776,425   804,159   27,734   3.6%
Selling, general and administrative  1,165,696   1,112,568   (53,128)  (4.6)%
                 
Total operating expense  3,903,515   3,617,021   (286,494)  (7.3)%
                 
Operating income
  808,312   830,959   22,647   2.8%
Other income (expense)
  (7,624)  (50,486)  (42,862)  (562.2)%
                 
Income before income taxes and equity in net income (losses) of affiliates
  800,688   780,473   (20,215)  (2.5)%
Income taxes
  322,955   308,400   (14,555)  (4.5)%
                 
Income before equity in net income (losses) of affiliates
  477,733   472,073   (5,660)  (1.2)%
Equity in net income (losses) of affiliates (net of applicable taxes)  13,553   (672)  (14,225)   
                 
Net income
  491,286   471,401   (19,885)  (4.0)%
Less: Net (income) loss attributable to noncontrolling interests  (84)  472   556    
                 
Net income attributable to NTT DOCOMO, INC.
 ¥491,202  ¥471,873  ¥(19,329)  (3.9)%
                 
(6)Inclusive of circuit switched data communications.
(7)“PHS services revenues” for the year ended March 31, 2008 has been reclassified into “Other revenues.”
Analysis of operating results for the year ended March 31, 2009 and comparison with the prior fiscal year
As of March 31, 2009, the number of our cellular (FOMA+mova) subscriptions reached 54.60 million and increased by 1.21 million or 2.3% from 53.39 million at the end of the prior fiscal year. We expect that the growth rate of our cellular subscriptions will decelerate in the future as the growth rate of cellular subscriptions declines due to the maturity of the market in Japan. The number of FOMA subscriptions increased by 5.09 million or 11.6% to 49.04 million as of March 31, 2009 from 43.95 million at the end of the prior fiscal year. The ratio of FOMA subscriptions to the total cellular subscriptions reached 89.8% as of March 31, 2009. On the other hand, the number


66


of mova subscriptions, which has decreased since the year ended March 31, 2004, decreased by 3.88 million or 41.1% to 5.56 million as of March 31, 2009 from 9.44 million as of the end of the prior fiscal year. We have decided to discontinue mova services on March 31, 2012 and focus our business resources on FOMA services. Our market share decreased by 1.2 points to 50.8% as of March 31, 2009 from 52.0% as of the end of the prior fiscal year. The number of i-mode subscriptions increased by 0.48 million or 1.0% to 48.47 million as of March 31, 2009 from 47.99 million at the end of the prior fiscal year.
Aggregate ARPU of cellular (FOMA+mova) service decreased by ¥650 or 10.2% to ¥5,710 for the year ended March 31, 2009 from ¥6,360 in the prior fiscal year. Voice ARPU decreased by ¥830 or 20.0% to ¥3,330 for the year ended March 31, 2009 from ¥4,160 in the prior fiscal year. This decrease in voice ARPU was due to the large increase in the number of subscribers to “Value Plan” and new discount services introduced in the last fiscal year. Packet ARPU increased by ¥180 or 8.2% to ¥2,380 for the year ended March 31, 2009 from ¥2,200 in the prior fiscal year. This increase in packet ARPU was due to penetration of services such as “i-channel,” which promote i-mode usage and of an optional packet flat-rate service for unlimited i-mode usage, in addition to a raise in the i-mode monthly subscription fee of ¥100 per month effective from June 2008. The MOU (FOMA+mova) decreased by 1 minute or 0.7% to 137 minutes from 138 minutes in the prior fiscal year.
Our churn rate for cellular subscriptions was 0.50% and 0.80% for the years ended March 31, 2009 and 2008, respectively. The churn rate decreased by 0.30 points and was one of the lowest levels, reflecting our efforts to promote new sales methods and improve customer satisfaction. We believe that, due to various factors, such as the implementation of competitive billing arrangements, customer confidence in our network and services and the introduction of new services, our churn rate was lower than that of other operators. However, no assurance can be given that our churn rate will decline or remain low.
During the year ended March 31, 2009, in order to improve customer satisfaction, we have taken measures such as lowering basic monthly charge of “Type SS Value” billing plan, introduction of new packet flat-rate services “Pake-hodai double” and “Biz-hodai double,” enhancement of services for the loyalty membership program “docomo Premier Club,” rollout of newly organized handset series, expansion of FOMA high speed areas (achieved 100% POP coverage) andon-site visits and investigations in response to customers’ claims for network area quality, normally within 48 hours of contacts from our investigation staffs.
Operating revenues decreased by ¥263.8 billion or 5.6% to ¥4,448.0 billion for the year ended March 31, 2009 from ¥4,711.8 billion in the prior fiscal year. Wireless services revenues decreased by ¥324.2 billion or 7.8% to ¥3,841.1 billion from ¥4,165.2 billion in the prior fiscal year. As a result, wireless services accounted for 86.4% of operating revenues for the year ended March 31, 2009, decreasing from 88.4% in the prior fiscal year. The decrease in wireless services revenues resulted from a decrease in cellular services revenues, especially voice revenues. The decrease in cellular services revenues was a net of a decrease in voice revenues by ¥495.5 billion or 18.7% to ¥2,149.6 billion from ¥2,645.1 billion in the prior fiscal year, and an increase in packet communications revenues by ¥137.8 billion or 10.0% to ¥1,511.7 billion from ¥1,373.9 billion in the prior fiscal year. The factors for the decrease in cellular services revenues and the increase in packet communications revenues were already discussed in the analysis of changes in ARPU. Voice revenues from FOMA services decreased by ¥206.4 billion or 9.9% to ¥1,877.8 billion from ¥2,084.3 billion in the prior fiscal year, while packet communications revenues increased by ¥194.8 billion or 15.5% to ¥1,449.4 billion from ¥1,254.6 billion in the prior fiscal year. Equipment sales increased by ¥60.3 billion or 11.0% to ¥606.9 billion for the year ended March 31, 2009 from ¥546.6 billion in the prior fiscal year because of a decrease in sales commissions to be deducted from gross equipment sales due to the introduction of “Value Course.”
Operating expenses decreased by ¥286.5 billion or 7.3% to ¥3,617.0 billion for the year ended March 31, 2009 from ¥3,903.5 billion in the prior fiscal year. This decrease resulted mainly from a decrease in cost of equipment sold by ¥322.4 billion or 28.0% to ¥827.9 billion for the year ended March 31, 2009 from ¥1,150.3 billion in the prior fiscal year and in selling, general and administrative expenses, by ¥53.1 billion or 4.6% to ¥1,112.6 billion for the year ended March 31, 2009 from ¥1,165.7 billion for the prior fiscal year, due to the decrease in sales commissions through the penetration of “Value Course.” Cost of services increased by ¥61.3 billion or 7.6% to ¥872.4 billion for the year ended March 31, 2009 from ¥811.1 billion in the prior fiscal year due to an increase in customer service related costs. Depreciation and amortization increased by ¥27.7 billion or 3.6% to ¥804.2 billion


67


for the year ended March 31, 2009 from ¥776.4 billion in the prior fiscal year, due to the effect of accelerated depreciation charges of mova-related assets through the changes in estimated useful lives of such assets based on our decision to discontinue mova services on March 31, 2012.
The operating income margin improved to 18.7% for the year ended March 31, 2009 from 17.2% for the prior fiscal year. The decrease in cost of equipment sold due to the decrease in the number of handsets sold and the decrease in selling, general and administrative expenses contributed to this improvement.
As a result of the foregoing, our operating income increased by ¥22.6 billion or 2.8% to ¥831.0 billion for the year ended March 31, 2009 from ¥808.3 billion for the prior fiscal year.
Other income (or expense) includes items such as interest income, interest expense, gains and losses on sale of marketable securities and other investments and foreign exchange gains and losses. We accounted for ¥50.5 billion as other expenses for the year ended March 31, 2009 as we recorded other than temporary impairment charges for marketable securities and other investments of ¥57.8 billion. Other expenses increased by ¥42.9 billion from ¥7.6 billion for the year ended March 31, 2008. For the year ended March 31, 2009, other than temporary impairment charges included an impairment of ¥26.3 billion for KTF common shares based on its fair value as of March 31, 2009 in connection with the merger between KTF and KT in June 2009, under which KTF shares would be exchanged for KT common shares and KT exchangeable bonds.
Income before income taxes and equity in net income (losses) of affiliates decreased by ¥20.2 billion or 2.5% to ¥780.5 billion for the year ended March 31, 2009 from ¥800.7 billion for the prior fiscal year.
Income taxes were ¥308.4 billion for the year ended March 31, 2009 and ¥323.0 billion in the prior fiscal year, representing effective income tax rates of approximately 39.5% and 40.3%, respectively. We are subject to income taxes imposed by various taxing authorities in Japan, including corporate income tax, corporate enterprise tax and corporate inhabitant income taxes, which in the aggregate amounted to a statutory income tax rate of approximately 40.8% and 40.9% for the years ended March 31, 2009 and 2008, respectively. The Japanese government introduced various special tax benefits, one of which enabled us to deduct from our taxable income a portion of investments in research and development (“R&D investment tax incentive”). The difference between our effective income tax rate and statutory income tax rate for the year ended March 31, 2009 and 2008 arose primarily from such special tax allowances. In addition, for the year ended March 31, 2009, there was a tax refund of interests and penalties previously paid, which lowered the effective income tax rate for the year ended March 31, 2009.
Equity in net losses of affiliates (net of applicable taxes) was ¥0.7 billion for the year ended March 31, 2009 compared to net income of ¥13.6 billion for the prior fiscal year. The decrease resulted from the adjustment to reflect the earnings impact of purchase price allocations in Philippine Long Distance Telephone Company, a telecommunications operator in the Philippines (“PLDT”).
We acquired common equity interest of PLDT in March 2006 and during the period between March 2007 and February 2008, and started to apply the equity method in the prior fiscal year. In applying the equity method, we started the evaluation of purchase price allocations in order to recognize and account for our share of tangible, intangible and other assets and liabilities of PLDT. For the fiscal year ended March 31, 2009, upon the completion of the evaluation, depreciation and amortization expenses of corresponding tangible and intangible assets from the date of the initial acquisition were included as a reduction of equity in net income (losses) of affiliates.
As a result of the foregoing, we recorded net income attributable to NTT DOCOMO, INC. of ¥471.9 billion for the year ended March 31, 2009, a decrease of ¥19.3 billion or 3.9% from ¥491.2 billion for the prior fiscal year.
Segment Information

General

Our business consists of two reportable segments: mobile phone business and miscellaneous businesses. Our management monitors and evaluates the performance of our segments based on the information that follows, as derived from our management reports.


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The mobile phone business segment includes Xi services, FOMA services, mova services, packet communications services, satellite mobile communications services, international services and the equipment sales related to these services. The miscellaneous businesses segment includes home shopping services, high-speed internet connection services for hotel facilities, advertisement services, development, sales and maintenance of IT systems, credit services, multimedia broadcasting services and other miscellaneous services, which in the aggregate are not significant in amount.
PHS business, which had been previously identified as a reportable segment, was terminated in January 2008 and reclassified into miscellaneous businesses segment.

Mobile phone business segment

For the year ended March 31, 2010,2011, operating revenues from our mobile phone business segment decreased by ¥213.6¥77.0 billion or 4.9%1.8% to ¥4,167.7¥4,090.7 billion from ¥4,381.3¥4,167.7 billion in the prior fiscal year. Cellular services revenues, which are revenues from voice and packet communications of mobile phone services, decreased by ¥161.8¥92.3 billion or 4.4%2.6% to ¥3,499.5¥3,407.1 billion for the year ended March 31, 20102011 from ¥3,661.3¥3,499.5 billion in the prior fiscal year. Equipment sales revenues decreased for the year ended March 31, 20102011 decreased from the prior fiscal year due to a reduction in the decrease in number of handsets sold to agent resellers.wholesale price per unit. Revenues from our mobile phone business segment represented 97.3%96.8% and 98.5%97.3% of total operating revenues for the years ended March 31, 20102011 and 2009,2010, respectively. Operating expenses in our mobile phone business segment decreased by ¥203.9¥88.1 billion or 5.8%2.7% to ¥3,322.1¥3,233.9 billion from ¥3,526.0¥3,322.1 billion in the prior fiscal year. As a result, operating income from our mobile phone business segment decreasedincreased by ¥9.6¥11.1 billion or 1.1%1.3% to ¥845.6¥856.7 billion from ¥855.3compared to ¥845.6 billion in the prior fiscal year. Analysis of the changes in revenues and expenses of our mobile phone business segment is also presented in “Operating Trends” and “Operating Results for the year ended March 31, 2010,2011,” which were discussed above.

Miscellaneous businesses segment

Operating revenues from our miscellaneous businesses increased by ¥50.0¥16.9 billion or 74.9%14.5% from ¥66.7¥116.7 billion in the prior fiscal year to ¥116.7¥133.6 billion for the year ended March 31, 2010,2011, which represented 2.7%3.2% of total operating revenues. Operating expenses from our miscellaneous businesses increased by ¥37.0¥17.5 billion or 40.7%13.7% from ¥91.1¥128.1 billion in the prior fiscal year to ¥128.1¥145.6 billion. The increase in operating revenues and expenses resulted primarily from the acquisitionsteadfast expansion of OAK LAWN MARKETING, INC., a newly consolidated subsidiary from the current fiscal year, which provides home shopping services.business, which uses television as its main medium. As a result,we have also promoted the measures aimed for the launch and expansion of multimedia broadcasting and other new businesses, operating loss from our miscellaneous businesses for the year ended March 31, 2010, improved2011 grew to ¥11.4¥12.0 billion from ¥24.3¥11.4 billion in the prior fiscal year.

Recent Accounting Pronouncements

In October 2009, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update2009-13 “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU2009-13”). ASU2009-13 will requirerequires allocation of the overall consideration to each deliverable in an arrangement with multiple deliverables using the estimated selling price in the absence of vendor-specific objective evidence or third-party evidence of selling price for deliverables and eliminateeliminates residual method of allocation. ASU2009-13 is effective for fiscal years beginning on or after June 15, 2010. We are currently evaluatingestimate that the impact of adopting ASU2009-13 on our resultresults of operations and financial position.

position will be immaterial.

Critical Accounting Policies

The preparation of our consolidated financial statements requires our management to make estimates about expected future cash flows and other matters that affect the amounts reported in our financial statements in accordance with accounting policies established by our management. Note 2 to our consolidated financial statements includes a summary of the significant accounting policies used in the preparation of our consolidated financial statements. Certain accounting policies are particularly sensitive because of their significance to our reported results and because of the possibility that future events may differ significantly from the conditions and assumptions underlying the estimates used and judgments relating thereto made by our management in preparing

our financial statements. Our senior management has discussed the selection and development of the accounting estimates and the following disclosure regarding the critical accounting policies


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with our independent public accountants as well as our corporate auditors. The corporate auditors attend meetings of the board of directors and certain executive meetings to express their opinion and are under a statutory duty to overseeaudit the administration of our affairs by our directors and to examineaudit our financial statements. Our critical accounting policies are as follows.

Useful lives of property, plant and equipment, internal use software and other intangible assets

The values of our property, plant and equipment, such as the base stations, antennas, switching centers and transmission lines used by our cellular business, our internal-use software and our other intangible assets are recorded in our financial statements at acquisition or development cost and depreciated or amortized over their estimated useful lives. We estimate the useful lives of property, plant and equipment, internal-use software and other intangible assets in order to determine the amount of depreciation and amortization expenseexpenses to be recorded in each fiscal year. Our total depreciation and amortization expenses for the years ended March 31, 2011, 2010 and 2009 and 2008 were ¥693.1 billion, ¥701.1 billion ¥804.2 billion and ¥776.4¥804.2 billion, respectively. For the year ended March 31, 2009, depreciation and amortization expenses included the effect of accelerated depreciation charges of ¥60.1 billion for mova-related assets through the changes in estimated useful lives accompanied by our decision to discontinue mova services on March 31, 2012, while the effect of such accelerated depreciation charges was not material for the year ended March 31, 2011 and 2010. We determine the useful lives of our assets at the time the assets are acquired and base our determinations on expected usage, experience with similar assets, established laws and regulations as well as taking into account anticipated technological or other changes. The estimated useful lives of our wireless telecommunications equipment are generally set at from 8 to 16 years. The estimated useful life of our internal-use software is set at 5 years. If technological or other changes occur more rapidly or in a different form than anticipated, new laws or regulations are enacted, or the intended usage changes, the useful lives assigned to these assets may need to be shortened, resulting in recognition of additional depreciation and amortization expenses or losses in future periods.

Impairment of long-lived assets

We perform an impairment review for our long-lived assets to be held and used, including fixed assets such as our property, plant and equipment and certain identifiable intangibles such as software for telecommunications network, internal-use software and rights to use telecommunications facilities of wire line network operators, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. This analysis is separate from our analysis of the useful lives of our assets, although it is affected by some similar factors. Factors that we consider important and that can trigger an impairment review include, but are not limited to, the following trends or conditions related to the business that utilizes a particular asset:

significant decline in the market value of an asset;

loss of operating cash flow in current period;

• significant decline in the market value of an asset;
• loss of operating cash flow in current period;
• introduction of competitive technologies and services;
• significant underperformance of expected or historical cash flows;
• significant or continuing decline in subscriptions;
• changes in the manner of usage of an asset; and
• other negative industry or economic trends.

introduction of competitive technologies and services;

significant underperformance of expected or historical cash flows;

significant or continuing decline in subscriptions;

changes in the manner of usage of an asset; and

other negative industry or economic trends.

When we determine that the carrying amount of specific assets may not be recoverable based on the existence or occurrence of one or more of the above or other factors, we estimate the future cash inflows and outflows expected to be generated by the assets over their expected useful lives. We also estimate the sum of expected undiscounted future net cash flows based upon historical trends adjusted to reflect our best estimate of

future market and operating conditions. If the carrying value of the assets exceeds the sum of the expected undiscounted future net cash flows, we record an impairment loss based on the fair values of the assets. Such fair values may be based on established markets, independent appraisals and valuations or discounted cash flows. If actual market and operating conditions under which assets are used are less favorable or subscriber numbers are less than those projected by


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management, either of which results in loss of cash flows, additional impairment charges for assets not previously written-off may be required. For the year ended March 31, 2008, we recorded an impairment charges for certain long-lived assets but the impairment charges did not have a material impact on our results of operations and financial position. We did not recognize any impairment charges for the years ended March 31, 2011, 2010 and 2009.

Impairment of investments

We have made investments in certain domestic and foreign entities. These investments are accounted for under the equity method, cost method, or at fair value as appropriate based on various conditions such as ownership percentages, exercisable influence over the investments and marketability of the investments. The total carrying value for the investments“Investments in affiliatesaffiliates” was ¥578.1¥525.5 billion, while the total carrying value for investments in marketable“Marketable securities and securities accounted for under the cost methodother investments” was ¥151.0¥128.1 billion as of March 31, 2010.2011. Equity method and cost method accounting require that we assess if a decline in value or an associated event regarding any such investment has occurred and, if so, whether such decline is other than temporary. We perform a review for impairment whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable. Factors that we consider important and that can trigger an impairment review include, but are not limited to, the following:

significant or continued declines in the market values of the investee;

loss of operating cash flow in current period;

• significant or continued declines in the market values of the investee;
• loss of operating cash flow in current period;
• significant underperformance of historical cash flows of the investee;
• significant impairment losses or write-downs recorded by the investee;
• significant changes in the quoted market price of public investee affiliates;
• negative results of competitors of investee affiliates; and
• other negative industry or economic trends.

significant underperformance of historical cash flows of the investee;

significant impairment losses or write-downs recorded by the investee;

significant changes in the quoted market price of public investee affiliates;

negative results of competitors of investee affiliates; and

other negative industry or economic trends.

In performing our evaluations, we utilize various information including discounted cash flow valuations, independent valuations and, if available, quoted market values. Determination of recoverable amounts sometimes require estimates involving results of operations and financial position of the investee, changes in technology, capital expenditures, market growth and share, discount factors and terminal values.

In the event we determine as a result of such evaluations that there are other than temporary declines in value of investment below its carrying value, we record an impairment charge. Such write-down to fair value establishes a new cost basis in the carrying amount of the investment. The impairment charge of investment“Investment in affiliatesaffiliates” is included in “Equity in losses of affiliates” while the impairment charge of marketable“Marketable securities or securities under the cost methodand other investments” is reflected in “Other income (expense)” in our consolidated statements of income and comprehensive income.

For the year ended March 31, 2009, and 2008, we recorded impairment charges accompanying with other than temporary declines in the values of certain investee affiliates, but the impairment charges did not have a material impact on our results of operations and financial position. We did not recognize any impairment charges on “Investments in affiliates” for the year ended March 31, 2011 and 2010.

We also recorded impairment charges on certain investments which were classified as marketable“Marketable securities orand other investments.” The amount of impairment charges on “Marketable securities under the cost method. Forand other investments” was ¥13.4 billion, ¥4.0 billion and ¥57.8 billion for the year ended March 31, 2009, the amount of impairment charges was ¥57.8 billion. For the years ended March 31,2011, 2010 and 2008, the impairment charges did not have a material impact on our results of operations and financial position.

2009, respectively.

While we believe that the remaining carrying values of our investments are nearly equal to their fair value, circumstances in which the value of an investment is below its carrying amount or changes in the estimated realizable value can require additional impairment charges to be recognized in the future.

Accrued liabilities for point programs

We offer “docomo Points Service,” which provides benefits, including discounts on handset, to customers in exchange for points that we grant customers based on the usage of cellular and other services and record “Accrued liabilities for point programs” relating to the points that customers earn. The total amount of accrued liabilities for


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point programs recognized as short-term and long-term liabilities as of March 31, 2011 and 2010 and 2009 was ¥174.9¥199.6 billion and ¥116.7¥174.9 billion, respectively. Point program expense for the years ended March 31, 2011, 2010 and 2009 and 2008 was ¥126.8 billion, ¥142.2 billion and ¥114.7 billion, and ¥84.3 billion, respectively.

In determining the accrued liabilities for point programs, we estimate such factors as the point utilization rate reflecting the forfeitures by, among other things, cancellation of subscription. Higher-than-estimate utilization rate could result in the need for recognizing additional expenses or accrued liabilities in the future. In determining the accrued liabilities for point programs as of March 31, 2010,2011, one percent raise in point utilization rate would result in an additional accrual of approximately ¥1.4¥1.6 billion, if all the other factors are held constant.

Pension liabilities

We sponsor a non-contributory defined benefit pension plan which covers almost all of our employees. We also participate in the NTT CDBP, a contributory defined benefit welfare pension plan sponsored by NTT group.

Calculation of the amount of pension cost and liabilities for retirement allowances requires us to make various judgments and assumptions including the discount rate, expected long-term rate of return on plan assets, long-term rate of salary increases and expected remaining service lives of our plan participants. We believe that the most significant of these assumptions in the calculations are the discount rate and the expected long-term rate of return on plan assets. We determine an appropriate discount rate based on current market interest rates on high-quality, fixed-rate debt securities that are currently available and expected to be available during the period to maturity of the pension benefits. In determining the expected long-term rate of return on plan assets, we consider the current and projected asset allocations, as well as expected long-term investment returns and risks for each category of the plan assets based on analysis of historical performances. The rates are reviewed annually and we review our assumptions in a timely manner when an event occurs that would have significant influence on the rates or the investment environment changes dramatically.

The discount rates applied in determination of the projected benefit obligations as of March 31, 20102011 and 2009,2010, and expected long-term rates of return on plan assets for the years ended March 31, 20102011 and 20092010 were as follows:

     
  Years ended March 31
  2009 2010
 
Non-contributory defined benefit pension plan    
Discount rate 2.2% 2.1%
Expected long-term rate of return on plan assets 2.5% 2.5%
Actual return on plan assets Approximately (17)% Approximately 14%
NTT CDBP    
Discount rate 2.2% 2.1%
Expected long-term rate of return on plan assets 2.5% 2.5%
Actual return on plan assets Approximately (12)% Approximately 13%

   2010   2011 

Non-contributory defined benefit pension plan

    

Discount rate

   2.1%     2.0%  

Expected long-term rate of return on plan assets

   2.5%     2.3%  

Actual return on plan assets

   Approximately 14%     Approximately (2)%  

NTT CDBP

    

Discount rate

   2.1%     2.0%  

Expected long-term rate of return on plan assets

   2.5%     2.5%  

Actual return on plan assets

   Approximately 13%     Approximately (2)%  

The amount of projected benefit obligations of our non-contributory defined benefit pension plan as of March 31, 2011 and March 31, 2010 and 2009 was ¥190.4¥196.1 billion and ¥186.2¥190.4 billion, respectively. The amount of

projected benefit obligations of the NTT CDBP as of March 31, 20102011 and 2009,March 31, 2010, based on actuarial computations which covered only DOCOMO employees’ participation, was ¥88.7¥96.4 billion and ¥83.5¥88.7 billion, respectively. The amount is subject to a substantial change due to differences in actual performance or changes in assumptions. In conjunction with the differences between estimates and the actual benefit obligations, net losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized from “Accumulated other comprehensive income (loss)” over the expected average remaining service life of employees in accordance with U.S. GAAP.


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The following table shows the sensitivity of our non-contributory defined benefit pension plan and the NTT CDBP as of March 31, 20102011 to the change in the discount rate or the expected long-term rate of return on plan assets, while holding other assumptions constant.

Billions of yen

Change in Assumptions

Change in projected
benefit obligation
Change in pension
cost, before
applicable taxes
Accumulated other
comprehensive
income (loss), net
of applicable taxes

Non-contributory defined benefit pension plan

0.5% increase/decrease in discount rate

(11.8) / 12.6     
Billions of yen
Change in
0.4 / (0.3)
     Accumulated other
projected
Change in pension
comprehensive
benefit
cost, before
income (loss), net
Change in Assumptionsobligationapplicable taxesof applicable taxes
Non-contributory defined benefit pension plan7.2 / (7.7)  
0.5% increase/decrease in discount rate(11.5)/12.20.3/(0.3)7.0/(7.4)

0.5% increase/decrease in expected long-term rate of return on plan assets

   (0.4)/0.3 
NTT CDBP(0.4) / 0.3       

NTT CDBP

0.5% increase/decrease in discount rate

  (8.8)(9.6) /9.9 10.7  0.1/(0.0) 5.3/(5.9)0.1 / (0.1)5.8 / (6.4)

0.5% increase/decrease in expected long-term rate of return on plan assets

   (0.3)/0.3 

Please also refer to Note 15 “Employees’ retirement benefits” to our consolidated financial statements for further discussion.

Revenue recognition

We defer upfront activation fees and recognize them as revenues over the expected term of a subscription. Related direct cost to the extent of the activation fee amount are also being deferred and amortized over the same period. The reported amounts of revenue and cost of services are affected by the level of activation fees, related direct cost and the estimated length of the subscription period over which such fees and cost are amortized. Factors that affect our estimate of the subscription period over which such fees and cost are amortized include subscriber churn rate and newly introduced or anticipated competitive products, services and technology. The current amortization periods are based on an analysis of historical trends and our experiences. For the years ended March 31, 2011, 2010 2009 and 2008,2009, we recognized as revenues deferred activation fees of ¥14.6 billion, ¥18.4 billion ¥29.0 billion and ¥38.2¥29.0 billion, respectively, as well as corresponding amounts of related deferred cost. As of March 31, 2010,2011, remaining unrecognized deferred activation fees were ¥83.7 billion.

B.    LiquidityLiquidity and Capital Resources

Cash Requirements

Our cash requirements for the year ending March 31, 20112012 include cash needed to pay to the agent resellers to provide funds under the installment payment scheme, to expand our FOMA infrastructure,network, to invest in other facilities, to make repayments for interest bearing liabilities and other contractual obligations and to pay for strategic investments, acquisitions, joint ventures or other investments.investments aimed for capturing business opportunities. We believe that cash generated from our operating activities, future borrowings from banks and other financial institutions or future offerings of debt or equity securities in the capital markets will provide sufficient financial resources to meet our currently anticipated capital and other expenditure requirements and to satisfy our debt

service requirements. We believe we have enough financing ability supported by our high creditworthiness resulting from our stable financial performance and strong financial standing. Also, our management is of the opinion that the working capital is sufficient for our present requirements. When we determine the necessity for external financing, we take into consideration the amount of cash demand, timing of payments, available reserves of cash and cash equivalents and expected cash flows from operations. If we determine that demand for cash exceeds the amount of available reserves of cash and cash equivalents and expected cash flows from operations, we plan on obtaining external financing through borrowing or the issuance of debt or equity securities. Additional debt, equity or other financing may be required if we underestimate our capital or other expenditure requirements, or overestimate our future cash flows. There can be no assurance that such external financing will be available on commercially acceptable terms or in a timely manner.


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Capital Expenditures

The wireless telecommunications industry in general is highly capital intensive because significant capital expenditures are required for the construction of the wireless telecommunications network. Our capital requirements for our networks are determined by the nature of facility or equipment, the timing of its installment, the nature and the area of coverage desired, the number of subscribers served in the area and the expected volume of traffic. They are also influenced by the number of cells required in the service area, the number of radio channels in the cell and the switching equipment required. Capital expenditures are also required for information technology and servers for Internet-relatedinternet-related services.

In recent years, the usage of data communications services has expanded remarkably as a result of a rapid surge in the use of smartphones and other factors. We intend to accommodate the projected growth in data communications traffic through the combination of a number of measures, including capacity expansion of our existing FOMA network, coverage expansion of Xi services, application of traffic control against excessive network use, and data offloading through the use of Wi-Fi and other technologies.

Our capital expenditures for the fiscal year ended March 31, 2010,2011 recorded a decrease of ¥18.0 billion or 2.6% compared to the prior fiscal year. This was achieved by reducing the capital expenditures related to the construction of the FOMA network, which have continued to decline since the fiscal year as a result of our efforts to improveended March 31, 2007, and by employing various measures for improving the efficiency of capital investments and cut costs through such measures as the reduction of procurement costs, introduction of economical equipment and devising efficient designs and construction efforts, while working toprocesses, which more than offset factors that caused an increase in the amount of investments, such as further improve the coverage and quality enhancement of FOMA services and reinforcing our facilitiesareas, capacity buildup in response to accommodate the growth in data traffic.communications traffic and roll-out of Xi network. Moving ahead with the conversion intoto an IP-based network, we facilitated the integration and capacity enhancement of our network equipment. These initiatives enabled us to construct our service areas and improve the efficiency of quality enhancement activities by choosing from various different options the optimal equipment for each site taking into consideration the surrounding environmental conditions, traffic volume and other factors. During the fiscal year ended March 31, 2010,2011, we added approximately 7,2007,100 outdoor base stations to our FOMA network, growing the cumulative number of FOMA outdoor base stations to approximately 55,700.62,800. The cumulative number of facilities where we installed our indoor systemsbase stations grew to approximately 24,700,29,200, as we completed the installation in 4,800 facilities4,400 base stations during the fiscal year ended March 31, 2010.

2011. As for Xi service, which was launched during the fiscal year ended March 31, 2011, we completed the installation of 700 outdoor and 300 indoor base stations.

Total capital expenditures for the years ended March 31, 2011, 2010 and 2009 and 2008 were ¥668.5 billion, ¥686.5 billion ¥737.6 billion and ¥758.7¥737.6 billion, respectively. For the year ended March 31, 2010, 66.1%2011, 56.7% of capital expenditures were used for construction of the FOMA network, 1.1%3.9% for construction of the second generation movaXi network, 13.9%17.3% for the installation of servers and other cellular facilities and equipment and 18.9%22.1% for general capital expenditures such as an internal IT system. By comparison, in the prior fiscal year, 66.4%66.1% of capital expenditures were used for construction of the FOMA network, 1.5%1.1% for the mova network, 13.6%13.9% for other cellular facilities and equipment, and 18.5%18.9% for general capital expenditures.

For the year ending March 31, 2011,2012, we expect total capital expenditures to be ¥675.0¥705.0 billion, of which approximately 55.6%47.0% will be appropriated for the FOMA network, 5.2%11.2% for LTE networks, 15.5%the Xi network, 18.0% for servers and other cellular facilities and equipment and 23.7%23.8% for general capital expenditures. We intendIn the fiscal year ending March 31, 2012, we plan to promotebuild up the FOMA network facilities and expand Xi service areas on a continual basis to accommodate the projected growth in data traffic, while pursuing efficiency enhancement of facilities forby further quality improvement of FOMA service area, while promoting efficiency efforts of capital expenditures such as further advancement ofaccelerating the IP conversion of networks.

We currently expect thatour voice network. The estimated total annual capital expenditures for the nextfiscal year ending March 31, 2012 include the investments required for the replacement of facilities damaged by the Great East Japan Earthquake and new disaster preparedness measures of approximately ¥30.0 billion. Experiencing the earthquake, we have been currently reviewing the structure of our business facilities to construct a system to counter natural disasters. In response to the review, our management may take measures that require us to make additional capital expenditures.

According to our current estimates, the total annual capital expenditures for the fiscal year ending March 31, 2013 and the subsequent few fiscal years will likely be still on a declining trend despite our planned expendituresmaintained below ¥700.0 billion. Although we are projecting an increase in investments arising from the expansion of the Xi service areas and the launch of new services and businesses such as multimedia broadcasting service for mobile devices, because the rollout of LTE services in fiscal year ending March 2011, primarily becauseFOMA-related capital expenditures related to expanding, maintaining and upgrading ourhave already peaked, we will pursue efficient capital expenditures by rolling out the Xi service areas economically in view of actual demand while sharing common facilities with the FOMA network already peaked inand continuing other endeavors aimed for enhancing the fiscal year ended March 31, 2007, resulting in an expected decrease in total amountefficiency of capital expenditures.

our investments.

Our actual level of capital expenditures may vary significantly from expected levels for a number of reasons. Capital expenditures for expansion and enhancement of our existing cellular network may be influenced by the growth in subscriptions and traffic, which is difficult to predict with certainty, the ability to identify and procure suitably located base station sites on commercially reasonable terms, competitive environments in particular regions and other factors. The nature, scale and timing of capital expenditures to reinforce our 3G network may be materially different from our current plans due to demand for the services, delays in the construction of the network or in the introduction of services and changes in the variable cost of components for the network. We expect that these capital expenditures will be affected by market demand for our mobile multimedia services, including i-mode and other data transmissioncommunications services, and by our schedule for ongoing expansionthe state of theour existing network expansion efforts that are being continued to meet demand.


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satisfy these communication demands.


Long-term Debt and other Contractual Obligations

As of March 31, 2010,2011, we had ¥610.3¥428.1 billion in outstanding long-term debt including the current portion, primarily in corporate bonds and loans from financial institutions, compared to ¥639.2¥610.3 billion as of the end of the prior fiscal year. We issued domestic straight bonds in the aggregate amount of ¥239.9 billion in the year ended March 31, 2009 for the purpose of capital expenditures and refinancing of existing long-term debt. We did not implement any long-term financing in the years ended March 31, 20102011 or 2008.2010. We repaid ¥180.1 billion, ¥29.0 billion ¥77.1 billion and ¥131.0¥77.1 billion of long-term debt, in the years ended March 31, 2011, 2010 and 2009, and 2008, respectively.

Of our long-term debt outstanding as of March 31, 2010, ¥38.22011, ¥21.1 billion, including the current portion, was indebtedness to financial institutions, majority of which has fixed interest rate and itsrates, with a weighted average interest rate wasof 1.4% per annum. The term of maturities was from the year ending March 31, 20112012 through 2013. As of March 31, 2010,2011, we also had ¥572.1¥407.0 billion, including the current portion, in bonds due from the year ending March 31, 20112012 to 2019 with a weighted average coupon rate of 1.5%1.2% per annum. For information about our debt servicing schedule, see also Item 11, “Quantitative and Qualitative Disclosures about Market Risk.”

As of March 31, 2010,2011, we and our long-term debt obligations were rated by rating agencies as shown in the table below. Such ratings were issued by the rating agencies upon our requests. On May 18, 2009, Moody’s changed the outlook for our long-term obligation rating from “stable” to “negative.” On May 13, 2011, Moody’s announced that it placed Aa1 long-term obligation ratings on us under review for possible downgrade. Credit ratings reflect rating agencies’ current opinions about our financial capability of meeting payment obligations of

our debt in accordance with their terms. Rating agencies are able to upgrade, downgrade, reserve or withdraw their credit ratings on us anytime at their discretions. The rating is not a market rating or recommendation to buy, hold or sell our shares or any financial obligations of us.

Rating agencies

  

Type of rating

  Rating  Outlook
Rating agenciesType of ratingRatingOutlook

Moody’s

  Long-Term Obligation Rating  Aa1  Negative

Standard & Poor’s

  Long-Term Issuer Credit Rating  AA  Stable

Standard & Poor’s

  Long-Term Issue Credit Rating  AA  

Japan Credit Rating Agency, Ltd.

  Long-Term Senior Debt Rating  AAA  Stable

Rating and Investment Information, Inc. Inc

  Issuer Rating  AA+  Stable

None of our debt obligations include a clause in which a downgrade of our credit rating could lead to a change in a payment term of such an obligation so as to accelerate its maturity.

The following table summarizes our long-term debt, interest payments on long-term debt, lease obligations and other contractual obligations (including current portion) over the next several years.

As most of our long-term debt bears interest at fixed-rate, we use interest rate swap transactions, under which we receive fixed rate interest payments and pay floating rate interest payments, to hedge the changes in fair value of certain debt as a part of our asset-liability management (“ALM”).

Long-Term Debt, Lease Obligations and other Contractual Obligations

                     
     Millions of yen 
     Payments Due by Period 
     1 year
  1-3
  3-5
  After
 
Category of Obligations Total  or less  years  years  5 years 
 
Long-Term Debt                    
Bonds  ¥ 572,097   ¥ 163,630   ¥ 228,467   ¥ 70,000   ¥ 110,000 
Loans  38,172   17,086   21,086       
Interest Payments on Long-Term Debt  28,066   7,196   8,443   5,080   7,347 
Capital Leases  7,621   3,098   3,381   1,076   66 
Operating Leases  21,632   2,958   4,272   3,012   11,390 
Other Contractual Obligations  123,644   123,311   333       
                     
Total  ¥ 791,232   ¥ 317,279   ¥ 265,982   ¥ 79,168   ¥ 128,803 

        Millions of yen 
        Payments Due by Period 

Category of Obligations

  Total   1 year or less   1-3 years   3-5 years   After 5 years 

Long-Term Debt

          

Bonds

  ¥  407,032    ¥  167,032    ¥  130,000    ¥    ¥  110,000  

Loans

   21,070     6,070     15,000            

Interest Payments on Long-Term Debt

   20,725     4,606     6,673       4,198     5,248  

Capital Leases

   8,804     4,355     3,475     937     37  

Operating Leases

   20,047     2,874     3,924     3,234     10,015  

Other Contractual Obligations

   74,834     73,101     1,733            
                         

Total

  ¥552,512    ¥258,038    ¥160,805    ¥8,369    ¥125,300  

*The amount of contractual obligations which is immaterial in amount is not included in “Other Contractual Obligations” in the above table.


75


“Other contractual obligations” principally consisted of commitments to purchase property and equipment for our cellular network, commitments to purchase inventories, mainly handsets, and commitments to purchase services. As of March 31, 2010,2011, we had committed ¥26.7¥28.9 billion for property, plant and equipment, ¥50.4¥23.8 billion for inventories and ¥46.6¥22.1 billion for other purchase commitments.

In addition to our existing commitments, we expect to make significant capital expenditures on an ongoing basis for our FOMA network, LTE rolloutand Xi networks and for other purposes. Also, we consider potential opportunities for entry to new areas of business, merger and acquisitions, establishment of joint ventures, strategic investments or other arrangements primarily in wireless communications businesses from time to time. Currently, we have no contingent liabilities related to litigation or guarantees that could have a materially adverse effect on our financial position.

Sources of Cash

The following table sets forth certain information about our cash flows during the years ended March 31, 2011, 2010 2009 and 2008:

             
  Millions of yen 
  Years ended March 31 
  2008  2009  2010 
 
Net cash provided by operating activities ¥1,560,140  ¥1,173,677  ¥1,182,818 
Net cash used in investing activities  (758,849)  (1,030,983)  (1,163,926)
Net cash used in financing activities  (497,475)  (182,441)  (260,945)
             
Net increase (decrease) in cash and cash equivalents  303,843   (47,357)  (241,833)
Cash and cash equivalents at beginning of year  343,062   646,905   599,548 
             
Cash and cash equivalents at end of year ¥646,905  ¥599,548  ¥357,715 
             
2009:

    Millions of yen 
    Years ended March 31 
    2009  2010  2011 

Net cash provided by operating activities

  ¥    1,173,677   ¥    1,182,818   ¥    1,287,037  

Net cash used in investing activities

   (1,030,983  (1,163,926  (455,370

Net cash used in financing activities

   (182,441  (260,945  (421,969
             

Net increase (decrease) in cash and cash equivalents

   (47,357  (241,833  407,836  

Cash and cash equivalents at beginning of year

   646,905    599,548    357,715  
             

Cash and cash equivalents at end of year

  ¥599,548   ¥357,715   ¥765,551  
             

Analysis of cash flows for the year ended March 31, 2011 and comparison with the prior fiscal year

For the year ended March 31, 2011, net cash provided by operating activities was ¥1,287.0 billion, an increase of ¥104.2 billion or 8.8% from the prior fiscal year, mainly due to an increase in cash inflow resulting from a decrease of fund-provision in relation to installment receivables for subscribers’ handset purchases, and due to a decrease in the payment of income taxes.

