nippon telegraph and telephone corporation · offering circular nippon telegraph and telephone...

OFFERING CIRCULAR

NIPPON TELEGRAPH AND TELEPHONECORPORATION

(incorporated with limited liability under the laws of Japan)

U.S.$10,000,000,000

Euro Medium Term Note Programme

Under the Euro Medium Term Note Programme described in this Offering Circular (the ‘‘Programme’’), NipponTelegraph and Telephone Corporation (‘‘NTT’’ or the ‘‘Issuer’’), subject to compliance with all relevant laws,regulations and directives, may from time to time issue Euro Medium Term Notes (the ‘‘Notes’’). The aggregatenominal amount of Notes outstanding will not at any time exceed U.S.$10,000,000,000 (or the equivalent in othercurrencies).

Application has been made to the Financial Services Authority in its capacity as competent authority under theFinancial Services and Markets Act 2000 (the ‘‘FSMA’’) (the ‘‘UK Listing Authority’’) for Notes issued within 12months of this Offering Circular to be admitted to the official list maintained by the UK Listing Authority (the‘‘Official List’’) and to the London Stock Exchange plc (the ‘‘London Stock Exchange’’) for such Notes to be admittedto trading on the London Stock Exchange’s Professional Securities Market (the ‘‘Market’’). References in this OfferingCircular to Notes being ‘‘listed’’ (and all related references) shall mean that such Notes have been admitted to tradingon the Market and have been admitted to the Official List. The Market is not a regulated market for the purposes ofthe Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments. However,unlisted Notes may be issued pursuant to the Programme. The relevant Final Terms (as defined in ‘‘Overview of theProgramme - Method of Issue’’) in respect of the issue of any Notes will specify whether or not such Notes will belisted on the Official List and admitted to trading on the Market.

Each Series (as defined in ‘‘Overview of the Programme - Method of Issue’’) of Notes in bearer form will berepresented on issue by a temporary global note in bearer form (each a ‘‘temporary Global Note’’) or a permanentglobal note in bearer form (each a ‘‘permanent Global Note’’ and together with the temporary Global Notes, the‘‘Global Notes’’). Notes in registered form will be represented by registered certificates (each a ‘‘Certificate’’), oneCertificate being issued in respect of each Noteholder’s entire holding of Registered Notes of one Series. Notes inregistered form will initially be evidenced by a Global Certificate (each a ‘‘Global Certificate’’). Global Notes andCertificates may be deposited on the issue date with (and in the case of Global Certificates, registered in the name of anominee for) a common depositary (the ‘‘Common Depositary’’) on behalf of Euroclear Bank S.A./N.V., (‘‘Euroclear’’)and Clearstream Banking, societe anonyme (‘‘Clearstream, Luxembourg’’). The provisions governing the exchange ofinterests in Global Notes for other Global Notes and definitive Notes are described in ‘‘Summary of Provisions Relatingto the Notes while in Global Form’’.

The Programme is rated AA by Standard & Poor’s Ratings Japan K.K. and rated Aa2 by Moody’s Japan K.K.Tranches of Notes may be rated or unrated. Where a Tranche of Notes is rated, the ratings will be specified in theFinal Terms. Such rating will not necessarily be the same as ratings assigned to the Programme. The Issuer is rated AAby Standard & Poor’s Ratings Japan K.K. and rated Aa2 by Moody’s Japan K.K. A rating is not a recommendationto buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigningrating agency.

Prospective investors should have regard to the factors described under the section headed ‘‘Risk Factors’’ in thisOffering Circular. This Offering Circular does not describe all the risks of an investment in the Notes.

Arranger for the Programme

BofA Merrill Lynch

Dealers

Barclays BNP PARIBASBofA Merrill Lynch CitigroupCredit Suisse Daiwa Capital Markets EuropeDeutsche Bank Goldman Sachs InternationalJ.P. Morgan Mizuho SecuritiesMorgan Stanley Nomura

UBS Investment Bank

The date of this Offering Circular is 1 November, 2012.

Proof6:29.10.12

This Offering Circular comprises listing particulars for the purposes of the listing rules made under

Section 73A(2) of the FSMA by the UK Listing Authority, for the purpose of giving information with

regard to the Issuer, the Issuer together with its consolidated subsidiaries and affiliates accounted for by

the equity method (together the ‘‘NTT Group’’) and the Notes which, according to the particular nature

of the Issuer and the Notes, is necessary to enable investors to make an informed assessment of the

assets and liabilities, financial position, profit and losses and prospects of the Issuer and the rights

attaching to the Notes.

This Offering Circular does not constitute a prospectus for the purposes of EU Directive 2003/71/

EC (the ‘‘Prospectus Directive’’).

The Issuer accepts responsibility for the information contained in this Offering Circular. Having

taken all reasonable care to ensure that such is the case the Issuer confirms that, to the best of its

knowledge, the information contained in this Offering Circular is in accordance with the facts and does

not omit anything likely to affect the import of such information.

This Offering Circular is to be read in conjunction with all documents which are incorporated

herein by reference (see ‘‘Documents Incorporated by Reference’’ on page 3).

No person has been authorised to give any information or to make any representation other than

those contained in this Offering Circular in connection with the issue or sale of the Notes and, if given

or made, such information or representation must not be relied upon as having been authorised by the

Issuer, or any of the Dealers or the Arranger (as defined in ‘‘Overview of the Programme’’). Neither the

delivery of this Offering Circular nor any sale made in connection herewith shall, under any

circumstances, create any implication that there has been no change in the affairs of the Issuer since the

date hereof or the date upon which this Offering Circular has been most recently amended or

supplemented or that there has been no adverse change in the financial position of the Issuer since the

date hereof or the date upon which this Offering Circular has been most recently amended or

supplemented or that any other information supplied in connection with the Programme is correct as of

any time subsequent to the date on which it is supplied or, if different, the date indicated in the

document containing the same.