Net cash used in investing activities was ¥455.4 billion, a decrease of ¥708.6 billion or 60.9% from the prior fiscal year. This was mainly due to an increase of proceeds from redemption of short-term investments, an increase of proceeds from redemption of short-term bailment for consumption to a related party and a decrease in purchases of non-current assets, which were partially offset by an increase in purchases of short-term investments of more than three months for cash management purpose.

Net cash used in financing activities was ¥422.0 billion, an increase of ¥161.0 billion or 61.7% from the prior fiscal year. This was mainly due to an increase in repayment of long-term debt and an increase in dividends paid.

The balance of cash and cash equivalents was ¥765.6 billion as of March 31, 2011, an increase of ¥407.8 billion or 114.0% from the prior fiscal year end. The balance of investments with original maturities of longer than three months, which were made to manage a part of our cash efficiently, was ¥161.0 billion as of March 31, 2011, compared to ¥403.0 billion as of March 31, 2010.

Analysis of cash flows for the year ended March 31, 2010 and comparison with the prior fiscal year

Net cash provided by operating activities for the fiscal year ended March 31, 2010 was ¥1,182.8 billion, an increase of ¥9.1 billion or 0.8% from the prior fiscal year. The increase was mainly due to an increased amount of cash collection of installment receivable for handsets from customers, which was partially offset by (1) a decrease in cash inflow due mainly to a decrease in voice ARPU and (2) an increase in cash outflow due to factors such as an increase in payment for income taxes as a result of a tax adjustment for accelerated depreciation of mova-related assets recorded in the previous year.

Net cash used in investing activities was ¥1,163.9 billion, an increase of ¥132.9 billion or 12.9% from the prior fiscal year. The increase was mainly due to an increase in purchases of short-term investments of more than three months for cash management purposes, a decrease of proceeds from redemption of long-term bailment for consumption to a related party, and an increase in short-term bailment for consumption to a related party, which were partially offset by a decrease in purchases of property, plant and equipment and non-current investments.

Net cash used in financing activities was ¥260.9 billion, an increase of ¥78.5 billion or 43.0% from the prior fiscal year. The increase was mainly due to a decrease of proceeds from long-term debt, which was partially offset by a decrease in payments to acquire treasury stock and repayment of long-term debt.

The balance of cash and cash equivalents was ¥357.7 billion as of March 31, 2010, a decrease of ¥241.8 billion or 40.3% from the prior fiscal year end. The balance of investments with original maturities of longer than three months, which were made to manage a part of our cash efficiently, was ¥403.0 billion and ¥2.4 billion as of March 31, 2010 and 2009, respectively.

Analysis of cash flows for the year ended March 31, 2009 and comparison with the prior fiscal year

Net cash provided by operating activities was ¥1,173.7 billion, a decrease of ¥386.5 billion or 24.8% from the prior fiscal year. The decrease was mainly due to an increase of ¥182.1 billion to ¥361.8 billion in the payment of income taxes (the payment of income taxes during the prior fiscal year was ¥179.7 billion due to the realization of


76


the tax deduction for the impairment of our investment in Hutchison 3G UK Holdings Limited) as well as an increase of the payment in providing funds for installment receivable for handsets.
Net cash used in investing activities was ¥1,031.0 billion, an increase of ¥272.1 billion or 35.9% from the prior fiscal year. The increase resulted mainly from an increase in acquisition of long-term investments such as equity investments and a decrease of proceeds from sales or redemption of long-term investments.
Net cash used in financing activities was ¥182.4 billion, a decrease of ¥315.0 billion or 63.3% from the prior fiscal year. The decrease resulted mainly from an increase of proceeds from long-term debt through issuances of corporate bonds and a decrease of repayment of long-term debt.
We spent ¥136.8 billion during the fiscal year ended March 31, 2009 to repurchase our own stock in the market, purchase of treasury stock at the request of dissenting shareholders who opposed the merger under which our regional subsidiaries were dissolved and merged into the Company, and purchase of fractional shares.
The balance of cash and cash equivalents was ¥599.5 billion as of March 31, 2009, a decrease of ¥47.4 billion or 7.3% from the prior fiscal year end. The balance of investments with original maturities of longer than three months, which were made to manage a part of our cash efficiently, was ¥2.4 billion and ¥52.2 billion as of March 31, 2009 and 2008, respectively.
Prospect of cash flows for the year ending March 31, 20112012

As for our sources of cash for the year ending March 31, 2011,2012, we currently expect our net cash flows from operating activities to decrease from the prior fiscal year due to a decreasean increase in voice revenues duecash outflows resulting mainly from a continued uptakethe increase in handset installment claims payable to agent resellers caused by the expanded sales of “Value Plan” and a decrease in billable MOU,handset equipments, although it is expected to be partially offset by a decrease in the payment of income taxes.

Our net cash flow used in investing activities for the year ending March 31, 2011 is expected to decreaseincrease due to factors including a decreaseprojected increase in our capital expenditures to approximately ¥675.0¥705.0 billion from ¥686.5compared to ¥668.5 billion for the fiscal year ended March 31, 2010.

C.  Research and Development
2011.

C. Research and Development

Our research and development activities include development of new products and services, development related to LTE and research on fourth-generation mobile communications systems andor LTE-Advanced, conversion into IP networks for economical network constructions.constructions and basic research aimed for driving innovation. Research and development costs are charged to expenses as incurred. We incurred ¥109.1 billion, ¥109.9 billion ¥100.8 billion and ¥100.0¥100.8 billion as research and development expenses for the years ended March 31, 2011, 2010 and 2009, respectively.

D. Prospects for Business Trends and 2008, respectively.

D.  Trend Information
Financial Performance

The mobile communication market in Japan is undergoing changes brought about by such factors as increasing rate of mobile phone penetration, diversification of customer needs, the introduction of Mobile Number Portability, and market entry by new competitors.rapid growth in smartphone adoption. Under these market conditions, with operators stepping up their efforts in such areas as reinforcement of handset lineup, provision of value-added services and introduction of less expensive billing plans, the competition among operators is expected to remain intense.

For the fiscal year ending March 31, 2011, we are projecting a decrease in operating revenues but an increase in operating income compared to the prior fiscal year. Trends

The trends in the market observed during the fiscal year ended March 31, 2010 and expected for the fiscal year ending March 31, 2011,2012, are summarized below:

Operating revenues:

Although it will be difficult to expect a significant increase in the number of new subscriptions given the rise in the penetration rate to a high level, we will aim to expand our subscription count by cultivating new demands for smartphones, PC data cards, mobile Wi-Fi routers, embedded communication modules and other devices. Also, we intend to strive to expand the customer base of our Xi service. On the other hand, we will strive to maintain our low churn rate through loyalty marketing targeted at enhancing the satisfaction of our existing users. As a result of these actions, we believe we can achieve an increase in our total cellular subscriptions during the fiscal year ending March 31, 2012. We will also facilitate the migration of mova subscribers to FOMA and Xi networks in view of the scheduled termination of mova service on March 31, 2012.

In the fiscal year ended March 31, 2011, both our aggregate cellular ARPU (Xi+FOMA+mova) and voice ARPU recorded a decline over the prior fiscal year, but packet ARPU posted year-on-year gains.

 • Our total number of cellular subscriptions is expected to increase during the fiscal year ending March 31, 2011, as we will strive to lower the churn rate through loyalty marketing targeted at enhancing the satisfaction of our existing users, because the growth of new subscriptions will likely be limited given that the cellular penetration rate has already risen to a high level. The percentage of FOMA subscriptions to our total cellular subscriptions as of March 31, 2011 is projected to reach approximately 98%, as a result of our ongoing subscriber migration efforts.


77


• In the fiscal year ended March 31, 2010, our aggregate cellular ARPU (FOMA+mova) and voice ARPU both recorded a decline over the prior fiscal year, but packet ARPU postedyear-on-year gains. This trend is likely to continue in the fiscal year ending March 31, 2011. The primary reason behind2012, but the declinepace of voice ARPU is the negative revenue impact from the expanded uptake of “Value Plan” introduced in November 2007 which offers discounts on basic monthly charges and a decrease in billable MOU. On the other hand, the main reasons for the growth of packet ARPU include the revenue growth resulting from an increase in the subscriptions to flat-rate packet billing plans, expansion of packet usage, growth in the number of users using data plans and smartphones.
• Equipment sales revenues for the fiscal year ended March 31, 2010 decreased due to the decline in the number of handsets sold to agent resellers. For the year ending March 31, 2011, because we are projecting a slight decrease in the number of handsets sold to agent resellers and a reduction in the whole sale price per unit, a continual decline from the prior fiscal year is expected.
• As a result of the foregoing, operating revenues for the fiscal year ending March 31, 2011 is expected to drop from the fiscal year ended March 31, 2010, primarily because the negative revenue impact of the decline in aggregate ARPU will likely be larger than the revenue-boosting effect expected from the growth in the total number of subscriptions.
• Selling, general and administrative expenses, network-related costs (communication network charges, depreciation and amortization costs) and other operating expenses for the fiscal year ending March 31, 2011 areis expected to decrease from the previous fiscal year dueslow as we plan to the improvement of cost efficiency to be achieved through a review on sales policies, enhancement of operational efficiency expected from the integration of nationwide common operations, and efficient facility roll-out to be achieved through the introduction of new technologies and review of design methods.step up our measures for boosting packet ARPU.

The primary reasons behind the decline in voice ARPU include the reduction of revenues resulting from the expanded uptake of “Value Plan”, a billing plan introduced in November 2007 which offers discounts on basis monthly charges, a decrease in billable MOU, and the impact of reduced interconnection fees revenue resulting from the revisions made to the calculation method of interconnection charges.

The primary reason behind the increase in packet ARPU is the growth in revenues derived from the increase in the number of smartphone and PC data card users, expansion in the subscriptions to flat-rate billing plans for packet access and other factors. We expect the total number of smartphones to be sold in the fiscal year ending March 31, 2012 will increase, compared to 2.52 million for the fiscal year ended March 31, 2011.

Equipment sales revenues for the fiscal year ended March 31, 2011 decreased due to the decline in the wholesale price per unit resulting from reduced cost of procurement. The reduction of procurement and wholesale price per unit is necessary for us to maintain and improve our competitiveness, and we expect to achieve a reduction in both procurement and wholesale price per unit in the fiscal year ending March 31, 2012. We also expect to improve the efficiency of our handset sales commissions in the fiscal year ending March 31, 2012, which is expected to result in reduced commission fees deducted from the equipment sales revenues under the U.S. GAAP. Because this revenue boosting effect of improving the efficiency of sales commissions is likely to become greater than the negative revenue impact resulting from a reduction in the wholesale price per unit, the equipment sales revenues for the fiscal year ending March 31, 2012 are projected to record an increase compared to the prior fiscal year.

“Other revenues”, which are the revenues generated by businesses other than cellular phone business, recorded an increase in the fiscal year ended March 31, 2011 as a result of actions implemented for their growth. We expect to achieve a year-on-year increase in other revenues in the fiscal year ending March 31, 2012 as well, as we plan to take actions to drive the growth of credit payment, home shopping and other businesses.

As a result of the foregoing, operating revenues for the fiscal year ending March 31, 2012 are expected to increase from the fiscal year ended March 31, 2011.

Operating Expenses:

Cost of equipment sold recorded a decrease in the fiscal year ended March 31, 2011, as we prepared a product lineup mainly comprising low-price handsets in view of the growing demands for less expensive products among our customers. Because we anticipate a similar trend to continue in the fiscal year ending March 31, 2012, cost of equipment sold is projected to decline in the fiscal year ending March 31, 2012.

Improvement of cost efficiency is expected for Selling, general and administrative expenses, network-related costs (communication network charges, depreciation and amortization costs) and other operating expenses for the fiscal year ending March 31, 2012. We aim to achieve the improvement of cost efficiency through a review on sales policies, enhancement of operational efficiency expected from the integration of nationwide common operations, and efficient facility roll-out to be achieved through the introduction of new technologies and review of design methods and other factors.

For the restoration of facilities damaged by the Great East Japan Earthquake and additional measures for enhanced disaster preparedness, we plan to incur expenses of approximately ¥20.0 billion in the fiscal year ending March 31, 2012.

As a result of the foregoing, the operating expenses for the fiscal year ending March 31, 2012 are expected to increase slightly compared to the fiscal year ended March 31, 2011.

Due to the above, we expect operating income and net income for the fiscal year ending March 31, 20112012 to increase from the fiscal year ended March 31, 2010.

2011.

The Great East Japan Earthquake that hit Japan on March 11, 2011 caused disruptions to our business activities and those of our partners such as agent resellers and equipment vendors. The possible occurrence of social infrastructure paralysis caused by such events as aftershocks, deterioration of power supply, proliferation of radioactive substance from the disaster-hit nuclear power plant, and stagnation in Japan’s overall economy may restrict our business activities and those of our partner companies, or may require us to incur additional expenses or investments that are currently unforeseen, or may disrupt the provision of our services resulting in a loss of sales opportunities, which could lead to a failure to generate the expected revenues.

In particular, concerns of power supply shortages have been mounting in the aftermath of the Great East Japan Earthquake due to damage sustained by the nuclear power plant in Fukushima, and in May 2011, the Japanese Government decided to introduce the restriction of electricity use during certain periods and times during July and September 2011, based on Article 27 of the Business Electricity Act. The restriction requests large electricity customers to reduce, in principle, 15% of the maximum power use during the periods and times of 2010 that corresponds to the restricted periods and times of 2011. Introduction of the restriction and other additional measures that restrict electricity use could have an adverse effect on our business activities in terms of the provision of services to customers, including the provision of telecommunications service or sales of mobile devices and other activities. It could also affect the production activities of our partner companies and result in an impact on our supply chain, including the supply of handset equipment for sale and network facilities, and the consumption behavior of our customers. These potential impacts are not factored in the results forecasts for the fiscal year ending March 31, 2012, as it is difficult to assess the scale of such impacts at this point.

Further information regarding trend information is contained elsewhere in this Item 5.

The discussion above includes forward-looking statements based on management’s assumptions and beliefs as to the factors set forth above, as to market and industry conditions and as to our performance under those conditions and are subject to the qualifications set forth in “Special Note Regarding Forward-looking Statements” which can be found immediately following the table of contents. Our actual results could vary significantly from these projections and could be influenced by a number of factors and uncertainties, including changes in the market and industry conditions, competition and other factors and risks as discussed in “Risk Factors” in Item 3.D. Additionally, unanticipated events and circumstances may affect our actual financial and operating results. As a result, no representation can be or is made with respect to the accuracy of the foregoing projections.

E.  Off-Balance Sheet Arrangements

E.    Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

F.  Tabular Disclosure of Contractual Obligations

F.    Tabular Disclosure of Contractual Obligations

Please refer to Item.Item 5.B.

Item 6.

Directors, Senior Management and Employees
A.  Directors and Senior Management
Item 6. Directors, Senior Management and Employees

A.    Directors and Senior Management

Directors, Corporate Executives and Corporate Auditors

Our board of directors has the ultimate responsibility for the administration of our affairs. Our Articles of Incorporation provide for a maximumspecify the number of 15 directors.directors as not more than 15. Directors are elected at a general meeting of

shareholders from among those candidates nominated by the board of directors. The candidates may also be nominated by shareholders. The normal term of office of directors is two years, although they may serve any number of


78


consecutive terms. The board of directors elects from among directors one or more representative directors, who have the authority individually to represent us. From among directors, the board of directors also elects the president and may elect a chairman and one or more senior executive vice presidents and executive vice presidents.

We have a board of corporate auditors as an organization that is independent from the board of directors. The board of corporate auditors audits execution of duties by directors and carries out accounting audits. Our Articles of Incorporation provide for not more than five corporate auditors. Under the Corporation Law (“Corporation Law”) of Japan, the board of corporate auditors is composed of all of our corporate auditors. Corporate auditors, more than half of whom must be from outside our company, are elected at a general meeting of shareholders from among those candidates nominated by the board of directors with the prior consent of our board of corporate auditors. The candidates may also be nominated by shareholders. The board of corporate auditors may, by its resolution, request that the board of directors submit to a general meeting of shareholders an item of business concerning election of corporate auditorsand/or proposed candidates of corporate auditors. The normal term of office of a corporate auditor is four years, although they may serve any number of consecutive terms. Corporate auditors are under a statutory duty to overseeaudit the administration of our affairs by our directors, to examineaudit our financial statements and business reports submitted by our directors to the general meetings of shareholders and to report to the shareholders the results of investigations regarding any actions by our directors that are unreasonable or which are in violation or breach of laws, ordinances or the Articles of Incorporation of our company. They are obliged to attend meetings of the board of directors and to express their opinions if they deem necessary, but they are not entitled to vote. The board of corporate auditors has a statutory duty to prepare and submit an audit report to the directors each year. A corporate auditor may note his or her opinion in the audit report if his or her opinion is different from the opinion expressed in the audit report. The board of corporate auditors is empowered to decide audit policy, the methods of examination of our affairs and financial position and other matters concerning the execution of the corporate auditors’ work duties.

In addition to corporate auditors, we must appoint independent public accountants who have statutory duties to examine the financial statements to be submitted by the board of directors to the general meetings of shareholders, reporting thereon to the board of corporate auditors and the directors, and examining the financial statements to be filed with the director of the Kanto Local Finance Bureau of Japan. Since our incorporation, KPMG AZSA & Co.,LLC, has acted as our independent public accountant.

We introduced an executive officer system in 2005 with the aim of clarifying the board’s managerial supervision function and further enhancing its business execution functions.

The following table sets forth our board of directors and corporate auditors as of June 24, 201023, 2011 and certain other information.

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
  Date
Current
Terms

Ends
  Initial
Appointment
Date
 

Directors:

     Initial
Name
 History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
Directors:

Ryuji Yamada(2)
(2
)

(May 5, 1948)

 President and Chief Executive Officer 

April 1973

June 2001

 April 1973

Entered NTT Public Corporation

322June 2007*
June 2001

Senior Vice President and Executive Manager of Plant Planning Department of Nippon Telegraph and Telephone West Corporation (“NTT West”)

413    

June

2012

  

  

June

2007


  June 2002 Executive Vice President and Senior Executive Manager of the Marketing and Support Solutions Headquarters of NTT West  
 
  June 2004 Representative Director and Senior Executive Vice President of Nippon Telegraph and Telephone Corporation (“NTT”)  


79


 
 
Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
 June 2007 Senior Executive Vice President and Managing Director of Corporate Marketing Division of the Company  
 
  June 2008 President and Chief Executive Officer of the Company  

Kiyoyuki Tsujimura(2)(2
)

(Jan. 11, 1950)

 

Senior Executive Vice President

President/

Responsible for Multimedia Services, Technology

 April 1975 Entered NTT Public Corporation 235June 2001*
281    
June
2012


June
2001

  June 2001 Senior Vice President and Managing Director of Global Business Department of the Company   
  June 2002 Senior Vice President and Managing Director of Corporate Strategy and Planning Department of the Company   
  June 2004 Executive Vice President and Managing Director of Corporate Strategy and Planning Department of the Company   
  June 2005 Executive Vice President and Managing Director of Products and Services Division of the Company   
  June 2008 Senior Executive Vice President and Managing Director of Products and ServiceServices Division of the Company   
  July 2008 Senior Executive Vice President and Responsible for Multimedia Services and Technology of the Company’s Division of the Company   

Masatoshi Suzuki(2) (2
)

(Oct. 30, 1951)

 

Senior Executive Vice President

President/

Responsible for Global Business, Corporate

 April 1975 Entered NTT Public Corporation 127June 2007*
174    
June
2012



June
2007



  June 2004 Senior Vice President and Managing Director of Public Relations Department of the Company   
  June 2005 

(Implementation of executive officer system)

Senior Vice President and Managing Director of Public Relations Department of the Company

   
  June 2007 Executive Vice President and Managing Director of Human Resources Management Department of the Company   
  June 2008 Senior Executive Vice President and Managing Director of Global Business Division of the Company   

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
  Date
Current
Terms

Ends
  July 2008Initial
Appointment
Date
 

July 2008

Senior Executive Vice President and Responsible for Global Business and Corporate of the Company

(Principal concurrent position)

Member of the Board of Tata Teleservices Limited (India)

  

Hiroshi Matsui(2)(2
)

(Aug. 6, 1946)

 

Senior Executive Vice President

President/

Responsible for CSR, Branches in Kanto and Koshinetsu areas

 July 1969 Entered Ministry of Posts and Telecommunications 90June 2008*
130    
June
2012


June
2008

  January 2003 Vice-Minister for Policy Coordination, Ministry of Public Management, Home Affairs, Posts and Telecommunications 

80


  
Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
  August 2005 President of Postal Savings Promotion Society  
  September2007September 2007 Advisor to the Company  
 
  June 2008 Senior Executive Vice President of the Company  
 
  July 2008 Senior Executive Vice President and Responsible for CSR and Branches in Kanto and Koshinetsu areas of the Company  
Bunya Kumagai(3)
(Oct. 13, 1952)
 Executive Vice President

Kazuto Tsubouchi  (3)

(May 2, 1952)

 Responsible for Consumer SalesApril 1975Entered NTT Public Corporation124June 2006*
June 2003Senior Vice President and Managing Director of Sales Promotion Department of the Company
June 2005

Executive Vice President and Managing Director of Marketing Division of NTT DoCoMo Tokai, Inc.

June 2006Senior Vice President and Managing Director of Marketing Division of the Company
June 2007Executive Vice President and Managing Director of Marketing Division of the Company
July 2008Executive Vice President and Responsible for Consumer Sales of the Company
Kazuto Tsubouchi(3)
(May 2, 1952)
Executive Vice President/

Managing Director of Accounts and Finance Department

Responsible for Business Alliance Department

 

April 1976

 

Entered NTT Public Corporation

 94

121

 


June 2006*
2012


 


June
2006


  December 2000 General Manager of Kanazawa Branch of NTT West   
  June 2004 Senior Vice President and Managing Director of Accounts and Finance Department of NTT DoCoMo Kansai, Inc.   
  June 2006 Senior Vice President and Managing Director of Accounts and Finance Department of the Company   
  June 2008 Executive Vice President, Chief Financial Officer and Managing Director of Accounts and Finance Department of the Company   
  July 2008 

Executive Vice President, Chief Financial Officer, Managing Director of Accounts and Finance Department and Responsible for Business Alliance Department of the Company

(Principal concurrent position)

Member of the Board of Tata Teleservices Limited (India)

   

Kaoru Kato(3)

(May 20, 1951)

 Executive Vice President / Managing Director of Corporate Strategy & Planning Department Research Institute April 1977 Entered NTT Public Corporation 70June 2008*
94    
June
2012


June
2008

  July 2005 Representative Director and Senior Corporate Executive Officer of Sumitomo Mitsui Card Co., Ltd.   

81


Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
  June 2007 Executive Vice President of NTT DoCoMo Kansai, Inc.   
  July 2007 Executive Vice President and Managing Director of Corporate Strategy Planning Department of NTT DoCoMo Kansai, Inc.  
   

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
Date
Current
Terms

Ends
Initial
Appointment
Date
 June 2008 Executive Vice President and Managing Director of Corporate Strategy and Planning Department of the Company  
  April 2009 Executive Vice President, Managing Director of Corporate Strategy and Planning Department and Managing Director of Mobile Society Research Institute of the Company  
  July 2009 Executive Vice President and Managing Director of Corporate Strategy and Planning Department of the Company  

Mitsunobu Komori(3)

(Sep. 18, 1952)

 

Executive Vice President

President/

Managing Director of R&D Center

 April 1977 Entered NTT Public Corporation 79June 2008*
96    
June
2012


June
2008

  July 2002 Senior Manager of Department V of NTT   
  June 2005 Senior Vice President and Managing Director of Core Network Engineering Department of the Company   
  July 2007 Senior Vice President and General Manager of Kanagawa Branch of the Company   
  June 2008 Executive Vice President, Chief Technical Officer and Managing Director of Research and Development Division of the Company   
  July 2008 Executive Vice President, Chief Technical Officer and Managing Director of R&D Center of the Company   
Akio Oshima

Fumio Iwasaki (3)

(June 23, 1951)

Feb. 28, 1953)

 

Executive Vice President

Managing Director of Corporate Marketing DivisionApril 1974Entered NTT Public Corporation116June 2010*
June 2004Senior Vice President and Managing Director of Corporate Marketing Department II of the Company
July 2004Senior Vice President and Managing Director of System Marketing Department II of the Company
June 2005Senior Vice President and Managing Director of System Marketing Department II of the Company
April 2006Senior Vice President and Managing Director of Marketing Department II of the Company
June 2006Executive Vice President and Managing Director of Marketing Division of NTT DoCoMo Kansai, Inc.

82

President/


Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
December 2006Senior Executive Vice President and Managing Director of Marketing Division of NTT DoCoMo Kansai, Inc.
June 2007Senior Executive Vice President of NTT DoCoMo Kansai, Inc.
June 2008Executive Vice President and Managing Director of Corporate Marketing Division of the Company
July 2008Executive Vice President and Managing Director of Corporate Marketing Division of the Company
June 2010 Executive Vice President and Managing Director of Corporate Marketing Division of the Company
Fumio Iwasaki(3)
(Feb, 28, 1953)
Executive Vice PresidentResponsible for Network

 April 1977 Entered NTT Public Corporation 92June 2010*
109    
June
2012


June
2010

  June 2004 Senior Vice President and Managing Director of Network Planning Department of the Company   
  June 2005 Senior Vice President and Managing Director of Network Planning Department of the Company  
 
  June 2007 Senior Executive Vice President and Managing Director of Corporate Marketing Division of NTT DoCoMo Kyushu, Inc.  
 
  July 2008 Senior Vice President and Managing Director of Kyushu Regional Office of the Company  
 
  June 2010 Executive Vice President and Responsible for Network of the Company 

Tsutomu Shindou  (3)

(Sep. 4, 1954)

Executive Vice President/

Managing Director of Corporate Marketing Division

April 1978Entered NTT Public Corporation72
June
2012


June
2011

July 2005Managing Director of System Marketing Department III of the Company   
Takashi Tanaka(3)
(Jun. 2, 1955)
 Senior Vice PresidentApril 2006 Managing Director of Human Resources ManagementCorporate Marketing Department III of the Company
April 2007Managing Director of Corporate Marketing Department I of the Company
June 2007Senior Vice President and Managing Director of Corporate Marketing Department I of the Company

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
Date
Current
Terms

Ends
Initial
Appointment
Date
June 2011Executive Vice President, Managing Director of Corporate Marketing Division and Managing Director of Corporate Marketing Department I of the Company

(effective June 24, 2011)

Executive Vice President and Managing Director of Corporate Marketing Division of the Company

Takashi Tanaka  (3)

(Jun. 2, 1955)

Executive Vice President/ Responsible for Consumer Sales April 1979 Entered NTT Public Corporation 98June 2007*
123    
June
2012

  
July 2001June
2007
  Senior Director of Human Resources Management Department of the Company
  
  June 2003 Managing Director of Affiliated Companies Department of the Company   
  June 2007 Senior Vice President and Managing Director of General Affairs Department of the Company  
 
  June 2008 Senior Vice President and Managing Director of Human Resources Management Department of the Company  
 
  July 2008 Senior Vice President and Managing Director of Human Resources Management Department of the Company (change in Japanese department name)
  June 2011 Executive Vice President and Responsible for Consumer Sales of the Company
Katsuhiro Nakamura

Wataru Kagawa(3)  (
3)

(Mar. 2,Oct. 4, 1953)

 Senior Vice PresidentPresident/ Managing Director of General Affairs Department, Managing Director of Corporate Citizenship Department and Business Process Improvement Office April 19771978 Entered NTT Public Corporation 7151  
June 2008*
2012


June
2011

  JuneJuly 2004 Senior Vice President and Managing Director of Marketing DivisionIR Department of NTT DoCoMo Hokkaido, Inc.

83


the Company   
  Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
June 2005 Representative Director, Senior Vice President and Managing DirectorGeneral Manager of Corporate Strategy and Planning Department and Managing DirectorSaitama Branch of Marketing Division of NTT DoCoMo Hokkaido, Inc.the Company   
  June 2007 Senior Vice President and Responsible for Business Process ReformMember of the CompanyBoard and Managing Director of General Affairs Department of NTT DoCoMo Kansai, Inc.   
  July 2008Associate Senior Vice President and Managing Director of Kansai Regional Office of the Company   
June 20082011 Senior Vice President and Managing Director of General Affairs Department, Corporate Citizenship Department and Business Process Improvement Office of the Company   

Kazuhiro Yoshizawa (3)

(Jun. 21, 1955)

Senior Vice President/ Managing Director of Human Resources Management DepartmentApril 1979Entered NTT Public Corporation86
June
2012


June
2011

December 1996Senior Director of Corporate Strategy and Planning Department of the Company
July 2001Senior Director of Human Resources Management Department of the Company
July 2003Senior Director of Corporate Strategy and Planning Department of the Company
June 2007Senior Vice President and Managing Director of Corporate Marketing Department II of the Company

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
Date
Current
Terms

Ends
Initial
Appointment
Date

June 2011

Senior Vice President and Managing Director of Human Resources management Department of the Company

Hiroshi Tsujigami

(Sep. 8, 1958)

Member of the Board

April 1983

July 1999

Entered NTT Public Corporation

Manager of Department I of NTT

10
June
2012


June
2008

  
      July 2008Senior Vice President, Managing Director of General Affairs Department and Managing Director of Corporate Citizenship Department of the Company
Hiroshi Tsujigami
(Sep. 8, 1958)
Member of the BoardApril 1983Entered NTT Public Corporation10June 2008*
July 1999Manager of Department I of NTT
  October 2000 Senior Manager of Department I of NTT   
  July 2003 Senior Manager of Corporate Strategy and Planning Department of NTT West   
  July 2007 Senior Manager of Corporate Strategy and Planning Department of NTT   
  June 2008 

Member of the Board of the Company

(Principal concurrent positions)

Senior Manager of Corporate Strategy and Planning Department of NTT

Member of the Board of NTT Investment Partners, Inc.

   

Corporate Auditors:

     
Kenichi Aoki

Shunichi Tamari (4)

(Oct. 9, 1946)

Jan. 10, 1949)

 Corporate Auditor 

April 1971

June 2001

 May 1970

Entered NTT Public Corporation

62June 2008**
June 1998Senior Vice President and Managing Director of General Affairs Department of the Company
January 1999Senior Vice President and Managing Director of Affiliated Companies Department of the Company
June 2000Senior Vice President and General Manager of Chiba Branch of the Company
June 2002Senior Executive Vice President and Managing Director Mobile Multimedia Division of NTT DoCoMo Chugoku, Inc.

84


Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
June 2004Representative Director, Executive Vice President and Managing Director of Corporate Strategy Planning Department of DoCoMo Support, Inc.
June 2005President of DoCoMo Support, Inc.
June 2008Corporate Auditor of the Company
Shunichi Tamari(4)
(Jan. 10, 1949)
Corporate AuditorApril 1971Entered NTT Public Corporation80June 2008*
June 2001Representative Director, Executive Vice President and Managing Director of Corporate Strategy and Planning Department of NTT DoCoMo Hokuriku, Inc.

97
June
2012


June
2008

    
  June 2002 Senior Vice President and Managing Director of Service Operation and Maintenance Department of the Company   
  January 2004 Senior Vice President and Managing Director of Service Quality Management Department of the Company   
  June 2004 Executive Vice President and General Manager of Chiba Branch of the Company   
  June 2005 President of DoCoMo Engineering, Inc.   
  June 2008 Corporate Auditor of the Company   
Yoshitaka Makitani

Shuro Hoshizawa (4)

(July 30, 1947)

Jun. 17, 1949)

 

Corporate Auditor

 May 1970April 1973 Entered NTT Public Corporation 48125 
June 2009**
2015


June
2011

  June 2002 September 2000Member of the Board, Senior Vice President Senior Executive Managerand Managing Director of Accounts and FinanceCorporate Marketing Department Senior Executive ManagerI of Affiliated Companies Department of NTT DATA Corporation (“NTT DATA”)the Company   
  June 2004 July 2001Executive Vice President, Member of the Board Senior Vice President and Senior Executive ManagerManaging Director of Accounts and Finance DepartmentCorporate Marketing Division of NTT DATAthe Company   
  June 2005

(Implementation of executive officer system)

Executive Vice President, Member of the Board and Managing Director of Corporate Marketing Division

   June 2002
 Member of the Board, Executive Vice June 2007President and Senior Executive Manager of Accounts and Finance DepartmentRepresentative Director of NTT DATADoCoMo Hokkaido, Inc.

Name

(Date of Birth)

Position/

Responsibility

History, Positions, Responsibilities and

Principal Concurrent Positions

Shares
Owned (1)
  
Date
Current
Terms

Ends
  Initial
Appointment
Date
 
July 2008Associate Senior Vice President and Managing Director of Hokkaido Regional Office of the Company
July 2008President and Representative Director of DOCOMO Support, Inc.
 June 2003Member of the Board, Executive Vice President, Senior Executive Manager of General Affairs Department and Senior Executive Manager of Affiliated Companies Department of NTT DATA
June 2005President of NTT BUSINESS ASSOCIE Corporation
June 20092011 Corporate Auditor of the Company  

Kyouichi Yoshizawa(4)

(Apr. 12, 1950)

 Corporate Auditor 

April 1969

August 2000

 April 1969

Entered NTT Public Corporation

80June 2007**

85


Initial
Name
History, Positions, Responsibilities
Shares
Appointment
(Date of Birth)PositionResponsibilityand Principal Concurrent PositionsOwned(1)Date
August 2000Secretary General of East Japan Headquarters of All NTT Workers Union of Japan

105
June
2015


June
2007

    
  July 2002 President of East Japan Headquarters of All NTT Workers Union of Japan  
 
  August 2004 Secretary General of National Headquarters of All NTT Workers Union of Japan  
 
  September 2006 Advisor, , NTT Travel Service Co. Ltd.  
 
  June 2007 Corporate Auditor of the Company  
Takaaki Wakasugi

Haruo Morosawa (4) (5)

(Mar. 11, 1943)Dec. 27, 1950)

 Corporate Auditor April 1974 June 1985Entered Board of Audit of Japan Professor, Faculty of Economics, University of Tokyo10  66
June
2015

 
June 2007**
2011

  December 1999 September 1990Co-director, Mitsui Life Financial Research Center, UniversityDirector for Accounting, Secretariat of Michigan Ross SchoolGeneral Executive Bureau, Board of BusinessAudit of Japan   
  December 2000 April 2003Director andDeputy Director-General, Secretariat of General ManagerExecutive Bureau, Board of Audit of Japan Corporate Governance Research Institute   
  AprilDecember 2004 ProfessorDirector General of Finance, School1st Bureau, Board of Business administration, Tokyo Keizai UniversityAudit of Japan   
  April 2009 June 2004Professor Emeritus, UniversityDeputy Secretary General of TokyoGeneral Executive Bureau, Board of Audit of Japan   
  April 2010Member of the West Block Bidding Inspection Commission of Japan Railway Construction, Transport and Technology Agency   
June 20072011 Corporate Auditor of the Company   

Eiko Tsujiyama (5)

(Dec. 11, 1947)

Corporate AuditorAugust 1980Assistant Professor, Humanities Department, Ibaraki University0
June
2015


June
2011

  
  April 1985 (Directorship at other companies)Assistant Professor, Faculty of Economics, Musashi University   
  April 1991 Professor, SchoolFaculty of Business Administration, Tokyo KeizaiEconomics, Musashi University  
 Outside director, Nissui, Ltd.
Outside director, Ricoh Corporation
Outside corporate auditor, JFE Holdings, Inc.
(Notes)
(1)April 2003Professor of Accounting Faculty of Business & Commerce, Waseda University
June 2011Corporate Auditor of the Company

(Principal concurrent positions)

Professor of Accounting Faculty of Business & Commerce, Waseda University

Corporate Auditor of Mitsubishi Corporation

Director of ORIX Corporation

Corporate Auditor of LAWSON, INC.

(1)DOCOMO shares owned as of May 31, 20102011
(2)Representative director
(3)Concurrently serves as a EVP/SVP
(4)Full-time corporate auditor
(5)Independent directordirector/corporate auditor under the Security Listing Regulations of the Tokyo Stock Exchange regulations.
Current term expires in June 2012
**Current term expires in June 2011regulations

86


The following table shows information about our corporate executivesexecutive officers as of June 24, 2010,23, 2011, including their positions and responsibilities.

Name

 

Position

 

Responsibility

NamePositionResponsibility
EVPs/SVPs:
Toru KobayashiKatsuhiro Nakamura Executive Vice President Managing Director of Tokai Regional Office
Kiyoshi Tokuhiro Executive Vice President Managing Director of Kansai Regional Office
Yoshiyuki Takeda Executive Vice President Deputy Managing Director of R&D Center
Hiroaki Nishioka
Tomohiro Kurosawa Senior Vice President Managing Director of Hokkaido Regional Office
Yuji Araki Senior Vice President Managing Director of Tohoku Regional Office
Mitoshi Hirokane Senior Vice President Managing Director of Hokuriku Regional Office
Akiko Ide Senior Vice President Managing Director of Chugoku Regional Office
Masaaki Sado
Shoji Suto Senior Vice President Managing Director of Shikoku Regional Office
Toshinari Kunieda Senior Vice President Managing Director of Kyusyu Regional Office
Yasuhiro TaguchiSenior Vice PresidentGeneral Manager, Kanagawa Branch
Seizo Onoe Senior Vice President Managing Director of R&D Strategy Department
Hiroshi SawadaSenior Vice PresidentManaging Director of Core Network Development Department
Kiyohito Nagata Senior Vice President 

Managing Director of Strategic Marketing Department

Responsible for Product Business Strategy

Hiroyasu Asami Senior Vice President Managing Director of ConsumerSmart Communication Services Department
Tomohiro Kurosawa
Kei Irie Senior Vice President Managing Director of Communication Device SupportNetwork Department
Hiroshi SawadaSenior Vice PresidentManaging Director of Service Platform Department
Kazunori Yamamoto Senior Vice President Managing Director of Sales Promotion Department
Tsutomu Shindou
Morikazu Takahashi Senior Vice President Deputy Managing Director of Corporate Marketing Division
Hirotaka SatoSenior Vice President

(effective June 24, 2011)

Managing Director of Corporate Marketing Department I

Kazuhiro Yoshizawa
Koji Aoyama Senior Vice President Managing Director of Corporate Marketing Department II
Yasuhiro TaguchiSenior Vice PresidentManaging Director of Corporate Marketing Department III
Masaki Yoshikawa Senior Vice President Managing Director of Credit Card Business Division
Seiji Nishikawa Senior Vice President Managing Director of Information Systems Department
Kiyohiro Omatsuzawa Senior Vice President Managing Director of Procurement and Supply Department
Tooru AzumiSenior Vice PresidentManaging Director of Business Process Improvement Office
Yoshikiyo Sakai Senior Vice President 

Managing Director of Public Relations Department

Deputy Managing Director of Mobile Society Research Institute

Notes:
Directors who concurrently serve as EVPs/SVPs are not included in the above list.


89


Note:  Directorswho concurrently serve as EVPs/SVPs are not included in the above list.

B.Compensation

The aggregate compensation to the directors and corporate auditors during the year ended March 31, 20102011 was as follows:

(in millions, except number of persons)
                         
    Breakdown of Compensation  
  Total
 Base
 Stock
   Retirement
 Number of
Position Compensation Salary Option Bonus Bonus Persons
 
Director*  ¥515   ¥404      ¥111      12 
Corporate Auditor**  60   60            2 
Outside Director/Corporate Auditor  69   69            4 
                         
Total  644   533      111      18 
                         
(Notes)

   Millions of yen     
       Breakdown of Compensation     

Position

  Total
Compensation
   Base
Salary
   Stock
Option
   Bonus   Retirement
Bonus
   Number of
Persons
 

Director *

  ¥  514    ¥  396         ¥  118          14  

Corporate Auditor **

   60     60                    2  

Outside Director/ Corporate Auditor

   69     69                    3  
                              

Total

   643     525          118          19  
                              

(Notes)
1.Upper limits on compensation to directors and corporate auditors were set at ¥600 million annually for directors and ¥150 million annually for corporate auditors at the 15th ordinary general meeting of shareholders held on June 20, 2006.
2.The above includes one corporate auditortwo directors who retired at the end of the 18th19th ordinary general meeting of shareholders held on June 19, 2009.18, 2010.
*Excluding Outside Director
**Excluding Outside Corporate Auditor

C.
C.  Board Practices

Information required by this item is set forth in Items 6.A. and 6.B. of this annual report. We do not have any contracts with directors or corporate auditors providing for severance benefits upon termination of employment.

In order to enable our directors (including former directors) and corporate auditors (including former corporate auditors) to fully perform the roles expected of them in the execution of their work duties, we are permitted, pursuant to the Corporation Law and our Articles of Incorporation, to release directors and corporate auditors from liability for damages resulting from neglect of duties, with such release to be made by resolution of the board of directors, and to be within the range permitted by law. Further, we can conclude agreements with outside directors and auditors limiting their liability for damages resulting from neglect of duties. However, the liability limit pursuant to these agreements is the amount stipulated by law.

D.
D.  Employees

The information required by this item is set forth in Item 4.B. of this annual report.

E.
E.  Share Ownership

Information required by this item is set forth in Item 6.A. of this annual report and below. We have not granted stock options to any of our directors or corporate auditors and we do not currently have any stock option plans approved pursuant to which they may be granted shares or stock options.

As of May 31, 2010,2011, our directors and corporate auditors owned 1,8642,097 of our shares. Currently, most of our full-time directors and corporate auditors participate in a director stock purchase plan, pursuant to which a plan administrator makes open market purchases of shares for the accounts of participating directors on a monthly basis.

Certain of our employees and certain other of our subsidiaries’ employees participate in an employee stock purchase plan, pursuant to which a plan administrator makes open market purchases of our shares for the accounts of participating employees on a monthly basis. Such purchases are made out of amounts deducted from each


90


participating employee’s salary. In addition, if the employee chooses to participate in an optional benefit plan, we contribute a maximum of ¥80 for each ¥1,000 contributed by the employee.

Item 7. Major Shareholders and Related Party Transactions

A.
Item 7.Major Shareholders and Related Party Transactions
A.  Major Shareholders

As of March 31, 2010,2011, NTT owned 27,640,000 shares, or 66.43%66.65% of our outstanding voting shares and 63.12%63.32% of our total issued shares. To the best of our knowledge, no other shareholder beneficially owned more than 5% of the outstanding shares (excluding treasury shares). The Government,Japanese government, in the name of the Minister of Finance, owned 40.16%40.15% of the voting rights of NTT as of the same date. NTT does not have any special voting rights. For more information regarding our relationship with NTT, see Item 4.B. “Business Overview — Overview—Relationship with NTT.”

At the end of March 2008, we canceled approximately 1.01 million shares, which were held as treasury stock, increasing NTT’s share ownership of our total issued shares from 60.24% to 61.60%.

At the end of March 2009, we canceled approximately 0.92 million shares, which were held as treasury stock, increasing NTT’s share ownership of our total issued shares from 61.60% to 62.89%. At the end of March 2010, we canceled approximately 0.16 million shares, which were held as treasury stock, increasing NTT’s share ownership of our total issued shares from 62.89% to 63.12%.

At the end of March 2011, we canceled approximately 0.14 million shares, which were held as treasury stock, increasing NTT’s share ownership of our total issued shares from 63.12% to 63.32%.

The ownership and distribution of the shares by category of shareholders according to our register of shareholders and register of beneficial shareholders as of March 31, 20102011 were as follows:

             
      Outstanding
  Number of
 Number of
 Voting
Category Shareholders Shares Held Shares
 
Japanese financial institutions  263   4,656,043   10.63%
Japanese securities companies  74   462,693   1.06%
Other Japanese corporations  2,328   28,141,639   64.27%
Foreign corporations and individuals  930   5,496,148   12.55%
Japanese individuals, treasury shares and others  326,506   5,033,477   11.49%
             
Total  330,101   43,790,000   100.00%
             

Category

  

Number of
  Shareholders

   Number of
Shares Held
   Outstanding
Voting Shares
 

Japanese financial institutions

   264     4,542,376     10.41

Japanese securities companies

   52     375,835     0.86

Other Japanese corporations

   2,215     28,149,551     64.49

Foreign corporations and individuals

   929     5,691,226     13.04

Japanese individuals, treasury shares and others

   312,084     4,891,012     11.20
               

Total

   351,544     43,650,000     100.00
               

According to The Bank of New York Mellon, depositary for our ADSs, as of March 31, 2010, 155,4252011, 180,564 shares of our common stock were held in the form of 15,542,50018,056,400 ADRs. According to our register of shareholders, as of March 31, 2010,2011, there were 330,101315,544 holders of common stock of record worldwide. As of March 31, 2010,2011, there were 212217 record holders of our common stock with addresses in the United States, whose shareholdings represented approximately 5.06%5.53% of the issued common stock on that date. Because some of these ADSs and shares were held by brokers or other nominees, the number of record holders with addresses in the United States may be fewer than the number of beneficial owners in the United States.

None of our shares of common stock entitles the holder to any preferential voting rights.

We know of no arrangements the operation of which may at a later time result in a change of control.

B.
B.  Related Party Transactions
DOCOMO has

We have entered into a number of different types of transactions with NTT, its other subsidiaries and its affiliated companies in the ordinary course of business. For information regarding our relationship with NTT, see Item 4.B. “Business Overview — Overview—Relationship with NTT.”

DOCOMO has

We have also entered into contracts of bailment of cash for consumption with NTT FINANCE CORPORATION (“NTT FINANCE”) for cash management purposes. For information regarding our transactions with NTT FINANCE, see Note 13 of “Notes to Consolidated Financial Statements — Statements—Related Party Transactions.”

C.
C.  Interests of Experts and Counsel

Not applicable.


91


Item 8. Financial Information

A.
Item 8.Financial Information
A.  Consolidated Statements and Other Financial Information

Financial Statements

The information required by this item is set forth beginning onpage F-2 of this annual report.

Legal or Arbitration Proceedings

The information on legal or arbitration proceedings required by this item is set forth in Item 4.B. of this annual report.

Dividend Policy

We believe that providing returns to shareholders is one of the most important issues in corporate management while at the same time we are making efforts to strengthen our financial position and maintain internal reserves. We aim to continue stable dividend payments taking into account our consolidated financial results and the operating environment, with the goal to continue to pay regular dividends.

We expect to pay an annual dividend of ¥5,200¥5,600 per share for the year ending March 31, 2011,2012, which will consist of a ¥2,600¥2,800 interim dividend and a ¥2,600¥2,800 year-end dividend.

B.
B.  Significant Changes

Except as otherwise disclosed herein, there has been no significant change in our financial position since March 31, 2010,2011, the date of our last audited financial statements.


92


Item 9. The Offer and Listing

A.
Item 9.The Offer and Listing Details
A.  Offer and Listing Details

Price Ranges of Shares

Since October 1998, our shares have been listed on the First Section of the Tokyo Stock Exchange (“TSE”). On June 11, 2010,9, 2011, the closing sale price of our shares on the TSE was ¥133,300¥146,000 per share. Our shares are also quoted and traded through the New York Stock Exchange (“NYSE”) and the London Stock Exchange. The following table lists the reported high and low sale prices of our shares on the TSE, highs and lows of Tokyo Stock Price Exchange (“TOPIX”) and Nikkei Stock Average for the periods indicated:

                         
  TSE TOPIX Nikkei Stock Average
  (Japanese yen) (Points) (Japanese yen)
Fiscal Year ended March 31, High Low High Low High Low
 
2006  216,000   159,000   1,735.25   1,104.30   17,125.64   10,770.58 
2007  229,000   162,000   1,823.89   1,439.00   18,300.39   14,045.53 
2008  224,000   148,000   1,796.89   1,139.62   18,297.00   11,691.00 
2009  180,300   129,500   1,449.14   698.46   14,601.27   6,994.90 
1st Quarter  169,000   149,000   1,449.14   1,214.92   14,601.27   12,521.84 
2nd Quarter  179,100   151,500   1,334.52   1,069.69   13,603.31   11,160.83 
3rd Quarter  177,800   136,000   1,107.68   721.53   11,456.64   6,994.90 
4th Quarter  180,300   129,500   896.21   698.46   9,325.35   7,021.28 
2010  150,400   127,500   987.27   778.21   11,147.62   8,084.62 
1st Quarter  145,000   132,600   954.08   778.21   10,170.82   8,084.62 
2nd Quarter  150,400   134,700   987.27   852.11   10,767.00   9,050.33 
3rd Quarter  144,300   127,500   920.54   809.24��  10,707.51   9,076.41 
4th Quarter  143,700   129,600   984.06   876.77   11,147.62   9,867.39 
Calendar Year 2009
                        
                         
December  134,600   129,200   920.54   829.56   10,707.51   9,233.20 
Calendar Year 2010
                        
                         
January  139,800   129,600   966.40   901.12   10,982.10   10,198.04 
February  143,700   135,200   921.90   876.77   10,449.75   9,867.39 
March  143,100   137,100   984.06   893.81   11,147.62   10,116.86 
April  154,400   142,100   1,001.77   968.79   11,408.17   10,865.92 
May  145,700   135,100   970.46   850.88   10,847.9   9,395.29 
June (through June 11, 2010)  137,300   132,000   895.09   846.47   9,962.42   9,378.23 


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    TSE   TOPIX   Nikkei Stock Average 
    (Japanese yen)   (Points)   (Japanese yen) 

Fiscal Year ended March 31,

  High   Low   High   Low   High   Low 

2007

   229,000     162,000     1,823.89     1,439.00     18,300.39     14,045.53  

2008

   224,000     148,000     1,796.89     1,139.62     18,297.00     11,691.00  

2009

   180,300     129,500     1,449.14     698.46     14,601.27     6,994.90  

2010

   150,400     127,500     987.27     778.21     11,147.62     8,084.62  

1st Quarter

   145,000     132,600     954.08     778.21     10,170.82     8,084.62  

2nd Quarter

   150,400     134,700     987.27     852.11     10,767.00     9,050.33  

3rd Quarter

   144,300     127,500     920.54     809.24     10,707.51     9,076.41  

4th Quarter

   143,700     129,600     984.06     876.77     11,147.62     9,867.39  

2011

   159,000     128,000     1,001.77     725.90     11,408.17     8,227.63  

1st Quarter

   154,400     132,000     1,001.77     835.91     11,408.17     9,347.07  

2nd Quarter

   149,000     133,000     874.25     800.69     9,807.36     8,796.45  

3rd Quarter

   144,800     133,200     909.67     799.64     10,394.22     9,123.62  

4th Quarter

   159,000     128,000     976.28     725.90     10,891.60     8,227.63  

Calendar Year 2010

                        

December

   144,800     135,000     909.67     858.87     10,394.22     9,918.55  

Calendar Year 2011

                        

January

   149,000     141,800     939.70     904.25     10,620.57     10,182.57  

February

   159,000     145,600     976.28     910.28     10,891.60     80,245.75  

March

   157,500     128,000     964.18     725.90     10,768.48     8,227.63  

April

   151,800     143,100     874.35     824.61     9,849.74     9,405.19  

May

   151,800     144,400     866.65     812.52     10,017.47     9,406.04  

June (through June 9, 2011)

   150,400     145,300     839.59     805.23     9,720.73     9,358.31  

Since March 2002, our American Depositary Shares have been listed on the NYSE. On June 11, 2010,9, 2011, the closing sale price of American Depositary Shares on the NYSE was $14.62$18.25 per share. The following table lists the reported high and low sale prices of our American Depositary Shares on the NYSE for the periods indicated:
         
  NYSE
  (U.S. dollars)
Fiscal Year Ended March 31, High Low
 
2006  18.78   14.09 
2007  18.85   13.83 
2008  18.73   13.02 
2009  20.35   12.22 
1st Quarter  15.99   13.96 
2nd Quarter  16.72   13.89 
3rd Quarter  20.35   12.22 
4th Quarter  19.93   13.26 
2010  16.49   13.11 
1st Quarter  15.11   13.11 
2nd Quarter  16.49   14.23 
3rd Quarter  16.03   13.98 
4th Quarter  16.07   14.05 
Calendar Year 2009
        
         
December  15.39   13.98 
Calendar Year 2010
        
         
January  15.45   14.05 
February  16.07   15.14 
March  15.92   15.06 
April  16.49   15.20 
May  15.84   14.88 
June (through June 11, 2010)  15.01   14.47 

    NYSE 
    (U.S. dollars) 

Fiscal Year ended March 31,

  High   Low 

2007

   18.85     13.83  

2008

   18.73     13.02  

2009

   20.35     12.22  

2010

   16.49     13.11  

1st Quarter

   15.11     13.11  

2nd Quarter

   16.49     14.23  

3rd Quarter

   16.03     13.98  

4th Quarter

   16.07     14.05  

2011

   19.23     14.47  

1st Quarter

   16.49     14.47  

2nd Quarter

   17.52     15.10  

3rd Quarter

   17.46     16.09  

4th Quarter

   19.23     16.00  

Calendar Year 2010

        

December

   17.46     16.21  

Calendar Year 2011

        

January

   18.06     17.03  

February

   19.14     17.93  

March

   19.23     16.00  

April

   18.53     17.15  

May

   18.66     17.81  

June (through June 9, 2011)

   18.57     18.13  

B.
B.  Plan of Distribution

Not applicable.

C.
C.  Markets

See Item 9.A. of this annual report for information on the markets on which our common stock is listed or quoted.

D.
D.  Selling Shareholders

Not applicable.

E.
E.  Dilution

Not applicable.

F.
F.  Expenses of the Issue

Not applicable.


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Item 10. Additional Information

A.
Item 10.Additional Information
A.  Share Capital

Not applicable.

B.
B.  Memorandum and Articles of Association
1. Objects and Purposes in Our Articles of Incorporation

1. Objects and Purposes in Our Articles of Incorporation

Article 2 of our Articles of Incorporation, which are attached as an exhibit to this annual report, statesstate our purposes, which includesinclude engaging in the telecommunications business, other businesses related to the operation of a wireless telecommunication services provider and non-related businesses.

2. Provisions Regarding Our Directors

2. Provisions Regarding Our Directors

There is no provision in our Articles of Incorporation as to a director’s power to vote on a proposal, arrangement or contract in which a director is materially interested, but, under the Corporation Law, a director is required to refrain from voting on such matters at meetings of the board of directors.

The Corporation Law provides that compensation for directors is fixed by resolution of a general meeting of shareholders of a company. Within the upper limit approved by the shareholders’ meeting, the board of directors will determine the amount of compensation for each director. The board of directors may, by its resolution, leave such decision to the discretion of the Company’s president.

The Corporation Law provides that the incurrence by a company of a significant loan from a third party should be approved by a resolution of the Company’s board of directors, by its resolution.directors. Our Regulations of the Board of Directors have adopted this policy.

There is no mandatory retirement age for our directors under the Corporation Law or our Articles of Incorporation.

There is no requirement concerning the number of shares one individual must hold in order to qualify him or her as a director of NTT DOCOMO, INC. under the Corporation Law or our Articles of Incorporation.

3. Holding of Our Shares by Foreign Investors

3. Holding of Our Shares by Foreign Investors

There are no limitations on the rights of non-residents or foreign shareholders to hold or exercise voting rights on our shares imposed by the Corporation Law or our Articles of Incorporation or our other constituent documents.

4. Rights of Our Shareholders

4. Rights of Our Shareholders

The following section contains certain information relating to the shares, including summaries of certain provisions of our Articles of Incorporation and Share Handling Regulations and of the Corporation Law relating to joint stock corporations.

• General

General

At present, our authorized share capital is 188,130,000 shares with no par value of which 43,790,00043,650,000 shares have been issued. All issued shares are fully paid and non-assessable.

On January 5, 2009, a new central clearing system for shares of Japanese listed companies was established pursuant to the Law Concerning Book-Entry Transfer of Corporate Bonds, Shares, Etc. of Japan (including the

cabinet order and ministerial ordinances promulgated thereunder; the “Book-Entry Law”), and since then the shares of all Japanese companies listed on any Japanese financial instruments exchange, including our shares, have become subject to this new system. On the same day, all existing shares were dematerialized and all existing share certificates for such shares became null and void. At present, the Japan Securities Depository Center, Inc. (“JASDEC”) is the sole institution that is designated by the relevant authorities as a book-entry transfer institution which is permitted to engage in the clearing operations of shares of Japanese listed companies


95


under the Book-Entry Law. Under the new clearing system, in order for any person to hold, sell or otherwise dispose of shares of Japanese listed companies, such person must have an account at an account management institution unless such person has an account directly at JASDEC. “Account management institutions” are, in general, financial instruments firms engaged in type 1 financial instruments business (i.e., securities brokers/dealers), banks, trust companies and certain other financial institutions which meet the requirements prescribed by the Book-Entry Law.

Under the Book-Entry Law, any transfer of shares is effected through book entry, and title to the shares passes to the transferee at the time when the number of the shares to be transferred is, by an application for book entry, recorded in the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal owner of the shares recorded in such account.

Under the Corporation Law and the Book-Entry Law, in order to assert shareholders’ rights against us, a shareholder must have its name and address registered in the register of shareholders, except in limited circumstances. Although, in general, holders of an account with shares recorded are to be registered in the register of shareholders on the basis of information notified by JASDEC to us at certain prescribed time, in order to exercise minority shareholders’ rights (other than those for which the record dates for which are fixed) against us, a holder of an account with shares needs to make an application though an account management institution to JASDEC, which will then give a notice of the name and address of such holder, the number of shares held by such holder and other requisite information to us, and to exercise rights within four weeks from such notice.

The registered beneficial holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders’ rights against us.

• Dividends

Dividends

Dividends on our shares are generally distributed in proportion to the number of shares owned by each shareholder.

In Japan, the ex-dividend date and the record date for any dividend precede the date of determination of the amount of the dividend to be paid. Generally, the ex-dividend date is two business days prior to the record date.

Under the Corporation Law, we are permitted to make distributions of surplus to our shareholders any number of times per fiscal year pursuant to resolutions of our general meeting of shareholders, subject to certain limitations described below. Distributions of surplus are required, in principle, to be authorized by a resolution of the general meeting of shareholders. In an exception to the above rule, we are permitted to make distributions of surplus in cash to our shareholders by board resolution once per fiscal year if our Articles of Incorporation so provide. Currently, our Articles of Incorporation so provide. This exception is intended to make it possible to distribute an interim dividend.

We are also permitted to make distributions of surplus pursuant to a board resolution if certain requirements under the Corporation Law are met, including that our Articles of Incorporation provide that the board of directors may determine to distribute surplus. Currently, our Articles of Incorporation do not so provide. Accordingly, distributions of our surplus must be approved by a general meeting of shareholders.

Distributions of surplus may be made in cash or in-kind in proportion to the number of shares held by each shareholder. If a distribution of surplus is to be made in-kind, we may, pursuant to a general meeting of

shareholders resolution, or as the case may be, a board resolution, grant our shareholders a right to require us to make the distribution in cash instead of in-kind. If no such right is granted, the relevant distribution must be approved by a special resolution of a general meeting of shareholders (see “— Voting“Voting Rights”). Currently, we do not have any concrete plan to make a distribution of surplus in-kind.

Under the Corporation Law, when we make a distribution of surplus, we must set aside in our additional paid-in capital or legal reserves an amount equal to one-tenth of the amount of surplus so distributed, until the sum of our additional paid-in capital and legal reserves reaches one-quarter of our stated capital as required by an ordinance of the Ministry of Justice.


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Under the Corporation Law, we may distribute any dividends up to the amount of the aggregate of (a) and (b) below, less the aggregate of (c) through (f) below, on an unconsolidated basis, as of the effective date of such distribution, if our net assets are not less than ¥3,000,000:

 (a)the amount of surplus, as described below;

 (b)in the event that extraordinary financial statements as of, or for a period from the beginning of the businessfiscal year to, the specified date are approved, the aggregate amount of (i) the aggregate amount of the current net income for such period described in the profit and loss statement included in the extraordinary financial statements and (ii) the amount of consideration that we received for the treasury stock that we disposed of during such period;

 (c)the book value of our treasury stock;

 (d)in the event that we disposed of treasury stock after the end of the previous businessfiscal year, the amount of consideration that we received for such treasury stock;

 (e)in the event of that which is described in (b) in this paragraph, the absolute difference between zero and the amount of current net profit and loss for such period described in the profit and loss statement included in the extraordinary financial statements; and

 (f)the aggregate amount of accounts provided for in an ordinance of the Ministry of Justice.

For the purposes of this section, the amount of surplus is the excess of the aggregate of I. through IV. below, less the aggregate of V. through VII. below, on an unconsolidated basis:

 I.the total amount of (x) assets and (y) the book value of treasury stock less the total amount of (i) liabilities, (ii) stated capital, (iii) additional paid-in capital, (iv) legal reserve and (v) certain other amounts set forth in an ordinance of the Ministry of Justice;

 II.in the event that we disposed of treasury stock after the end of the previous businessfiscal year, the difference between the book value of such treasury stock and the consideration that we received for such treasury stock;

 III.in the event that we reduced our stated capital after the end of the previous businessfiscal year, the amount of such reduction less the portion thereof that has been transferred to additional paid-in capitaland/or the legal reserve (if any);

 IV.in the event that additional paid-in capitaland/or legal reserves were reduced after the end of the previous businessfiscal year, the amount of such reduction less the portion thereof that has been transferred to stated capital (if any);

 V.in the event that we canceled treasury stock after the end of the previous businessfiscal year, the book value of such treasury stock;

 VI.in the event that we distributed dividends after the end of the previous businessfiscal year, the aggregate of the following amounts:

a.    

the aggregate amount of the book value of the distributed assets, excluding the book value of such assets that would be distributed to shareholders for their exercise of the right to receive dividends in cash instead of dividends in kind;
b. the aggregate amount of cash distributed to shareholders who exercised the right to receive dividends in cash instead of dividends in kind; and
c. the aggregate amount of cash paid to shareholders holding fewer shares that was required in order to receive dividends in kind;


97


b.    the aggregate amount of cash distributed to shareholders who exercised the right to receive dividends in cash instead of dividends in kind; and

c.    the aggregate amount of cash paid to shareholders holding fewer shares that was required in order to receive dividends in kind;

 VII.the aggregate amounts of a. through d. below, less e. and f. below:
a. in the event that the amount of surplus was reduced and transferred to additional paid-in capital, the legal reserveand/or stated capital after the end of the previous business year, the amount so reduced;
b. in the event that we distributed dividends after the end of the previous business year, the amount set aside in additional paid-in capitaland/or legal reserve;
c. in the event that we disposed of treasury stock in the process of (x) a merger in which we succeeded all rights and obligations of a merged company, (y) a corporate split in which we succeeded all or a part of the rights and obligations of a split company or (z) a share exchange in which we acquired all shares of a company after the end of the previous business year, the difference between the book value of such treasury stock and the consideration that we received for such treasury stock;
d. in the event that we reduced the amount of surplus in the process of a corporate split (including absorption-type corporate split and incorporation-type corporate split) in which we became a split company after the end of the previous business year, the amount so reduced;
e. in the event that we made (x) a merger in which we succeeded all rights and obligations of a merged company, (y) a corporate split in which we succeeded all or a part of the rights and obligations of a split company or (z) a share exchange in which we acquired all shares of a company after the end of the previous business year, the aggregate amount of (i) the amount of our capital surplus after such merger, corporate split or share exchange, less the amount of our capital surplus before such merger, corporate split or share exchange, and (ii) the amount of our retained earnings after such merger, corporate split or share exchange, less the amount of our retained earnings after such merger, corporate split or share exchange; and
f. in the event that the amount of capital surplus increased in accordance with the provisions of an ordinance of the Ministry of Justice after the end of the previous business year, such increased amount.

a.    in the event that the amount of surplus was reduced and transferred to additional paid-in capital, the legal reserve and/or stated capital after the end of the previous fiscal year, the amount so reduced;

b.    in the event that we distributed dividends after the end of the previous fiscal year, the amount set aside in additional paid-in capital and/or legal reserve;

c.    in the event that we disposed of treasury stock in the process of (x) a merger in which we succeeded all rights and obligations of a merged company, (y) a corporate split in which we succeeded all or a part of the rights and obligations of a split company or (z) a share exchange in which we acquired all shares of a company after the end of the previous fiscal year, the difference between the book value of such treasury stock and the consideration that we received for such treasury stock;

d.    in the event that we reduced the amount of surplus in the process of a corporate split (including absorption-type corporate split and incorporation-type corporate split) in which we became a split company after the end of the previous fiscal year, the amount so reduced;

e.    in the event that we made (x) a merger in which we succeeded all rights and obligations of a merged company, (y) a corporate split in which we succeeded all or a part of the rights and obligations of a split company or (z) a share exchange in which we acquired all shares of a company after the end of the previous fiscal year, the aggregate amount of (i) the amount of our capital surplus after such merger, corporate split or share exchange, less the amount of our capital surplus before such merger, corporate split or share exchange, and (ii) the amount of our retained earnings after such merger, corporate split or share exchange, less the amount of our retained earnings before such merger, corporate split or share exchange; and

f.    in the event that the amount of capital surplus increased in accordance with the provisions of an ordinance of the Ministry of Justice after the end of the previous fiscal year, such increased amount.

Under the Corporation Law, we will be permitted to prepare non-consolidated extraordinary financial statements consisting of a balance sheet as of any date subsequent to the end of the previous businessfiscal year and an income statement for the period from the first day of the current businessfisccal year to the date of such balance sheet. If we prepare such extraordinary financial statements, special provisions may apply to the calculation of distributable amount.

We plan to make distributions of surplus twice per fiscal year, if possible. The record date for annual dividends is March 31 and the record date for interim dividends is September 30. Under the Book-Entry Law, holders of account with shares recorded as of the respective record dates are deemed to be registered in the register of shareholders as of such record dates on the basis of information notified by JASDEC to us.

For information as to Japanese taxes on dividends, see “Taxation — “Taxation—Japanese Taxation” below.

• Capital and Reserves

Capital and Reserves

An increase in our authorized share capital is only possible pursuant to an amendment of our articles of incorporation.

The entire paid-in amount of new shares is required to be accounted for as stated capital, although we may account for an amount not exceeding one-half of such paid-in amount as additional paid-in capital. We may at any time reduce the whole or any part of our additional paid-in capital and legal reserve or transfer them to stated capital by shareholder’s resolution. The whole or any part of surplus may also be transferred to stated capital or additional paid-in capital or legal reserve by resolution of a general meeting of shareholders.


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Stock Splits

• Stock Splits
We may at any time split our issued shares into a greater number of shares by resolution of the board resolution.of directors. So long as the shares are our only class of issued shares, we may increase the number of authorized shares in the same ratio as that of any stock split by amending our Articles of Incorporation, which amendment may be effected by board resolution without shareholder’s approval.

Under the Book-Entry Law, we must give notice to JASDEC regarding a stock split at least two weeks prior to the relevant record date. On the effective date of the stock split, the numbers of shares recorded in all accounts held by our shareholders at account management institutions or at JASDEC will be increased in accordance with the applicable ratio.

• Consolidation of Shares

Consolidation of Shares

Generally, we may consolidate shares into a smaller number of shares by a special resolution of a general meeting of shareholders. A company that conducts a consolidation of shares is required by the Corporation Law to give public notice to its shareholders in order to inform them of the ratio and effective date of the consolidation of shares.

Under the Book-Entry Law, we must give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the relevant record date. On the effective date of the consolidation of shares, the number of shares recorded in all accounts held by our shareholders at account management institutions or at JASDEC will be decreased in accordance with the applicable ratio.

• Fractional Shares
The fractional share system was terminated on August 1, 2008 pursuant to the amendment to our Articles of Incorporation approved at the Ordinary General Meeting of Shareholders held on June 20, 2008.
• General Meeting of Shareholders

General Meeting of Shareholders

The ordinary general meeting of our shareholders is usually held in June of each fiscal year in Tokyo. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary. Notice of a shareholders’ meeting stating the purpose thereof and a summary of the matters to be acted upon must be dispatched to each shareholder having voting rights (or, in the case of a non-resident shareholder, to his or her mailing address or standing proxy in Japan) at least two weeks prior to the date set for the meeting. The record date for an ordinary general meeting of shareholders is March 31.

Under the Corporation Law and our Articles of Incorporation, any shareholder of record as of the relevant record date who is holding 300 or more voting rights or one percent or more of the total number of voting rights for six months or longer may propose a matter to be considered at a general meeting of shareholders by submitting a written request to our director at least eight weeks prior to the date of such meeting. To the contrary, under the Book-Entry Law, such shareholder is not required to be registered in the register of shareholders when exercising the right of proposal, but such shareholder is required to make an application though an account management institution to JASDEC, which will then give us notice of the name and address of such shareholder, the number of shares held by such shareholder and other requisite information, and to exercise the right of proposal within four weeks from such notice.

• Voting Rights

Voting Rights

Generally, a holder of our shares is entitled to one vote for each such share. Except as otherwise provided in law and our Articles of Incorporation, a resolution can be adopted at a meeting of shareholders by shareholders

holding a majority of our shares having voting rights represented at such meeting. Shareholders may also exercise their voting rights through proxies, provided that a proxy is one of our shareholders or that in the case of a shareholder being the Government,Japanese government, local government or juridical person, its proxy may be its employee. Shareholders who intend to be absent from the shareholders’ meeting may exercise their voting rights in writing or by electronic means. The Corporation Law and our Articles of Incorporation provide that the quorum for appointment of directors and


99


corporate auditors shall not be less than one-third of the total number of the voting rights.rights represented at the meeting. Our Articles of Incorporation provide that shares may not be voted cumulatively for the appointment of directors.

Under the Corporation Law and our Articles of Incorporation, certain corporate actions must be approved by a “special resolution” of our meeting of shareholders, when the quorum is one-third of the total number of shares having voting rights and the approval of the holders of two-thirds of our shares having voting rights represented at the meeting is required. Examples of corporate actions that require a special resolution are:

any amendment of our articles of incorporation (except for amendments that may be authorized solely by the board of directors under the Corporation Law);

a reduction of stated capital, except for a reduction of stated capital for the purpose of replenishing capital deficiencies at the day of the ordinary general meeting;

• any amendment of our articles of incorporation (except for amendments that may be authorized solely by the board of directors under the Corporation Law);
• a reduction of stated capital, except for a reduction of stated capital for the purpose of replenishing capital deficiencies at the day of the ordinary general meeting;
• a distribution by us of surplus in-kind, if we do not grant shareholders the right to require us to effect the distribution in cash, instead of in-kind;
• a dissolution, a merger, subject to a certain exception under which a shareholders’ resolution is not required;
• the transfer of the whole or an important part of the business, except for the transfer of an important part of the business in which the book value of transferred assets does not exceed 20% of that of the Company’s total assets;
• the taking over of the whole of the business of any other corporation;
• a share exchange or share transfer for the purpose of establishing a 100% parent-subsidiary relationship, subject to a certain exception under which a shareholders’ resolution is not required;
• a company split, subject to a certain exception under which a shareholders’ resolution is not required;
• the offering of shares at a “specially favorable” price and any offering of stock acquisition rights or bonds with stock acquisition rights at a “specially favorable” price or in a “specially favorable” condition to any persons other than shareholders; and
• any purchase of the Company’s own shares from a certain person.

a distribution by us of surplus in-kind, if we do not grant shareholders the right to require us to effect the distribution in cash, instead of in-kind;

a dissolution or a merger, subject to a certain exception under which a shareholders’ resolution is not required;

the transfer of the whole or an important part of the business, except for the transfer of an important part of the business in which the book value of transferred assets does not exceed 20% of that of the Company’s total assets;

the taking over of the whole of the business of any other corporation;

a share exchange or share transfer for the purpose of establishing a 100% parent-subsidiary relationship, subject to a certain exception under which a shareholders’ resolution is not required;

a company split, subject to a certain exception under which a shareholders’ resolution is not required;

the offering of shares at a “specially favorable” price and any offering of stock acquisition rights or bonds with stock acquisition rights at a “specially favorable” price or in a “specially favorable” condition to any persons other than shareholders; and

any purchase of the Company’s own shares from a certain person.

The voting rights of holders of ADSs are exercised by the depositary based on instructions from those holders. With respect to voting by holders of ADSs, please see Item 12.D of our registration statement onForm 20-F filed with the Securities and Exchange Commission on January 25, 2002.

• Liquidation Rights

Liquidation Rights

In the event of our liquidation, the assets remaining after payment of all taxes, liquidation expenses and debts will be distributed among the shareholders in proportion to the respective number of shares which they hold.

• Issue of Additional Shares and Pre-emptive Rights

Issue of Additional Shares and Pre-emptive Rights

Shareholders have no pre-emptive rights. Authorized but unissued shares may be issued at such times and upon such terms as the board of directors determines, by its resolution subject to the limitations as to the offering

of shares at a “specially favorable” price mentioned above. Under the Corporation Law, the board of directors may, however, determine to grant shareholders subscription rights in connection with a particular issue of shares. Any such subscription rights must be granted on uniform terms to all shareholders on a pro rata basis. In addition, we are required to notify each shareholder of certain matters regarding such subscription rights, as well as the date by which shareholders need to exercise such rights.

We may issue stock acquisition rights or bonds with stock acquisition rights in relation to which stock acquisition rights are non-separable. Except where the issue of stock acquisition rights would be on “specially favorable” terms or price, the issue of stock acquisition rights or of bonds with stock acquisition rights may be authorized by a resolution of the board of directors. Upon exercise of the stock acquisition rights, the holder of such rights may, subject to the terms and conditions thereof, either acquire shares by paying the applicable exercise price


100


or, if so determined by a resolution of the board of directors, by making a substitute payment, such as having bonds redeemed without payment to the holder in lieu of the exercise price.
• Dilution

Dilution

It is possible that, in the future, market conditions and other factors might make subscription rights allocated to shareholders desirable at a subscription price substantially below their then current market price, in which case shareholders who do not exercise and are unable otherwise to realize the full value of their subscription rights will suffer dilution of their equity interest in us. As of March 31, 2010,2011, we have not issued stock acquisition rights or bond with stock acquisition rights.

• Report to Shareholders

Report to Shareholders

We furnish to our shareholders notices of shareholders’ meetings, annual business reports, including non-consolidated and consolidated financial reports, and notices of resolutions adopted at the shareholders’ meetings, all of which are in Japanese.Japanese and English translation. Such notices as described above may be given by electronic means to those shareholders who have agreed to such method of notice.

• Record Date

Record Date

In addition to the record dates for an ordinary general meeting of shareholders and annual and interim dividends which are provided for in our Articles of Incorporation, by a resolution of the board of directors and after giving at least two weeks’ prior public notice, we may at any time set a record date in order to determine shareholders who are entitled to certain rights pertaining to the shares.

Under the Book-Entry Law, we are required to give notice of each record date to JASDEC at least two weeks prior to such record date. JASDEC is required to promptly give us notice of the names and addresses of all of our shareholders of record, the numbers of shares held by them and other relevant information as of such record date.

• Repurchase by Us of Shares and Treasury Shares

Repurchase of our Own Shares

Under the Corporation Law, we are generally required to obtain authorization for any acquisition of our own shares by means of:

 (i)a resolution at a general meeting of shareholders;

 (ii)a resolution of the board of directors if the acquisition is in accordance with our Articles of Incorporation; or

 (iii)a resolution of the board of directors if the acquisition is to purchase our shares from a subsidiary.

We may only dispose of shares we may so acquire in accordance with the procedures applicable to a new share issuance under the Corporation Law.

Upon due authorization, we may acquire our own shares:

in the case of (i) and (ii) above:

through the stock exchanges on which the shares are listed or the over-the-counter markets on which the shares are traded; or

• in the case of (i) and (ii) above:

by way of tender offer;

• through the stock exchanges on which the shares are listed or the over-the-counter markets on which the shares are traded; or
• by way of tender offer;

in the case of (i) above, from a specific person, but only if our shareholders approve this acquisition by special resolution; and

• in the case of (i) above, from a specific person, but only if our shareholders approve this acquisition by special resolution; and
• in the case of (iii) above, from the subsidiary.

in the case of (iii) above, from the subsidiary.

In the event we are to acquire our own shares from a specific person other than a subsidiary at the price which exceeds market price, each other shareholder may request the directors to acquire the shares held by such shareholder as well.


101


Acquisitions described in (i) through (iii)and (ii) above must satisfy certain other requirements, including that the total amount of the purchase price may not exceed the distributable amount.
• Shareholders of Unknown Location

Shareholders of Unknown Location

We are not required to send a notice to a shareholder if a notice to such shareholder fails to arrive at the registered address of the shareholder in our register of shareholders or at the address otherwise notified to us continuously for five years or more.

In addition, we may dispose of the shares at the then market price of the shares and hold or deposit the proceeds for such shareholder, the location of which is unknown, (i) notices to the shareholders fails to arrive continuously for five years or more at the registered address of the shareholder in our register of shareholders or at the address otherwise notified to us, and (ii) the shareholder fails to receive dividends on the shares continuously for five years or more at the address registered in our register of shareholders or at the address otherwise notified to us.

• American Depositary Receipts

American Depositary Receipts

The current ADS/share ratio is 100 ADSs per each share of common stock.

For further information regarding our American Depositary Receipt program, please refer to the our registration statement filed with the Securities and Exchange Commission onForm 20-F on February 8, 2002.

• Reporting of Substantial Shareholdings

Reporting of Substantial Shareholdings

The Financial Instruments and Exchange LawAct of Japan and its related regulations require any person who has become, solely or jointly, a holder of more than 5% of the total issued shares of a company that is listed on any Japanese financial instruments exchange, to file a report with the director of the competent Local Finance Bureau of the Ministry of Finance within five business days from the date of becoming such holder. With certain exceptions, a similar report must also be filed in respect of any subsequent change of 1% or more in the holding or of any change specified in the ordinance in material matters set out in any previously-filed reports. For this purpose, shares issuable upon exercise of stock acquisition rights are taken into account in determining both the number of shares held by the holder and the issuer’s total issued shares. Copies of each report must also be furnished to the issuer of the shares and to all Japanese financial instruments exchanges on which the shares are listed. These reports are made available for public inspection.

• Daily Price Fluctuation Limits under Japanese Financial Instruments Exchange Rules

Daily Price Fluctuation Limits under Japanese Financial Instruments Exchange Rules

Share prices on Japanese financial instruments exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges set daily price limits, which limit the maximum range of fluctuation within a single trading day. Daily price limits are set according to the previous day’s closing price or special quote. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.


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On June 11, 2010,9, 2011, the closing price of our shares on the Tokyo Stock Exchange was ¥133,300¥146,000 per share. The following table shows the daily price limit for a stock on the Tokyo Stock Exchange with a closing price of between ¥100,000 and ¥150,000 per share, as well as the daily price limit if our per share price were to rise to between ¥150,000 and ¥200,000, or fall to between ¥70,000 and ¥100,000.

Selected Daily Price Limits

                 
        Maximum Daily Price
Previous Day’s Closing Price or Special Quote Movement
 
Over ¥70,000   Less than  ¥100,000  ¥15,000 
Over  100,000   Less than   150,000   30,000 
Over  150,000   Less than   200,000   40,000 

Previous Day’s Closing Price or Special Quote

   Maximum Daily Price
Movement
 

Over

   ¥    70,000    Less than  ¥  100,000    ¥  15,000  

Over

   100,000    Less than   150,000     30,000  

Over

   150,000    Less than   200,000     40,000  

For a history of the trading price of our shares on the Tokyo Stock Exchange, see Item 9.A.

C.
C.  Material Contracts

We have not entered into any material contracts (which would present any significant impact on our financial condition), other than in the ordinary course of business.

D.
D.  Exchange Controls

There are no laws, decrees, regulations or other legislation which materially affect our ability to import or export capital for our use or our ability to pay dividends to nonresident holders of our shares.

E.
E.  Taxation
1.  United States Federal Income Taxation

1. United States Federal Income Taxation

This section describes the material United States federal income tax consequences of owning shares or ADSs. It applies to you only if you are a U.S. holder (as defined below) and hold your shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

a dealer in securities;

a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

• a dealer in securities;
• a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;
• a tax-exempt organization;
• a life insurance company;
• a person liable for alternative minimum tax;
• a person that actually or constructively owns 10% or more of our voting stock;
• a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or
• a person whose functional currency is not the U.S. dollar.

a tax-exempt organization;

a life insurance company;

a person liable for alternative minimum tax;

a person that actually or constructively owns 10% or more of our voting stock;

a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or

a person whose functional currency is not the U.S. dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the Convention Between the Government of the United States of America and the Government of the Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respectRespect to Taxes on Income (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of The Bank of New York Mellon as depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

If a partnership holds shares or ADSs, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the


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shares or ADSs should consult its tax advisor with regard to the United States federal income tax treatment of an investment in shares or ADSs.

In general, and taking into account this assumption,the earlier assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income tax.

You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are for United States federal income tax purposes:

a citizen or resident of the United States;

a domestic corporation;

• a citizen or resident of the United States;
• a domestic corporation;
• an estate whose income is subject to United States federal income tax regardless of its source; or
• a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

an estate whose income is subject to United States federal income tax regardless of its source; or

a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

You should consult your own tax advisor regarding the United States federal, state and local and the Japanese and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.