The distribution of this Offering Circular and the offering or sale of the Notes in certain

jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are

required by the Issuer, the Dealers and the Arranger to inform themselves about and to observe any such

restriction. The Notes have not been and will not be registered under the United States Securities Act of

1933 (the ‘‘Securities Act’’) or with any securities regulatory authority of any state or other jurisdiction

of the United States and may include Notes in bearer form that are subject to U.S. tax law

requirements. Subject to certain exceptions, Notes may not be offered, sold or, in the case of bearer

Notes, delivered within the United States or to, or for the account or benefit of, U.S. persons. For a

description of certain restrictions on offers and sales of Notes and on distribution of this Offering

Circular, see ‘‘Subscription and Sale’’.

The Notes have not been and will not be registered under the Financial Instruments and Exchange

Act of Japan (Law No. 25 of 1948, as amended) (the ‘‘FIEA’’) and will be subject to the Special

Taxation Measures Law of Japan (Law No. 26 of 1957, as amended) (the ‘‘Special Taxation Measures

Law’’). BY PURCHASING THE NOTES, AN INVESTOR WILL BE DEEMED TO HAVE

REPRESENTED THAT IT IS, FOR JAPANESE TAX PURPOSES, A GROSS RECIPIENT (AS

DEFINED IN ‘‘SUBSCRIPTION AND SALE’’).

This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the

Issuer or the Dealers to subscribe for, or purchase, any Notes. This Offering Circular may only be used

for the purposes for which it has been published.

The Arranger and the Dealers have not independently verified the information contained in this

Offering Circular. None of the Dealers or the Arranger makes any representation, express or implied, or

accepts any responsibility, with respect to the accuracy or completeness of any of the information in this

Offering Circular. To the fullest extent permitted by law, none of the Dealers or the Arranger accept

any responsibility for the contents of this Offering Circular or for any other statement, made or

purported to be made by the Arranger or a Dealer or on its behalf in connection with the Issuer or the

issue and offering of any Notes. The Arranger and each Dealer accordingly disclaim all and any liability

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c107236pu010Proof6:29.10.12B/LRevision:0OperatorPutA

whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise

have in respect of this Offering Circular or any such statement. Neither this Offering Circular nor any

other financial statements are intended to provide the basis of any credit or other evaluation and should

not be considered as a recommendation by any of the Issuer, the Arranger or the Dealers that any

recipient of this Offering Circular or any other financial statements should purchase the Notes. Each

potential purchaser of Notes should determine for itself the relevance of the information contained in this

Offering Circular and its purchase of Notes should be based upon such investigation as it deems

necessary.

In connection with the issue of any Tranche, the Dealer or Dealers (if any) named as the

stabilising manager(s) (the ‘‘Stabilising Manager(s)’’) (or persons acting on behalf of any Stabilising

Manager(s)) may over-allot Notes or effect transactions with a view to supporting the market price of

the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that

the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake

stabilisation action. Any stabilisation action may begin on or after the date on which adequate public

disclosure of the final terms of the offer of the relevant Tranche is made and, if begun, may be ended at

any time, but it must end no later than the earlier of 30 days after the issue date of the relevant

Tranche and 60 days after the date of the allotment of the relevant Tranche. Any stabilisation action or

over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on behalf

of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to

‘‘US dollars’’ and ‘‘U.S.$’’ are to the currency of the United States of America, references to ‘‘Japanese

yen’’, ‘‘yen’’ and ‘‘¥’’ are to the currency of Japan, references to ‘‘Sterling’’ and ‘‘£’’ are to the currency

of the United Kingdom and references to ‘‘Euro’’, ‘‘euro’’, ‘‘EUR’’ and ‘‘A’’ are to the currency of those

member states of the European Union which are participating in the European Economic and Monetary

Union pursuant to the Treaty on European Union; and ‘‘Euro Note’’ means a Note denominated in

Euro.

Unless otherwise specified herein, financial information included in this Offering Circular for NTT

has been extracted from the audited consolidated financial statements for NTT for the two years ended

31 March, 2012.

Notes may not be a suitable investment for all investors. Each potential investor in any Notes must

determine the suitability of that investment in light of its own circumstances. In particular, each potential

investor should:

* have sufficient knowledge and experience to make a meaningful evaluation of the relevant

Notes, the merits and risks of investing in the relevant Notes and the information contained

or incorporated by reference in this Offering Circular or any applicable supplement;

* have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of

its particular financial situation, an investment in the relevant Notes and the impact such

investment will have on its overall investment portfolio;

* have sufficient financial resources and liquidity to bear all of the risks of an investment in the

relevant Notes, including where principal or interest is payable in one or more currencies, or

where the currency for principal or interest payments is different from the potential investor’s

currency;

* understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of

any relevant indices and financial markets; and

* be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for

economic, interest rate and other factors that may affect its investment and its ability to bear

the applicable risks.

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DOCUMENTS INCORPORATED BY REFERENCE

This Offering Circular should be read and construed in conjunction with:

(i) the audited consolidated annual financial statements of NTT for the years ended 31

March, 2011 and 31 March, 2012 (together with the audit reports thereon) prepared in

accordance with accounting principles generally accepted in the United States, as set out

on pages F-1 to F-68 inclusive of NTT’s 20-F filed with the U.S. Securities and Exchange

Commission on 29 June, 2012,

(ii) the interim unaudited consolidated financial statements of NTT for the three month period

ended 30 June 2012, as set out on pages 4 to 19 inclusive of NTT’s 6-K filed with theU.S. Securities and Exchange Commission on 7 August, 2012, and

(iii) the section entitled ‘‘Information on the Company’’ set out on pages 17 to 47 inclusive, the

section entitled ‘‘Operating and Financial Review and Prospects’’ set out on pages 48 to 91inclusive and the section entitled ‘‘Directors, Senior Management and Employees’’ set out

on pages 91 to 99 inclusive of NTT’s 20-F filed with the U.S. Securities and Exchange

Commission on 29 June, 2012

in each case, which has been previously published or is published simultaneously with this

Offering Circular and which has been approved by the Financial Services Authority or filed with it.

Such documents shall be incorporated in, and form part of this Offering Circular, save that any

statement contained in a document which is incorporated by reference herein shall be modified or

superseded for the purpose of this Offering Circular to the extent that a statement contained herein

modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any

statement so modified or superseded shall not, except as so modified or superseded, constitute a part

of this Offering Circular.

Any documents themselves incorporated by reference in the documents incorporated by reference

in this Offering Circular shall not form part of this Offering Circular. Only the sections or pages of

the documents referred to above shall be incorporated by reference in, and form part of, this Offering

Circular. Any sections or pages which have been omitted therefrom are either not relevant for theinvestor or covered elsewhere in this Offering Circular.

Copies of documents incorporated by reference in this Offering Circular may be obtained fromthe registered office of the Issuer and The Bank of Tokyo-Mitsubishi UFJ, Ltd., London Branch as

Fiscal Agent and the website of the Regulatory News Service operated by the London Stock

Exchange at http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.

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SUPPLEMENTAL LISTING PARTICULARS

The Issuer has given an undertaking to the Dealers that, if at any time during the duration of

the Programme there is a significant new factor, material mistake or inaccuracy relating to

information contained in this Offering Circular, which is capable of affecting the assessment by

investors of the assets and liabilities, financial position, profits and losses and prospects of the Issuer,and/or the rights attaching to the Notes, the Issuer shall prepare an amendment or supplement to this

Offering Circular or publish replacement listing particulars for use in connection with any subsequent

offering of the Notes and shall supply to each Dealer such number of copies of such supplement

hereto as such Dealer may reasonably request.

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TABLE OF CONTENTS

Page

Documents Incorporated by Reference ................................................................................... 4

Supplemental Listing Particulars ............................................................................................. 5

Table of Contents .................................................................................................................... 6

Overview of the Programme .................................................................................................... 7

Risk Factors............................................................................................................................. 11

Terms and Conditions of the Notes ........................................................................................ 22

Use of Proceeds ....................................................................................................................... 42

Summary of Provisions relating to the Notes while in Global Form ..................................... 43

Form of Final Terms ............................................................................................................... 47

Nippon Telegraph and Telephone Corporation ...................................................................... 53

Japanese Taxation.................................................................................................................... 61

Subscription and Sale .............................................................................................................. 64

General Information ................................................................................................................ 67

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OVERVIEW OF THE PROGRAMME

The following overview does not purport to be complete and is taken from, and is qualified in its

entirety by, the remainder of this Offering Circular and, in relation to the terms and conditions of a

particular Tranche of Notes, the applicable Final Terms. Words and expressions defined in ‘‘Terms and

Conditions of the Notes’’ below shall have the same meanings in this overview.

Issuer: Nippon Telegraph and Telephone Corporation

Description: Euro Medium Term Note Programme

Size: Up to U.S.$10,000,000,000 (or the equivalent in other currencies at

the date of issue of any tranche of Notes) aggregate nominal amountof Notes outstanding at any one time.

Arranger: Merrill Lynch International

Dealers: Barclays Bank PLC

BNP Paribas

Citigroup Global Markets LimitedCredit Suisse Securities (Europe) Limited

Daiwa Capital Market Europe Limited

Deutsche Bank AG, London Branch

Goldman Sachs International

J.P. Morgan Securities plc

Merrill Lynch International

Mizuho International plc

Morgan Stanley & Co. International plcNomura International plc

UBS Limited

The Issuer may from time to time terminate the appointment of any

dealer under the Programme or appoint additional dealers either in

respect of one or more Tranches or in respect of the whole

Programme. References in this Offering Circular to ‘‘Permanent

Dealers’’ are to the persons listed above as Dealers and to suchadditional persons that are appointed as dealers in respect of the

whole Programme (and whose appointment has not been terminated)

and references to ‘‘Dealers’’ are to all Permanent Dealers and all

persons appointed as a dealer in respect of one or more Tranches.

Fiscal Agent: The Bank of Tokyo-Mitsubishi UFJ, Ltd., London Branch

Method of Issue: The Notes will be issued on a syndicated or non-syndicated basis. The

Notes will be issued in series (each a ‘‘Series’’) having one or more

issue dates and on terms otherwise identical (or identical other than

in respect of the first payment of interest), the Notes of each Series

being intended to be interchangeable with all other Notes of that

Series. Each Series may be issued in tranches (each a ‘‘Tranche’’) on

the same or different issue dates. The specific terms of each Tranche

(which will be supplemented, where necessary, with the relevant termsand conditions and, save in respect of the issue date, issue price, first

payment of interest and nominal amount of the Tranche, will be

identical to the terms of other Tranches of the same Series) will be set

out in the final terms to this Offering Circular (the ‘‘Final Terms’’).