2.  Taxation of Dividends

2. Taxation of Dividends

Under the United States federal income tax laws, and subject to the passive foreign investment company rules discussed below, if you are a U.S. holder, the gross amount of any dividend paid by us out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) is subject to United States federal income taxation. If you are a non corporate U.S. holder, dividends paid to you in taxable years beginning before January 1, 20112013 that constitute qualified dividend income will be taxable to you at a maximum tax rate of 15% provided that you hold the shares or ADSs for more than 60 days during the121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends paid by us with respect to our shares or ADSs generally will be qualified dividend income. You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend is taxable to you when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will

be the U.S. dollar value of the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a nontaxable return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain.

Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable or deductible against your United States federal income tax liability. To the extent a refund of the tax withheld is available to you under Japanese law or under the Treaty, the amount of tax that is refundable will not be eligible for credit against your United States federal income tax liability. Please see “Japanese Taxation”, below, for the procedures for obtaining a reduced rate of withholding under the Treaty or a tax refund. In addition, special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate. Dividends will be income from sources outside the United States and will, depending on your circumstances, generally be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to you.


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Distributions of additional shares or ADSs to you with respect to shares or ADSs that are made as part of apro ratadistribution to all of our shareholders generally will not be subject to United States federal income tax. Your basis in the new shares or ADSs received will be determined by allocating your basis in the shares or ADSs you held at the time of the distribution between the new shares or ADSs and the shares or ADSs you held at the time of the distribution based on their relative fair market values on the date of the distribution.
• Taxation of Capital Gains

Taxation of Capital Gains

Subject to the passive foreign investment company rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for the United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares or ADSs. Capital gain of a non-corporate U.S. holder recognized in taxable years beginning before January 1, 2013 is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

• Passive Foreign Investment Company Rules

Passive Foreign Investment Company Rules

We do not expect our shares and ADSs to be treated as stock of a passive foreign investment company, or “PFIC,” for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. If we were to be treated as a PFIC, unless a U.S. holder elects to be taxed annually on a mark-to-market basis with respect to the shares or ADSs, gain realized on the sale or other disposition of your shares or ADSs would in general not be treated as capital gain. Instead, if you are a U.S. holder, you would be treated as if you had realized such gain and certain “excess distributions” ratably over your holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your shares or ADSs. In addition, dividends that you receive from us will not be eligible for the special tax rates applicable to qualified dividend income if we are treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

If you own shares or ADSs during any year that we are a PFIC with respect to you, you must file Internal Revenue Service Form 8621.
3.  Japanese Taxation

3. Japanese Taxation

The following is a summary of the principal Japanese tax consequences to owners of our shares or ADSs who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which income from our shares is attributable. The tax treatment is subject to possible changes (including changes that may be introduced if a bill currently proposed by the Japanese government is made into law) in the applicable Japanese laws or double taxation conventions occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor. Potential investors should consult their own tax advisors as to:

the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;

the laws of the jurisdiction of which they are resident; and

• the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;
• the laws of the jurisdiction of which they are resident; and
• any tax treaty between Japan and their country of residence.

any tax treaty between Japan and their country of residence.

Generally, a non-resident individual or a non-Japanese corporation as a holder of shares or ADSs is subject to Japanese withholding tax on dividends paid by us. In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by us to a non-resident individual of Japan or a non-Japanese corporation is 20%. With respect to dividends paid on listed shares issued by a Japanese corporation (such as our shares) to a non-resident individual of Japan or a non-Japanese corporation, the aforementioned 20% withholding tax rate is reduced to (i) 7% for dividends to be paid untildue and payable on or before December 31, 2011,2013, and (ii) 15% for dividends to be paid thereafter, exceptdue and payable thereafter. This tax reduction is not available for dividends paid to anya non-resident individual shareholder who holds 5% or morea certain ratio (or more) of the issued shares of that corporation.a Japanese corporation, such ratio being 5% with respect to dividends to be due and payable on or before September 30, 2011 and 3% thereafter. Japan has entered into income tax treaties conventions or agreements, whereby the maximumabove-mentioned withholding tax rate is reduced, generally set at


105


to 15% for portfolio investors with, among others, Australia, Belgium, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, and Switzerland. Pursuant toSwitzerland, while the Convention Betweenincome tax treaties with Australia, France, the United Kingdom and the United States of America and Japangenerally reduce the withholding tax rate to 10% for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, a portfolio investor that is a U.S. holder that is eligible for benefitsinvestors. In addition, under the treaty is generally subject to Japanese withholding tax on dividends on shares at a rate of 10%. A similar withholding tax treatment applies under theincome tax treaty between the United KingdomStates and Japan, for dividends at 10%, underpaid to pension funds of qualified United States residents eligible to enjoy treaty benefits are exempt from Japanese income taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds. Under the income tax treaty between FranceJapan and Japan for portfolio investors on dividends taxed at 10%. In addition, under the tax treaty between Australia and Japan, the standard treaty withholding rate on dividends taxed on or after January 1, 2009 has been reduced in general from 15%United Kingdom, similar treatment will be applied to 10%.dividends. Under Japanese tax law, theany reduced maximum rate applicable under thea tax treaties, conventions or agreementstreaty shall be applicable, subject to completion of below-described application procedures, exceptavailable when such maximum rate is higher thanbelow the rate otherwise applicable under the Japanese statutory rate.
tax law referred to in the preceding paragraph with respect to the dividends to be paid by us on the shares.

Non-resident holders who are entitled to a reduced rate of Japanese withholding tax on payments of dividends on the shares by us are required to submit an Application Form for the Income Tax Convention regarding Relief from Japanese Income Tax on Dividends in advance through us to the relevant tax authority before the payment of dividends. A standing proxy for non-resident holders may provide the application. With respect to ADSs, this reduced rate is applicable if the depositary or its agent submits in duplicate two Application Forms for Income Tax Convention (one is FORM 4 subtitled “Extension of Time for Withholding of Tax on Dividends with respect to Foreign Depositary Receipt” to the payer of dividends, who has to file the original with the district director of tax office for the place where the payer resides, by the day before the payment of dividends and the other is FORM 5 subtitled “Relief from Japanese Income Tax on Dividends with respect to Foreign Depositary Receipt” to the district director of tax office through the payer of Dividends in eight months from the day following the base date of payment of dividends for application purposes for which FORM 4 has been submitted). To claim this reduced rate, a non-resident holder of ADSs will be required to file proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. Non-resident holders who do not submit an application in

advance will generally be entitled to claim a refund from the relevant Japanese tax authority of withholding taxes withheld in excess of the rate of an applicable tax treaty.

Gains derived from the sale of shares or ADSs outside Japan, or from the sale of shares within Japan by a nonresident holder, generally are not subject to Japanese income or corporation taxes provided that such gains are from portfolio investments where the shareholding ratio is within certain prescribed level.

Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired shares or ADSs as a legatee, heir or donee, even if the individual is not a Japanese resident.

F.
F.  Dividends and Paying Agents

Not applicable.

G.
G.  Statement by Experts

Not applicable.

H.
H.  Documents on Display

We have filed with the SEC this annual report onForm 20-F under the Securities Exchange Act of 1934 with respect to our shares and ADSs.

You may review a copy of the annual report and other information without charge at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may also getobtain copies of all or any portion of the annual report from the public reference room. For information regarding the procedures of the public reference room, please call the SEC at1-800-SEC-0330. The Securities and Exchange CommissionSEC also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.


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SEC.


As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.

I.
I.  Subsidiary Information

Not applicable.

Item 11.Quantitative and Qualitative Disclosures about Market Risk

Item 11. Quantitative and Qualitative Disclosures about Market Risk

We are primarily exposed to market risks from changes in interest rates, foreign currency exchange rates and stock prices. The fair value of our assets and liabilities, and our earnings and cash flows may be negatively impacted by these market risks.

To manage these risks, of fluctuating interest rates and foreign currency exchange rates, we use derivative instruments such as interest rate swap agreements, foreign exchange forward contracts, and foreign currency option contracts, etcetc. as needed. The derivative instruments are executed with creditworthy financial institutions and our management believes that there is little risk of default by these counterparties. We set and follow internal regulations that establish conditions to enter into derivative contracts and procedures offor approving and monitoring such contracts. We do not hold or issue derivative instruments for trading purposes.

No specific hedging activities are taken against the pricefluctuations in prices of fluctuations of stocks held by us as marketable securities.

Interest rate risk

We use interest rate swap transactions, under which we receive fixed rate interest payments and pay floating rate interest payments, to hedge the changes in fair value of certain debt as a part of our asset-liability management (“ALM”).

The following table below provides information about financial instruments that are sensitive to changes in interest rates:

                                     
  Weighted
                
  Average
                
  Interest
               Fair
  Rate (per
 Expected Maturity (Year Ending March 31) value
  annum) 2011 2012 2013 2014 2015 Thereafter Total 3/31/10
    (Millions of yen)
 
DEBT
                                    
Corporate bonds                                    
Japanese Yen Bonds  1.2%  163,630   168,467   60,000   70,000      110,000   572,097   583,109 
Borrowings from banks and others                                    
Japanese Yen Loans  1.4%  17,000   6,000   15,000            38,000   38,684 
Euro Loans  4.6%  86   86               172   173 
Long term debt, including current portion Total      180,716   174,553   75,000   70,000      110,000   610,269   621,966 
                                     
    Expected Maturity and Weighted Average Interest Rate (per annum)
 Fair
    (Year Ending March 31) value
    2011 2012 2013 2014 2015 Thereafter Total 3/31/10
    (Millions of yen)
 
INTEREST RATE SWAP AGREEMENTS
                                    
Fixed to Floating (Japanese Yen)                                    
Notional Amount      70,000   165,800               235,800   3,297 
Fixed receive rate      1.4%  1.6%              1.5%    
Floating pay rate      0.5%  0.8%              0.7%    


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   Weighted
Average
Interest
Rate (per
annum)
  Millions of yen 
    Expected Maturity  Fair
value
3/31/11
 
    Year ending March 31,  
        2012      2013  2014  2015  2016  Thereafter        Total        

DEBT

          

Corporate bonds

Japanese Yen Bonds

   1.2  167,032    60,000    70,000            110,000    407,032    417,139  

Borrowings from banks and others

          

Japanese Yen Loans

   1.4  6,000    15,000                    21,000    21,274  

Euro Loans

   2.4  70                        70    70  

Long term debt, including current portion Total

    173,102    75,000    70,000            110,000    428,102    438,483  
      Millions of yen 
      Expected Maturity and Weighted Average Interest Rate (per  annum)  Fair
value
3/31/11
 
      Year ending March 31,  
      2012  2013  2014  2015  2016  Thereafter  Total  

INTEREST RATE SWAP AGREEMENTS

   

        

Fixed to Floating

(Japanese Yen)

  

  

        

Notional Amount

  

  165,800                        165,800    1,232  

Fixed receive rate

  

  1.6%                        1.6%   

Floating pay rate

  

  0.7%                        0.7%   

Foreign exchange risk

In order to decreasemitigate foreign currency risks we engage in foreign currency hedge and option transactions. As of March 31, 2010,2011, the foreign exchange forward contracts outstanding totaled ¥4,478¥4,296 million, and had a fair valuewith an unrealized loss of ¥108¥154 million. As of March 31, 2010,2011, the foreign currency option transaction contracts outstanding totaled ¥21,285¥15,143 million, and had a fair valuewith an unrealized loss of ¥1,552¥1,859 million.

Investment price risk

The fair values of a certain investments of ours, primarily in marketable securities, expose us to fluctuation risks of securities prices. In general, we have invested in highly-liquid and low-risk instruments, which are not held for trading purposes. These investments are subject to changes in the market prices of the securities. The following table below provides information about our market sensitive marketable securities and constitutes a “forward-looking statement.”

         
  March 31,
  2010
  Carrying
 Fair
  Amount Value
  (Millions of yen)
 
Equity securities available-for-sale  136,627   136,627 
Debt securities available-for-sale:        
Due within 1 year      
Due after 1 year through 5 years  4   4 
Due after 5 years through 10 years      
Due after 10 years      
Total  136,631   136,631 
securities:

   Millions of yen 
   March 31, 2011 
   Carrying
Amount
   Fair Value 

Equity securities available-for-sale

   117,759     117,759  

Debt securities available-for-sale:

    

Due within 1 year

          

Due after 1 year through 5 years

   4     4  

Due after 5 years through 10 years

          

Due after 10 years

          
          

Total

   117,763     117,763  
          

Concentrations of credit risk

As of March 31, 2010,2011, we did not have any significant concentration of business transacted with an individual counterparty or groups of counterparties that could, if suddenly eliminated, severely impact our operations.


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Item 12. Description of Securities Other Than Equity Securities

Item 12.Description of Securities Other Than Equity Securities
Fees payable by ADR Holders

The following table shows the fees and charges that a holder of our ADR may have to pay, either directly or indirectly:

Services

  

Fees[USD]

ServicesFees[USD]

Taxes and other governmental charges

  As applicable

Such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Issuer or Foreign Registrar and applicable to transfers of Shares to the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder

  As applicable

Such cable, telex and facsimile transmission expenses as are expressly provided in this Deposit Agreement

  As applicable

Such expenses as are incurred by the Depositary in the conversion of Foreign Currency

  As applicable

The execution and delivery of Receipts and the surrender of Receipts

  $5.00 or less per 100 ADR

Any cash distribution made pursuant to the Deposit Agreement

  $.02 or less per ADR

The distribution of securities, such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a results of the deposit of such securities, but which securities are instead distributed by the Depositary to OwnersOwners.

  As applicable

Fees paid to DOCOMO by the Depositary

The Bank of New York Mellon, as Depositary, has agreed to reimburse DOCOMO for the New York Stock Exchange listing fees of $38,000 for the calendar year 2010. Furthermore, from April 1, 20092010 to March 31, 2010,2011, the Bank of New York Mellon has waived a total of $133$131 thousand in fees associated with the administration of the ADR program, investor relations expenses and administrative fees for routine corporate actions such as, among others, proxy process fees and cash distribution process fees, in addition to their standard fees for providing investor relations information services.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Item 13.Defaults, Dividend Arrearages and Delinquencies

None.

Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15.Controls and Procedures
1.  Disclosure Controls and Procedures

Item 15. Controls and Procedures

1. Disclosure Controls and Procedures

The Company’s management carried out an evaluation, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 20102011 pursuant to the U.S. Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 20102011 were effective.


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2. Management’s Report on Internal Control over Financial Reporting

2.  Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) under the U.S. Securities Exchange Act of 1934. Internal control over financial reporting of the Company is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of internal control to future periods are subject to risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 20102011 by using the criteria set forth in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon this evaluation, our management concluded that the Company’s internal control over financial reporting as of March 31, 20102011 was effective.

Our independent registered public accounting firm, KPMG AZSA & Co.,LLC, has issued an audit report on the effectiveness of our internal control over financial reporting as of March 31, 2010,2011, which appears onpage F-3 of this annual report onForm 20-F.

3. Changes in Internal Control over Financial Reporting

3.  Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the year ended March 31, 20102011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A.Audit Committee Financial Expert

Item 16A. Audit Committee Financial Expert

Our board of corporate auditors has resolved to elect Mr. Yoshitaka Makitani and Mr. Takaaki WakasugiMs. Eiko Tsujiyama as an “audit committee financial experts”expert” within the meaning of the rules of the Securities and Exchange Commission. In addition, Mr. Makitani and Mr. Wakasugi areMs. Tsujiyama is an outside corporate auditorsauditor under the Corporation Law and areis independent from us.

Item 16B.Code of Ethics

Item 16B. Code of Ethics

We have a code of ethics that applies to our chief executive officer, chief financial officer and other senior officers in order to promote honesty, integrity, transparency, and ethical conduct in such persons’ performance of their management responsibilities. Our code of ethics, as of June 24, 2010,23, 2011, is attached to this annual report onForm 20-F as exhibit 11.1.

Item 16C.

Principal Accountant Fees and Services
Item 16C. Principal Accountant Fees and Services

Fees Paid to the Independent Auditor

The Company and its subsidiaries engaged KPMG AZSA & Co.LLC to perform an annual audit of the Company’s financial statements. Audit fees and audit-related fees paid to KPMG AZSA & Co.LLC and its affiliates for the year ended March 31, 20102011 were ¥892¥888 million. In addition, the fees other than audit fees and audit-related fees we paid to KPMG AZSA & Co.LLC and its affiliates were ¥26¥84 million as tax fees.


110

fees, etc.


The following table presents information concerning fees paid to KPMG AZSA & Co.LLC and its affiliates for the years ended March 31, 20092010 and 2010.
         
  Year ended
 
  March 31, 
  2009  2010 
  (in millions) 
 
Audit fees(1)
 ¥920  ¥892 
Audit-related fees(2)
  4    
Tax fees(3)
  49   26 
All other fees(4)
      
         
Total ¥973  ¥918 
2011.

   Millions of yen 
    Year ended March 31, 
        2010           2011     

Audit fees (1)

  ¥  892    ¥  888  

Audit-related fees (2)

          

Tax fees (3)

   26     27  

All other fees (4)

        57  
          

Total

  ¥918    ¥972  
          

(1)These are fees for professional services performed by KPMG AZSA & Co.LLC and its affiliates for the audit of the Company and its subsidiaries’ annual financial statements and services that are normally provided in connection with statutory and regulatory filings.
(2)These are fees for assurance and related services rendered by these accountants that are reasonably related to the performance of the audit or review of the Company’s and its subsidiaries’ financial statements such as the issuance of comfort letters in connection with corporate bond offerings, and that are not reported under audit fees.
(3)These are fees for professional services performedrendered by KPMG AZSA & Co. and its affiliates tax division except those related to the audit and includesfor tax returns and tax consultations.consultation services.
(4)These are fees for the services provided by KPMG AZSA & Co.LLC and its affiliates, other than the fees reported in paragraphs (1) through (3)., such as providing guidance and counsel on International Financial Reporting Standards.

Pre-Approval of Services Provided by KPMG AZSA & Co.LLC and its affiliates

The Company and its subsidiaries have adopted policies and procedures for the Company’s board of directorsdirectors’ and the board of corporate auditors’ pre-approving all audit and non-audit work performed by KPMG AZSA & Co.LLC and its affiliates. Specifically, the policies and procedures prohibit KPMG AZSA & Co.LLC and its affiliates from performing any services for the Company or its subsidiaries without the prior approval of the Company’s board of directors and the board of corporate auditors.

All of the services provided by KPMG AZSA & Co.LLC and its affiliates sinceRule 2-01(c)(7) ofRegulation S-X became effective were approved by the Company’s board of directors and the board of corporate auditors pursuant to the approval policies described above, and none of such services were approved pursuant to the procedures described inRule 2-01(c)(7)(i)(C) ofRegulation S-X, which waives the general requirement for pre-approval in certain circumstances.

Item 16D.Exemptions from the Listing Standards for Audit Committees

Item 16D. Exemptions from the Listing Standards for Audit Committees

With respect to the requirements ofRule 10A-3 under the Securities Exchange Act of 1934 relating to listed company audit committees, which apply to us through Section 303A.06 of the New York Stock Exchange’s Listed Company Manual, we rely on an exemption provided by paragraph (c)(3) of that Rule available to foreign private issuers with boards of corporate auditors meeting certain requirements. For a New York Stock Exchange-listed Japanese company with a board of corporate auditors, the requirements for relying on paragraph (c)(3) ofRule 10A-3 are as follows:

 The board of corporate auditors must be established, and its members must be selected, pursuant to Japanese law expressly requiring such a board for Japanese companies that elect to have a corporate governance system with corporate auditors.

 Japanese law must and does require the board of corporate auditors to be separate from the board of directors.

 None of the members of the board of corporate auditors may be elected by management, and none of the listed company’s executive officers may be a member of the board of corporate auditors.

 Japanese law must and does set forth standards for the independence of the members of the board of corporate auditors from the listed company or its management.


111


 The board of corporate auditors, in accordance with Japanese law or the listed company’s governing documents, must be responsible, to the extent permitted by Japanese law, for the appointment, retention and oversight of the work of any registered public accounting firm engaged (including, to the extent permitted by Japanese law, the resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, including its principal accountant which audits its consolidated financial statements included in its annual reports onForm 20-F.

 To the extent permitted by Japanese law:

the board of corporate auditors must establish procedures for (i) the receipt, retention and treatment of complaints received by the listed company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by the listed company’s employees of concerns regarding questionable accounting or auditing matters;

• the board of corporate auditors must establish procedures for (i) the receipt, retention and treatment of complaints received by the listed company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by the listed company’s employees of concerns regarding questionable accounting or auditing matters;
• the board of corporate auditors must have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties; and
• the listed company must provide for appropriate funding, as determined by its board of corporate auditors, for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, (ii) compensation to any advisers employed by the board of corporate auditors, and (iii) ordinary administrative expenses of the board of corporate auditors that are necessary or appropriate in carrying out its duties.

the board of corporate auditors must have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties; and

the listed company must provide for appropriate funding, as determined by its board of corporate auditors, for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, (ii) compensation to any advisers employed by the board of corporate auditors, and (iii) ordinary administrative expenses of the board of corporate auditors that are necessary or appropriate in carrying out its duties.

In our assessment, our board of corporate auditors, which meets the requirements for reliance on the exemption in paragraph (c)(3) ofRule 10A-3 described above, is not materially less effective thansignificantly different from an audit committee meeting all the requirements of paragraph (b) ofRule 10A-3 (without relying on any exemption provided by that Rule) at acting independently of management and performing the functions of an audit committee as contemplated therein.

Item 16E.

Purchases of Equity Securities by Issuer and Affiliated Purchasers
Item 16E. Purchases of Equity Securities by Issuer and Affiliated Purchasers

ISSUER PURCHASES OF EQUITY SECURITIES

                 
      (c) Total Number
 (d) Maximum
      of
 Number
  (a) Total
   Shares Purchased as
 of Shares that May
  Number of
   Part of Publicly
 Yet Be Purchased
  Shares
 (b) Average Price
 Announced Plans
 Under the Plans or
Period Purchased Paid per Share or Programs Programs*
 
April 2009                
(from April 1 to April 30)  0      0   354,917 
May 2009                
(from May 1 to May 31)  0      0   354,917 
June 2009                
(from June 1 to June 30)  0      0   354,917 
July 2009                
(from July 1 to July 31)  0      0   0 
August 2009                
(from August 1 to August 31)  0      0   0 
September 2009                
(from September 1 to September 30)  0      0   0 
October 2009                
(from October 1 to October 31)  0      0   0 
November 2009                
(from November 1 to November 30)  154,065   129,815   154,065   5,935 
December 2009                
(from December 1 to December 31)  0      0   0 


112


Period

 (a) Total
Number of
Shares
Purchased
  (b) Average
Price Paid
per Share
(yen)
  (c) Total
Number  of

Shares Purchased
as Part of Publicly
Announced Plans
or Programs
  (d) Maximum
Number of
Shares that May
Yet Be Purchased
Under the Plans
or Programs *
 

April 2010 (from April 1 to April 30)

  0        0    0  

May 2010 (from May 1 to May 31)

  0        0    0  

June 2010 (from June 1 to June 30)

  0        0    0  

July 2010 (from July 1 to July 31)

  0        0    0  

August 2010 (from August 1 to August 31)

  0        0    0  

September 2010 (from September 1 to September 30)

  0        0    0  

October 2010 (from October 1 to October 31)

  0        0    0  

November 2010 (from November 1 to November 30)

  0        0    0  

December 2010 (from December 1 to December 31)

  22,155    143,026    22,155    137,845  

January 2011 (from January 1 to January 31)

  115,986    145,114    115,986    0  

February 2011 (from February 1 to February 28)

  0        0    0  

March 2011 (from March 1 to March 31)

  0        0    0  
                

Total

  138,141    144,779    138,141      
                

                 
      (c) Total Number
 (d) Maximum
      of
 Number
  (a) Total
   Shares Purchased as
 of Shares that May
  Number of
   Part of Publicly
 Yet Be Purchased
  Shares
 (b) Average Price
 Announced Plans
 Under the Plans or
Period Purchased Paid per Share or Programs Programs*
 
January 2010                
(from January 1 to January 31)  0      0   0 
February 2010                
(from February 1 to February 28)  0      0   0 
March 2010                
(from March 1 to March 31)  0      0   0 
                 
Total  154,065   129,815   154,065   0 
*The numbers from April 1company announced a share purchase plan, which was approved by the Board of Directors on December 17, 2010, authorizing the repurchase of up to June 30, 2009 for maximum number of shares to be purchased, described in column (d), are based on thean aggregate number of shares authorized at the general shareholders meeting held on June 20, 2008. The number for maximum number of shares to be purchased in November 2009, described in column (d), is based on the maximum number of 160,000 shares authorized atand up to an aggregate purchase price of 20 billion yen from December 20, 2010 to January 28, 2011. On January 26, 2011, the boardaggregate price of directors meeting held on November 9, 2009.share repurchases reached 19,999,930,791 yen, and thus the share repurchases were concluded in accordance with the aforesaid resolution.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

Item 16F.

Change in Registrant’s Certifying AccountantCommittees

Not applicable.
Item 16G.Corporate Governance
• Committees

Under the Corporation Law, Japanese joint stock corporations (kabushiki kaisha)(kabushiki kaisha) above a certain size whose shares are transferable without the approval of such corporations, including the Company, may elect to structure their corporate governance system to be either that of a company with a board of corporate auditors (kansayakukai secchigaisha)(kansayakukai secchigaisha) or that of a company with committees (iinkai secchigaisha)(iinkai secchigaisha). The Company is currently a company with a board of corporate auditors.

As a company with a board of corporate auditors, the Company is not required under the Corporation Law to have any outside directors on its board of directors. The tasks of auditing the performance of its directors and auditing the Company’s financial statements are assigned to the Company’s corporate auditors, who are separate from the Company’s directors. Under the Corporation Law, at least one half of a company’s corporate auditors are required to be “outside” corporate auditors who must meet certain requirements. An “outside” corporate auditor is defined as a corporate auditor who has never served as a corporate auditor, accounting councilor, executive officer, manager or any other employee of the Company or any of its subsidiaries.

In addition, the Securities Listing Regulations of the Tokyo Stock Exchange (“TSE”) requires the Company as a TSE-listed company to designate at least one “independent” director/corporate auditor. An “independent”

director/corporate auditor is defined as an outside director/corporate auditor who is unlikely to have conflicts of interest with general investors. As of June 2010,2011, we have appointed onetwo corporate auditorauditors as an “independent” director/corporate auditor.

• Board of Corporate Auditors
auditors.

Board of Corporate Auditors

Under the corporate auditor system that the Company employs, the board of corporate auditors is a legally separate and independent body from the board of directors. The function of the board of corporate auditors and each corporate auditor is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company: to audit the performance of the directors, and express an opinion if it is the opinion of the board of corporate auditors that the method, or the results, of the audit by the Company’s accounting firm is not suitable and express the reason for such opinion, for the protection of the Company’s shareholders.

113


Under the Corporation Law, the Company is required to have not less than three corporate auditors. The Articles of Incorporation of the Company permit it to have up to five corporate auditors. Currently, five corporate auditors of the Company have been elected. The term of office of each corporate auditor is for up to four years afterhis/her election, whereas the term of office of each director is for up to two years afterhis/her election.

With respect to the requirements ofRule 10A-3 under the U.S. Securities Exchange Act of 1934, relating to listed company audit committees, the Company relies on an exemption under that rule which is available to foreign private issuers with boards of corporate auditors meeting certain criteria.

• Directors

Directors

The Company’s directors must be elected at a general meeting of shareholders. Its board of directors does not have the power to fill vacancies thereon.

The Company’s corporate auditors must also be elected at a general meeting of shareholders. The Company’s board of directors must obtain the consent of its board of corporate auditors in order to submit a proposal for election of a corporate auditor to a general meeting of shareholders. The board of corporate auditors is also empowered to request that the Company’s directors submit a proposal for election of a corporate auditor to a general meeting of shareholders. All corporate auditors have the right to state their opinion concerning the election of a corporate auditor at the general meeting of shareholders.

• Compensation

Compensation

The maximum aggregate compensation amount for the Company’s directors and that of the Company’s corporate auditors must be, and accordingly has been, approved at a general meeting of shareholders.

The Company must also obtain the approval at a general meeting of shareholders if the Company desires to change such maximum amount of compensation.

The compensation amount for each director is determined by the Company’s President or another director who is delegated to do so by the board of directors, and that for each corporate auditor is determined upon consultation among the corporate auditors.

• Shareholder Approval with respect to any Equity Compensation Plan

Shareholder Approval with respect to any Equity Compensation Plan

Pursuant to the Corporation Law, if the Company desires to adopt an equity compensation plan under which stock acquisition rights are granted on specially favorable conditions (except where such rights are granted to all of its shareholders on apro ratabasis), the Company must approve the said plan by a “special resolution” of a general meeting of shareholders, where the quorum is one-third of the total number of voting rights and the approval of at least two-thirds of the voting rights represented at the meeting is required.

Item 17.

Financial Statements
In lieu of responding to this item, we have responded to Item 18 of this annual report.
Item 18.Financial Statements
17. Financial Statements

Not applicable.

Item 18. Financial Statements

The information required by this item is set forth beginning onpage F-2 of this annual report.


114


Item 19. Exhibits

Item 19.Exhibits
     
Exhibit
  
Number Description
 
 1.1 Articles of Incorporation of the registrant (English translation)
 1.2 Share Handling Regulations of the registrant (English translation)
 1.3 Regulations of the Board of Directors of the registrant (English translation)
 1.4 Regulations of the Board of Corporate Auditors of the registrant (English translation)*
 2.1 Form of Deposit Agreement among the registrant, The Bank of New York Mellon as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement onForm F-6 (File No. 333-9694) filed on May 15, 2002)
 11.1 Code of Ethics**
 12.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 12.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 13.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
 13.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
*Exhibit
Number

Description

1.1Articles of Incorporation of the registrant (English translation)
1.2Share Handling Regulations of the registrant (English translation)
1.3Regulations of the Board of Directors of the registrant (English translation)
1.4Regulations of the Board of Corporate Auditors of the registrant (English translation) *
2.1Form of Deposit Agreement among the registrant, The Bank of New York Mellon as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form F-6 (File No. 333-9694) filed on May 15, 2002)
11.1Code of Ethics **
12.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
13.2Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

*Previously filed with the Securities and Exchange Commission on June 25, 2007 and herein incorporated by reference.
**Previously filed with the Securities and Exchange Commission on June 27, 2006 and herein incorporated by reference.

We have not included as exhibits certain instruments with respect to our long-term debt. The amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We agree to furnish a copy of any such instrument to the Commission upon request.


115


FeliCa is a registered trademark of Sony Corporation.

Google, Android and Android Market are trademarks of Google Inc.

Wi-Fi is a registered trademark of the Wi-Fi Alliance.

Xperia is a trademark or registered trademark of Sony Ericsson Mobile Communications AB.

Windows Mobile is a trademark or registered trademark of Microsoft Corporation in the U.S. and other countries.

TOUCH WOOD is a registered trademark of Rightning Inc.

BlackBerry, related trademarks and names are the property of Research In Motion Limited and are registered and/or used in the U.S. and countries around the world. Used under license from Research In Motion Limited.

iPhone is a trademark of Apple Inc.

All other trademarks are the property of their respective owners.

NTT DOCOMO, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

   Page
 

   F-2  

   F-4  

   F-6  

   F-7  

   F-8  

   F-9  

Financial statement schedule for the years ended March 31, 2008, 2009, 2010 and 2010:2011:

Schedule II—Valuation and qualifying accounts

   
F-55F-56  


F-1


Report of Independent Registered Public Accounting Firm

The Board of Directors and the Shareholders

NTT DOCOMO, INC.:

We have audited the consolidated financial statements of NTT DOCOMO, INC. and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NTT DOCOMO, INC. and subsidiaries as of March 31, 20102011 and 2009,2010, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2010,2011, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), NTT DOCOMO, INC.’s internal control over financial reporting as of March 31, 2010,2011, based on criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 18, 201017, 2011 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

(signed) KPMG AZSA & Co.

LLC

Tokyo, Japan

June 18, 2010


F-217, 2011


Report of Independent Registered Public Accounting Firm

The Board of Directors and the Shareholders

NTT DOCOMO, INC.:

We have audited NTT DOCOMO, INC.’s internal control over financial reporting as of March 31, 2010,2011, based on criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NTT DOCOMO, INC.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, NTT DOCOMO, INC. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2010,2011, based on criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of NTT DOCOMO, INC. and subsidiaries as of March 31, 20102011 and 2009,2010, and the related consolidated statements of income and comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2010,2011, and our report dated June 18, 201017, 2011 expressed an unqualified opinion on those consolidated financial statements.

(signed) KPMG AZSA & Co.

LLC

Tokyo, Japan

June 18, 2010


F-317, 2011


NTT DOCOMO, INC. AND SUBSIDIARIES

MARCH 31, 20092010 and 20102011

         
  Millions of yen 
  2009  2010 
 
ASSETS
        
Current assets:
        
Cash and cash equivalents ¥599,548  ¥357,715 
Short-term investments        
Third parties  2,448   313,010 
Related parties     90,000 
Accounts receivable        
Third parties  822,548   827,052 
Related parties  12,515   11,174 
         
Sub-total  835,063   838,226 
Less: Allowance for doubtful accounts  (15,072)  (15,633)
         
Total accounts receivable, net  819,991   822,593 
Credit card receivables  72,996   126,009 
Inventories  123,206   141,277 
Deferred tax assets  102,903   100,545 
Prepaid expenses and other current assets        
Third parties  100,764   102,263 
Related parties  5,872   7,566 
         
Total current assets  1,827,728   2,060,978 
         
         
Property, plant and equipment:
        
Wireless telecommunications equipment  5,361,043   5,478,833 
Buildings and structures  814,056   830,921 
Tools, furniture and fixtures  519,213   516,084 
Land  198,985   199,018 
Construction in progress  99,232   83,608 
         
Sub-total  6,992,529   7,108,464 
Accumulated depreciation and amortization  (4,301,044)  (4,500,874)
         
Total property, plant and equipment, net  2,691,485   2,607,590 
         
         
Non-current investments and other assets:
        
Investments in affiliates  572,014   578,095 
Marketable securities and other investments  141,544   151,026 
Intangible assets, net  578,728   628,691 
Goodwill  154,385   198,436 
Other assets        
Third parties  261,724   247,530 
Related parties  11,716   10,381 
Deferred tax assets  248,896   274,048 
         
Total non-current investments and other assets  1,969,007   2,088,207 
         
Total assets
 ¥6,488,220  ¥6,756,775 
         

   Millions of yen 
   2010  2011 
ASSETS   

Current assets:

   

Cash and cash equivalents

  ¥357,715   ¥765,551  

Short-term investments

   

Third parties

   313,010    141,028  

Related parties

   90,000      

Accounts receivable

   

Third parties

   827,052    751,809  

Related parties

   11,174    10,602  
         

Sub-total

   838,226    762,411  

Credit card receivables

   126,009    160,446  

Less: Allowance for doubtful accounts

   (15,633  (18,021
         

Total accounts receivable and credit card receivables, net

   948,602    904,836  

Inventories

   141,277    146,357  

Deferred tax assets

   100,545    83,609  

Prepaid expenses and other current assets

   

Third parties

   102,263    107,380  

Related parties

   7,566    6,538  
         

Total current assets

   2,060,978    2,155,299  
         

Property, plant and equipment:

   

Wireless telecommunications equipment

   5,478,833    5,569,818  

Buildings and structures

   830,921    845,588  

Tools, furniture and fixtures

   516,084    507,914  

Land

   199,018    198,842  

Construction in progress

   83,608    95,251  
         

Sub-total

   7,108,464    7,217,413  

Accumulated depreciation and amortization

   (4,500,874  (4,694,094
         

Total property, plant and equipment, net

   2,607,590    2,523,319  
         

Non-current investments and other assets:

   

Investments in affiliates

   578,095    525,456  

Marketable securities and other investments

   151,026    128,138  

Intangible assets, net

   628,691    672,256  

Goodwill

   198,436    205,573  

Other assets

   

Third parties

   247,530    220,232  

Related parties

   10,381    29,687  

Deferred tax assets

   274,048    331,633  
         

Total non-current investments and other assets

   2,088,207    2,112,975  
         

Total assets

  ¥    6,756,775   ¥    6,791,593  
         

See accompanying notes to consolidated financial statements.


F-4


NTT DOCOMO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS — SHEETS—(Continued)

MARCH 31, 20092010 and 20102011

         
  Millions of yen 
  2009  2010 
 
LIABILITIES AND EQUITY
        
Current liabilities:
        
Current portion of long-term debt ¥29,000  ¥180,716 
Short-term borrowings     78 
Accounts payable, trade        
Third parties  545,717   524,526 
Related parties  122,808   107,911 
Accrued payroll  58,627   54,580 
Accrued interest  1,187   995 
Accrued income taxes  238,742   185,890 
Other current liabilities        
Third parties  150,241   131,337 
Related parties  2,113   2,129 
         
Total current liabilities  1,148,435   1,188,162 
         
Long-term liabilities:
        
Long-term debt (exclusive of current portion)  610,233   429,553 
Accrued liabilities for point programs  94,023   151,628 
Liability for employees’ retirement benefits  146,326   138,447 
Other long-term liabilities        
Third parties  143,103   184,036 
Related parties  2,792   2,503 
         
Total long-term liabilities  996,477   906,167 
         
Total liabilities  2,144,912   2,094,329 
         
Equity:
        
NTT DOCOMO, INC. shareholders’ equity        
Common stock, without a stated value —        
Authorized — 188,130,000 and 188,130,000 shares at March 31,
2009 and 2010, respectively
        
Issued — 43,950,000 and 43,790,000 shares at March 31,
2009 and 2010, respectively
        
Outstanding — 41,759,807 and 41,605,742 shares at March 31,
2009 and 2010, respectively
  949,680   949,680 
Additional paid-in capital  785,045   757,109 
Retained earnings  3,061,848   3,347,830 
Accumulated other comprehensive income (loss)  (65,689)  (37,379)
Treasury stock, 2,190,193 and 2,184,258 shares at March 31, 2009 and 2010, respectively, at cost  (389,299)  (381,363)
         
Total NTT DOCOMO, INC. shareholders’ equity  4,341,585   4,635,877 
Noncontrolling interests  1,723   26,569 
         
Total equity  4,343,308   4,662,446 
         
Commitments and contingencies
        
Total liabilities and equity
 ¥ 6,488,220  ¥ 6,756,775 
         

   Millions of yen 
   2010  2011 
LIABILITIES AND EQUITY   

Current liabilities:

   

Current portion of long-term debt

  ¥180,716   ¥173,102  

Short-term borrowings

   78    276  

Accounts payable, trade

   

Third parties

   524,526    495,842  

Related parties

   107,911    113,495  

Accrued payroll

   54,580    54,801  

Accrued interest

   995    916  

Accrued income taxes

   185,890    162,032  

Other current liabilities

   

Third parties

   131,337    120,993  

Related parties

   2,129    1,711  
         

Total current liabilities

   1,188,162    1,123,168  
         

Long-term liabilities:

   

Long-term debt (exclusive of current portion)

   429,553    255,000  

Accrued liabilities for point programs

   151,628    199,587  

Liability for employees’ retirement benefits

   138,447    152,647  

Other long-term liabilities

   

Third parties

   184,036    181,275  

Related parties

   2,503    2,322  
         

Total long-term liabilities

   906,167    790,831  
         

Total liabilities

   2,094,329    1,913,999  
         

Equity:

   

NTT DOCOMO, INC. shareholders’ equity

   

Common stock, without a stated value—

   

Authorized shares

   

188,130,000 shares at March 31, 2010

   

188,130,000 shares at March 31, 2011

   

Issued shares

   

43,790,000 shares at March 31, 2010

   

43,650,000 shares at March 31, 2011

   

Outstanding shares

   

41,605,742 shares at March 31, 2010

   

41,467,601 shares at March 31, 2011

   949,680    949,680  

Additional paid-in capital

   757,109    732,914  

Retained earnings

   3,347,830    3,621,965  

Accumulated other comprehensive income (loss)

   (37,379  (76,955

Treasury stock

   

2,184,258 shares at March 31, 2010

   

2,182,399 shares at March 31, 2011

   (381,363  (377,168
         

Total NTT DOCOMO, INC. shareholders’ equity

   4,635,877    4,850,436  

Noncontrolling interests

   26,569    27,158  
         

Total equity

   4,662,446    4,877,594  
         

Commitments and contingencies

   

Total liabilities and equity

  ¥  6,756,775   ¥  6,791,593  
         

See accompanying notes to consolidated financial statements.