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Issue Price: Notes may be issued at their nominal amount or at a discount or

premium to their nominal amount.

Form of Notes: The Notes may be issued in bearer form only (‘‘Bearer Notes’’), in

bearer form exchangeable for Registered Notes (‘‘Exchangeable

Bearer Notes’’) or in registered form only (‘‘Registered Notes’’). Each

Tranche of Bearer Notes and Exchangeable Bearer Notes will be

represented on issue by a temporary Global Note if (i) definitiveNotes are to be made available to Noteholders following the expiry of

40 days after their issue date or (ii) such Notes have an initial

maturity of more than one year and are being issued in compliance

with the D Rules (as defined in ‘‘Subscription and Sale — Selling

Restrictions’’), otherwise such Tranche will be represented by a

permanent Global Note. Registered Notes will be represented by

Certificates, one Certificate being issued in respect of each

Noteholder’s entire holding of Registered Notes of one Series.Certificates representing Registered Notes that are registered in the

name of a nominee for one or more clearing systems are referred to as

‘‘Global Certificates’’.

Clearing Systems: Clearstream, Luxembourg, Euroclear and, in relation to any

Tranche, such other clearing system as may be agreed between the

Issuer, the Fiscal Agent and the relevant Dealer.

Initial Delivery of Notes: On or before the issue date for each Tranche, the Global Note

representing Bearer Notes or Exchangeable Bearer Notes or the

Certificate representing Registered Notes, as the case may be, may be

deposited with a Common Depositary for Euroclear and

Clearstream, Luxembourg. Global Notes or Certificates may also

be deposited with any other clearing system or may be delivered

outside any clearing system provided that the method of such delivery

has been agreed in advance by the Issuer, the Fiscal Agent, and therelevant Dealer. Registered Notes that are to be credited to one or

more clearing systems on issue will be registered in the name of

nominees or a common nominee for such clearing systems.

Currencies: Subject to compliance with all relevant laws, regulations and

directives, Notes may be issued in any currency agreed between the

Issuer and the relevant Dealers.

Maturities: Subject to compliance with all relevant laws, regulations and

directives, any maturity between one month and 30 years.

Denomination: Definitive Notes will be in such denomination as may be specified inthe relevant Final Terms save that (i) in the case of any Notes which

are to be offered to the public in a Member State of the European

Economic Area in circumstances which would otherwise require the

publication of a prospectus under the Prospectus Directive, the

minimum denomination shall be at least A100,000 (or its equivalent in

any other currency as at the date of issue of the Notes) and (ii) unless

otherwise permitted by then current laws and regulations, Notes

(including Notes denominated in sterling) which have a maturity ofless than one year and in respect of which the issue proceeds are to be

accepted by the Issuer in the United Kingdom or whose issue

otherwise constitutes a contravention of Section 19 of the FSMA will

have a minimum denomination of £100,000 (or its equivalent in any

other currency).

Fixed Rate Notes: Fixed interest will be payable in arrear on the date or dates in each

year specified in the relevant Final Terms.

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Floating Rate Notes: Floating Rate Notes will bear interest determined separately for each

Series as follows:

(i) on the same basis as the floating rate under a notional interest

rate swap transaction in the relevant Specified Currency governed by

an agreement incorporating the 2006 ISDA Definitions as published

by the International Swaps and Derivatives Association, Inc. or

(ii) by reference to LIBOR, LIBID, LIMEAN or EURIBOR as

adjusted for any applicable margin.

Interest periods will be specified in the relevant Final Terms.

Zero Coupon Notes: Zero Coupon Notes may be issued at their nominal amount or at a

discount to it and will not bear interest.

Interest Periods and

Interest Rates:

The length of the interest periods for the Notes and the applicable

interest rate or its method of calculation may differ from time to time

or be constant for any Series. Notes may have a maximum interest

rate, a minimum interest rate, or both. The use of interest accrual

periods permits the Notes to bear interest at different rates in the

same interest period. All such information will be set out in the

relevant Final Terms.

Redemption: The relevant Final Terms will specify the basis for calculating the

redemption amounts payable. Unless permitted by then current laws

and regulations, Notes (including Notes denominated in sterling)

which have a maturity of less than one year and in respect of which

the issue proceeds are to be accepted by the Issuer in the United

Kingdom or whose issue otherwise constitutes a contravention ofSection 19 of the FSMA must have a minimum redemption amount

of £100,000 (or its equivalent in any other currency).

Redemption by Instalments: The Final Terms issued in respect of each issue of Notes that are

redeemable in two or more instalments will set out the dates onwhich, and the amounts in which, such Notes may be redeemed.

Optional Redemption: The Final Terms issued in respect of each issue of Notes will state

whether such Notes may be redeemed prior to their stated maturity at

the option of the Issuer (either in whole or in part) and/or the

Noteholders, and if so the terms applicable to such redemption.

Status of Notes: The Notes will constitute direct and unsubordinated general

obligations and will rank pari passu and without any preference

among themselves and with all of the Issuer’s other unsubordinated

indebtedness in the form of bonds, notes or debentures (which fall

within the meaning of shasai as referred to in Article 9, paragraph 1,of the Nippon Telegraph and Telephone Corporation Law (the

‘‘NTT Law’’)) from time to time outstanding that is unsecured except

for the preferential right referred to in Article 9, paragraph 1, of the

NTT Law (as described further in Condition 3).