F-5


NTT DOCOMO, INC. AND SUBSIDIARIES

YEARS ENDED MARCH 31, 2008, 2009, 2010 and 20102011

             
  Millions of yen 
  2008  2009  2010 
 
Operating revenues:
            
Wireless services            
Third parties ¥4,107,844  ¥3,786,917  ¥3,727,801 
Related parties  57,390   54,165   49,108 
Equipment sales            
Third parties  538,195   600,630   503,086 
Related parties  8,398   6,268   4,409 
             
Total operating revenues  4,711,827   4,447,980   4,284,404 
             
Operating expenses:
            
Cost of services (exclusive of items shown separately below)            
Third parties  561,763   630,415   685,774 
Related parties  249,370   242,023   214,868 
Cost of equipment sold (exclusive of items shown separately below)  1,150,261   827,856   698,495 
Depreciation and amortization  776,425   804,159   701,146 
Selling, general and administrative            
Third parties  1,025,812   980,251   1,031,011 
Related parties  139,884   132,317   118,865 
             
Total operating expenses  3,903,515   3,617,021   3,450,159 
             
Operating income
  808,312   830,959   834,245 
             
Other income (expense):
            
Interest expense  (4,556)  (4,618)  (5,061)
Interest income  2,487   2,162   1,289 
Other, net  (5,555)  (48,030)  5,684 
             
Total other income (expense)  (7,624)  (50,486)  1,912 
             
Income before income taxes and equity in net income (losses) of affiliates
  800,688   780,473   836,157 
Income taxes:
            
Current  334,462   395,467   381,507 
Deferred  (11,507)  (87,067)  (43,310)
             
Total income taxes  322,955   308,400   338,197 
             
Income before equity in net income (losses) of affiliates
  477,733   472,073   497,960 
Equity in net income (losses) of affiliates, net of applicable taxes  13,553   (672)  (852)
             
Net income
  491,286   471,401   497,108 
             
Less: Net (income) loss attributable to noncontrolling interests  (84)  472   (2,327)
             
Net income attributable to NTT DOCOMO, INC. 
 ¥491,202  ¥471,873  ¥494,781 
             
             
Net income
 ¥491,286  ¥471,401  ¥497,108 
Other comprehensive income (loss):
            
Unrealized holding gains (losses) onavailable-for-sale securities, net of applicable taxes
  (16,769)  (30,310)  13,159 
Less: Reclassification of realized gains and losses, net of applicable taxes included in net income  431   28,709   1,937 
Change in fair value of derivative instruments, net of applicable taxes  (525)  (4)  (63)
Less: Reclassification of realized gains and losses, net of applicable taxes included in net income  658   (121)   
Foreign currency translation adjustment, net of applicable taxes  7,299   (47,538)  5,917 
Less: Reclassification of realized gains and losses, net of applicable taxes included in net income  (127)  (54)  (35)
Pension liability adjustment, net of applicable taxes            
Actuarial gains (losses) arising during period, net  (4,909)  (16,316)  6,828 
Less: Amortization of prior service cost  (1,338)  (1,340)  (1,340)
Less: Amortization of actuarial gains and losses  502   797   1,858 
Less: Amortization of transition obligation  75   81   79 
Less: Reclassification of actuarial gains and losses due to transfer of the substitutional portion to the government  2,232       
             
Total other comprehensive income (loss)  (12,471)  (66,096)  28,340 
             
Comprehensive income
  478,815   405,305   525,448 
             
Less: Comprehensive (income) loss attributable to noncontrolling interests  (77)  469   (2,357)
             
Comprehensive income attributable to NTT DOCOMO, INC. 
 ¥478,738  ¥405,774  ¥523,091 
             
             
Per share data:
            
Weighted average common shares outstanding — Basic and Diluted (shares)  43,120,586   42,238,715   41,705,738 
             
Basic and Diluted earnings per share attributable to NTT DOCOMO, INC. (yen) ¥11,391.36  ¥11,171.58  ¥11,863.62 
             

  Millions of yen 
  2009  2010  2011 

Operating revenues:

   

Wireless services

   

Third parties

 ¥3,786,917   ¥3,727,801   ¥3,702,658  

Related parties

  54,165    49,108    44,211  

Equipment sales

   

Third parties

  600,630    503,086    474,506  

Related parties

  6,268    4,409    2,898  
            

Total operating revenues

  4,447,980    4,284,404    4,224,273  
            

Operating expenses:

   

Cost of services (exclusive of items shown separately below)

   

Third parties

  630,415    685,774    678,666  

Related parties

  242,023    214,868    217,836  

Cost of equipment sold (exclusive of items shown separately below)

  827,856    698,495    662,829  

Depreciation and amortization

  804,159    701,146    693,063  

Selling, general and administrative

   

Third parties

  980,251    1,031,011    1,012,267  

Related parties

  132,317    118,865    114,883  
            

Total operating expenses

  3,617,021    3,450,159    3,379,544  
            

Operating income

  830,959    834,245    844,729  
            

Other income (expense):

   

Interest expense

  (4,618  (5,061  (4,943

Interest income

  2,162    1,289    1,326  

Other, net

  (48,030  5,684    (5,774
            

Total other income (expense)

  (50,486  1,912    (9,391
            

Income before income taxes and equity in net income (losses) of affiliates

  780,473    836,157    835,338  

Income taxes:

   

Current

  395,467    381,507    355,734  

Deferred

  (87,067  (43,310  (17,897
            

Total income taxes

  308,400    338,197    337,837  
            

Income before equity in net income (losses) of affiliates

  472,073    497,960    497,501  

Equity in net income (losses) of affiliates, net of applicable taxes

  (672  (852  (5,508
            

Net income

  471,401    497,108    491,993  
            

Less: Net (income) loss attributable to noncontrolling interests

  472    (2,327  (1,508
            

Net income attributable to NTT DOCOMO, INC.

 ¥471,873   ¥494,781   ¥490,485  
            

Net income

 ¥471,401   ¥497,108   ¥491,993  

Other comprehensive income (loss):

   

Unrealized holding gains (losses) on available-for-sale securities, net of applicable taxes

  (30,310  13,159    (12,297

Less: Reclassification of realized gains and losses, net of applicable taxes included in net income

  28,709    1,937    7,003  

Change in fair value of derivative instruments, net of applicable taxes

  (4  (63  4  

Less: Reclassification of realized gains and losses, net of applicable taxes included in net income

  (121        

Foreign currency translation adjustment, net of applicable taxes

  (47,538  5,917    (28,258

Less: Reclassification of realized gains and losses, net of applicable taxes included in net income

  (54  (35  356  

Pension liability adjustment, net of applicable taxes

   

Actuarial gains (losses) arising during period, net

  (16,316  6,828    (6,367

Prior service cost arising during period, net

          48  

Less: Amortization of prior service cost

  (1,340  (1,340  (1,346

Less: Amortization of actuarial gains and losses

  797    1,858    1,144  

Less: Amortization of transition obligation

  81    79    88  
            

Total other comprehensive income (loss)

  (66,096  28,340    (39,625
            

Comprehensive income

  405,305    525,448    452,368  
            

Less: Comprehensive (income) loss attributable to noncontrolling interests

  469    (2,357  (1,459
            

Comprehensive income attributable to NTT DOCOMO, INC.

 ¥405,774   ¥523,091   ¥450,909  
            

Per share data:

   

Weighted average common shares outstanding—Basic and Diluted (shares)

    42,238,715      41,705,738      41,576,859  
            

Basic and Diluted earnings per share attributable to NTT DOCOMO, INC. (yen)

 ¥11,171.58   ¥11,863.62   ¥11,797.07  
            

See accompanying notes to consolidated financial statements.


F-6


NTT DOCOMO, INC. AND SUBSIDIARIES

YEARS ENDED MARCH 31, 2008, 2009, 2010 and 20102011

                                 
  Millions of yen 
  NTT DOCOMO, INC. shareholders’ equity          
           Accumulated
     Total NTT
       
     Additional
     other
  Treasury
  DOCOMO, INC.
       
  Common
  paid-in
  Retained
  comprehensive
  stock
  shareholders’
  Noncontrolling
  Total
 
  stock  capital  earnings  income (loss)  at cost  equity  interests  equity 
 
Balance at March 31, 2007 ¥949,680  ¥1,135,958  ¥2,493,155  ¥12,874  ¥(430,364) ¥4,161,303  ¥1,164  ¥4,162,467 
                                 
Purchase of treasury stock                  (173,002)  (173,002)      (173,002)
Retirement of treasury stock      (187,387)          187,387           
Cash dividends declared (¥4,400 per share)          (190,543)          (190,543)      (190,543)
Acquisition of new subsidiaries                         44   44 
Others                         3   3 
Comprehensive income                                
Net income          491,202           491,202   84   491,286 
Other comprehensive income (loss)                                
Unrealized holding gains (losses) onavailable-for-sale securities
              (16,331)      (16,331)  (7)  (16,338)
Change in fair value of derivative instruments              133       133       133 
Foreign currency translation adjustment              7,172       7,172       7,172 
Pension liability adjustment:                                
Actuarial gains (losses) arising during period, net              (4,909)      (4,909)      (4,909)
Less: Amortization of prior service cost              (1,338)      (1,338)      (1,338)
Less: Amortization of actuarial gains and losses             502       502       502 
Less: Amortization of transition obligation              75       75       75 
Less: Reclassification of actuarial gains and losses due to transfer of the substitutional portion to the government              2,232       2,232       2,232 
                                 
Balance at March 31, 2008 ¥949,680  ¥948,571  ¥2,793,814  ¥410  ¥(415,979) ¥4,276,496  ¥1,288  ¥4,277,784 
                                 
Purchase of treasury stock                  (136,846)  (136,846)      (136,846)
Retirement of treasury stock      (163,526)          163,526           
Cash dividends declared (¥4,800 per share)          (203,839)          (203,839)      (203,839)
Acquisition of new subsidiaries                         944   944 
Others                         (40)  (40)
Comprehensive income                                
Net income          471,873           471,873   (472)  471,401 
Other comprehensive income (loss)                                
Unrealized holding gains (losses) onavailable-for-sale securities
              (1,610)      (1,610)  9   (1,601)
Change in fair value of derivative instruments              (125)      (125)      (125)
Foreign currency translation adjustment              (47,586)      (47,586)  (6)  (47,592)
Pension liability adjustment:                                
Actuarial gains (losses) arising during period, net              (16,316)      (16,316)      (16,316)
Less: Amortization of prior service cost              (1,340)      (1,340)      (1,340)
Less: Amortization of actuarial gains and losses              797       797       797 
Less: Amortization of transition obligation              81       81       81 
                                 
Balance at March 31, 2009 ¥949,680  ¥785,045  ¥3,061,848  ¥(65,689) ¥(389,299) ¥4,341,585  ¥1,723  ¥4,343,308 
                                 
Purchase of treasury stock                  (20,000)  (20,000)      (20,000)
Retirement of treasury stock      (27,936)          27,936           
Cash dividends declared (¥5,000 per share)          (208,799)          (208,799)      (208,799)
Acquisition of new subsidiaries                         22,588   22,588 
Others                         (99)  (99)
Comprehensive income                                
Net income          494,781           494,781   2,327   497,108 
Other comprehensive income (loss)                                
Unrealized holding gains (losses) onavailable-for-sale securities
              15,096       15,096   0   15,096 
Change in fair value of derivative instruments              (63)      (63)      (63)
Foreign currency translation adjustment              5,852       5,852   30   5,882 
Pension liability adjustment:                                
Actuarial gains (losses) arising during period, net              6,828       6,828       6,828 
Less: Amortization of prior service cost              (1,340)      (1,340)      (1,340)
Less: Amortization of actuarial gains and losses              1,858       1,858       1,858 
Less: Amortization of transition obligation              79       79       79 
                                 
Balance at March 31, 2010
 ¥949,680  ¥757,109  ¥3,347,830  ¥(37,379) ¥(381,363) ¥4,635,877  ¥26,569  ¥4,662,446 
                                 

  Millions of yen 
  NTT DOCOMO, INC. shareholders’ equity          
  Common
stock
  Additional
paid-in
capital
  Retained
earnings
  Accumulated
other
comprehensive
income (loss)
  Treasury
stock at cost
  Total NTT
DOCOMO, INC.
shareholders’
equity
  Noncontrolling
interests
  Total equity 

Balance at March 31, 2008

 ¥  949,680   ¥   948,571   ¥  2,793,814   ¥        410   ¥  (415,979 ¥  4,276,496   ¥    1,288   ¥  4,277,784  
                                

Purchase of treasury stock

      (136,846  (136,846   (136,846

Retirement of treasury stock

   (163,526    163,526           

Cash dividends declared (¥4,800 per share)

    (203,839    (203,839   (203,839

Cash distributions to noncontrolling interests

           (3  (3

Acquisition of new subsidiaries

           944    944  

Others

           (37  (37

Comprehensive income

        

Net income

    471,873      471,873    (472  471,401  

Other comprehensive income (loss)

        

Unrealized holding gains (losses) on available-for-sale securities

     (1,610   (1,610  9    (1,601

Change in fair value of derivative instruments

     (125   (125   (125

Foreign currency translation adjustment

     (47,586   (47,586  (6  (47,592

Pension liability adjustment:

        

Actuarial gains (losses) arising during period, net

     (16,316   (16,316   (16,316

Prior service cost arising during period, net

              

Less: Amortization of prior service cost

     (1,340   (1,340   (1,340

Less: Amortization of actuarial gains and losses

     797     797     797  

Less: Amortization of transition obligation

     81     81     81  
                          ��     

Balance at March 31, 2009

 ¥949,680   ¥785,045   ¥3,061,848   ¥(65,689 ¥(389,299 ¥4,341,585   ¥1,723   ¥4,343,308  
                                

Purchase of treasury stock

      (20,000  (20,000   (20,000

Retirement of treasury stock

   (27,936    27,936           

Cash dividends declared (¥5,000 per share)

    (208,799    (208,799   (208,799

Cash distributions to noncontrolling interests

           (3  (3

Acquisition of new subsidiaries

           22,588    22,588  

Others

           (96  (96

Comprehensive income

        

Net income

    494,781      494,781    2,327    497,108  

Other comprehensive income (loss)

        

Unrealized holding gains (losses) on available-for-sale securities

     15,096     15,096    0    15,096  

Change in fair value of derivative instruments

     (63   (63   (63

Foreign currency translation adjustment

     5,852     5,852    30    5,882  

Pension liability adjustment:

        

Actuarial gains (losses) arising during period, net

     6,828     6,828     6,828  

Prior service cost arising during period, net

              

Less: Amortization of prior service cost

     (1,340   (1,340   (1,340

Less: Amortization of actuarial gains and losses

     1,858     1,858     1,858  

Less: Amortization of transition obligation

     79     79     79  
                                

Balance at March 31, 2010

 ¥949,680   ¥757,109   ¥3,347,830   ¥(37,379 ¥(381,363 ¥4,635,877   ¥26,569   ¥4,662,446  
                                

Purchase of treasury stock

      (20,000  (20,000   (20,000

Retirement of treasury stock

   (24,195         24,195           

Cash dividends declared (¥5,200 per share)

    (216,350    (216,350   (216,350

Cash distributions to noncontrolling interests

           (1,243  (1,243

Acquisition of new subsidiaries

              

Others

           373    373  

Comprehensive income

        

Net income

    490,485      490,485    1,508    491,993  

Other comprehensive income (loss)

        

Unrealized holding gains (losses) on available-for-sale securities

     (5,293   (5,293  (1  (5,294

Change in fair value of derivative instruments

     4     4     4  

Foreign currency translation adjustment

     (27,854   (27,854  (48  (27,902

Pension liability adjustment:

        

Actuarial gains (losses)
arising during period, net

     (6,367   (6,367   (6,367

Prior service cost arising during period, net

     48     48     48  

Less: Amortization of prior service cost

     (1,346   (1,346   (1,346

Less: Amortization of actuarial gains and losses

          1,144     1,144     1,144  

Less: Amortization of transition obligation

     88     88     88  
                                

Balance at March 31, 2011

 ¥  949,680   ¥  732,914   ¥  3,621,965   ¥(76,955 ¥(377,168 ¥  4,850,436   ¥  27,158   ¥  4,877,594  
                                

See accompanying notes to consolidated financial statements.


F-7


NTT DOCOMO, INC. AND SUBSIDIARIES

YEARS ENDED MARCH 31, 2008, 2009, 2010 and 20102011

             
  Millions of yen 
  2008  2009  2010 
 
Cash flows from operating activities:
            
Net income ¥491,286  ¥471,401  ¥497,108 
Adjustments to reconcile net income to net cash provided by operating activities —            
Depreciation and amortization  776,425   804,159   701,146 
Deferred taxes  (2,471)  (87,626)  (44,550)
Loss on sale or disposal of property, plant and equipment  54,359   43,304   32,735 
Impairment loss on marketable securities and other investments  11,418   57,812   4,007 
Equity in net (income) losses of affiliates  (22,810)  1,239   2,122 
Dividends from affiliates  15,349   15,500   12,854 
Changes in assets and liabilities:            
Decrease / (increase) in accounts receivable  187,434   (148,909)  (1,056)
Increase / (decrease) in allowance for doubtful accounts  1,803   67   242 
(Increase) / decrease in credit card receivables  (6,627)  (32,857)  (30,042)
(Increase) / decrease in inventories  (10)  23,327   (17,262)
Decrease / (increase) in prepaid expenses and other current assets  10,803   18,196   1,582 
(Increase) / decrease in non-current installment receivable for handsets  (58,931)  (37,712)  13,860 
(Decrease) / increase in accounts payable, trade  (50,477)  (49,286)  (21,227)
Increase / (decrease) in accrued income taxes  134,912   35,158   (53,765)
Increase / (decrease) in other current liabilities  6,206   (29,126)  (22,019)
(Decrease) / increase in accrued liabilities for point programs  (3,552)  37,390   57,605 
(Decrease) / increase in liability for employees’ retirement benefits  (19,002)  29,438   (8,015)
Increase / (decrease) in other long-term liabilities  12,332   17,753   35,878 
Other, net  21,693   4,449   21,615 
             
Net cash provided by operating activities  1,560,140   1,173,677   1,182,818 
             
Cash flows from investing activities:
            
Purchases of property, plant and equipment  (548,517)  (517,776)  (480,080)
Purchases of intangible and other assets  (216,816)  (241,373)  (245,488)
Purchases of non-current investments  (124,312)  (313,889)  (10,027)
Proceeds from sale and redemption of non-current investments  101,341   660   9,534 
Acquisitions of subsidiaries, net of cash acquired  (14,797)  568   (29,209)
Purchases of short-term investments  (6,562)  (32,977)  (377,591)
Redemption of short-term investments  5,443   32,255   69,605 
Proceeds from redemption of long-term bailment for consumption to a related party  50,000   50,000    
Short-term bailment for consumption to a related party        (90,000)
Other, net  (4,629)  (8,451)  (10,670)
             
Net cash used in investing activities  (758,849)  (1,030,983)  (1,163,926)
             
Cash flows from financing activities:
            
Proceeds from long-term debt     239,913    
Repayment of long-term debt  (131,005)  (77,071)  (29,042)
Proceeds from short-term borrowings  15,249   62,274   138,214 
Repayment of short-term borrowings  (15,351)  (64,032)  (138,149)
Principal payments under capital lease obligations  (2,821)  (2,837)  (3,256)
Payments to acquire treasury stock  (173,002)  (136,846)  (20,000)
Dividends paid  (190,543)  (203,839)  (208,709)
Other, net  (2)  (3)  (3)
             
Net cash provided by (used in) financing activities  (497,475)  (182,441)  (260,945)
             
Effect of exchange rate changes on cash and cash equivalents  27   (7,610)  220 
             
Net increase (decrease) in cash and cash equivalents
  303,843   (47,357)  (241,833)
Cash and cash equivalents at beginning of year
  343,062   646,905   599,548 
             
Cash and cash equivalents at end of year
 ¥646,905  ¥599,548  ¥357,715 
             
             
Supplemental disclosures of cash flow information:
            
Cash received during the year for:
            
Income tax refunds ¥20,346  ¥21,999  ¥1,323 
Cash paid during the year for:
            
Interest, net of amount capitalized  4,656   4,141   5,251 
Income taxes  200,079   383,838   436,459 
Non-cash investing and financing activities:
            
Assets acquired through capital lease obligations  2,579   2,334   2,347 
Acquisitions of shares through share exchange        15,023 
Acquisitions of exchangeable bonds through share exchange        20,821 
Acquisitions of shares through conversion of exchangeable bonds        26,326 
Retirement of treasury stock  187,387   163,526   27,936 

   Millions of yen 
   2009  2010  2011 

Cash flows from operating activities:

    

Net income

  ¥       471,401   ¥       497,108   ¥     491,993  

Adjustments to reconcile net income to net cash provided by operating activities—

    

Depreciation and amortization

   804,159    701,146    693,063  

Deferred taxes

   (87,626  (44,550  (22,563

Loss on sale or disposal of property, plant and equipment

   43,304    32,735    27,936  

Impairment loss on marketable securities and other investments

   57,812    4,007    13,424  

Equity in net (income) losses of affiliates

   1,239    2,122    10,539  

Dividends from affiliates

   15,500    12,854    12,757  

Changes in assets and liabilities:

    

(Increase) / decrease in accounts receivable

   (148,909  (1,056  75,200  

(Increase) / decrease in credit card receivables

   (32,857  (30,042  (19,746

Increase / (decrease) in allowance for doubtful accounts

   67    242    2,469  

Decrease / (increase) in inventories

   23,327    (17,262  (5,217

Decrease / (increase) in prepaid expenses and other current assets

   18,196    1,582    (2,753

(Increase) / decrease in non-current installment receivable for handsets

   (37,712  13,860    7,029  

(Decrease) / increase in accounts payable, trade

   (49,286  (21,227  (30,988

Increase / (decrease) in accrued income taxes

   35,158    (53,765  (23,805

(Decrease) / increase in other current liabilities

   (29,126  (22,019  (14,464

Increase / (decrease) in accrued liabilities for point programs

   37,390    57,605    47,959  

Increase / (decrease) in liability for employees’ retirement benefits

   29,438    (8,015  14,203  

Increase / (decrease) in other long-term liabilities

   17,753    35,878    (8,791

Other, net

   4,449    21,615    18,792  
             

Net cash provided by operating activities

   1,173,677    1,182,818    1,287,037  
             

Cash flows from investing activities:

    

Purchases of property, plant and equipment

   (517,776  (480,080  (423,119

Purchases of intangible and other assets

   (241,373  (245,488  (250,757

Purchases of non-current investments

   (313,889  (10,027  (11,746

Proceeds from sale of non-current investments

   660    9,534    3,946  

Acquisitions of subsidiaries, net of cash acquired

   568    (29,209  (7,678

Purchases of short-term investments

   (32,977  (377,591  (745,602

Redemption of short-term investments

   32,255    69,605    917,492  

Long-term bailment for consumption to a related party

           (20,000

Proceeds from redemption of long-term bailment for consumption to a related party

   50,000          

Short-term bailment for consumption to a related party

       (90,000  (20,000

Proceeds from redemption of short-term bailment for consumption to a related party

           110,000  

Other, net

   (8,451  (10,670  (7,906
             

Net cash used in investing activities

   (1,030,983  (1,163,926  (455,370
             

Cash flows from financing activities:

    

Proceeds from long-term debt

   239,913          

Repayment of long-term debt

   (77,071  (29,042  (180,075

Proceeds from short-term borrowings

   62,274    138,214    717  

Repayment of short-term borrowings

   (64,032  (138,149  (488

Principal payments under capital lease obligations

   (2,837  (3,256  (4,597

Payments to acquire treasury stock

   (136,846  (20,000  (20,000

Dividends paid

   (203,839  (208,709  (216,283

Other, net

   (3  (3  (1,243
             

Net cash provided by (used in) financing activities

   (182,441  (260,945  (421,969
             

Effect of exchange rate changes on cash and cash equivalents

   (7,610  220    (1,862
             

Net increase (decrease) in cash and cash equivalents

   (47,357  (241,833  407,836  

Cash and cash equivalents at beginning of year

   646,905    599,548    357,715  
             

Cash and cash equivalents at end of year

  ¥599,548   ¥357,715   ¥765,551  
             

Supplemental disclosures of cash flow information:

    

Cash received during the year for:

    

Income tax refunds

  ¥21,999   ¥1,323   ¥301  

Cash paid during the year for:

    

Interest, net of amount capitalized

   4,141    5,251    5,023  

Income taxes

   383,838    436,459    378,998  

Non-cash investing and financing activities:

    

Assets acquired through capital lease obligations

   2,334    2,347    5,631  

Acquisitions of shares through share exchange

       15,023      

Acquisitions of exchangeable bonds through share exchange

       20,821      

Acquisitions of shares through conversion of exchangeable bonds

       26,326      

Retirement of treasury stock

   163,526    27,936    24,195  

See accompanying notes to consolidated financial statements.


F-8


NTT DOCOMO, INC. AND SUBSIDIARIES
1. Nature of operations:

1. Nature of operations:

NTT DOCOMO, INC. and subsidiaries (“DOCOMO”) is a joint stock corporation that was incorporated under the laws of Japan in August 1991 as the wireless telecommunications arm of NIPPON TELEGRAPH AND TELEPHONE CORPORATION (“NTT”). NTT, 33.71%36.62% of which is owned by the Japanese government, owns 63.12%63.32% of DOCOMO’s issued stock and 66.43%66.65% of DOCOMO’s voting stock outstanding as of March 31, 2010.

2011.

DOCOMO provides its subscribers with wireless telecommunications services such as Xi, FOMA, (3G wireless services), mova, (2G wireless services), packet communications services (wireless data communications services using packet switching) and satellite mobile communications services, primarily on its own nationwide networks. In addition, DOCOMO sells handsets and related equipment primarily to agent resellers who in turn sell such equipment to subscribers.

DOCOMO terminated Personal Handyphone System (“PHS”) services on January 7, 2008. Also,

DOCOMO plans to terminate mova services on March 31, 2012.

2. Summary of significant accounting and reporting policies:

2. Summary of significant accounting and reporting policies:

DOCOMO maintains its books and records and prepares its statutory financial statements in conformity with the Japanese Telecommunications Business Act and the related accounting regulations and accounting principles generally accepted in Japan, which differ in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The accompanying consolidated financial statements are prepared in accordance with U.S. GAAP and, therefore, reflect certain adjustments to DOCOMO’s books and records.

(1) Adoption of new accounting standards

Business Combinations(1) Adoption of new accounting standard

Financing Receivables

Effective AprilOctober 1, 2009,2010, DOCOMO adopted Accounting Standards Update (“ASU”) 2010-20 “Receivables (Topic 310): Disclosures about the accounting pronouncementCredit Quality of Financing Receivables and the Allowance for Credit Losses” issued in December 2007 relating to business combinations. This pronouncement requires an acquirer in a business combination to generally recognize and measure allby the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values as of the acquisition date. This pronouncement also requires the acquirer to recognize and measure as goodwill the excess of consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date over the fair value of the identifiable net assets acquired. The excess of the fair value of the identifiable net assets acquired over consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date is required to be recognized and measured as a gain from a bargain purchase. The adoption of this pronouncement did not have a material impact on DOCOMO’s results of operations and financial position.

Noncontrolling Interests in Consolidated Financial Statements
Effective April 1, 2009, DOCOMO adopted the accounting pronouncement issued in December 2007 relating to noncontrolling interests in the consolidated financial statements. This pronouncement requires noncontrolling interests held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. This pronouncement also requires changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for as equity transactions. Upon the adoption of this pronouncement, “Noncontrolling


F-9


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
interests”, which was previously referred to as “Minority interests” and classified between “Total liabilities” and “Shareholders’ equity” in the consolidated balance sheets, is now included as a separate component of “Equity”. In addition, “Net income” in the consolidated statements of income and comprehensive income now includes net income or loss attributable to noncontrolling interests, which was previously referred to as “Minority interests” and deducted. As a result, the adoption of this pronouncement changed the presentation and disclosure of noncontrolling interests in the consolidated financial statements retrospectively, but did not have a material impact on DOCOMO’s results of operations and financial position.
Fair Value Measurements and Disclosures
In January 2010, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2010-06 “Fair Value Measurementsin July 2010. ASU2010-20 requires enhanced disclosures regarding the nature of the credit risk inherent in the entity’s financing receivables, how that credit risk is analyzed and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”. ASU2010-06 requires disclosure of fair value measurements by class instead of major category as well as significant transfers between Level 1 and Level 2assessed, and the reasons for the transfers regarding assets and liabilities thatchange in the allowance for credit losses. The required additional disclosures are measured on a recurring basis. The adoption of ASU2010-06 resulted in expanded disclosure but did not have any impact on DOCOMO’s results of operations and financial position. See Note 18 for further discussion. ASU2010-06 will require separate disclosures regarding the amounts of purchases, sales, issuances and settlements in Level 3 fair value measurements. This requirement is effective for fiscal years beginning after December 15, 2010.
(2) Significant accounting policies
20.

(2) Significant accounting policies

Principles of consolidation—

The consolidated financial statements include accounts of DOCOMO and its majority-owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

DOCOMO also evaluates whether DOCOMO has a controlling financial interest in an entity through means other than voting rights and accordingly determines whether DOCOMO should consolidate the entity. For the years ended March 31, 2008, 2009, 2010 and 2010,2011, DOCOMO had no variable interest entities to be consolidated or disclosed.

Use of estimates—

The preparation of DOCOMO’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. DOCOMO has identified the following areas where it believes estimates and assumptions are particularly critical to the consolidated financial statements. These are determination of useful lives of property, plant and equipment, internal use software and other intangible assets, impairment of long-lived assets, impairment of investments, accrued liabilities for point programs, pension liabilities and revenue recognition.

During the year ended March 31 2009, DOCOMO decreased the estimated useful lives of its long lived assets related to its mova services. This change in accounting estimate was due to the scheduled termination of mova services on March 31, 2012. As mova subscribers havehad been steadily migrating to FOMA, DOCOMO hashad decided to discontinue mova services and concentrate on FOMA services. The change resulted in a decrease of ¥60,072 million in “Income before income taxes and equity in net income (losses) of affiliates”, ¥35,563 million in “Net income attributable to NTT DOCOMO, INC.” and ¥841.95 in “Basic and Diluted earnings per share attributable to NTT DOCOMO, INC.” in the accompanying consolidated statement of income


F-10


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
and comprehensive income for the year ended March 31, 2009. The impact on the results of operations and financial position for the yearyears ended March 31, 2010 isand 2011 are not material. The change is reflected prospectively and prior periods have not been adjusted.

Cash and cash equivalents—

DOCOMO considers cash in banks and short-term highly liquid investments with original maturities of 3 months or less at the date of purchase to be cash and cash equivalents.

Short-term investments—

Highly liquid investments, which have original maturities of longer than 3 months at the date of purchase and remaining maturities of 1 year or less at the end of fiscal year, are considered to be short-term investments.

Allowance for doubtful accounts—

The allowance for doubtful accounts is computed based on historical bad debt experience and the estimated uncollectible amount based on the analysis of certain individual accounts, including claims in bankruptcy.

Inventories—

Inventories are stated at the lower of cost or market. The cost of equipment sold is determined by thefirst-in, first-out method. Inventories consist primarily of handsets and accessories. DOCOMO evaluates its inventory mainly for obsolescence on a periodic basis and records valuation adjustments as required. Due to the rapid technological changes associated with the wireless communicationstelecommunications business, DOCOMO wrote downrecognized losses on write-downs and disposed of obsolete handsetsdisposals during the years ended March 31, 2008, 2009, 2010 and 20102011 resulting in losses totaling ¥16,946 million, ¥14,180 million, ¥18,539 million and ¥18,539¥9,821 million, respectively, which were included in “Cost of equipment sold” in the accompanying consolidated statements of income and comprehensive income.

Property, plant and equipment—

Property, plant and equipment are stated at cost and include interest cost incurred during construction, as discussed below in “Capitalized interest”. Property, plant and equipment under capital leases are stated at the present value of minimum lease payments. Depreciation is computed by the declining-balance method at rates based on the estimated useful lives of the respective assets with the exception of buildings, which are depreciated

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

on a straight-line basis. Useful lives are determined at the time the asset is acquired and are based on its expected use, past experience with similar assets and anticipated technological or other changes. If technological or other changes occur more or less rapidly or in a different form than anticipated or the intended use changes, the useful lives assigned to these assets are adjusted as appropriate. Property, plant and equipment held under capital leases and leasehold improvements are amortized using either the straight-line method or the declining-balance method, depending on the type of the assets, over the shorter of the lease term or estimated useful life of the asset.

The estimated useful lives of major depreciable assets are as follows:

Major wireless telecommunications equipment

   8 to 16 years  

Steel towers and poles for antenna equipment

   30 to 40 years  

Reinforced concrete buildings

   42 to 56 years  

Tools, furniture and fixtures

   4 to 15 years  


F-11


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Depreciation and amortization expenses for the years ended March 31, 2008, 2009, 2010 and 20102011 were ¥579,101 million, ¥614,481 million, and ¥513,753 million, and ¥488,973 million, respectively.

When depreciable telecommunications equipment is retired or abandoned in the normal course of business, the amounts of such telecommunications equipment and its accumulated depreciation are deducted from the respective accounts. Any remaining balance is charged to expense immediately. DOCOMO estimates the fair values of its asset retirement obligations to restore certain leased land and buildings used for DOCOMO’s wireless telecommunications equipment to their original states. The aggregate fair valuesvalue of its asset retirement obligations dodoes not have a material impact on DOCOMO’s results of operations or financial position.

Expenditures for replacements and betterments are capitalized, while expenditures for maintenance and repairs are expensed as incurred. Assets under construction are not depreciated until placed in service. The rental costs associated with ground or building operating leases that are incurred during a construction period are expensed.

Capitalized interest—

DOCOMO capitalizes interest related to the construction of property, plant and equipment over the period of construction. DOCOMO also capitalizes interest associated with the development of internal-use software. DOCOMO amortizes such capitalized interest over the estimated useful lives of the related assets.

Investments in affiliates—

The equity method of accounting is applied to investments in affiliates where DOCOMO is able to exercise significant influence over the investee, but does not have a controlling financial interest. Under the equity method of accounting, DOCOMO records its share of earningsincome and losses of the affiliate and adjusts its carrying amount. DOCOMO periodically reviews the facts and circumstances related thereto to determine whether or not it can exercise significant influence over the operating and financial policies of the affiliate. For some investees accounted for under the equity method, DOCOMO records its share of income or losses of such investees with up to a 3 monthsmonth lag in its consolidated statements of income and comprehensive income.

DOCOMO evaluates the recoverability of the carrying value of its investments in affiliates, which includes investor level goodwill, when there are indicators that a decline in value below its carrying amount may be other than temporary. In performing its evaluations, DOCOMO utilizes various information including cash flow projections, independent valuations and, as applicable, quoted market values to determine recoverable amounts

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and the length of time an investment’s carrying value exceeds its estimated current recoverable amount. In the event of a determination that a decline in value is other than temporary, a charge to earnings is recorded for the loss, and a new cost basis in the investment is established.

Marketable securities and other investments—

Marketable securities consist of debt and equity securities. DOCOMO determines the appropriate classification of its investment securities at the time of purchase. DOCOMO periodically reviews the carrying amounts of its marketable securities for impairments that are other than temporary. If this evaluation indicates that a decline in value is other than temporary, the security is written down to its estimated fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether a decline in value is other than temporary, DOCOMO considers whether DOCOMO has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the decline in


F-12


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
value, the severity and duration of the decline, changes in value subsequent to year-end, forecasted earnings performance of the investee and the general market condition in the geographic area or industry the investee operates in.

Equity securities held by DOCOMO, whose fair values are readily determinable, are classified as available-for-sale.available-for-sale securities. Available-for-sale equity securities are carried at fair value with unrealized holding gains or losses, net of applicable taxes, included in “Accumulated other comprehensive income (loss)”. Realized gains and losses are determined using the average cost method and are reflected currently in earnings.

Debt securities held by DOCOMO, which DOCOMO has the positive intent and ability to hold to maturity, are classified as held-to-maturity, and the other debt securities that may be sold before maturity are classified as available-for-sale securities. Held-to-maturity debt securities are carried at amortized cost. Available-for-sale debt securities are carried at fair value with unrealized holding gains or losses, net of applicable taxes, included in “Accumulated other comprehensive income (loss)”. Realized gains and losses are determined using thefirst-in, first-out cost method and are reflected currently in earnings. Debt securities with original maturities of 3 months or less at the date of purchase are recorded as “Cash and cash equivalents”, while those with original maturities of longer than 3 months at the date of purchase and remaining maturities of 1 year or less at the end of fiscal year are recorded as “Short-term investments” in the consolidated balance sheets.

DOCOMO did not hold or transact any trading securities during the years ended March 31, 2008, 2009, 2010 and 2010.

2011.

Other investments include equity securities whose fair values are not readily determinable. Equity securities whose fair values are not readily determinable are carried at cost. Other-than-temporary declines in value are charged to earnings. Realized gains and losses are determined using the average cost method and are reflected currently in earnings.

Goodwill and other intangible assets—

Goodwill is an asset representing the excess of the acquisition cost of businesses over the fair value of the identifiable netfuture economic benefits arising from other assets acquired.acquired in a business combination that are not individually identified and separately recognized. Other intangible assets primarily consist of software for telecommunications network, internal-use software, software acquired to be used in manufacture of handsets and rights to use certain telecommunications facilities of wireline operators.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DOCOMO does not amortize either goodwill, including investor level goodwill related to the investments accounted for under the equity method, or other intangible assets acquired in a purchase business combination and determined to have an indefinite useful life. However, (1) goodwill, except those related to equity method investments, and (2) other intangible assets that have indefinite useful lives are tested for impairment at least annually.

The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). Fair value of the reporting unit is determined using discounted cash flow method. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and DOCOMO performs the second step of the impairment test (measurement). Under the second step, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. If the fair value of the reporting unit exceeds its carrying value, the second step does not need to be performed.


F-13


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Goodwill related to equity method investments is tested for impairment as a part of the other-than-temporary impairment assessment of the equity method investment as a whole.

Intangible assets that have finite useful lives, consisting primarily of software for telecommunications network, internal-use software, software acquired to be used in manufacture of handsets and rights to use telecommunications facilities of wireline operators are amortized on a straight-line basis over their useful lives.

DOCOMO capitalizes the cost of internal-use software which has a useful life in excess of 1 year. Subsequent costs for additions, modifications or upgrades to internal-use software are capitalized only to the extent that the software is able to perform a task it previously did not perform. Software acquired to be used in the manufacture of handsets is capitalized if the technological feasibility of the handset to be ultimately marketed has been established at the time of purchase.acquisition. Software maintenance and training costs are expensed in the period in which they areas incurred. Capitalized software costs are being amortized over a period ofup to 5 years at a maximum.

Customer related assets principally consist of contractual customer relationships in the mobile phone business that were recorded in connection with the acquisition of noncontrolling interests of the regional subsidiaries in November 2002 through the process of identifying separable intangible assets apart from goodwill. The customer related assets had been amortized over 6 years, which was the expected term of subscription in mobile phone business.
years.

Amounts capitalized related to rights to use certain telecommunications assets of wireline operators, primarily NTT, are amortized over 20 years.

Impairment of long-lived assets—

DOCOMO’s long-lived assets other than goodwill, such as property, plant and equipment, software and intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held for use is evaluated by a comparison of the carrying amount of the asset with future undiscounted cash flows expected to be generated by the asset or asset group. If the asset (or asset group) is determined to be impaired, the loss recognized is the amount by which the carrying value of the asset (or asset group) exceeds its fair value as measured through various valuation techniques, including discounted cash flow models, quoted market value and third-party independent appraisals, as considered necessary.

Hedging activities—

DOCOMO uses derivative instruments, including interest rate swap agreements, foreign currency swap contracts and foreign exchange forward contracts, and other financial instruments in order to manage its exposure to fluctuations in interest rates and foreign exchange rates. DOCOMO does not hold or issue derivative instruments for trading purposes.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

These financial instruments are effective in meeting the risk reduction objectives of DOCOMO by generating either transaction gains and losses which offset transaction gains and losses of the hedged items or cash flows which offset the cash flows related to the underlying position in respect of amount and timing.

All derivative instruments are recorded on the consolidated balance sheets at fair value. The recorded fair values of derivative instruments represent the amounts that DOCOMO would receive or pay to terminate the contracts at each fiscal year end.


F-14


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
For derivative instruments that qualify as fair value hedge instruments, the changes in fair value of the derivative instruments are recognized currently in earnings, which offset the changes in fair value of the related hedged assets or liabilities that are also recognized in earnings of the period.

For derivative instruments that qualify as cash flow hedge instruments, the changes in fair value of the derivative instruments are initially recorded in “Accumulated other comprehensive income (loss)” and reclassified into earnings when the relevant hedged transaction is realized.

For derivative instruments that do not qualify as hedging instruments, the changes in fair value of the derivative instruments are recognized currently in earnings.

DOCOMO discontinues hedge accounting when it is determined that the derivative instruments or other financial instruments are no longer highly effective as a hedge or when DOCOMO decides to discontinue the hedging relationship.

Cash flows from derivative instruments that are designated as qualifying hedges are classified in the consolidated statements of cash flows under the same categories as the cash flows from the relevant assets, liabilities or anticipated transactions.

Accrued liabilities for point programs—

DOCOMO offers “docomo Points Service,” which provides benefits, including discount on handset, to customers in exchange for points that we grant customers based on the usage of cellular and other services and record “Accrued liabilities for point programs” relating to the points that customers earn. In determining the accrued liabilities for point programs, DOCOMO estimates such factors as the point utilization rate reflecting the forfeitures by, among other things, cancellation of subscription.