Negative Pledge: See ‘‘Terms and Conditions of the Notes — Negative Pledge’’.

Cross Default: See ‘‘Terms and Conditions of the Notes — Events of Default’’.

Early Redemption: Except as provided in ‘‘Optional Redemption’’ above, Notes will be

redeemable at the option of the Issuer prior to maturity only for tax

reasons. See ‘‘Terms and Conditions of the Notes -Redemption,

Purchase and Options’’.

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Withholding Tax: All payments of principal and interest in respect of the Notes will be

made free and clear of withholding taxes of Japan subject to legal

requirements and customary exceptions (including the ICMA

Standard EU Exceptions), all as described in ‘‘Terms andConditions of the Notes — Taxation’’.

Governing Law: English.

Listing and admission to trading: Application has been made to list the Notes on the Official List and

to admit them to trading on the Market or as otherwise specified inthe relevant Final Terms and references to listing shall be construed

accordingly. As specified in the relevant Final Terms, a Series of

Notes may be unlisted.

Ratings: The Programme is rated AA by Standard & Poor’s Ratings Japan

K.K. and rated Aa2 by Moody’s Japan K.K. Tranches of Notes

issued under the Programme may be rated or unrated. Where a

Tranche of Notes is rated, the ratings will be specified in the Final

Terms. Such rating will not necessarily be the same as ratings

assigned to the Programme. The Issuer is currently rated AA by

Standard & Poor’s Ratings Japan K.K. (‘‘S&P’’) and rated Aa2 byMoody’s Japan K.K. (‘‘Moody’s’’).

These ratings have been obtained by the Issuers with the

understanding that Moody’s and S&P will continue to monitor thecredit of the Issuers and make future adjustments in these ratings to

the extent warranted. A revision or withdrawal of the initial ratings

on the Notes may have an adverse effect on the market price of the

Notes but will not constitute an Event of Default.

A security rating is not a recommendation to buy, sell or hold

securities and may be subject to revision or withdrawal at any time.

Selling Restrictions: United States, the EEA (including the United Kingdom), Japan and

other relevant jurisdictions. See ‘‘Subscription and Sale’’.

The Notes will be issued in compliance with U.S. Treas. Reg. §1.163-

5(c)(2)(i)(D) (the ‘‘D Rules’’) unless (i) the relevant Final Terms states

that Notes are issued in compliance with U.S. Treas. Reg. §1.163-

5(c)(2)(i)(C) (the ‘‘C Rules’’) or (ii) the Notes are issued other than in

compliance with the D Rules or the C Rules but in circumstances in

which the Notes will not constitute ‘‘registration required

obligations’’ under the United States Tax Equity and FiscalResponsibility Act of 1982 (‘‘TEFRA’’), which circumstances will

be referred to in the relevant Final Terms as a transaction to which

TEFRA is not applicable.

The Issuer is a Category 2 Issuer under Regulation S.

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RISK FACTORS

Prospective investors should consider carefully the risks set forth below and the other information

contained in this Offering Circular prior to making any investment decision with respect to the Notes.

Each of the risks highlighted below could have a material adverse effect on the Issuer’s business,

operations, financial condition or prospects, which in turn, could have a material adverse effect on the

amount of principal and interest which investors will receive in respect of the Notes. In addition, each of

the risks highlighted below could adversely affect the trading price of the Notes or the rights of investors

under the Notes and, as a result, investors could lose some or all of their investment.

Prospective investors should note that the risks described below are not the only risks the Issuer

faces. However, the Issuer believes that the factors described below represent the principal risks inherent

in investing in the Notes issued under the Programme. There may be additional risks that the Issuer

currently considers not to be material or of which it is not currently aware, and any of these risks could

have the effects set forth above.

Risks Related to Issuer’s Business

NTT Group’s business may be affected by the economic situation globally and in Japan.

In the fiscal year ended 31 March, 2012, the European sovereign bond crisis caused further

instability in the economies of developed countries which, when combined with the slow-down in thegrowth rates of emerging economies, led to an overall slow-down in the pace of global economic

recovery. The Japanese economy, despite increased demand after the severe conditions following the

Great East Japan Earthquake in March 2011, experienced only a modest recovery due to the impact

of the sluggish global economy, the protracted period of the strong yen, damage to its business and

trade from the flooding in Thailand and other factors.

With respect to the future of the Japanese economy, despite expectations that the economic

recovery will stabilize as a result of various background regulatory effects, there is a risk of an

economic downturn due to a downward swing in overseas economies caused by the European

sovereign debt crisis and the increasing price of crude oil. In addition, the effects of the shutdown of

all nuclear power plants in Japan and power supply restrictions related to the accident at theFukushima Daiichi Nuclear Power Plant, deflation and the potential for a worsening of employment

conditions remain as concerns. As a large amount of NTT Group’s business revenues are attributed

to the provision of services in Japan, NTT Group’s financial condition and results of operations may

be affected. In the solutions business in particular, corporate IT investments have been restrained by,

among other things, a decline in corporate earnings. Meanwhile, customers are making increasingly

severe demands regarding costs and requiring very stringent evaluations of potential IT investments,

which may lead to declines in the sales prices of systems and services provided by NTT Group in the

current market environment.

NTT Group’s other businesses include the real estate business and finance business. In the real

estate business, NTT Group’s financial condition and results of operations may be impacted by adecrease in the profitability of investments if there is a decrease in demand in the real estate leasing

market or apartment sales market as a result of the economic slowdown. In the finance business, in

order to minimize losses incurred through the insolvency of counterparties, NTT Group has been

making an effort to manage the extension of credit based on the creditworthiness of its

counterparties. However, the economic circumstances of these counterparties may change due to the

impact of the economic slowdown, which may lead to unrecoverable loans, potentially affecting NTT

Group’s financial condition and results of operations.