Employees’ retirement benefit plans—

DOCOMO recognizes the funded status of its defined benefit plans, measured as the difference between the plan assets at fair value and the benefit obligation, in the consolidated balance sheets. Changes in the funded status are recognized as changes in comprehensive income during the fiscal period in which such changes occur.

Pension benefits earned during the year as well as interest on projected benefit obligations are accrued currently. Net losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets and prior service cost due to the changes of benefit plans, both of which are included in “Accumulated other comprehensive income (loss)”, are amortized to earnings over the expected average remaining service period of employees on a straight-line basis.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue recognition—

DOCOMO primarily generates revenues from two sources—wireless services and equipment sales. These revenue sources are separate and distinct earnings processes. Wireless service is sold to the subscriber directly or through third-party resellers who act as agents, while equipment, including handsets, are sold principally to agent resellers.

DOCOMO sets its wireless services rates in accordance with the Japanese Telecommunications Business Act and government guidelines, which currently allow wireless telecommunications operators to set their own tariffs without government approval. Wireless service revenues primarily consist of basic monthly charges, airtime charges and fees for activation.


F-15


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Basic monthly charges and airtime charges are recognized as revenues at the time the service is provided to the subscribers. DOCOMO’s monthly billing plans for cellular (FOMA and mova) services generally include a certain amount of allowances (free minutesand/or packets), and the used amount of the allowances is subtracted from total usage in calculating the airtime revenue from a subscriber for the month. DOCOMO offers a billing arrangement called “Nikagetsu Kurikoshi” (2 month carry-over), in which the unused allowances are automatically carried over for up to the following two months. In addition, DOCOMO offers an arrangement which enables the unused allowances that were carried over for the two months to be automatically used to cover the airtimeand/or packet feescharges exceeding the allowances of the other subscriptions in the “Family Discount” group, a discount billing arrangement for families. Out of the unused allowance in a month, DOCOMO defers the revenues based on the portion which is estimated to be used in the following two months. As for the portion which is estimated to expire, DOCOMO recognizes the revenue attributable to such portion of allowances ratably as the remaining allowances are utilized, in addition to the revenue recognized when subscribers make calls or utilize data transmissions.

Equipment sales are recognized as revenues when equipment is accepted by agent resellers and all inventory risk is transferred from DOCOMO. Certain commissions paid to agent resellers are recognized as a reduction of revenue upon delivery of the equipment to such agent resellers.

DOCOMO enables subscribers to select installment payments for the purchase of the handset over a period of 12 or 24 months. When installment payments are selected, under agreements entered into among DOCOMO, subscribers and agent resellers, DOCOMO provides financing by providing funds for the purchase of the handset by the subscribers. DOCOMO then includes current installments for the receivable for the purchased handset with basic monthly charges and airtime charges for the installment payment term. This is a separate contract from the wireless services contract between DOCOMO and the subscriber or the handset purchase agreement between the agent reseller and the subscriber, and cash collection from the subscriber is the recovery of the cash payment. Therefore, cash collection from subscribers for the purchased handsets does not have an impact on DOCOMO’s revenue.

Non-recurring upfront fees such as activation fees are deferred and recognized as revenues over the estimated average period of the subscription for each service. The related direct costs are also deferred to the extent of the related upfront fee amount and are amortized over the same period.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred revenue and deferred charges as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Current deferred revenue  ¥ 104,287   ¥ 84,848 
Long-term deferred revenue  72,542   71,085 
Current deferred charges  16,606   12,657 
Long-term deferred charges  72,542   71,085 

   Millions of yen 
   2010   2011 

Current deferred revenue

  ¥  84,848    ¥  81,219  

Long-term deferred revenue

   71,085     72,214  

Current deferred charges

   12,657     11,481  

Long-term deferred charges

   71,085     72,214  

Current deferred revenue is included in “Other current liabilities” in the consolidated balance sheets.

Selling, general and administrative expenses—

Selling, general and administrative expenses primarily include commissions paid to sales agents, expenses associated with point programs, advertising expenses, as well as other expenses such as payroll and related benefit costs of personnel not directly involved in the service operations and maintenance process. Commissions paid to sales agents represent the largest portion of selling, general and administrative expenses.


F-16


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Income taxes—

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

DOCOMO determines whether it is more likely than not that a tax position will be sustained and, if any, DOCOMO determines the amount of tax benefit to recognize in the financial statements. DOCOMO has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income.

Earnings per share attributable to NTT DOCOMO, INC.—

Basic earnings per share attributable to NTT DOCOMO, INC. include no dilution and are computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share attributable to NTT DOCOMO, INC. assume the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

DOCOMO did not issue dilutive securities during the years ended March 31, 2008, 2009, 2010 and 2010,2011, and therefore there is no difference between basic and diluted earnings per share attributable to NTT DOCOMO, INC.

Foreign currency translation—

All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at appropriate year-end current rates and all income and expense accounts are translated at rates that approximate those rates prevailing at the time of the transactions. The accompanying translation adjustments are included in “Accumulated other comprehensive income (loss)..

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign currency receivables and payables of DOCOMO are translated at appropriate year-end current rates and the accompanying translation gains or losses are included in earnings currently.

The effects of exchange rate fluctuations from the initial transaction date to the settlement date are recorded as exchange gain or loss, which are included in “Other income (expense)” in the accompanying consolidated statements of income and comprehensive income.

(3) Reclassifications

(3) Reclassifications

Certain reclassifications are made to the prior years’ consolidated financial statements to conform to the presentation used for the year ended March 31, 2010.


F-17

2011.


(4) The Great East Japan Earthquake

The Great East Japan Earthquake and the subsequent tsunami on March 11, 2011, damaged some of DOCOMO’s base station facilities located in certain areas of Tohoku region, and caused the temporary disruption of cellular services. For the fiscal year ended March 31, 2011, ¥7,123 million was recognized in selling, general and administrative expenses as a result of this disaster, pertaining to write-downs of damaged facilities and equipment (¥3,583 million), personnel and other expenses incurred in response to the disaster (¥3,540 million). Most of these expenses were recognized in the mobile phone business segment.

In addition, DOCOMO management also considered the following as a result of this disaster:

Impairment of long-lived assets, other than goodwill—

After the damaged assets were written-down or written-off, DOCOMO management considered whether this event indicated that the revised carrying amounts of property, plant and equipment and intangible assets may not be recoverable. DOCOMO management determined that no impairment losses on property, plant and equipment and intangible assets were necessary as a result of this event.

Impairment of goodwill—

The potential impact of March 11, 2011 events on the fair value of DOCOMO’s domestic mobile phone reporting unit was considered as part of DOCOMO’s annual goodwill impairment review of this reporting unit on March 31, 2011. DOCOMO management determined that no goodwill impairment existed at March 31, 2011.

Collectability of accounts receivable—

DOCOMO has not experienced any significant change in the trend of payment delays or bad debts of its customers after the earthquake, although DOCOMO offered relief programs including an extension of payment deadlines on phone bills and refunds of the basic monthly fees and other charges to certain customers in the disaster-stricken area. The impact of these relief programs was immaterial.

Realization of deferred tax assets—

The potential impact of March 11, 2011 events on DOCOMO’s estimates of future taxable income were considered as part of DOCOMO’s evaluation of the realizability of its deferred tax assets at March 31, 2011. DOCOMO management determined that no valuation allowance was necessary as a result of this event at March 31, 2011.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

3. Cash and cash equivalents:

3. Cash and cash equivalents:

“Cash and cash equivalents” as of March 31, 20092010 and 20102011 comprised the following:

         
  Millions of yen 
  2009  2010 
 
Cash  ¥ 349,564   ¥ 277,715 
Certificates of deposit  160,000   40,000 
Bailment for consumption  60,000   20,000 
Other  29,984   20,000 
         
Total  ¥ 599,548   ¥ 357,715 
         

   Millions of yen 
   2010   2011 

Cash

  ¥  277,715    ¥  305,574  

Certificates of deposit

   40,000     210,000  

Commercial paper

   20,000     199,977  

Bailment for consumption

   20,000     50,000  
          

Total

  ¥357,715    ¥765,551  
          

The aggregate amount of commercial paper as of March 31, 2010 and 2011 was ¥39,990 million and ¥259,972 million, respectively and ¥19,990 million and ¥59,995 million was recorded in “Short-term investments” in the consolidated balance sheet as they have original maturities of longer than 3 months at the date of purchase and remaining maturities of 1 year or less at the end of fiscal year in addition to the amounts in “Cash and cash equivalents,” which is stated above. Commercial paper is classified as held-to-maturity securities and their amortized amounts approximate their fair value.

Information regarding “Bailment for consumption” is disclosed in Note 13.

4. Inventories:

4. Inventories:

“Inventories” as of March 31, 20092010 and 20102011 comprised the following:

         
  Millions of yen 
  2009  2010 
 
Telecommunications equipment to be sold  ¥ 121,315   ¥ 137,145 
Materials and supplies  239   995 
Other  1,652   3,137 
         
Total  ¥ 123,206   ¥ 141,277 
         
5. Investments in affiliates:

   Millions of yen 
   2010   2011 

Telecommunications equipment to be sold

  ¥  137,145    ¥  141,106  

Materials and supplies

   995     2,560  

Other

   3,137     2,691  
          

Total

  ¥141,277    ¥146,357  
          

5. Investments in affiliates:

Sumitomo Mitsui Card Co., Ltd.—

As of March 31, 20092010 and 2010,2011, DOCOMO held 34% of the outstanding common shares of Sumitomo Mitsui Card Co., Ltd. (“Sumitomo Mitsui Card”). DOCOMO entered into an agreement with Sumitomo Mitsui Card, Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui Banking Corporation to jointly promote the credit transaction services which use mobile phones compatible with “Osaifu-Keitai” (wallet-phone) service.

Philippine Long Distance Telephone Company—

As of March 31, 20092010 and 2010,2011, DOCOMO held approximately 14% of the outstanding common shares of Philippine Long Distance Telephone Company (“PLDT”), a telecommunication operator in the Philippines. PLDT is a public company listed on the Philippine Stock Exchange and the New York Stock Exchange.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On March 14, 2006, DOCOMO acquired approximately 7% of PLDT’s outstanding common shares for ¥52,213 million from NTT Communications Corporation (“NTT Com”), a subsidiary of NTT and accounted for the investment under the cost method.NTT. From March 2007 to February 2008, DOCOMO acquired approximately an additional 7% common equity interest for ¥98,943 million in the market. Together with the PLDT common shares continued to be held by NTT Com, on a consolidated basis NTT held approximately 21% of the total outstanding common shares of PLDT.


F-18


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In accordance with an agreement entered into on January 31, 2006 between PLDT and its major shareholders, including NTT Com and DOCOMO, DOCOMO has the right to exercise the entire 21% voting rights associated with the ownership interest collectively held by DOCOMO and NTT Com. As DOCOMO obtained the ability to exercise significant influence over PLDT, DOCOMO has accounted for the investment by applying the equity method from the date of the initial acquisition of PLDT shares. The prior period financial statements have not been retroactively adjusted to reflect the application of the equity method from the date of the initial investments because the impact on results of operations and net equity of DOCOMO is not material to the prior or current period financial statements presented.

DOCOMO determined the fair value of tangible, intangible and other assets and liabilities of PLDT with the assistance of an independent third party appraiser in order to recognize and account for DOCOMO’s share of identifiable intangible assets and embedded goodwill of its equity investment in equity in PLDT. During the year ended March 31, 2009, upon the completion of the evaluation, adjustments to reflect the earnings impact of the final allocation of the investment in PLDT were charged to equity in net income (loss) of affiliates. As a result, “Equity in net income (losses) of affiliates, net of applicable taxes” in the consolidated statementsstatement of income and comprehensive income for the year ended March 31, 2009 decreased by ¥4,817 million and “Investments in affiliates” in consolidated balance sheetssheet as of March 31, 2009 decreased by ¥8,137 million.

DOCOMO’s carrying amount of its investment in PLDT was ¥109,042¥105,944 million and ¥105,944¥95,859 million as of March 31, 20092010 and 2010,2011, respectively. The aggregate market price of the PLDT shares owned by DOCOMO was ¥119,801¥134,088 million and ¥134,088¥119,749 million as of March 31, 20092010 and 2010,2011, respectively.

Tata Teleservices Limited—

As of March 31, 20092010 and 2010,2011, DOCOMO held approximately 26% of the outstanding common shares of Tata Teleservices Limited (“TTSL”), which were acquired for ¥252,321 million.

.

On November 12, 2008, DOCOMO entered into a capital alliance with TTSL and Tata Sons Limited, the parent company of TTSL. On March 25, 2009, DOCOMO acquired theTTSL’s outstanding common shares of TTSLfor ¥252,321 million pursuant to the capital alliance and accounted for the investment by applying the equity method.

DOCOMO determined the fair value of tangible, intangible and other assets and liabilities of TTSL with the assistance of an independent third party appraiser in order to recognize and account for DOCOMO’s share of identifiable intangible assets and embedded goodwill of its equity investment in equity in TTSL. During the year ended March 31, 2010, upon the completion of the evaluation, adjustments to reflect the earnings impact of the final allocation of the investment in TTSL were charged to equity in net income (loss) of affiliates. As a result, “Equity in net income (losses) of affiliates, net of applicable taxes” in the consolidated statementsstatement of income and comprehensive income for the year ended March 31, 2010 decreased by ¥2,788 million and “Investments in affiliates” in the consolidated balance sheetssheet as of March 31, 2010 decreased by ¥4,710 million.

DOCOMO made additional investments totaling ¥14,424 million in response to a rights offering that TTSL commenced in March and May, 2011. TTSL is expected to use the capital increase to strengthen the quality of the 3G network in India’s market. As a result of its participation in the rights offering, DOCOMO’s equity interest in TTSL slightly increased to approximately 27%.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Impairment—

DOCOMO evaluates the recoverability of the carrying value of its investments in affiliates including those mentioned above when there are indications that a decline in value below carrying amount may be other than temporary. As a result of such evaluations, DOCOMO recorded impairment charges for other-than-temporary declines during the yearsyear ended March 31, 2008 and 2009. The impairments did not have a material impact on DOCOMO’s results of operations or financial position. The impairment charges are included in “Equity in net income (losses) of affiliates, net of applicable taxes” in the accompanying statements of income and comprehensive income. DOCOMO has determined that the estimated fair values of each of its investments in affiliates as of March 31, 2010 and 2011 are not less than the related carrying values on an individual basis.


F-19


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
All of the equity method investees, except for PLDT, are privately held companies as of March 31, 2010.
2011.

DOCOMO’s cumulative share of the earnings or losses of affiliates, less amounts distributed by affiliates as dividends, was ¥8,469 million, ¥10,346 million, ¥11,967 million and ¥11,967¥14,531 million, as of March 31, 2008, 2009, 2010 and 2010,2011, respectively. Dividends received from affiliates were ¥15,349 million, ¥15,500 million, ¥12,854 million and ¥12,854¥12,757 million for the years ended March 31, 2008, 2009, 2010 and 2010,2011, respectively. DOCOMO does not have significant business transactions with its affiliates.

The total carrying value of DOCOMO’s “Investments in affiliates” in the accompanying consolidated balance sheets as of March 31, 20092010 and 20102011 was greater by ¥210,600¥421,132 million and ¥421,132¥382,037 million, respectively, than its aggregate underlying equity in net assets of such affiliates as of the date of the most recent available financial statements of the investees. The difference mainly consisted of goodwill and amortizable intangible assets. The difference as of March 31, 2009 does not include the effect of the investment in TTSL, which was made on March 25, 2009.

6. Marketable securities and other investments:

6. Marketable securities and other investments:

“Marketable securities and other investments” as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Marketable securities:        
Available-for-sale  ¥ 112,967   ¥ 136,631 
Other investments  28,582   14,395 
         
Sub-total  ¥ 141,549   ¥ 151,026 
Less: Available-for-sale securities classified as “Short-term investments”  (5)   
         
Marketable securities and other investments (Non-current)  ¥ 141,544   ¥ 151,026 
         

   Millions of yen 
   2010   2011 

Marketable securities:

    

Available-for-sale

  ¥  136,631    ¥  117,763  

Other investments

   14,395     10,375  
          

Marketable securities and other investments (Non-current)

  ¥151,026    ¥128,138  
          

Maturities of debt securities classified as available-for-sale as of March 31, 20092010 and 20102011 were as follows:

                 
  Millions of yen  Millions of yen 
  2009  2010 
  Carrying
  Fair
  Carrying
  Fair
 
  amount  value  amount  value 
 
Due within 1 year ¥5  ¥5  ¥  ¥ 
Due after 1 year through 5 years        4   4 
Due after 5 years through 10 years            
Due after 10 years            
                 
Total ¥5  ¥5  ¥4  ¥4 
                 


F-20


   Millions of yen   Millions of yen 
   2010   2011 
   Carrying
amount
   Fair
value
   Carrying
amount
   Fair
value
 

Due within 1 year

  ¥  —    ¥  —    ¥  —    ¥  —  

Due after 1 year through 5 years

   4     4     4     4  

Due after 5 years through 10 years

                    

Due after 10 years

                    
                    

Total

  ¥4    ¥4    ¥4    ¥4  
                    

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The aggregate cost, gross unrealized holding gains and losses and fair value by type of available-for-sale securities as of March 31, 20092010 and 20102011 were as follows:

                 
  Millions of yen 
  2009 
  Cost / Amortized
  Gross unrealized
  Gross unrealized
    
  cost  holding gains  holding losses  Fair value 
 
Available-for-sale:                
Equity securities ¥118,509  ¥1,352  ¥6,899  ¥112,962 
Debt securities  5   0      5 
                 
  Millions of yen 
  2010 
  Cost / Amortized
  Gross unrealized
  Gross unrealized
    
  cost  holding gains  holding losses  Fair value 
 
Available-for-sale:                
Equity securities ¥121,308  ¥20,257  ¥4,938  ¥136,627 
Debt securities  4      0   4 

   Millions of yen 
   2010 
   Cost / Amortized
cost
   Gross unrealized
holding gains
   Gross unrealized
holding losses
   Fair value 

Available-for-sale:

        

Equity securities

  ¥  121,308    ¥  20,257    ¥  4,938    ¥  136,627  

Debt securities

   4          0     4  
   Millions of yen 
   2011 
   Cost / Amortized
cost
   Gross unrealized
holding gains
   Gross unrealized
holding losses
   Fair value 

Available-for-sale:

        

Equity securities

  ¥109,199    ¥10,663    ¥2,103    ¥117,759  

Debt securities

   4     0          4  

The proceeds and gross realized gains (losses) from the sale of available-for-sale securities and other investments for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows:

             
  Millions of yen 
  2008  2009  2010 
 
Proceeds  ¥ 896   ¥ 660   ¥ 71,640 
Gross realized gains  748   377   5,627 
Gross realized losses  (2)  (267)  (4,934)

   Millions of yen 
   2009  2010  2011 

Proceeds

  ¥    660   ¥  71,640   ¥  3,585  

Gross realized gains

   377    5,627    475  

Gross realized losses

   (267  (4,934  (22

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Gross unrealized holding losses on and fair value of available-for-sale securities and cost method investments included in other investments as of March 31, 20092010 and 2010,2011, aggregated by investment category and length of time during which individual securities were in a continuous unrealized loss position were as follows:

                         
  Millions of yen 
  2009 
  Less than
  12 months
    
  12 months  or longer  Total 
     Gross unrealized
     Gross unrealized
     Gross unrealized
 
  Fair value  holding losses  Fair value  holding losses  Fair value  holding losses 
 
Available-for-sale:                        
Equity securities ¥62,405  ¥6,899  ¥ —  ¥ —  ¥62,405  ¥6,899 
Cost method investments  438   1,398   35   68   473   1,466 
                         
  Millions of yen 
  2010 
  Less than
  12 months
    
  12 months  or longer  Total 
     Gross unrealized
     Gross unrealized
     Gross unrealized
 
  Fair value  holding losses  Fair value  holding losses  Fair value  holding losses 
 
Available-for-sale:                        
Equity securities ¥18,156  ¥2,302  ¥19,835  ¥2,636  ¥37,991  ¥4,938 
Debt securities  4   0         4   0 
Cost method investments        276   1,309   276   1,309 


F-21


  Millions of yen 
  2010 
  Less than
12 months
  12 months
or longer
  Total 
  Fair value  Gross unrealized
holding losses
  Fair value  Gross unrealized
holding losses
  Fair value  Gross unrealized
holding losses
 

Available-for-sale:

      

Equity securities

 ¥  18,156   ¥  2,302   ¥  19,835   ¥  2,636   ¥  37,991   ¥  4,938  

Debt securities

  4    0            4    0  

Cost method investments

          276    1,309    276    1,309  
  Millions of yen 
  2011 
  Less than
12 months
  12 months
or longer
  Total 
  Fair value  Gross unrealized
holding losses
  Fair value  Gross unrealized
holding losses
  Fair value  Gross unrealized
holding losses
 

Available-for-sale:

      

Equity securities

 ¥4,781   ¥874   ¥10,351   ¥1,229   ¥15,132   ¥2,103  

Debt securities

                        

Cost method investments

  42    66    104    218    146    284  

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Other investments include long-term investments in various privately held companies.

For long-term investments in various privately held companies for which there are no quoted market prices, a reasonable estimate of fair value could not be made without incurring excessive costs. Accordingly, DOCOMO believes that it is not practicable to disclose estimated fair values of these cost method investments. Unless DOCOMO identifies events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments, the fair value of such cost method investments are not estimated.

The aggregate carrying amount of cost method investments included in other investments and the aggregate carrying amount of investments whose fair values were not evaluated for impairment as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Cost method investments included in other investments  ¥ 28,538   ¥ 14,351 
Including: Investments whose fair values were not evaluated for impairment  25,709   9,918 

   Millions of yen 
   2010   2011 

Cost method investments included in other investments

  ¥  14,351    ¥  10,341  

Including: Investments whose fair values were not evaluated for impairment

   9,918     9,714  

The amount of other-than-temporary impairment of marketable securities and other investments is disclosed in Note 12.

DOCOMO held approximately 11% of the outstanding common shares of KT Freetel Co., Ltd. (“KTF”) as of March 31, 2009, with the initial acquisition cost of ¥65,602 million. On January 20, 2009, DOCOMO agreed

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

with KT Corporation (“KT”) that DOCOMO would exchange 40% of its KTF shareholding for KT common shares and the remaining 60% for KT exchangeable bonds in connection with the proposed merger between KT and KTF. Therefore, DOCOMO determined that the decline in value of KTF shares was other than temporary and recognized ¥26,313 million of impairment loss on the investment in KTF shares based on its fair value as of March 31, 2009. The loss is recorded in other income (expense) under the line item “Other, net” in the consolidated statement of income and comprehensive income for the year ended March 31, 2009.

The exchange of KTF shares for KT exchangeable bonds and for KT common shares was carried out on May 27, 2009 and June 1, 2009, respectively. KT exchangeable bonds were acquired for ¥20,821 million and DOCOMO recognized ¥2,753 million of realized loss. KT common shares were acquired for ¥15,023 million and DOCOMO recognized ¥692 million of realized loss. The exchange of KT exchangeable bonds for KT ADRs was carried out on December 14, 2009. KT ADRs were acquired for ¥26,326 million and DOCOMO recognized ¥5,477 million of realized gain. These amounts are included in the table of proceeds and gross realized gains (losses) from the sale of available-for-sale securities and other investments for the year ended March 31, 2010 which is presented above.

7. Goodwill and other intangible assets:

7. Goodwill and other intangible assets:

Goodwill—

The majority of DOCOMO’s goodwill was recognized when DOCOMO purchased all the remaining noncontrolling interests in its eight regional subsidiaries through share exchanges and made these subsidiaries wholly owned in November 2002.


F-22


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The changes in the carrying amount of goodwill by business segment for the years ended March 31, 20092010 and 20102011 were as follows:
             
  Millions of yen 
  2009 
  Mobile phone
  Miscellaneous
    
  business  businesses  Consolidated 
 
Balance at beginning of year ¥139,890  ¥18,999  ¥158,889 
Goodwill acquired during the year  18   102   120 
Goodwill decreased during the year  (0)  (344)  (344)
Foreign currency translation adjustment  (1,293)  (2,987)  (4,280)
             
Balance at end of year ¥138,615  ¥15,770  ¥154,385 
             
             
  Millions of yen 
  2010 
  Mobile phone
  Miscellaneous
    
  business  businesses  Consolidated 
 
Balance at beginning of year ¥138,615  ¥15,770  ¥154,385 
Goodwill acquired during the year     43,456   43,456 
Goodwill increased during the year     345   345 
Foreign currency translation adjustment  60   190   250 
             
Balance at end of year ¥138,675  ¥59,761  ¥198,436 
             

   Millions of yen 
   2010 
   Mobile phone
business
  Miscellaneous
businesses
  Consolidated 

Balance at beginning of year

  ¥  138,597   ¥  15,788   ¥  154,385  

Goodwill acquired during the year

   3,426    40,030    43,456  

Foreign currency translation adjustment

   60    190    250  

Other

       345    345  
             

Balance at end of year

  ¥142,083   ¥56,353   ¥198,436  
             
   Millions of yen 
   2011 
   Mobile phone
business
  Miscellaneous
businesses
  Consolidated 

Balance at beginning of year

  ¥142,083   ¥56,353   ¥198,436  

Goodwill acquired during the year

   10,852        10,852  

Foreign currency translation adjustment

   (1,219  (1,901  (3,120

Other

   (509  (86  (595
             

Balance at end of year

  ¥151,207   ¥54,366   ¥205,573  
             

Information regarding operating segments is discussed in Note 14.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The main componentcomponents of goodwill acquired during the yearyears ended March 31, 2010 wasand 2011 were ¥40,030 million associated with the acquisition of 51.0% shares of OAK LAWN MARKETING, INC.

INC and ¥10,852 million associated with the additional acquisition of 65.0% shares of PacketVideo Corporation, respectively.

Other intangible assets—

Other intangible assets, as of March 31, 20092010 and 20102011 comprised the following:

             
  Millions of yen 
  2009 
  Gross carrying
  Accumulated
  Net carrying
 
  amount  amortization  amount 
 
Amortizable intangible assets:            
Software for telecommunications network ¥691,124  ¥464,579  ¥226,545 
Internal-use software  939,103   673,258   265,845 
Software acquired to be used in the manufacture of handsets  124,954   58,273   66,681 
Customer related assets  50,949   50,949    
Rights to use telecommunications facilities of wireline operators  20,820   9,604   11,216 
Other  11,649   3,208   8,441 
             
Total amortizable intangible assets ¥1,838,599  ¥1,259,871  ¥578,728 
             


F-23


   Millions of yen 
   2010 
   Gross carrying
amount
   Accumulated
amortization
   Net carrying
amount
 

Amortizable intangible assets:

      

Software for telecommunications network

  ¥     783,874    ¥    540,767    ¥  243,107  

Internal-use software

   1,014,142     740,675     273,467  

Software acquired to be used in manufacture of handsets

   158,738     77,877     80,861  

Rights to use telecommunications facilities of wireline operators

   18,193     6,380     11,813  

Other

   21,844     6,123     15,721  
               

Total amortizable intangible assets

  ¥1,996,791    ¥1,371,822    ¥624,969  
               

Unamortizable intangible assets:

      

Trademarks and trade names

      ¥3,722  
         

Total unamortizable intangible assets

      ¥3,722  
         

Total

      ¥628,691  
         
   Millions of yen 
   2011 
   Gross carrying
amount
   Accumulated
amortization
   Net carrying
amount
 

Amortizable intangible assets:

      

Software for telecommunications network

  ¥      824,404    ¥      565,166    ¥  259,238  

Internal-use software

   1,092,442     816,389     276,053  

Software acquired to be used in manufacture of handsets

   190,722     96,107     94,615  

Rights to use telecommunications facilities of wireline operators

   19,052     7,126     11,926  

Other

   37,624     11,181     26,443  
               

Total amortizable intangible assets

  ¥2,164,244    ¥1,495,969    ¥668,275  
               

Unamortizable intangible assets:

      

Trademarks and trade names

      ¥3,981  
         

Total unamortizable intangible assets

      ¥3,981  
         

Total

      ¥672,256  
         

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

             
  Millions of yen 
  2010 
  Gross carrying
  Accumulated
  Net carrying
 
  amount  amortization  amount 
 
Amortizable intangible assets:            
Software for telecommunications network ¥783,874  ¥540,767  ¥243,107 
Internal-use software  1,014,142   740,675   273,467 
Software acquired to be used in the manufacture of handsets  158,738   77,877   80,861 
Rights to use telecommunications facilities of wireline operators  18,193   6,380   11,813 
Other  21,844   6,123   15,721 
             
Total amortizable intangible assets ¥1,996,791  ¥1,371,822  ¥624,969 
             
Unamortizable intangible assets:            
Trademarks and trade names         ¥3,722 
             
Total unamortizable intangible assets         ¥3,722 
             
Total         ¥628,691 
             

The amount of amortizable intangible assets acquired during the year ended March 31, 20102011 was ¥235,273¥250,949 million, the main components of which were software for telecommunications network in the amount of ¥95,638¥104,669 million and internal-use software in the amount of ¥94,651¥98,825 million. The weighted-average amortization period of such software for telecommunications network and internal-use software is 5.0 years and 4.8 years, respectively. Amortization of intangible assets for the years ended March 31, 2008, 2009, 2010 and 20102011 was ¥197,324 million, ¥189,678 million, ¥187,393 million and ¥187,393¥204,090 million, respectively. Estimated amortization of existing intangible assets for fiscal years ending March 31, 2011, 2012, 2013, 2014, 2015 and 20152016 is ¥191,361¥204,187 million, ¥144,658¥159,294 million, ¥102,016¥125,546 million, ¥68,438¥90,710 million, and ¥35,196¥41,488 million, respectively. The weighted-average amortization period of the intangible assets acquired during the year ended March 31, 20102011 is 5.15.0 years.

The amount of unamortizable intangible assets acquired during the year ended March 31, 20102011 was ¥3,722¥259 million, the component of which was trademarks and trade names. DOCOMO did not hold unamortizable intangible assets as of March 31, 2009.

8. Other assets:

8. Other assets:

“Other assets” as of March 31, 20092010 and 20102011 comprised the following:

         
  Millions of yen 
  2009  2010 
 
Deposits ¥81,557  ¥79,151 
Deferred customer activation costs  72,542   71,085 
Installment receivables for handsets (Non-current)  96,799   85,753 
Allowance for doubtful accounts  (1,350)  (4,047)
Other  23,892   25,969 
         
Total ¥273,440  ¥257,911 
         

F-24


   Millions of yen 
   2010  2011 

Deposits

  ¥    79,151   ¥    59,615  

Deferred customer activation costs

   71,085    72,214  

Installment receivables for handsets (Non-current).

   85,753    75,391  

Allowance for doubtful accounts

   (4,047  (1,118

Long-term bailment for consumption to a related party

       20,000  

Other

   25,969    23,817  
         

Total

  ¥257,911   ¥249,919  
         

Information regarding “Long-term bailment for consumption to a related party” is disclosed in Note 13.

9. Short-term borrowings and long-term debt:

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
9. Short-term borrowings and long-term debt:
Short-term borrowings, excluding the current portion of long-term debt as of March 31, 20092010 and 20102011 were as follows:
         
  Millions of yen 
  2009  2010 
 
Short-term borrowings denominated in Euro:        
Unsecured short-term loans from financial institutions ¥ —  ¥     78 
(Year ended March 31, 2010 — weighted-average interest of 7.6% per annum)        
         
Total short-term borrowings ¥       —  ¥       78 
         

   Millions of yen 
       2010           2011     

Short-term borrowings denominated in Euro:

    

Unsecured short-term loans from financial institutions

  ¥      78    ¥      276  

(Year ended March 31, 2010—weighted-average interest rate per annum: 7.6%)

    

(Year ended March 31, 2011—weighted-average variable rate per annum: 5.3% as of March 31, 2011)

    
          

Total short-term borrowings

  ¥78    ¥276  
          

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-term debt as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Debt denominated in Japanese Yen:        
Unsecured corporate bonds ¥572,233  ¥572,097 
(Year ended March 31, 2009 — interest rates per annum : 1.0%-2.0%, due : years ending March 31,2011-2019)
        
(Year ended March 31, 2010 — interest rates per annum : 1.0%-2.0%, due : years ending March 31,2011-2019)
        
Unsecured indebtedness to financial institutions  67,000   38,000 
(Year ended March 31, 2009 — interest rates per annum : 1.0%-1.5%, due : years ending March 31,2010-2013)
        
(Year ended March 31, 2010 — interest rates per annum : 1.3%-1.5%, due : years ending March 31,2011-2013)
        
Debt denominated in Euro:        
Unsecured indebtedness to financial institutions     172 
(Year ended March 31, 2010 — variable rate per annum : 4.6% as of March 31, 2010, due : year ending March 31, 2012)        
         
Sub-total ¥639,233  ¥610,269 
Less: Current portion  (29,000)    (180,716)
         
Total long-term debt ¥  610,233  ¥429,553 
         
DOCOMO issued ¥240,000 million unsecured corporate bonds in total during the year ended March 31, 2009.

   Millions of yen 
   2010  2011 

Debt denominated in Japanese Yen:

   

Unsecured corporate bonds

  ¥  572,097   ¥  407,032  

(Year ended March 31, 2010—interest rates per annum: 1.0%-2.0%, due: years ending March 31, 2011-2019)

   

(Year ended March 31, 2011—interest rates per annum: 1.0%-2.0%, due: years ending March 31, 2012-2019)

   

Unsecured indebtedness to financial institutions

   38,000    21,000  

(Year ended March 31, 2010—interest rates per annum: 1.3%-1.5%, due: years ending March 31, 2011-2013)

   

(Year ended March 31, 2011—interest rates per annum: 1.3%-1.5%, due: years ending March 31, 2012-2013)

   

Debt denominated in Euro:

   

Unsecured indebtedness to financial institutions

             172                70  

(Year ended March 31, 2010—variable rate per annum: 4.6% as of March 31, 2010, due: year ending March 31, 2012)

   

(Year ended March 31, 2011—variable rate per annum: 2.4% as of March 31, 2011, due: year ending March 31, 2012)

   
         

Sub-total

  ¥610,269   ¥428,102  

Less: Current portion

   (180,716  (173,102
         

Total long-term debt

  ¥429,553   ¥255,000  
         

Interest rates on DOCOMO’s borrowings are mainly fixed. DOCOMO uses interest rate swap transactions, under which DOCOMO receives fixed rate interest payments and pays floating rate interest payments, to hedge the changes in fair value of certain debt as a part of its asset-liability management (ALM). Information relating to interest rate swap contracts is disclosed in Note 19. Interest costs related specifically to short-term borrowings and long-term debt for the years ended March 31, 2008, 2009, 2010 and 20102011 totaled ¥5,882 million, ¥7,187 million, ¥7,441 million and ¥7,441¥6,709 million, respectively. “Interest expense” in the consolidated statements of income and comprehensive income excludes the amounts of capitalized interest.


F-25


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The aggregate amounts of annual maturities of long-term debt as of March 31, 2010,2011, were as follows:
     
  Millions of
 
Year ending March 31, yen 
 
2011 ¥180,716 
2012  174,553 
2013  75,000 
2014  70,000 
2015   
Thereafter  110,000 
     
Total ¥610,269 
     
10. Equity:

Year ending March 31,

  Millions of
yen
 

2012

  ¥  173,102  

2013

   75,000  

2014

   70,000  

2015

     

2016

     

Thereafter

   110,000  
     

Total

  ¥428,102  
     

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10. Equity:

Effective May 1, 2006, the Corporate Law of Japan provides that (i) dividends of earnings require approval at a general meeting of shareholders, (ii) interim cash dividends can be distributed upon the approval of the board of directors, if the articles of incorporation provide for such interim cash dividends and (iii) an amount equal to at least 10% of decrease in retained earnings by dividends payment be appropriated from retained earnings to a legal reserve up to 25% of capital stock. The legal reserve is available for distribution upon approval of the shareholders.

The distributable amount available for the payments of dividends to shareholders as of March 31, 20102011 was ¥3,213,669¥3,474,726 million and was included in “Additional paid-in capital” and “Retained earnings”.

In the general meeting of shareholders held on June 18, 2010,17, 2011, the shareholders approved cash dividends of ¥108,175¥107,816 million or ¥2,600 per share, payable to shareholders recorded as of March 31, 2010,2011, which were declared by the board of directors on April 28, 2010.

2011.

In order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment, DOCOMO acquires treasury stock.

With regard to the acquisition of treasury stock, the Corporate Law of Japan provides that (i) it can be done according to the resolution of the general meeting of shareholders, and (ii) the acquisition of treasury stock through open market transactions can be done according to the resolution of the board of directors if the articles of incorporation contain such a provision. The provision is stipulated in DOCOMO’s articles of incorporation.

Issued shares and treasury stock—

DOCOMO acquired treasury stock at the request of dissenting shareholders, made pursuant to paragraph (1) of Article 797 of the Corporate Law of Japan, against the merger under which its eight regional subsidiaries were dissolved and merged into DOCOMO as of July 1, 2008.


F-26


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The changes in the number of issued shares and treasury stock for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows, where fractional shares are rounded off:

         
  Number of
  Number of
 
  issued shares  treasury stock 
 
As of March 31, 2007  45,880,000   2,286,356 
         
Acquisition of treasury stock based on the resolution by the general meeting of shareholders     965,666 
Acquisition of fractional shares     51 
Retirement of treasury stock  (1,010,000)  (1,010,000)
         
As of March 31, 2008  44,870,000   2,242,073 
         
Acquisition of treasury stock based on the resolution by the general meeting of shareholders     856,405 
Acquisition of treasury stock at the request of dissenting shareholders against the merger     11,711 
Acquisition of fractional shares     4 
Retirement of treasury stock  (920,000)  (920,000)
         
As of March 31, 2009  43,950,000   2,190,193 
         
Acquisition of treasury stock based on the resolution of the board of directors
     154,065 
Retirement of treasury stock
  (160,000)  (160,000)
         
As of March 31, 2010
  43,790,000   2,184,258 
         

   Number of
issued shares
  Number of
treasury stock
 

As of March 31, 2008

   44,870,000    2,242,073  
         

Acquisition of treasury stock based on the resolution by the general meeting of shareholders

       856,405  

Acquisition of treasury stock at the request of dissenting shareholders against the merger

       11,711  

Acquisition of fractional shares

       4  

Retirement of treasury stock

   (920,000  (920,000
         

As of March 31, 2009

   43,950,000    2,190,193  
         

Acquisition of treasury stock based on the resolution of the board of directors

       154,065  

Retirement of treasury stock

   (160,000  (160,000
         

As of March 31, 2010

   43,790,000    2,184,258  
         

Acquisition of treasury stock based on the resolution of the board of directors

       138,141  

Retirement of treasury stock

   (140,000  (140,000
         

As of March 31, 2011

   43,650,000    2,182,399  
         

Effective August 1, 2008, DOCOMO abolished the fractional share system.

DOCOMO has not issued shares other than shares of its common stock.

The general meetingsmeeting of shareholders approved stock repurchase plans as follows:

           
    Approved maximum
  Approved maximum
 
    number of treasury stock
  budget for share
 
Date of the general
   to be repurchased
  repurchase
 
meeting of shareholders Term of repurchase (Shares)  (Millions of yen) 
 
June 20, 2006 June 20, 2006 - June 19, 2007  1,400,000  ¥250,000 
June 19, 2007 June 20, 2007 - June 19, 2008  1,000,000   200,000 
June 20, 2008 June 21, 2008 - June 20, 2009  900,000   150,000 
The meeting of the board of directors approved stock repurchase plans as follows:
           
    Approved maximum
  Approved maximum
 
    number of treasury stock
  budget for share
 
Date of the meeting of the
   to be repurchased
  repurchase
 
board of directors Term of repurchase (Shares)  (Millions of yen) 
 
November 9, 2009
 November 10, 2009 - November 30, 2009  160,000  ¥20,000 

Date of the general meeting of
shareholders

 

Term of repurchase

 Approved maximum
number of treasury
stock to be repurchased

(Shares)
  Approved maximum
budget for share
repurchase

(Millions of yen)
 

June 19, 2007

 June 20, 2007 – June 19, 2008  1,000,000   ¥  200,000  

June 20, 2008

 June 21, 2008 – June 20, 2009  900,000    150,000  

 

The meeting of the board of directors approved stock repurchase plans as follows:

 

  

Date of the meeting of
the board of directors

 

Term of repurchase

 Approved maximum
number of treasury
stock to be repurchased

(Shares)
  Approved maximum
budget for share
repurchase

(Millions of yen)
 

November 9, 2009

 November 10, 2009 – November 30, 2009  160,000   ¥  20,000  

December 17, 2010

 December 20, 2010 – January 28, 2011  160,000    20,000  

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The aggregate number and price of shares repurchased for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows:

         
Year ended March 31, Shares  Millions of yen 
 
2008  965,717  ¥173,002 
2009  868,120   136,846 
2010
  154,065   20,000 


F-27


Year ended March 31,

  Shares   Millions of yen 

2009

   868,120    ¥  136,846  

2010

   154,065     20,000  

2011

   138,141     20,000  

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Based on the resolution of the board of directors, DOCOMO retired its own shares held as treasury stock as shown in the following table. The share retirement resulted in a decrease of “Additional paid-in capital” in the same amount as the aggregate purchase price. There were no changes in the number of authorized shares.
         
     Millions of
 
Date of the board of directors Shares  yen 
 
March 28, 2008  1,010,000  ¥187,387 
March 26, 2009  920,000   163,526 
March 26, 2010
  160,000   27,936 

Date of the board of directors

  Shares   Millions of yen 

March 26, 2009

   920,000    ¥  163,526  

March 26, 2010

   160,000     27,936  

March 28, 2011

   140,000     24,195  

Accumulated other comprehensive income (loss):

Changes in accumulated other comprehensive income (loss), net of applicable taxes, were as follows:

                     
  Millions of yen 
  Unrealized holding
  Change in fair
          
  gains (losses) on
  value
  Foreign currency
     Accumulated other
 
  available-for-sale
  of derivative
  translation
  Pension liability
  comprehensive
 
  securities  instruments  adjustment  adjustment  income (loss) 
 
As of March 31, 2007 ¥13,829  ¥(58) ¥7,427  ¥(8,324) ¥12,874 
2008 change  (16,331)  133   7,172   (3,438)  (12,464)
                     
As of March 31, 2008 ¥(2,502) ¥75  ¥14,599  ¥(11,762) ¥410 
2009 change  (1,610)  (125)  (47,586)  (16,778)  (66,099)
                     
As of March 31, 2009 ¥(4,112) ¥(50) ¥(32,987) ¥(28,540) ¥(65,689)
2010 change
  15,096   (63)  5,852   7,425   28,310 
                     
As of March 31, 2010
 ¥10,984  ¥(113) ¥(27,135) ¥(21,115) ¥(37,379)
                     

  Millions of yen 
  Unrealized holding
gains (losses) on
available-for-sale
securities
  Change in fair value
of derivative
instruments
  Foreign currency
translation
adjustment
  Pension liability
adjustment
  Accumulated other
comprehensive
income (loss)
 

As of March 31, 2008

 ¥  (2,502 ¥      75   ¥   14,599   ¥  (11,762 ¥        410  

2009 change

  (1,610  (125  (47,586  (16,778  (66,099
                    

As of March 31, 2009

 ¥(4,112 ¥(50 ¥(32,987 ¥(28,540 ¥(65,689

2010 change

  15,096    (63  5,852    7,425    28,310  
                    

As of March 31, 2010

 ¥10,984   ¥(113 ¥(27,135 ¥(21,115 ¥(37,379

2011 change

  (5,293  4    (27,854  (6,433  (39,576
                    

As of March 31, 2011

 ¥5,691   ¥(109 ¥(54,989 ¥(27,548 ¥(76,955
                    

The amount of taxes applied to the items in “Accumulated other comprehensive income (loss)” is described in Note 16.

11. Research and development expenses and advertising expenses:

11. Research and development expenses and advertising expenses:

Research and development expenses—

Research and development costs are charged to expense as incurred. Research and development expenses are included primarily in “Selling, general and administrative” expenses and amounted to ¥100,035 million, ¥100,793 million, ¥109,916 million and ¥109,916¥109,108 million for the years ended March 31, 2008, 2009, 2010 and 2010,2011, respectively.

Advertising expenses—

Advertising costs are charged to expense as incurred. Advertising expenses are included in “Selling, general and administrative” expenses and amounted to ¥55,357 million, ¥54,986 million, ¥54,114 million and ¥54,114¥54,984 million for the years ended March 31, 2008, 2009, 2010 and 2010,2011, respectively.


F-28


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

12. Other income (expense):

12. Other income (expense):

Other income (expense) included in “Other, net” in the consolidated statements of income and comprehensive income for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Net realized gains (losses) on investments in affiliates ¥333  ¥ —  ¥(26)
Net realized gains on marketable securities and other investments  746   110   693 
Other-than-temporary impairment of marketable securities and other investments
  (11,418)  (57,812)  (4,007)
Foreign exchange gains (losses), net  (1,609)  (851)  (615)
Rental revenue received  2,256   2,144   2,524 
Dividends income  3,310   2,951   4,652 
Penalties and compensation for damages  2,193   4,161   2,204 
Other, net  (1,366)  1,267   259 
             
Total ¥(5,555) ¥(48,030) ¥5,684 
             
13. Related party transactions:

   Millions of yen 
   2009  2010  2011 

Net realized gains (losses) on dispositions of investments in affiliates

  ¥   ¥(26 ¥95  

Net realized gains on dispositions of marketable securities and other investments

   110    693    453  

Other-than-temporary impairment loss on marketable securities and other investments

   (57,812  (4,007  (13,424

Foreign exchange gains (losses), net

   (851  (615  (1,575

Rental revenue received

   2,144    2,524    1,804  

Dividends income

   2,951    4,652    4,819  

Penalties and compensation for damages

   4,161    2,204    1,605  

Other, net

   1,267    259    449  
             

Total

  ¥  (48,030 ¥   5,684   ¥    (5,774
             

13. Related party transactions:

As previously described, DOCOMO is majority-owned by NTT, which is a holding company for more than 600700 companies comprising the NTT group.

DOCOMO has entered into a number of different types of transactions with NTT, its subsidiaries and its affiliated companies in the ordinary course of business. DOCOMO’s transactions with NTT group companies include purchases of wireline telecommunications services (i.e. for DOCOMO’s offices and operations facilities) based on actual usage, leasing of various telecommunications facilities and sales of DOCOMO’s various wireless communicationstelecommunications services. During the years ended March 31, 2008, 2009, 2010 and 2010,2011, DOCOMO purchased capital equipment from NTT group companies in the amount of ¥78,112 million, ¥70,840 million, and ¥72,928 million respectively.

¥76,214 million, respectively.

DOCOMO has entered into contracts of bailment of cash for consumption with NTT FINANCE CORPORATION (“NTT FINANCE”) for cash management purposes. NTT and its subsidiaries collectively own 99.3% of the voting interests in NTT FINANCE, of which DOCOMO owned 2.9% as of March 31, 2010.2011. Accordingly, NTT FINANCE is a related party of DOCOMO. Under the terms of the contracts, excess cash generated at DOCOMO are bailed to NTT FINANCE and NTT FINANCE manages the funds on behalf of DOCOMO. DOCOMO can withdraw the funds upon its demand and receives relevant interests from NTT FINANCE. The funds are accounted for as “Cash and cash equivalents”equivalents,” “Short-term investments,” or “Short-term investments”“Other assets” depending on the initial contract periods.

The balance of bailment was ¥60,000 million as of March 31, 2009. The assets related to the contracts were recorded as “Cash and cash equivalents” in the consolidated balance sheet as of March 31, 2009. The contracts had remaining terms to maturity ranging up to 1 month with an average interest rate of 0.5% per annum as of March 31, 2009.

The balance of bailment was ¥110,000 million as of March 31, 2010. The assets related to the contracts were recorded as “Cash and cash equivalents” of ¥20,000 million and “Short-term investments” of ¥90,000 million in the


F-29


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
consolidated balance sheet as of March 31, 2010. The contracts had remaining terms to maturity ranging up to 4 months with an average interest rate of 0.3% per annum as of March 31, 2010.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The balance of bailment was ¥70,000 million as of March 31, 2011. The assets related to the contracts were recorded as “Cash and cash equivalents” of ¥50,000 million and “Other assets” of ¥20,000 million in the consolidated balance sheet as of March 31, 2011. The contracts had remaining terms to maturity ranging up to 2 years and 9 months with an average interest rate of 0.3% per annum as of March 31, 2011.

The average balance of the contracts of bailment expired during the year ended March 31, 2008, 2009, 2010 and 20102011 was ¥51,243 million, ¥48,778 million, ¥15,616 million and ¥15,616¥82,959 million, respectively. The recorded amounts of interest income derived from the contracts were ¥388 million, ¥270 million, ¥75 million and ¥75¥171 million for the years ended March 31, 2008, 2009, 2010 and 2010,2011, respectively.

14. Segment reporting:
The operating segments reported below are those for which segment-specific financial information is available.

14. Segment reporting:

DOCOMO’s management uses thisthe following segment financial information to make decisions on the allocation of management resources and to evaluate business performance. Accounting policies used to determine segment profit or loss and segment assets are consistent with those used to prepare the consolidated financial statements in accordance with U.S.GAAP.

U.S. GAAP.

DOCOMO has two operating segments. The mobile phone business segment includes Xi services, FOMA services, mova services, packet communications services, satellite mobile communications services, international services and the equipment sales related to these services. The miscellaneous businesses segment includes home shopping services provided primarily through TV media, high-speed internet connection for hotel facilities, advertisement services, development, sales and maintenance of IT systems, credit services and other miscellaneous services, which in the aggregate are not significant in amount. DOCOMO terminated its PHS services on January 7, 2008. Therefore, “PHS business”, which was presented separately in the past, has been reclassified into “Miscellaneous businesses” in the tables below. DOCOMO plans to terminate mova services on March 31, 2012. The “Corporate” column in the tables below is not an operating segment but is included to reflect the recorded amounts of common assets which are not allocated to any operating segment.

DOCOMO identifies its reportable segments based on the nature of services included, as well as the characteristics of the telecommunications networks used to provide those services. DOCOMO’s management monitors and evaluates the performance of its segments based on the information derived from DOCOMO’s management reports.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets by segment are not included in the management reports, however, they are included herein only for the purpose of disclosure. Depreciation and amortization is shown separately, as well as included as part of operating expenses. Corporate assets primarily include cash, deposits, securities loans and investments in affiliates. DOCOMO allocates amounts of asset and related depreciation and amortization to common assets, such as buildings for telecommunications purposes and common facilities, on a systematic and rational basis based on the proportionate amount of network assets of each segment. Capital expenditures in the “Corporate” column include expenditures in “Miscellaneous businesses” and certain expenditures related to the buildings for telecommunications purposes and common facilities, which are not allocated to each segment.


F-30


   Millions of yen 

Year ended March 31, 2009

  Mobile phone
business
   Miscellaneous
businesses
  Corporate   Consolidated 

Operating revenues

  ¥  4,381,254    ¥   66,726   ¥    ¥  4,447,980  

Operating expenses

   3,525,967     91,054         3,617,021  
                   

Operating income (loss)

  ¥855,287    ¥(24,328 ¥    ¥830,959  
                   

Other income (expense)

       ¥(50,486
          

Income before income taxes and equity in net income (losses) of affiliates

       ¥780,473  
          

Other significant non-cash item:

       

Point program expense

  ¥111,062    ¥3,663   ¥    ¥114,725  
                   

Total assets

  ¥4,960,000    ¥139,617   ¥  1,388,603    ¥6,488,220  
                   

Depreciation and amortization

  ¥796,807    ¥7,352   ¥    ¥804,159  
                   

Capital expenditures

  ¥601,307    ¥   ¥136,299    ¥737,606  
                   
   Millions of yen 

Year ended March 31, 2010

  Mobile phone
business
   Miscellaneous
businesses
  Corporate   Consolidated 

Operating revenues

  ¥  4,167,704    ¥  116,700   ¥    ¥  4,284,404  

Operating expenses

   3,322,064     128,095         3,450,159  
                   

Operating income (loss)

  ¥845,640    ¥(11,395 ¥    ¥834,245  
                   

Other income (expense)

       ¥1,912  
          

Income before income taxes and equity in net income (losses) of affiliates

       ¥836,157  
          

Other significant non-cash item:

       

Point program expense

  ¥134,954    ¥7,266   ¥    ¥142,220  
                   

Total assets

  ¥4,949,025    ¥259,283   ¥  1,548,467    ¥6,756,775  
                   

Depreciation and amortization

  ¥691,851    ¥9,295   ¥    ¥701,146  
                   

Capital expenditures

  ¥556,829    ¥   ¥129,679    ¥686,508  
                   

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

                 
  Millions of yen 
  Mobile phone
  Miscellaneous
       
Year ended March 31, 2008 business  businesses  Corporate  Consolidated 
 
Operating revenues ¥4,647,132  ¥64,695  ¥ —  ¥4,711,827 
Operating expenses  3,788,943   114,572      3,903,515 
                 
Operating income (loss) ¥858,189  ¥(49,877) ¥ —  ¥808,312 
                 
Other income (expense)             ¥(7,624)
                 
Income before income taxes and equity in net income (losses) of affiliates             ¥800,688 
                 
Other significant non-cash item:                
Point program expense ¥83,314  ¥1,028  ¥ —  ¥84,342 
                 
Total assets ¥4,838,663  ¥100,332  ¥1,271,839  ¥6,210,834 
                 
Depreciation and amortization ¥767,481  ¥8,944  ¥ —  ¥776,425 
                 
Capital expenditures ¥623,975  ¥ —  ¥134,768  ¥758,743 
                 
                 
  Millions of yen 
  Mobile phone
  Miscellaneous
       
Year ended March 31, 2009 business  businesses  Corporate  Consolidated 
 
Operating revenues ¥4,381,254  ¥66,726  ¥ —  ¥4,447,980 
Operating expenses  3,525,967   91,054      3,617,021 
                 
Operating income (loss) ¥855,287  ¥(24,328) ¥ —  ¥830,959 
                 
Other income (expense)             ¥(50,486)
                 
Income before income taxes and equity in net income (losses) of affiliates             ¥780,473 
                 
Other significant non-cash item:                
Point program expense ¥111,062  ¥3,663  ¥ —  ¥114,725 
                 
Total assets ¥4,960,000  ¥139,617  ¥1,388,603  ¥6,488,220 
                 
Depreciation and amortization ¥796,807  ¥7,352  ¥ —  ¥804,159 
                 
Capital expenditures ¥601,307  ¥ —  ¥136,299  ¥737,606 
                 

F-31


   Millions of yen 

Year ended March 31, 2011

  Mobile phone
business
   Miscellaneous
businesses
  Corporate   Consolidated 

Operating revenues

  ¥  4,090,659    ¥  133,614   ¥    ¥  4,224,273  

Operating expenses

   3,233,925     145,619         3,379,544  
                   

Operating income (loss)

  ¥856,734    ¥(12,005 ¥    ¥844,729  
                   

Other income (expense)

       ¥(9,391
          

Income before income taxes and equity in net income (losses) of affiliates

       ¥835,338  
          

Other significant non-cash item:

       

Point program expense

  ¥118,576    ¥8,271   ¥    ¥126,847  
                   

Total assets

  ¥4,843,925    ¥286,338   ¥  1,661,330    ¥6,791,593  
                   

Depreciation and amortization

  ¥682,029    ¥11,034   ¥    ¥693,063  
                   

Capital expenditures

  ¥520,770    ¥4,759   ¥142,947    ¥668,476  
                   

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
                 
  Millions of yen 
  Mobile phone
  Miscellaneous
       
Year ended March 31, 2010 business  businesses  Corporate  Consolidated 
 
Operating revenues ¥4,167,704  ¥116,700  ¥  ¥4,284,404 
Operating expenses  3,322,064   128,095      3,450,159 
                 
Operating income (loss) ¥845,640  ¥(11,395) ¥  ¥834,245 
                 
Other income (expense)             ¥1,912 
                 
Income before income taxes and equity in net income (losses) of affiliates             ¥836,157 
                 
Other significant non-cash item:                
Point program expense ¥134,954  ¥7,266  ¥  ¥142,220 
                 
Total assets ¥4,949,025  ¥259,283  ¥1,548,467  ¥6,756,775 
                 
Depreciation and amortization ¥691,851  ¥9,295  ¥  ¥701,146 
                 
Capital expenditures ¥556,829  ¥  ¥129,679  ¥686,508 
                 
DOCOMO does not disclose geographical information, since the amounts of operating revenues generated and long-lived assets owned outside Japan are immaterial.

There were no sales and operating revenue from transactions with a single external customer amounting to 10% or more of DOCOMO’s revenues for the years ended March 31, 2008, 2009, 2010 and 2010.

2011.

Revenues from external customers for each similar product and service were as follows:

             
  Millions of yen 
Year ended March 31, 2008  2009  2010 
 
Operating Revenues :
            
Wireless services ¥4,165,234  ¥3,841,082  ¥3,776,909 
Cellular services revenues  4,018,988   3,661,283   3,499,452 
— Voice revenues  2,645,096   2,149,617   1,910,499 
Including: FOMA services  2,084,263   1,877,835   1,785,518 
— Packet communications revenues  1,373,892   1,511,666   1,588,953 
Including: FOMA services  1,254,648   1,449,440   1,558,284 
Other revenues  146,246   179,799   277,457 
Equipment sales  546,593   606,898   507,495 
             
Total operating revenues ¥  4,711,827  ¥  4,447,980  ¥  4,284,404 
             

F-32


   Millions of yen 

Year ended March 31,

  2009   2010   2011 

Operating Revenues:

      

Wireless services

  ¥  3,841,082    ¥  3,776,909    ¥  3,746,869  

Cellular services revenues

   3,661,283     3,499,452     3,407,145  

—Voice revenues

   2,149,617     1,910,499     1,712,218  

Including: FOMA services

   1,877,835     1,785,518     1,658,863  

—Packet communications revenues

   1,511,666     1,588,953     1,694,927  

Including: FOMA services

   1,449,440     1,558,284     1,679,840  

Other revenues

   179,799     277,457     339,724  

Equipment sales

   606,898     507,495     477,404  
               

Total operating revenues

  ¥4,447,980    ¥4,284,404    ¥4,224,273  
               

15. Employees’ retirement benefits:

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
15. Employees’ retirement benefits:
Severance payments and contract-type corporate pension plan—

Employees whose services with DOCOMO are terminated are normally entitled to lump-sum severance or retirement payments and pension benefits based on internal labor regulations. The amounts are determined by a combination of factors such as the employee’s salary eligibility, length of service and other conditions. The pension benefit is covered by the non-contributory defined benefit pension plans (“Defined benefit pension plans”) sponsored by DOCOMO.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents reconciliations and changes in the Defined benefit pension plans’ projected benefit obligations and fair value of plan assets for the years ended March 31, 20092010 and 2010.2011. DOCOMO uses a measurement date of March 31 for its Defined benefit pension plans.

         
  Millions of yen 
  2009  2010 
 
Change in benefit obligations:        
Projected benefit obligation, beginning of year ¥182,228  ¥186,177 
Service cost  9,216   9,204 
Interest cost  4,058   3,979 
Actuarial (gain) loss  914   592 
Transfer of liability from defined benefit pension plans of the NTT group  245   215 
Other     151 
Benefit payments  (10,484)  (9,950)
         
Projected benefit obligation, end of year ¥186,177  ¥190,368 
Change in fair value of plan assets:        
Fair value of plan assets, beginning of year ¥79,544  ¥67,040 
Actual return on plan assets  (13,106)  9,864 
Employer contributions  2,676   2,680 
Transfer of plan assets from defined benefit pension plans of the NTT group  57   49 
Benefit payments  (2,131)  (2,563)
         
Fair value of plan assets, end of year ¥67,040  ¥77,070 
At March 31:        
Funded status ¥(119,137) ¥(113,298)
         

   Millions of yen 
   2010  2011 

Change in benefit obligations:

   

Projected benefit obligation, beginning of year

  ¥    186,177   ¥    190,368  

Service cost

   9,204    9,244  

Interest cost

   3,979    3,894  

Actuarial (gain) loss

   592    1,586  

Transfer of liability from defined benefit pension plans of the NTT group

   215    328  

Other

   151    7  

Benefit payments

   (9,950  (9,363
         

Projected benefit obligation, end of year

  ¥190,368   ¥196,064  
         

Change in fair value of plan assets:

   

Fair value of plan assets, beginning of year

  ¥67,040   ¥77,070  

Actual return on plan assets

   9,864    (1,407

Employer contributions

   2,680    5,053  

Transfer of plan assets from defined benefit pension plans of the NTT group

   49    77  

Benefit payments

   (2,563  (2,980
         

Fair value of plan assets, end of year

  ¥77,070   ¥77,813  
         

At March 31:

   

Funded status

  ¥(113,298 ¥(118,251
         

The amounts recognized in DOCOMO’s consolidated balance sheets as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Liability for employees’ retirement benefits ¥(119,155) ¥(113,332)
Prepaid pension cost  18   34 
         
Net amount recognized ¥(119,137) ¥(113,298)
         


F-33


   Millions of yen 
   2010  2011 

Liability for employees’ retirement benefits

  ¥  (113,332 ¥  (118,290

Prepaid pension cost

   34    39  
         

Net amount recognized

  ¥(113,298 ¥(118,251
         

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Prepaid pension cost is included in “Other assets” in the consolidated balance sheets.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Items recognized in “Accumulated other comprehensive income (loss)” as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Actuarial gains (losses), net ¥(48,865) ¥(39,052)
Prior service cost  16,425   14,518 
Transition obligation  (1,185)  (1,060)
         
Total ¥(33,625) ¥(25,594)
         

   Millions of yen 
   2010  2011 

Actuarial gains (losses), net

  ¥  (39,052 ¥  (42,262

Prior service cost

   14,518    12,611  

Transition obligation

   (1,060  (935
         

Total

  ¥(25,594 ¥(30,586
         

The accumulated benefit obligation for the Defined benefit pension plans was ¥180,214¥184,555 million and ¥184,555¥190,067 million as of March 31, 20092010 and 2010,2011, respectively.

The projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets in the pension plans with the projected or accumulated benefit obligation in excess of the plan assets as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Plans with projected benefit obligation in excess of plan assets:        
Projected benefit obligation ¥186,169  ¥190,346 
Fair value of plan assets  67,014   77,014 
Plans with accumulated benefit obligation in excess of plan assets:        
Accumulated benefit obligation ¥180,207  ¥184,532 
Fair value of plan assets  67,014   77,014 

   Millions of yen 
   2010   2011 

Plans with projected benefit obligation in excess of plan assets:

    

Projected benefit obligation

  ¥  190,346    ¥  196,025  

Fair value of plan assets

   77,014     77,735  

Plans with accumulated benefit obligation in excess of plan assets:

    

Accumulated benefit obligation

  ¥184,532    ¥190,028  

Fair value of plan assets

   77,014     77,735  

The net periodic pension cost for the Defined benefit pension plans for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Service cost ¥9,521  ¥9,216  ¥9,204 
Interest cost on projected benefit obligation  3,889   4,058   3,979 
Expected return on plan assets  (2,144)  (2,116)  (1,649)
Amortization of prior service cost  (1,907)  (1,907)  (1,907)
Amortization of actuarial gains and losses  834   1,192   2,190 
Amortization of transition obligation  127   127   125 
             
Net periodic pension cost ¥10,320  ¥10,570  ¥11,942 
             


F-34


   Millions of yen 
   2009  2010  2011 

Service cost

  ¥    9,216   ¥    9,204   ¥    9,244  

Interest cost on projected benefit obligation

   4,058    3,979    3,894  

Expected return on plan assets

   (2,116  (1,649  (1,714

Amortization of prior service cost

   (1,907  (1,907  (1,907

Amortization of actuarial gains and losses

   1,192    2,190    1,497  

Amortization of transition obligation

   127    125    125  
             

Net periodic pension cost

  ¥10,570   ¥11,942   ¥11,139  
             

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

Other changes in plan assets and benefit obligations of the Defined benefit pension plans recognized in “Accumulated other comprehensive income (loss)” for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Other changes in plan assets and benefit obligations recognized in “Accumulated other comprehensive income (loss)”:            
Actuarial (gains) losses arising during period, net ¥6,018  ¥16,136  ¥(7,623)
Amortization of prior service cost  1,907   1,907   1,907 
Amortization of actuarial gains and losses  (834)  (1,192)  (2,190)
Amortization of transition obligation  (127)  (127)  (125)
             
Total recognized in “Accumulated other comprehensive income (loss)” ¥6,964  ¥16,724  ¥(8,031)
             
Total recognized in net periodic pension cost and “Accumulated other comprehensive income (loss)” ¥17,284  ¥27,294  ¥3,911 
             

   Millions of yen 
   2009  2010  2011 

Other changes in plan assets and benefit obligations recognized in “Accumulated other comprehensive income (loss)”:

    

Actuarial (gains) losses arising during period, net

  ¥  16,136   ¥  (7,623 ¥    4,707  

Amortization of prior service cost

   1,907    1,907    1,907  

Amortization of actuarial gains and losses

   (1,192  (2,190  (1,497

Amortization of transition obligation

   (127  (125  (125
             

Total recognized in “Accumulated other comprehensive income (loss)”

  ¥16,724   ¥(8,031 ¥4,992  
             

Total recognized in net periodic pension cost and “Accumulated other comprehensive income (loss)” was ¥27,294 million, ¥3,911 million and ¥16,131 million for the years ended March 31, 2009, 2010 and 2011, respectively.

The amount of actuarial losses, unrecognized transition obligation and prior service cost, which are expected to be amortized and reclassified from “Accumulated other comprehensive income (loss)” to net pension cost during the year ending March 31, 20112012 is ¥1,497¥1,644 million, ¥125 million and ¥(1,907) million, respectively.

The assumptions used in determination of the pension plans’ projected benefit obligations as of March 31, 20092010 and 20102011 were as follows:

         
  2009  2010 
 
Discount rate  2.2%  2.1%
Long-term rate of salary increases  2.2   2.2 

   2010  2011 

Discount rate

   2.1  2.0

Long-term rate of salary increases

   2.2    2.9  

The assumptions used in determination of the net periodic pension cost for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows:

             
  2008  2009  2010 
 
Discount rate  2.2%  2.3%  2.2%
Long-term rate of salary increases  2.1   2.2   2.2 
Expected long-term rate of return on plan assets  2.5   2.5   2.5 

   2009  2010  2011 

Discount rate

   2.3  2.2  2.1

Long-term rate of salary increases

   2.2    2.2    2.2  

Expected long-term rate of return on plan assets

   2.5    2.5    2.3  

In determining the expected long-term rate of return on plan assets, DOCOMO considers the current and projected asset allocations, as well as expected long-term investment returns and risks for each category of the plan assets based on analysis of historical results.


F-35


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The following table presents the fair values of DOCOMO’s pension plan assets as of March 31, 2010.2010 and 2011. Descriptions of fair value hierarchy and the inputs used in measuring fair value are presented in Note 18.

                 
  Millions of yen 
  2010 
  Total  Level 1  Level 2  Level 3 
 
Cash and cash equivalents ¥443  ¥443  ¥  ¥ 
Debt securities                
Japanese government bonds/local government bonds  21,332   19,273   2,059    
Domestic corporate bonds  7,147      7,147    
Foreign government bonds  6,518   6,043   475    
Foreign corporate bonds  381   21   308   52 
Equity securities                
Domestic stocks  19,610   19,346   264    
Foreign stocks  9,916   9,916       
Securities investment trust beneficiary certificates                
Domestic debt securities  755      755    
Domestic equity securities  1,244      1,244    
Foreign debt securities  366      366    
Foreign equity securities  861      861    
Life insurance company general accounts  6,715      6,715    
Others  1,782   (0)  (0)  1,782 
                 
Total ¥77,070  ¥55,042  ¥20,194  ¥1,834 
                 

   Millions of yen 
   2010 
   Total   Level 1  Level 2  Level 3 

Cash and cash equivalents

  ¥        443    ¥        443   ¥   ¥  

Debt securities

      

Japanese government bonds/local government bonds

   21,332     19,273        2,059      

Domestic corporate bonds

   7,147         7,147      

Foreign government bonds

   6,518     6,043    475      

Foreign corporate bonds

   381     21    308    52  

Equity securities

      

Domestic stocks

   19,610     19,346    264      

Foreign stocks

   9,916     9,916          

Securities investment trust beneficiary certificates

      

Domestic debt securities

   755         755      

Domestic equity securities

   1,244         1,244      

Foreign debt securities

   366         366      

Foreign equity securities

   861         861      

Life insurance company general accounts

   6,715         6,715      

Other

   1,782     (0  (0  1,782  
                  

Total

  ¥77,070    ¥55,042   ¥20,194   ¥  1,834  
                  

   Millions of yen 
   2011 
   Total   Level 1  Level 2  Level 3 

Cash and cash equivalents

  ¥866    ¥866   ¥   ¥  

Debt securities

      

Japanese government bonds/local government bonds

   21,852     20,258    1,594      

Domestic corporate bonds

   8,023         8,023      

Foreign government bonds

   9,556     9,067    489      

Foreign corporate bonds

   455     89    354    12  

Equity securities

      

Domestic stocks

   16,873     16,849    24      

Foreign stocks

   7,515     7,515          

Securities investment trust beneficiary certificates

      

Domestic debt securities

   966         966      

Domestic equity securities

   997         997      

Foreign debt securities

   632         632      

Foreign equity securities

   583         583      

Life insurance company general accounts

   7,528         7,528      

Other

   1,967     (0  (2  1,969  
                  

Total

  ¥  77,813    ¥  54,644   ¥  21,188   ¥  1,981  
                  

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash and cash equivalents

Cash and cash equivalents include foreign currency deposits and call loans, and are all classified as Level 1.

Debt securities

Debt securities include Japanese government bonds and local government bonds, domestic corporate bonds, foreign government bonds and foreign corporate bonds. If active market prices are available, fair value is measured by quoted prices for identical assets in active markets, which is classified as Level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is classified as Level 2. Fair value measured by inputs derived from unobservable data is classified as Level 3.

Equity securities

Equity securities include domestic stocks and foreign stocks. If active market prices are available, fair value is measured by quoted prices for identical assets in active markets, which is classified as Level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is classified as Level 2.

Securities investment trust beneficiary certificates

Securities investment trust beneficiary certificates include bond investment trusts and foreign stock investment trusts. Fair values of securities investment trust beneficiary certificates are measured by inputs derived principally from observable market data provided by financial institutions. Therefore, they are classified as Level 2.


F-36


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Life insurance company general accounts

Life insurance company general accounts are the financial assets which guarantee an expected rate of return and a principal and they are all classified as Level 2.

Others
Others include

Other

Other includes fund of hedge funds and pension investment trust beneficiary rights. Fair value measured by inputs derived from unobservable data provided by financial institutions is classified as Level 3.

Level 3 reconciliation is not disclosed, since the amounts in Level 3 are immaterial.

The Defined benefit pension plans’ policy toward plan asset management is formulated with the ultimate objective of ensuring the steady disbursement of pension benefits in future periods. The long-term objective of asset management, therefore, is to secure the total profits deemed necessary to ensure the financial soundness of the plan assets. To achieve this, DOCOMO selects various investments and takes into consideration their expected returns and risks and the correlation among the investments. DOCOMO then sets a target allocation ratio for the plan assets and endeavors to maintain that ratio. The target ratio is formulated from a mid- to long-term perspective and reviewed annually. In the event that the investment environment changes dramatically, DOCOMO will review the asset allocation as necessary. The target ratio in March 20102011 was: domestic bonds, 40.0%41.5%; domestic stocks, 25.0%23.0%; foreign bonds, 10.0%15.0%; foreign stocks, 15.0%10.0%; and life insurance company general accounts, 10.0%10.5%. As securities investment trust beneficiary certificates are established for each asset, they are allocated among domestic bonds, domestic stocks, foreign bonds and foreign stocks.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 20092010 and 2010,2011, securities owned by the Defined benefit pension plans as its plan assetassets included the stock of NTT and the NTT group companies listed in Japan including DOCOMO in the amount of ¥498¥543 million (0.8%(0.7% of total plan assets) and ¥543¥515 million (0.7% of total plan assets), respectively.

DOCOMO’s pension plan assets do not have a concentration of material risks, including market risks and credit risks.
Occasionally, employees of the NTT group companies transfer to DOCOMO. Upon such transfer, the NTT group companies transfer the relevant vested pension obligation for each employee along with a corresponding amount of plan assets and cash. Therefore, the difference between the pension obligation and related plan assets transferred from the NTT group companies to DOCOMO, included in the above table which presents reconciliations of the changes in the Defined benefit pension plans’ projected benefit obligations and fair value of plan assets, represents cash paid by the NTT group companies to DOCOMO, which has not been invested in plan assets.

DOCOMO expects to contribute ¥3,289¥5,140 million to the Defined benefit pension plans in the year ending March 31, 2011.


F-37

2012.


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The benefit payments, which reflect expected future service under the Defined benefit pension plans, are expected to be as follows:
     
Year ending March 31, Millions of yen 
 
2011 ¥11,364 
2012  10,966 
2013  11,653 
2014  11,827 
2015  11,607 
2016-2020  69,666 

Year ending March 31,

  Millions of yen 

2012

  ¥  10,630  

2013

   11,069  

2014

   11,639  

2015

   11,873  

2016

   13,083  

2017-2021

   68,081  

Social welfare pension scheme and NTT Kigyou-Nenkin-Kikin (NTT Corporate Defined Benefit Pension Plan)—

DOCOMO participates in the national welfare pension plan (“National Plan”) and a contributory defined benefit pension plan sponsored by the NTT group (NTT Kigyou-Nenkin-Kikin or NTT Corporate Defined Benefit Pension Plan, “NTT CDBP”). The National Plan is a government-regulated social welfare pension plan under the Japanese Employees’ Pension Insurance Act and both NTT group and its employees provide contributions to such plan every year. The National Plan is considered a multi-employer plan and contributions to such plan are recognized as expenses. The total amount of contributions by DOCOMO was ¥13,369 million, ¥13,627 million, ¥14,425 million and ¥14,425¥14,703 million for the years ended March 31, 2008, 2009, 2010 and 2010,2011, respectively.

Both NTT group, including DOCOMO, and its employees provide contributions to the NTT CDBP to supplement the pension benefits to which the employees are entitled under the National Plan. The NTT CDBP is regulated under the Defined-Benefit Corporate Pension Act. The NTT CDBP is considered a defined benefit pension plan. The participation by DOCOMO and its subsidiaries in the NTT CDBP is accounted for as a single employer plan. The number of DOCOMO’s employees covered by the NTT CDBP as of March 31, 20092010 and 20102011 represented approximately 10.6%10.8% and 10.8%11.0% of the total members.

In February 2008, the NTT CDBP transferred the remaining substitutional obligation and related plan assets, determined pursuant to the government formula, of the pension fund to the government agency. DOCOMO accounted for the entire transfer process as a single settlement event upon completion of the transfer. The net amount of actuarial gains and losses proportionate to the substitutional portion immediately prior to the transfer, which was ¥3,892 million, and the excess of projected benefit obligation over the accumulated benefit obligation, which was ¥4,395 million, were netted and recognized as settlement gain of ¥503 million from the transaction. The net of the obligation settled and the assets transferred to the government was recognized as a gain on subsidy from the government of ¥24,199 million. As a result of recording the settlement gain and governmental subsidy as reduction of “Selling, general and administrative”, the aggregate amount of ¥24,702 million was recognized as decrease in operating expenses in the consolidated statements of income and comprehensive income for the year ended March 31, 2008. A “Decrease in liability for employees’ retirement benefits” of ¥19,002 million recognized in the consolidated statements of cash flows for the year ended March 31, 2008 was net of a decrease of ¥24,702 million in liability for employees’ retirement benefits due to gain on transfer of substitutional portion and an increase of ¥5,700 million in liability for employees’ retirement benefits which was derived from other factors.


F-38


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The following table presents reconciliations and changes in the NTT CDBP’s projected benefit obligation and fair value of plan assets for the years ended March 31, 20092010 and 2010.2011. The amount in the table is based on actuarial computations which covered only DOCOMO employees’ participation in the NTT CDBP. The funded status was recognized as “Liability for employees’ retirement benefits” in the consolidated balance sheets as of March 31, 20092010 and 2010.

         
  Millions of yen 
  2009  2010 
 
Change in benefit obligations:        
Projected benefit obligation, beginning of year ¥78,285  ¥83,473 
Service cost  3,132   3,216 
Interest cost  1,790   1,798 
Actuarial (gain) loss  2,111   2,160 
Internal adjustment due to transfer of employees within the NTT group  (715)  (734)
Benefit payments  (1,130)  (1,199)
         
Projected benefit obligation, end of year ¥83,473  ¥88,714 
Change in fair value of plan assets:        
Fair value of plan assets, beginning of year ¥64,309  ¥56,302 
Actual return on plan assets  (7,535)  7,783 
Employer contributions  816   800 
Employee contributions  416   411 
Internal adjustment due to transfer of employees within the NTT group  (574)  (498)
Benefit payments  (1,130)  (1,199)
         
Fair value of plan assets, end of year ¥56,302  ¥63,599 
At March 31:        
Funded status ¥(27,171) ¥(25,115)
         
2011.

   Millions of yen 
    2010  2011 

Change in benefit obligations:

   

Projected benefit obligation, beginning of year

  ¥    83,473   ¥    88,714  

Service cost

   3,216    3,256  

Interest cost

   1,798    1,849  

Actuarial (gain) loss

   2,160    4,527  

Internal adjustment due to transfer of employees within the NTT group

   (734  (445

Benefit payments

   (1,199  (1,485
         

Projected benefit obligation, end of year

  ¥88,714   ¥96,416  
         

Change in fair value of plan assets:

   

Fair value of plan assets, beginning of year

  ¥56,302   ¥63,599  

Actual return on plan assets

   7,783    (930

Employer contributions

   800    803  

Employee contributions

   411    413  

Internal adjustment due to transfer of employees within the NTT group

   (498  (341

Benefit payments

   (1,199  (1,485
         

Fair value of plan assets, end of year

  ¥63,599   ¥62,059  
         

At March 31:

   

Funded status

  ¥(25,115 ¥(34,357
         

Items recognized in “Accumulated other comprehensive income (loss)” as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Actuarial gains (losses), net ¥(16,383) ¥(11,288)
Prior service cost  1,783   1,426 
         
Total ¥(14,600) ¥(9,862)
         

   Millions of yen 
   2010  2011 

Actuarial gains (losses), net

  ¥  (11,288 ¥  (18,002

Prior service cost

   1,426    1,069  
         

Total

  ¥(9,862 ¥(16,933
         

The accumulated benefit obligation for the NTT CDBP regarding DOCOMO employees was ¥66,585¥71,285 million and ¥71,285¥76,553 million at March 31, 20092010 and 2010,2011, respectively.


F-39


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets in the pension plans with the projected or accumulated benefit obligation in excess of the plan assets as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Plans with projected benefit obligation in excess of plan assets:        
Projected benefit obligation ¥83,473  ¥88,714 
Fair value of plan assets  56,302   63,599 
Plans with accumulated benefit obligation in excess of plan assets:        
Accumulated benefit obligation ¥66,559  ¥71,243 
Fair value of plan assets  56,276   63,554 

   Millions of yen 
   2010   2011 

Plans with projected benefit obligation in excess of plan assets:

    

Projected benefit obligation

  ¥  88,714    ¥  96,416  

Fair value of plan assets

   63,599     62,059  

Plans with accumulated benefit obligation in excess of plan assets:

    

Accumulated benefit obligation

  ¥71,243    ¥76,497  

Fair value of plan assets

   63,554     61,997  

The net periodic pension cost for the NTT CDBP regarding DOCOMO employees for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Service cost ¥3,244  ¥3,132  ¥3,216 
Interest cost on projected benefit obligation  2,872   1,790   1,798 
Expected return on plan assets  (2,339)  (1,613)  (1,402)
Amortization of prior service cost  (357)  (357)  (357)
Amortization of actuarial gains and losses  16   97   874 
Contribution from employees  (452)  (416)  (411)
             
Net periodic pension cost ¥2,984  ¥2,633  ¥3,718 
             
Gain on transfer of substitutional portion of pension liabilities  (24,702)      
Total ¥(21,718) ¥2,633  ¥3,718 
             

   Millions of yen 
   2009  2010  2011 

Service cost

  ¥    3,132   ¥    3,216   ¥    3,256  

Interest cost on projected benefit obligation

   1,790    1,798    1,849  

Expected return on plan assets

   (1,613  (1,402  (1,583

Amortization of prior service cost

   (357  (357  (357

Amortization of actuarial gains and losses

   97    874    326  

Contribution from employees

   (416  (411  (413
             

Net periodic pension cost

  ¥2,633   ¥3,718   ¥3,078  
             

Other changes in plan assets and benefit obligations of the NTT CDBP regarding DOCOMO employees recognized in “Accumulated other comprehensive income (loss)” for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Other changes in plan assets and benefit obligations recognized in “Accumulated other comprehensive income (loss)”:            
Actuarial (gains) losses arising during period, net ¥3,049  ¥11,259  ¥(4,221)
Amortization of prior service cost  357   357   357 
Amortization of actuarial gains and losses  (16)  (97)  (874)
Reclassification of actuarial gains and losses due to transfer of the substitutional portion to the government  (3,892)      
             
Total recognized in “Accumulated other comprehensive income (loss)” ¥(502) ¥11,519  ¥(4,738)
             
Total recognized in net periodic pension cost, gain on transfer of substitutional portion of pension liabilities and “Accumulated other comprehensive income (loss)” ¥(22,220) ¥14,152  ¥(1,020)
             


F-40


   Millions of yen 
   2009  2010  2011 

Other changes in plan assets and benefit obligations recognized in “Accumulated other comprehensive income (loss)”:

    

Actuarial (gains) losses arising during period, net

  ¥  11,259   ¥  (4,221 ¥  7,040  

Amortization of prior service cost

   357    357    357  

Amortization of actuarial gains and losses

   (97  (874  (326
             

Total recognized in “Accumulated other comprehensive income (loss)”

  ¥11,519   ¥(4,738 ¥7,071  
             

Total recognized in net periodic pension cost and “Accumulated other comprehensive income (loss)” was ¥14,152 million, ¥(1,020) million and ¥10,149 million for the years ended March 31, 2009, 2010 and 2011, respectively.