NTT Group evaluates various means of capital procurement, including the issuance of corporate

bonds and debt. Although NTT is working towards securing low interest financing and stable funds,

NTT Group’s capital procurement costs may increase if there are major fluctuations in the financialmarket. Further, if the asset value of investment securities and other assets owned by NTT Group

declines because of depressed stock and financial markets, impairment losses may adversely affect

NTT Group’s results of operations. In addition, real estate sales and pension investments by NTT

Group may suffer further effects from a slow economy.

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NTT Group’s market share and revenues may suffer from competition.

It is anticipated that competition in the information and communications market in Japan will

grow increasingly fierce with the entry of companies employing a variety of business models. NTTGroup faces competition in all of its business segments.

In the current information and communications market, against the backdrop of the rapid

spread and diversification of smartphones, tablet devices and other mobile devices and the

development of IP and broadband technologies, the structure of the market itself is undergoing

significant change as a result of, among other things, the worldwide deployment by various market

players of new business models that leverage cloud networks. In addition, the development of a

variety of new fixed-mobile convergence services that combine fixed-line with mobile services is

expected to accelerate going forward.

NTT Group believes that it maintains a competitive advantage over other companies in Japan’s

information and communications market. However, along with the changing competitive environment,NTT Group must further expand its business in the highly competitive broadband market as the

conventional fixed-line telephone market shrinks. There is no guarantee that NTT Group will be able

to maintain its current competitive advantage. Such competition from other market participants may

have an effect on NTT Group’s future growth and profitability.

The conventional fixed-line telephone services market continues to shrink as a result of the shift

to IP telephone services and other factors. To be more competitive, NTT Group plans to strengthen

its ‘‘Hikari Denwa’’ and other IP telephone services. However, revenues could fall more than expected

as customers of NTT East and NTT West may switch to services of competitors offering IP

telephone services using fibre-optic services or CATV lines.

In the fixed-line broadband business market, access lines are becoming more diverse, faster andless expensive. In addition to increasing facility and service competition among service providers, the

market environment is undergoing major change as a result of the expansion of triple play service

offerings, including video distribution and IP telephony, and the appearance of new services for

information devices other than personal computers. In this market environment, fibre-optic services

have expanded to account for over half of broadband services in Japan. However, NTT Group

expects that competition with providers of other fibre-optic access, CATV and wireless broadband,

due to the spread of smartphones and tablet devices, will continue. As a result, NTT Group may

experience a decrease in market share or a slowdown in the growth of its subscriber base and need toreduce its rates further. To address such competition, NTT may be required to incur more expenses

than anticipated to increase its customer base, which may have an effect on NTT Group’s financial

condition and results of operations.

With regard to the upper layer services (platforms, content and applications), which are expected

to have increasing importance for the development of NTT Group, new companies are expected to

continue entering the market in a variety of forms from a multitude of fields. If the competitive

environment going forward is more severe than anticipated, NTT may not secure its anticipated

market share.

In the mobile communications market, there is a move away from the conventional vertically

integrated market, the application market is expanding in conjunction with the popularity ofsmartphones, ultra-high-speed broadband is now available using Long Term Evolution (‘‘LTE’’), a

mobile communications protocol with specifications formulated by the 3rd Generation Partnership

Project. and other technologies, and competition is growing more intense not only within each market

layer (handset, network, communication platform, and content and application layers), but across the

layers as well. For example, with Mobile Number Portability, the emergence of new businesses, the

rollout of attractive mobile devices from other service providers that appeal to customers, the

diversification of rate plans, and the introduction of new services, NTT Group faces fierce

competition. Moreover, some carriers are already offering fixed-mobile convergence services withfeatures such as combined point programs for both mobile and fixed-line services, free calls between

mobile and fixed-line phones and set discounts on fixed-line broadband services, and it is possible that

these carriers will further develop their line-up of services that provide a high level of customer

convenience. NTT Group’s ability to provide such services may be restricted by regulations. Under

- 12 -


these market conditions, the number of subscriptions that NTT Group acquires or retains may be

lower than anticipated, and the costs required to acquire or retain subscribers may be greater than

anticipated, which consequently may adversely affect the financial condition and performance of NTT

Group. In this competitive market environment, in order to provide more advanced and wide-rangingservices and increase convenience for its customers, NTT Group has provided various new rate plans

and services and has revised its rates. However, NTT Group cannot be certain that these measures

will enable it to acquire new subscriptions or maintain existing subscription levels. While the

diversification of rate plans could lead to a decline in ARPU, if the subscription rate for various

discount services or the trend of subscribers using and switching to flat-rate services is not in

accordance with NTT Group’s expectation, its ARPU may decrease more than expected. The

foregoing factors may have an effect on NTT Group’s financial condition and operating results.

The solutions business, which is the focal area of business of NTT DATA CORPORATION

(‘‘NTT DATA’’), is expected to be a major area of growth in the information services market, and

hardware vendors and others are committing their efforts to this business. Moreover, the growth ofinformation service companies in rapidly developing nations, such as India and China, is bringing

about global competition, and the intensification of competition resulting from the aggressive market

entry of competing companies may have an effect on NTT Group’s financial condition and its

operating results.

Growth of new businesses and migration from existing businesses accompanying the expansion of IP,broadband and ubiquitous services and other market developments may not progress as anticipated.

In Japan’s information and communications market, as the rollout of broadband and ubiquitous

services rapidly progresses, optical broadband services are increasing in the fixed-line communications

field and conventional fixed-line telephony is transitioning to optical IP telephone services. In the

mobile communications field, services and handsets are becoming more diverse and advanced. Manyother changes and developments are occurring in conjunction with the increased use of IP, including

convergence between fixed-line communications and mobile communications and between

communications and broadcasting services, and the creation of diverse new ICT (Information

Communication Technology)-based businesses.

NTT Group expects that the further development of broadband services will lead to increased

distribution of content and applications, and the importance of the content and applications layer in

business development will grow. As a result, NTT Group has worked to develop new products and

services to capitalize on this trend. For example, with respect to the IP television service ‘‘Hikari TV’’

distributed over ‘‘FLET’S Hikari’’, NTT Group launched a service which enables the viewing of video

programs on smartphones and tablet devices, as well as on TV. Also, with respect to the cloudservices, for which market expansion is anticipated going forward, NTT Group expanded its service

menus for services such as ‘‘BizCity’’ and ‘‘BizXaas’’ to promote the building and provision of

customer systems, and launched ‘‘Mobile Groupware’’ and other services that provide web-based

email and schedule functions that enable customer use without regard to differences in devices

between smartphones and PCs.

Further, while making an effort to expand its broadband user foundation by launching the two-

tiered fixed-rate service ‘‘FLET’S Hikari Light’’, which offers lower basic monthly charges to access

the Internet, NTT Group, through efforts in collaboration with other businesses, endeavoured to

achieve further popularisation and expansion of fibre-optic services.

However, revenues may not grow as anticipated if the following were to occur: the market for

fibre-optic services does not expand as anticipated due to diminished investment by businesses and a

decline in consumer confidence, or less than anticipated expansion of video delivery services and other

fibre-optic services; rate reductions for fibre-optic access services are greater than anticipated; anyissues relating to the formulation of business models, construction of networks or development of

technology for the provision of broadband and ubiquitous services cannot be easily resolved; or ICT

use in the public sector, including in medicine, education and government, does not progress as

anticipated.

In both the corporate and residential markets, fibre-optic IP telephone services that permit the

use of conventional fixed-line telephone numbers have grown in popularity. Although NTT Group is

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working to increase the number of subscribers for the high quality ‘‘Hikari Denwa’’ fibre-optic access

IP telephone service and its other IP telephone services, NTT expects that the migration of customers

to these IP telephone services will have a negative effect on the profitability of conventional fixed-line

telephone services. Growth in revenues from fibre-optic services and broadband and ubiquitousservices, as well as cost reductions achieved through the efficiencies of IP technology are projected to

offset the negative effect on fixed-line telephone services. Nevertheless, as discussed above, if revenues

in these areas do not grow as anticipated, if one-time costs for the migration from the existing

networks to the Next Generation Network (‘‘NGN’’) become greater than anticipated, or if the

burden of maintaining duplicative facilities for the existing networks and the NGN does not decline

as anticipated, there is a risk that NTT Group’s earnings and expenses may be adversely affected.

In the fiscal year ended 31 March, 2011, NTT Group began its systematic migration from theexisting IP network to the NGN, targeted for completion in the fiscal year ending 31 March, 2013.

NTT Group announced its migration plan from existing PSTN networks to the NGN in November

2011. However, if the migration to the NGN does not progress as anticipated, the maintenance costs

for duplicative facilities for a prolonged period and other transient costs may affect the financial

condition and results of operations of NTT Group.

In the mobile communications business, NTT Group believes that an increase in revenues from

factors such as the expansion of ‘‘i-modes’’ services, smartphones services, ‘‘FOMA’’ and ‘‘Xi’’, theresulting increase in packet and other communications services, and measures for new value creation

in collaboration with various services and industries, is a critical element for future growth.

Nevertheless, growth of these services may potentially be curtailed and NTT’s financial condition and

results of operations may be negatively impacted if operating systems, applications and content-

providing partners required for the provision of services do not cooperate or collaborate on

acceptable term as expected, new services fail to meet expectations in terms of scheduling, costs,

customer demand and appeal, the various current or future services of NTT DOCOMO Inc. (‘‘NTT

DOCOMO’’) are insufficient or not attractive enough to maintain current subscribers or attract newones, market demand for handset functions is not as envisioned, or higher communication speed

through LTE cannot be expanded as scheduled.

NTT Group’s international and domestic investments, alliances and collaborations and investments directed atnew fields of business may not produce the returns or provide the opportunities NTT Group expects, and maybe beyond the control of NTT Group.

NTT Group has sought to enter into joint ventures, alliances and collaborations, with both

domestic and overseas companies and organisations, to more actively respond to changes in thetelecommunications market, such as globalisation, migration to cloud services and the diversification

of user devices. NTT has focused on the steady expansion of total ICT services by utilising the

group’s abilities, in order to respond to the need for high-quality, comprehensive ICT services from

corporate customers in Japan and abroad with global end-to-end, one-stop services. However, NTT

Group may not be able to maintain or enhance the value or financial performance of domestic and

overseas operations in which it has invested or agreed to invest, or which NTT Group will invest in

or ally with in the future, or achieve sufficient synergies with these operations.