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The amount of actuarial losses and prior service cost, which are expected to be amortized and reclassified from “Accumulated other comprehensive income (loss)” to net periodic pension cost during the year ending March 31, 20112012 is ¥326¥1,024 million and ¥(357) million, respectively.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The assumptions used in determining the NTT CDBP’s projected benefit obligations, based on actuarial computations which covered only DOCOMO employees’ participation in the NTT CDBP, as of March 31, 20092010 and 20102011 were as follows:

         
  2009  2010 
 
Discount rate  2.2%  2.1%
Long-term rate of salary increases  2.6   3.4 

   2010  2011 

Discount rate

   2.1  2.0

Long-term rate of salary increases

   3.4    3.3  

The assumptions used in determining the net periodic pension cost, based on actuarial computations which covered only DOCOMO employees’ participation in the NTT CDBP, for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows:

             
  2008  2009  2010 
 
Discount rate  2.2%  2.3%  2.2%
Long-term rate of salary increases  2.6   2.6   2.6 
Expected long-term rate of return on plan assets  2.5   2.5   2.5 

   2009  2010  2011 

Discount rate

   2.3  2.2  2.1

Long-term rate of salary increases

   2.6    2.6    3.4  

Expected long-term rate of return on plan assets

   2.5    2.5    2.5  

In determining the expected long-term rate of return on plan assets, the NTT CDBP considers the current and projected asset allocations, as well as expected long-term investment returns and risks for each category of the plan assets based on analysis of historical results.


F-41


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table presents the fair values of NTT CDBP’s pension plan assets as of March 31, 2010.2010 and 2011. Descriptions of fair value hierarchy and the inputs used in measuring fair value are presented in Note 18.

   Millions of yen 
   2010 
   Total   Level 1   Level 2  Level 3 

Cash and cash equivalents

  ¥          93    ¥          93    ¥   ¥  

Debt securities

       

Japanese government bonds/local government bonds

   16,669     14,985     1,684      

Domestic corporate bonds

   16,732          16,732      

Foreign government bonds

   3,846     3,523     323      

Foreign corporate bonds

   198     18     102    78  

Equity securities

       

Domestic stocks

   12,304     12,135     169      

Foreign stocks

   5,853     5,853     0    0  

Securities investment trust beneficiary certificates

       

Domestic debt securities

   1,490          1,490      

Domestic equity securities

   1,019          1,019      

Foreign debt securities

   595          595      

Foreign equity securities

   648          648      

Life insurance company general accounts

   3,656          3,656      

Other

   496          (0  496  
                   

Total

  ¥63,599    ¥36,607    ¥  26,418   ¥  574  
                   
                 
  Millions of yen 
  2010 
  Total  Level 1  Level 2  Level 3 
 
Cash and cash equivalents ¥93  ¥93  ¥  ¥ 
Debt securities                
Japanese government bonds/local government bonds  16,669   14,985   1,684    
Domestic corporate bonds  16,732      16,732    
Foreign government bonds  3,846   3,523   323    
Foreign corporate bonds  198   18   102   78 
Equity securities                
Domestic stocks  12,304   12,135   169    
Foreign stocks  5,853   5,853   0   0 
Securities investment trust beneficiary certificates                
Domestic debt securities  1,490      1,490    
Domestic equity securities  1,019      1,019    
Foreign debt securities  595      595    
Foreign equity securities  648      648    
Life insurance company general accounts  3,656      3,656    
Others  496      (0)  496 
                 
Total ¥ 63,599  ¥ 36,607  ¥ 26,418  ¥  574 
                 

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

   Millions of yen 
   2011 
   Total  Level 1  Level 2   Level 3 

Cash and cash equivalents

  ¥(246 ¥(246 ¥    ¥  

Debt securities

      

Japanese government bonds/local government bonds

   10,459    9,301    1,158       

Domestic corporate bonds

   15,507        15,507       

Foreign government bonds

   4,991    4,731    260       

Foreign corporate bonds

   163    22    141       

Equity securities

      

Domestic stocks

   14,849    14,809    40       

Foreign stocks

   8,574    8,574           

Securities investment trust beneficiary certificates

      

Domestic debt securities

   814        814       

Domestic equity securities

   1,545        1,545       

Foreign debt securities

   581        581       

Foreign equity securities

   667        667       

Life insurance company general accounts

   3,745        3,745       

Other

   410        0     410  
                  

Total

  ¥  62,059   ¥  37,191   ¥  24,458    ¥  410  
                  

Cash and cash equivalents

Cash and cash equivalents include foreign currency deposits and call loans, and are all classified as Level 1.

Debt securities

Debt securities include Japanese government bonds and local government bonds, domestic corporate bonds, foreign government bonds and foreign corporate bonds. If active market prices are available, fair value is measured by quoted prices for identical assets in active markets, which is classified as Level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is classified as Level 2. Fair value measured by inputs derived from unobservable data is classified as Level 3.

Equity securities

Equity securities include domestic stocks and foreign stocks. If active market prices are available, fair value is measured by quoted prices for identical assets in active markets, which is classified as Level 1. If active market prices are not available, fair value is measured by inputs derived principally from observable market data provided by financial institutions, which is classified as Level 2. Fair value measured by inputs derived from unobservable data is classified as Level 3.

Securities investment trust beneficiary certificates

Securities investment trust beneficiary certificates include bond investment trusts and foreign stock investment trusts. Fair values of securities investment trust beneficiary certificates are measured by inputs derived principally from observable market data provided by financial institutions. Therefore, they are classified as Level 2.


F-42


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

Life insurance company general accounts

Life insurance company general accounts are the financial assets which guarantee an expected rate of return and a principal and they are all classified as Level 2.

Others
Others include

Other

Other includes loans to employees and lease receivables. Fair value measured by inputs derived from unobservable data provided by financial institutions is classified as Level 3.

Level 3 reconciliation is not disclosed, since the amounts in Level 3 are immaterial.

The NTT CDBP’s policy toward plan asset management is formulated with the ultimate objective of ensuring the steady disbursement of pension benefits in future periods. The long-term objective of asset management, therefore, is to secure the total profits deemed necessary to ensure the financial soundness of the plan assets. To achieve this, the NTT CDBP selects various investments and takes into consideration their expected returns and risks and the correlation among the investments. The NTT CDBP then sets a target allocation ratio for the plan assets and endeavors to maintain that ratio. The target ratio is formulated from a mid- to long-term perspective and reviewed annually. In the event that the investment environment changes dramatically, the NTT CDBP will review the asset allocation as necessary. The weighted average target ratio in March 20102011 was: domestic bonds, 57.9%44.3%; domestic stocks, 18.3%25.0%; foreign bonds, 7.8%10.0%; foreign stocks, 10.5%15.0%; and life insurance company general accounts, 5.5%5.7%. As securities investment trust beneficiary certificates are established for each asset, they are allocated among domestic bonds, domestic stocks, foreign bonds and foreign stocks.

As of March 31, 20092010 and 2010,2011, domestic stock owned by the NTT CDBP as its plan assetassets included common stock of NTT and the NTT group companies listed in Japan including DOCOMO in the amount of ¥4,739¥5,375 million (0.6% of total plan assets) and ¥5,375¥6,974 million (0.6%(0.8% of total plan assets), respectively.

NTT Group’s pension plan assets do not have a concentration of material risks, including market risks and credit risks.

DOCOMO expects to contribute ¥790¥786 million to the NTT CDBP in the year ending March 31, 2011.

2012.

The benefit payments, which reflect expected future service under the NTT CDBP, based on actuarial computations which covered only DOCOMO employees are expected to be as follows:

     
Year ending March 31, Millions of yen 
 
2011 ¥1,347 
2012  1,693 
2013  1,872 
2014  2,056 
2015  2,218 
2016-2020  13,007 


F-43


Year ending March 31,

  Millions of yen 

2012

  ¥    1,519  

2013

   1,881  

2014

   2,063  

2015

   2,226  

2016

   2,381  

2017-2021

   13,474  

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

16. Income taxes:

16. Income taxes:

Total income taxes for the years ended March 31, 2008, 2009, 2010 and 20102011 comprised the following:

             
  Millions of yen 
  2008  2009  2010 
 
Income from continuing operations before equity in net income (losses) of affiliates  ¥322,955   ¥308,400   ¥338,197 
Equity in net income (losses) of affiliates  9,257   (567)  (1,270)
Other comprehensive income (loss):            
Unrealized holding gains (losses) onavailable-for-sale securities
  (11,668)  (20,875)  9,109 
Less: Reclassification of realized gains and losses included in net income  299   19,786   1,335 
Change in fair value of derivative instruments  (363)  (3)  (43)
Less: Reclassification of realized gains and losses included in net income  455   (84)   
Foreign currency translation adjustment  6,634   (20,991)  3,082 
Less: Reclassification of realized gains and losses included in net income  (88)  (7)  (24)
Pension liability adjustment:            
Actuarial gains (losses) arising during period, net  (3,513)  (11,229)  4,702 
Less: Amortization of prior service cost  (926)  (923)  (923)
Less: Amortization of actuarial gains and losses  348   550   1,280 
Less: Amortization of transition obligation  52   56   55 
Less: Reclassification of actuarial gains and losses due to transfer of the substitutional portion to the government  1,660       
             
Total income taxes  ¥325,102   ¥274,113   ¥355,500 
             

   Millions of yen 
   2009  2010  2011 

Income from continuing operations before equity in net income (losses) of affiliates

  ¥  308,400   ¥  338,197   ¥  337,837  

Equity in net income (losses) of affiliates

   (567  (1,270  (5,031

Other comprehensive income (loss):

    

Unrealized holding gains (losses) on available-for-sale securities

   (20,875  9,109    (8,509

Less: Reclassification of realized gains and losses included in net income

   19,786    1,335    4,827  

Change in fair value of derivative instruments

   (3  (43  2  

Less: Reclassification of realized gains and losses included in net income

   (84        

Foreign currency translation adjustment

   (20,991  3,082    (12,523

Less: Reclassification of realized gains and losses included in net income

   (7  (24  245  

Pension liability adjustment:

    

Actuarial gains (losses) arising during period, net

   (11,229  4,702    (4,388

Prior service cost arising during period, net

           33  

Less: Amortization of prior service cost

   (923  (923  (928

Less: Amortization of actuarial gains and losses

   550    1,280    788  

Less: Amortization of transition obligation

   56    55    61  
             

Total income taxes

  ¥274,113   ¥355,500   ¥312,414  
             

Substantially all income or loss before income taxes and income tax expenses or benefitsexpense (benefit) are domestic.

For the years ended March 31, 2008, 2009, 2010 and 2010,2011, DOCOMO and its domestic subsidiaries were subject to a National Corporate Tax of 30%, a Corporate Inhabitant Tax of approximately 6% and a deductible Corporate Enterprise Tax and Special Local Corporate Tax of approximately 8%. The rate of the Corporate Inhabitant Tax and Corporate Enterprise Tax differs depending on the municipality.

The aggregate statutory income tax raterates for the years ended March 31, 2008, 2009, 2010 and 2010 was 40.9%,2011 were 40.8% and 40.8%, respectively.. The effective income tax rate for the years ended March 31, 2008, 2009, 2010 and 20102011 was 40.3%39.5%, 39.5%40.4% and 40.4%, respectively.


F-44


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

Reconciliation of the difference of the effective income tax rate and the statutory income tax rate of DOCOMO is as follows:

             
  2008  2009  2010 
 
Statutory income tax rate  40.9%  40.8%  40.8%
Expenses not deductible for tax purposes  0.3   0.2   0.1 
IT infrastructure tax incentive and tax credit for special tax treatment such as R&D investment tax incentive  (0.8)  (0.8)  (0.8)
Tax refund of interest and penalties previously paid     (0.8)   
Other  (0.1)  0.1   0.3 
             
Effective income tax rate  40.3%  39.5%  40.4%
             

       2009          2010          2011     

Statutory income tax rate

   40.8  40.8  40.8

Expenses not deductible for tax purposes

   0.2    0.1    0.1  

Tax credit for special tax treatment

   (0.8  (0.8  (0.8

Tax refund of interest and penalties previously paid

   (0.8        

Other

   0.1    0.3    0.3  
             

Effective income tax rate

   39.5  40.4  40.4
             

Deferred income taxes result from temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Significant components of deferred tax assets and liabilities as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Deferred tax assets:        
Accrued liabilities for loyalty programs ¥72,073  ¥110,700 
Property, plant and equipment and intangible assets principally due to differences in depreciation and amortization  84,816   94,530 
Liability for employees’ retirement benefits  59,019   55,876 
Deferred revenues regarding “Nikagetsu Kurikoshi”
(2 month carry-over)
  35,774   29,451 
Accrued enterprise tax  16,796   13,903 
Compensated absences  12,809   12,758 
Marketable securities and other investments  21,164   11,535 
Foreign currency translation adjustment  14,324   11,266 
Investments in affiliates  3,207   9,574 
Inventories  4,239   8,989 
Accrued bonus  7,059   7,287 
Accrued commissions to agent resellers  4,502   4,600 
Unrealized holding losses onavailable-for-sale securities
  2,835    
Other  16,886   18,267 
         
Total deferred tax assets ¥355,503  ¥388,736 
         
Deferred tax liabilities:        
Unrealized holding gains onavailable-for-sale securities
 ¥ —  ¥7,610 
Identifiable intangible assets     4,135 
Property, plant and equipment due to differences in capitalized interest  2,818   3,066 
Other  1,419   753 
         
Total deferred tax liabilities ¥4,237  ¥15,564 
         
Net deferred tax assets ¥351,266  ¥373,172 
         


F-45


   Millions of yen 
   2010  2011 

Deferred tax assets:

   

Accrued liabilities for loyalty programs

  ¥  110,700   ¥  116,137  

Property, plant and equipment and intangible assets principally due to differences in depreciation and amortization

   91,105    93,924  

Liability for employees’ retirement benefits

   55,881    61,191  

Deferred revenues regarding “Nikagetsu Kurikoshi” (2-month carry-over)

   29,451    28,453  

Foreign currency translation adjustment

   11,266    23,543  

Investments in affiliates

   9,574    19,342  

Marketable securities and other investments

   11,694    15,322  

Compensated absences

   12,758    12,730  

Accrued enterprise tax

   13,903    12,513  

Accrued bonus

   7,287    7,377  

Asset retirement obligations

   3,670    6,373  

Inventories

   8,989    4,409  

Accrued commissions to agent resellers

   4,600    4,355  

Other

   19,115    23,491  
         

Sub-total deferred tax assets

  ¥389,993   ¥429,160  

Less: Valuation allowance

   (1,257  (2,338
         

Total deferred tax assets

  ¥388,736   ¥426,822  
         

Deferred tax liabilities:

   

Identifiable intangible assets

  ¥4,135   ¥5,503  

Unrealized holding gains on available-for-sale securities

   7,610    3,927  

Property, plant and equipment due to differences in capitalized interest

   3,066    2,358  

Other

   753    1,650  
         

Total deferred tax liabilities

  ¥15,564   ¥13,438  
         

Net deferred tax assets

  ¥373,172   ¥413,384  
         

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The components of net deferred tax assets included in the consolidated balance sheets as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
  2009  2010 
 
Deferred tax assets (Current assets) ¥102,903  ¥100,545 
Deferred tax assets (Non-current investments and other assets)  248,896   274,048 
Other current liabilities  (92)   
Other long-term liabilities  (441)  (1,421)
         
Total ¥351,266  ¥373,172 
         

   Millions of yen 
   2010  2011 

Deferred tax assets (Current assets)

  ¥  100,545   ¥    83,609  

Deferred tax assets (Non-current investments and other assets)

   274,048    331,633  

Other current liabilities

         

Other long-term liabilities

   (1,421  (1,858
         

Total

  ¥373,172   ¥413,384  
         

As of and for the years ended March 31, 2008, 2009, 2010 and 2010,2011, DOCOMO had no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases within the next 12 months. The total amounts of interest and penalties related to unrecognized tax benefits for the years ended March 31, 2008, 2009, 2010 and 20102011 are immaterial.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and tax loss carry-forwards become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management believes that it is more likely than not all of the deferred tax assets, less valuation allowances, will be realized, however, that assessment could change in the near term if estimates of future taxable income during the carry-forward period are reduced.

DOCOMO mainly files income tax returns in Japan. DOCOMO is no longer subject to regular income tax examination by the tax authority before the year ended March 31, 2009.

2010.

Other taxes—

The consumption tax rate for all taxable goods and services, with minor exceptions, is 5%. Consumption tax payable or receivable is determined based on consumption taxes levied on operating revenues offset by consumption taxes directly incurred by DOCOMO when purchasing goods and services.


F-46


17. Commitments and contingencies:

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
17. Commitments and contingencies:
Leases—

DOCOMO leases certain facilities and equipment in the normal course of business under capital leases or operating leases.

Assets covered under capital leases at March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
Class of property 2009  2010 
 
Tools, furniture and fixtures ¥11,860  ¥11,269 
Software  503   411 
         
Sub-total  12,363   11,680 
Less: Accumulated depreciation and amortization  (8,174)  (8,033)
         
Total ¥4,189  ¥3,647 
         
Tools, furniture and fixtures are classified as part of property, plant and equipment, while software is classified as part of intangible assets.

   Millions of yen 

Class of property

  2010  2011 

Machinery, vessels and tools

  ¥  11,269   ¥  13,360  

Less: Accumulated depreciation and amortization

   (7,777  (8,802
         

Total

  ¥3,492   ¥4,558  
         

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future minimum lease payments by year under capital leases together with the present value of the net minimum lease payments as of March 31, 20102011 were as follows:

     
  Millions of
 
Year ending March 31, yen 
 
2011 ¥3,098 
2012  2,064 
2013  1,317 
2014  791 
2015  285 
Thereafter  66 
     
Total minimum lease payments  7,621 
Less: Amount representing interest  (440)
     
Present value of net minimum lease payments  7,181 
Less: Amounts representing estimated executory costs  (957)
     
Net minimum lease payments  6,224 
Less: Current obligation  (2,512)
     
Long-term capital lease obligations ¥3,712 
     

Year ending March 31,

  Millions of yen 

2012

  ¥    4,355  

2013

   2,246  

2014

   1,229  

2015

   682  

2016

   255  

Thereafter

   37  
     

Total minimum lease payments

   8,804  

Less: Amount representing interest

   (464
     

Present value of net minimum lease payments

   8,340  

Less: Amounts representing estimated executory costs

   (1,043
     

Net minimum lease payments

   7,297  

Less: Current obligation

   (3,663
     

Long-term capital lease obligations

  ¥3,634  
     

The above obligations are classified as part of other current and long-term liabilities as appropriate.


F-47


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The minimum rentalrent payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of March 31, 20102011 were as follows:
     
  Millions of
 
Year ending March 31, yen 
 
2011 ¥2,958 
2012  2,440 
2013  1,832 
2014  1,530 
2015  1,482 
Thereafter  11,390 
     
Total minimum future rentals ¥21,632 
     

Year ending March 31,

  Millions of yen 

2012

  ¥    2,874  

2013

   2,144  

2014

   1,780  

2015

   1,642  

2016

   1,592  

Thereafter

   10,015  
     

Total minimum rent payments

  ¥20,047  
     

Total rentalrent expense for all operating leases except those with terms of 1 month or less that were not renewed for the years ended March 31, 2008, 2009, 2010 and 20102011 were as follows:

             
  Millions of yen 
  2008  2009  2010 
 
Minimum rentals ¥70,673  ¥67,954  ¥68,673 
             

   Millions of yen 
   2009   2010   2011 

Rent expense

  ¥  67,954    ¥  68,673    ¥  62,666  
               

Litigation—

As

DOCOMO is involved in litigation and claims arising in the ordinary course of March 31, 2010,business and at least quarterly reviews them. DOCOMO hadbelieves that no litigation or claims outstanding, pending or threatened against which in the opinion of management would have a materially adverse effect on its results of operations or financial position.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Purchase commitments—

DOCOMO has entered into various contracts for the purchase of property, plant and equipment, inventories (primarily handsets) and services. Commitments outstanding as of March 31, 20102011 were ¥26,659¥28,890 million (of which ¥2,758¥4,222 million are with related parties) for property, plant and equipment, ¥50,371¥23,827 million (of which none are with related parties) for inventories and ¥46,614¥22,117 million (of which ¥2,188¥387 million are with related parties) for the other purchase commitments.

Loan commitments—

DOCOMO conducts the cash advance service accompanying credit business. Total outstanding credit lines regarding loan commitments of the cash advance service as of March 31, 20092010 and 20102011 were ¥61,132¥93,049 million and ¥93,049¥105,030 million, respectively.

Credit lines are not necessarily executed to the maximum amount because these contracts contain a clause to lower the credit lines if there are reasonable grounds.

Guarantees—

DOCOMO enters into agreements in the normal course of business that provide guarantees for counterparties. These counterparties include subscribers, related parties, foreign wireless telecommunications service providers and other business partners.


F-48


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DOCOMO provides subscribers with guarantees for product defects of cellular phone handsets sold by DOCOMO, but DOCOMO is provided with similar guarantees by the handset vendors and no liabilities were recognized for these guarantees.

Though the guarantees or indemnifications provided in transactions other than those with the subscribers are different in each contract, the likelihood of almost all of the performance of these guarantees or indemnifications are remote and amount of payments DOCOMO could be claimed for is not specified in almost all of the contracts. Historically, DOCOMO has not made any significant guarantee or indemnification payments under such agreements. DOCOMO estimates the fair value of the obligations related to these agreements is not significant. Accordingly, no liabilities were recognized for these obligations.

18. Fair value measurements:

18. Fair value measurements:

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. U.S.GAAPU.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value according to observability. The inputs are described as follows:

Level 1 —quoted prices in active markets for identical assets or liabilities
Level 2 —inputs other than quoted prices included within Level 1 that are observable for the asset or liability
Level 3 —unobservable inputs for the asset or liability

Level 1—quoted prices in active markets for identical assets or liabilities

Level 2—inputs other than quoted prices included within Level 1 that are observable for the asset or liability

Level 3—unobservable inputs for the asset or liability

DOCOMO also distinguishes assets and liabilities measured at fair value every period on a recurring basis from those measured on a nonrecurring basis under specific situation (for example, impaired assets).

(1) Assets and liabilities measured at fair value on a recurring basis

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Assets and liabilities measured at fair value on a recurring basis

DOCOMO’s assets and liabilities measured at fair value on a recurring basis includeavailable-for-sale securities and derivatives.

DOCOMO’s assets and liabilities that were measured at fair value on a recurring basis at March 31, 20092010 and 20102011 were as follows:

                
 Millions of yen 
 2009   Millions of yen 
 Total Level 1 Level 2 Level 3   2010 
  Total   Level 1   Level 2   Level 3 
Assets:                        
Available-for-sale securities
                        
Equity securities (domestic) ¥47,998  ¥47,998  ¥ —  ¥ —   ¥    53,029    ¥    53,029    ¥    ¥  
Equity securities (foreign)  64,964   64,964          83,598     83,598            
Debt securities (foreign)  5   5          4     4            
                         
Totalavailable-for-sale securities
  112,967   112,967          136,631     136,631            
                         
Derivatives                        
Interest rate swap agreements  3,433      3,433       3,297          3,297       
                         
Total derivatives  3,433      3,433       3,297          3,297       
                         
Total assets ¥116,400  ¥112,967  ¥3,433  ¥    —   ¥139,928    ¥136,631    ¥3,297    ¥  
                         

Liabilities:

        

Derivatives

        

Foreign exchange forward contracts

  ¥108    ¥    ¥108    ¥  

Foreign currency option contracts

   1,552          1,552       
                

Total derivatives

   1,660          1,660       
                

Total liabilities

  ¥1,660    ¥    ¥  1,660    ¥  —  
                


F-49


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
There were no significant transfers between Level 1 and Level 2.

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

   Millions of yen 
   2011 
   Total   Level 1   Level 2   Level 3 

Assets:

        

Available-for-sale securities

        

Equity securities (domestic)

  ¥    46,631    ¥    46,631    ¥    ¥  

Equity securities (foreign)

   71,128     71,128            

Debt securities (foreign)

   4     4            
                    

Total available-for-sale securities

   117,763     117,763            
                    

Derivatives

        

Interest rate swap agreements

   1,232          1,232       
                    

Total derivatives

   1,232          1,232       
                    

Total assets

  ¥118,995    ¥117,763    ¥1,232    ¥  
                    

Liabilities:

        

Derivatives

        

Foreign exchange forward contracts

  ¥154    ¥    ¥154    ¥  

Foreign currency option contracts

   1,859          1,859       
                    

Total derivatives

   2,013          2,013       
                    

Total liabilities

  ¥2,013    ¥    ¥  2,013    ¥  —  
                    
                 
  Millions of yen 
  2010 
  Total  Level 1  Level 2  Level 3 
 
Assets:                
Available-for-sale securities
                
Equity securities (domestic) ¥53,029  ¥53,029  ¥  ¥ 
Equity securities (foreign)  83,598   83,598       
Debt securities (foreign)  4   4       
                 
Totalavailable-for-sale securities
  136,631   136,631       
                 
Derivatives                
Interest rate swap agreements  3,297      3,297    
                 
Total derivatives  3,297      3,297    
                 
Total assets ¥139,928  ¥136,631  ¥3,297  ¥ 
                 
Liabilities:                
Derivatives                
Foreign exchange forward contracts ¥108  ¥  ¥108  ¥ 
Foreign currency option contracts  1,552      1,552    
                 
Total derivatives  1,660      1,660    
                 
Total liabilities ¥1,660  ¥  ¥  1,660  ¥     — 
                 

There were no significant transfers between Level 1 and Level 2.

Available-for-sale securities

Available-for-sale securities include marketable equity securities and debt securities, which are valued using quoted prices in active markets for identical assets. Therefore, these securities are classified as Level 1.

Derivatives

Derivative instruments are interest rate swap agreements, foreign exchange forward contracts and foreign currency option contracts, which are measured using valuation provided by financial institutions based on observable market data. Therefore, these derivatives are classified as Level 2. DOCOMO periodically validates the valuation of such derivatives using observable market data, such as interest rates.

(2) Assets and liabilities measured at fair value on a nonrecurring basis

(2) Assets and liabilities measured at fair value on a nonrecurring basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are not included in the table above. Changes of fair value in such assets and liabilities typically result from impairments.

DOCOMO may be required to measure fair value of long-lived assets, equity securities whose fair values are not readily determinable, and other assets or liabilities on a nonrecurring basis.


F-50


NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DOCOMO omitted the disclosure about assets and liabilities measured on a nonrecurring basis because of its immateriality.
19. Financial instruments:
(1) Risk management

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19. Financial instruments:

(1) Risk management

The fair values forof DOCOMO’s assets and liabilities and DOCOMO’s cash flows may be negatively impacted by fluctuations in interest rates and foreign exchange rates. To manage these risks, DOCOMO uses derivative instruments such as interest rate swap agreements, currency swap contracts, foreign exchange forward contracts, non-deliverable forward contracts (NDF) and foreign currency option contracts as needed. The financial instruments are executed with creditworthy financial institutions and DOCOMO’s management believes that there is little risk of default by these counterparties. DOCOMO sets and follows internal regulations that establish conditions to enter into derivative contracts and procedures of approving and monitoring such contracts.

(2) Fair value of financial instruments

(2) Fair value of financial instruments

Financial instruments—

Carrying amounts of “Cash and cash equivalents”, “Short-term investments”, “Accounts receivable”, “Credit card receivables”, “Accounts payable, trade” and certain other financial instruments approximate their fair values except the items separately referred to below.

Long-term debt including current portion—

The fair value of long-term debt including current portion is estimated based on the discounted amounts of future cash flows using DOCOMO’s current incremental borrowings rates for similar liabilities.

The carrying amount and the estimated fair value of long-term debt including current portion as of March 31, 20092010 and 20102011 were as follows:

               
Millions of yen
2009 2010
Carrying
   Carrying
  
amount Fair value amount Fair value
 
¥     639,233  ¥     645,504  ¥     610,269  ¥     621,966 

Millions of yen 
2010  2011 
Carrying
        amount         
  

                 Fair value                  

  Carrying
        amount         
                    Fair value                  
 ¥  610,269   ¥  621,966   ¥  428,102   ¥  438,483  

Derivative instruments—

(i) Fair value hedge

DOCOMO uses interest rate swap transactions, under which DOCOMO receives fixed rate interest payments and pays floating rate interest payments, to hedge the changes in fair value of certain debt as a part of its asset-liability management (ALM).

DOCOMO designated these derivatives as fair value hedges utilizing the short-cut method, which permits an assumption of no ineffectiveness if the key terms of these derivatives and those of certain hedged debt are identical.


F-51


NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – STATEMENTS—(Continued)

The contract amount and fair value of the interest rate swap agreement as of March 31, 20092010 and 20102011 were as follows:

                 
Contract Term
     Millions of yen
(in the year
 Weighted average rate per annum 2009
ended/ending
 Receive
 Pay
 Contract
 Fair
March 31,) fixed floating Amount value
 
2004-2012  1.5%  1.0% ¥     235,800  ¥     3,433 
                 
Contract Term
     Millions of yen
(in the year
 Weighted average rate per annum 2010
ended/ending
 Receive
 Pay
 Contract
 Fair
March 31,) fixed floating Amount value
 
2004-2012  1.5%  0.7% ¥     235,800  ¥     3,297 

      Millions of yen 

Contract Term

(in the year ended/ending March 31,)

  Weighted average rate per annum  2010 
  Receive
fixed
  Pay
floating
  Contract
Amount
   Fair
value
 

2004-2012

   1.5  0.7 ¥  235,800    ¥  3,297  

Contract Term

(in the year ended/ending March 31,)

     Millions of yen 
  Weighted average rate per annum  2011 
  Receive
fixed
  Pay
floating
  Contract
Amount
   Fair
value
 

2004-2012

   1.6  0.7 ¥165,800    ¥1,232  

The interest rate swap agreements have remaining terms to maturity ranging from 1 year6 months to 1 year and 9 months.

(ii) Cash flow hedge

From February 2005 to March 2008, DOCOMO entered into a currency swap contract to hedge currency exchange risk associated with the principal and interest payments of the $100 million unsecured corporate bonds. As this currency swap contract qualified as a cash flow hedge instrument for accounting purposes and all the essential terms of the currency swap and those of the hedged item are identical, there was no ineffective portion to the hedge. The gain or loss from the fluctuation in the fair value of the swap transaction was recorded as “Accumulated other comprehensive income (loss)”. The amount recorded as “Accumulated other comprehensive income (loss)” was reclassified as gain or loss when the offsetting gain or loss derived from the hedged item was recorded in the accompanying consolidated statements of income and comprehensive income.
In March 2008, DOCOMO redeemed the $100 million unsecured corporate bonds hedged by the contract. DOCOMO did not hold any currency swap contracts from March 31, 2008 to March 31, 2010.
(iii) Derivatives not designated as hedging instruments

DOCOMO had foreign exchange forward contracts and foreign currency option contracts to hedge currency exchange risk associated with foreign currency assets and liabilities. DOCOMO did not designate such derivative instruments as hedging instruments.

The contract amounts as of March 31, 20092010 and 20102011 were as follows:

         
  Millions of yen 
Instruments 2009  2010 
 
Foreign exchange risk management        
Foreign exchange forward contracts ¥     —  ¥4,478 
Foreign currency option contracts       —   21,285 
         
Total ¥ —  ¥25,763 
         


F-52


   Millions of yen 

Instruments

  2010   2011 

Foreign exchange risk management

    

Foreign exchange forward contracts

Foreign currency option contracts

  ¥

 

    4,478

21,285

  

  

  ¥

 

    4,296

15,143

  

  

          

Total

  ¥25,763    ¥19,439  
          

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(iv)(iii) The effect on the consolidated balance sheets

The locations and carrying amountsfair values of the derivative instruments as of March 31, 20092010 and 2010,2011, recorded in the accompanying consolidated balance sheets, were as follows:

Asset derivatives

           
    Millions of yen 
Instruments Locations 2009  2010 
 
Derivatives designated as hedging instruments          
Interest rate swap agreements Prepaid expenses and other current assets ¥  ¥630 
  Other assets  3,433   2,667 
           
Total   ¥3,433  ¥3,297 
           

   

Locations

  Millions of yen 

Instruments

        2010           2011     

Derivatives designated as hedging instruments

      

Interest rate swap agreements

  Prepaid expenses and other current assets  ¥      630    ¥  1,232  
  Other assets   2,667       
            

Total

    ¥3,297    ¥1,232  
            

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Liability derivatives

           
    Millions of yen 
Instruments Locations 2009  2010 
 
Derivatives not designated as hedging instruments          
Foreign exchange forward contracts Other current liabilities ¥  ¥108 
Foreign currency option contracts Other current liabilities     404 
  Other long-term liabilities     1,148 
           
Total   ¥  ¥1,660 
           

   

Locations

  Millions of yen 

Instruments

        2010           2011     

Derivatives not designated as hedging instruments

      

Foreign exchange forward contracts

  Other current liabilities  ¥      108    ¥      154  

Foreign currency option contracts

  Other current liabilities   404     724  
  Other long-term liabilities   1,148     1,135  
            

Total

    ¥1,660    ¥2,013  
            

The fair values of derivative instruments were measured using valuation provided by financial institutions based on observable market data and represent the amount that DOCOMO could have settled with the counterparties to terminate the contracts outstanding as of March 31, 20092010 and 2010.

(v) The effect on the consolidated statements of income and comprehensive income
2011.

(iv) The effect on the consolidated statements of income and comprehensive income

The locations and gain (loss) amounts of the derivative instruments for the years ended March 31, 2008, 2009, 2010 and 2010,2011, recognized in the accompanying consolidated statements of income and comprehensive income, were as follows:

               
    Amount of gain (loss) recognized in income
 
    on derivative 
    Millions of yen 
Instruments Locations 2008  2009  2010 
 
Derivatives in fair value hedging relationships              
Interest rate swap agreements Other, net* ¥    2,653  ¥    (78) ¥    (136)
               
Total   ¥    2,653  ¥     (78) ¥    (136)
               


F-53


       Amount of gain (loss) recognized
in income on  derivative
 
       Millions of yen 

Instruments

  Locations       2009          2010          2011     

Derivatives in fair value hedging relationships

      

Interest rate swap agreements

   Other, net*    ¥(78 ¥  (136 ¥  (2,065
               

Total

    ¥(78 ¥(136 ¥(2,065
               
       Amount of gain (loss) recognized
in income on  derivative
 
       Millions of yen 

Instruments

  Locations   2009  2010  2011 

Derivatives not designated as hedging instruments

      

Foreign exchange forward contracts

   Other, net*    ¥  (1,090 ¥67   ¥(517

Non-deliverable forward contracts (NDF)

   Other, net*     (4,050  16    71  

Foreign currency option contracts

   Other, net*         (565  (1,059
               

Total

    ¥(5,140 ¥(482 ¥(1,505
               

NTT DOCOMO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
               
    Amount of gain (loss) reclassified from
 
    Accumulated
 
    other comprehensive income
 
    (loss) into income 
    Millions of yen 
Instruments Locations 2008  2009  2010 
 
Derivatives in cash flow hedging relationships              
Currency swap contract Interest expense ¥    348  ¥    —  ¥    — 
  Other, net*  (1,462)      
               
Total   ¥   (1,114) ¥       —  ¥       — 
               
               
    Amount of gain (loss) recognized in income
 
    on derivative 
    Millions of yen 
Instruments Locations 2008  2009  2010 
 
Derivatives not designated as hedging instruments              
Foreign exchange forward contracts Other, net* ¥    18  ¥    (1,090) ¥    67 
Non-deliverable forward contracts (NDF) Other, net*  (13)  (4,050)  16 
Foreign currency option contracts Other, net*  (110)     (565)
               
Total   ¥     (105) ¥(5,140) ¥     (482)
               
*“Other, net” was included in “Other income (expense)”.
(vi) Contingent features in derivatives

NTT DOCOMO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(v) Contingent features in derivatives

As of March 31, 2010,2011, DOCOMO had no derivative instruments with credit-risk-related contingent features.

Other—

Information regarding “Investments in affiliates” and “Marketable securities and other investments” is disclosed in Notes 5 and 6, respectively.

(3) Concentrations of risk
As

20. Financing receivables:

DOCOMO has financing receivables including installment receivables and credit card receivables. Installment receivables arise from providing funds for the subscribers’ handset purchase from agent resellers. Credit card receivables arise from usage of credit services by the customers. These receivables generally do not bear interest.

DOCOMO appropriately extends credit to customers upon these transactions and manages credit risks. When entering into installment payment or credit card contracts, DOCOMO performs credit check and manage the credit exposure thereafter by monitoring payment delays. The amounts per transaction for handset purchases and credit card usage are generally low and the billing cycle is also short, generally one month. Therefore, DOCOMO is able to maintain accurate past due information on a timely basis. Most of its customers utilize automated payment system to make cash payments, which mitigates the risk of uncollected receivables significantly. Despite a downturn in the economy in recent years, historical losses have not been significant. Due to the nature of the business and its effective credit control system, DOCOMO believes that a credit risk in its business is low.

Allowance for doubtful accounts is computed based on historical bad debt experience and the estimated uncollectible amount based on the analysis of certain individual accounts, including claims in bankruptcy. When it is determined that there is little possibility of collection based on the debtor’s solvency, such receivables are written off. Since DOCOMO appropriately extends credits, manages credit risks and writes off uncollectible receivables, the amount of past due receivables is not significant.

Financing receivables and related allowance for doubtful accounts as of March 31, 2010, DOCOMO did not have any significant concentration of business transacted with an individual counterparty or groups of counterparties that could, if suddenly eliminated, severely impact its results of operations.

F-54

2011 were as follows:


   Millions of yen 
   2011 
   Installment
receivables
   Credit card
receivables
   Other   Total 

Allowance for doubtful accounts:

        

Ending balance at March 31, 2011

  ¥      4,504    ¥      3,085    ¥      231    ¥      7,820  
                    

Ending balance: collectively evaluated for impairment

   4,504     3,085     43     7,632  

Ending balance: individually evaluated for impairment

             188     188  

Financing receivables:

        

Ending balance at March 31, 2011

  ¥303,124    ¥160,446    ¥7,463    ¥471,033  
                    

Ending balance: collectively evaluated for impairment

   303,124     160,446     7,275     470,845  

Ending balance: individually evaluated for impairment

             188     188  

Schedule Of Valuation And Qualifying Accounts Disclosure

NTT DOCOMO, INC. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE

YEARS ENDED MARCH 31, 2008, 2009, 2010 and 20102011

SCHEDULE II — II—VALUATION AND QUALIFYING ACCOUNTS

                 
  Millions of yen 
  Balance at
          
  Beginning of
        Balance at End
 
  Year  Additions  Deductions*  of Year 
 
2008
                
Allowance for doubtful accounts ¥13,178  ¥12,107  ¥(8,784) ¥16,501 
2009
                
Allowance for doubtful accounts ¥16,501  ¥9,898  ¥(9,977) ¥16,422 
2010
                
Allowance for doubtful accounts ¥16,422  ¥13,990  ¥(10,732) ¥19,680 
*Amounts written off.


F-55


   Millions of yen 
   Balance at
beginning of
year
   Charged to
expenses
   Deductions*  Balance at
end of year
 

2009

       

Allowance for doubtful accounts

  ¥  16,501    ¥    9,898    ¥    (9,977 ¥  16,422  

2010

       

Allowance for doubtful accounts

  ¥16,422    ¥13,990    ¥(10,732 ¥19,680  

2011

       

Allowance for doubtful accounts

  ¥19,680    ¥13,745    ¥(14,286 ¥19,139  

 

*  Amounts written off.

     

   Millions of yen 
   Balance at
beginning of
year
   Charged to
expenses
   Deductions  Balance at
end of year
 

2009

       

Valuation allowance for deferred tax assets

  ¥      348    ¥     103    ¥  (0 ¥     451  

2010

       

Valuation allowance for deferred tax assets

  ¥451    ¥806    ¥(0 ¥1,257  

2011

       

Valuation allowance for deferred tax assets

  ¥1,257    ¥1,090    ¥(9 ¥2,338  

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing onForm 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

NTT DOCOMO, INC.

By

By 

/s/    RYUJI YAMADA

Ryuji Yamada
President and Chief Executive Officer
Ryuji Yamada
President and Chief Executive Officer

Date: June 24, 2010

23, 2011