Over the past few years, NTT Group has made proactive efforts to strengthen its global

businesses. With regards to its global customer base of 10,000 companies, including those of overseas

subsidiaries of group companies, along with providing rapid and low-cost services by harnessing

group company synergies and cross selling, NTT Group will make an effort to expand its global area

coverage and ICT service lineup in order to strengthen its services. To strengthen the framework for

promoting such global strategy, a ‘‘Global Strategy Committee’’ and a ‘‘Global Personnel Committee’’

have been established consisting of representatives from group companies, including foreign

subsidiaries. However, with the increase in foreign subsidiaries having different corporate cultures,there is the possibility that the merits of diversification will be outweighed by the inability to

implement appropriate controls, or that differences in thinking and awareness with respect to

managerial ideas and vision will lead to difficulties in the implementation of business strategies and

conduct of operations.

- 14 -


For the reasons stated above, NTT may record write-downs related to the impaired value of

investments in future periods.

NTT Group may not achieve anticipated cost savings.

NTT Group will continue to make efforts to reduce personnel costs and improve overall

operating efficiency in its fixed-line communications business. Moreover, with the transition to fibre-

optic access and IP networks, NTT Group is aiming to reduce costs by improving operational

systems efficiency and through business process reengineering of call centre operations. However, ifcountermeasures become necessary to address changes in the competitive environment or changes in

the market environment due to the economic slowdown, or if the development of the IP network or

migration from the existing IP network to the NGN is slower than anticipated, then sufficient cost

reductions may not be achieved due to factors such as costs for simultaneously maintaining duplicate

facilities for the existing IP network and the NGN not decreasing to the extent anticipated.

Also, with respect to capital expenditures, NTT Group expects to achieve significant cost

reductions by reducing capital expenditures for fibre-optic access and the NGN by deploying the

results of technical innovations, lowering the cost of equipment and improving construction methods.

NTT Group aims to reduce the total amount of capital expenditures as a percentage of operating

revenues by shifting the focus of capital expenditures to service creation businesses after capitalexpenditures in fibre optic access and the NGN stabilize at a lower level. However, in a case where

capital expenditure efficiency is not attained as envisioned due to such factors as network capacity

expansion in conjunction with the spread of devices, including smartphones and tablet devices, or the

enhancement of data centers in conjunction with the development of cloud services, it is possible that

capital expenditures will exceed what was envisioned.

Other mobile service providers in the world may not adopt or continue to use technologies and frequency bandsthat are compatible with those used by NTT DOCOMO’s mobile communications system, which could affectNTT Group’s ability to offer international services.

NTT DOCOMO is 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 technologies it uses on its mobile communications systems. NTT Group expects

that its overseas affiliates, strategic partners and many other mobile service providers will continue touse technologies compatible with NTT DOCOMO’s, but there is no guarantee of this in the future.

If a sufficient number of mobile service providers do not adopt technologies compatible withNTT DOCOMO’s, if mobile service providers switch to other technologies, or if there is a delay in

the introduction of compatible technologies, NTT DOCOMO may not be able to offer international

roaming or other services as expected and may not be able to offer its subscribers the convenience of

overseas services.

Also, NTT DOCOMO cannot ensure that handset and network vendors will be able to modify

their handsets and networks appropriately and promptly if the actions of standardisation

organisations result in changes to the standardized technologies that NTT DOCOMO adopts, which

would require modifications to the handsets and networks that NTT DOCOMO uses.

If such technologies compatible with the technologies NTT DOCOMO has adopted do not

develop as expected and NTT DOCOMO is not able to maintain or improve the quality of its

overseas services or enjoy the benefits of global economies of scale, this may have an effect on NTT

Group’s financial condition and results of operations.

If NTT Group and its business partners are unable to obtain licenses or other rights to use the intellectualproperties of third parties that are necessary for NTT Group to conduct its business, NTT Group may not beable to offer certain technologies, products, or services. In addition, NTT Group may be liable for damages dueto infringement of the intellectual property rights of other companies.

In order for NTT Group and its business partners to carry out its business operations, it is

necessary for NTT Group and its business partners to obtain licenses and other rights to use the

intellectual property and other rights of third parties. Currently, NTT Group and its business partners

have obtained licenses from the holders of such rights by concluding agreements with such holders,

- 15 -


and NTT Group plans to continue to obtain licenses from the holders of other intellectual property

rights that are necessary for carrying out its future business. However, if agreement cannot be

reached with the holders of such rights or if agreement concerning rights once granted cannot be

maintained thereafter, NTT Group and its business partners may not be able to provide certaintechnologies, products or services. Further, as NTT Group companies acquire foreign corporations,

NTT Group businesses are becoming increasingly internationalized, and as a result, it is increasingly

possible that a foreign corporation will assert infringement of intellectual property or other rights

against NTT Group. If NTT Group is subject to assertions of infringement of intellectual property

rights, NTT Group may be forced to expend considerable time and incur costs in reaching a

resolution, and if such claims are determined adversely to NTT Group through a court judgment or

through a settlement between the relevant parties, revenues from businesses related to such rights may

decrease and NTT Group may be liable for damages for infringement of such rights, and NTTGroup’s relevant business may be subject to an injunction, which may in turn adversely affect its

financial condition and results of operations.

Changes or decisions regarding telecommunications regulations may affect NTT Group’s business.

The regulation of the Japanese telecommunications industry has been changed in many areas,

including the elimination of foreign ownership restrictions (except in the case of NTT), retail price

deregulation and the implementation of a Long Run Incremental Cost Methodology (‘‘LRICMethodology’’) for interconnection charges and amendments to telecommunications laws aimed at

promoting competition. Decisions relating to Government regulations and the resulting changes in the

telecommunications industry may affect NTT Group’s financial condition and results of operation.

The frequencies that NTT DOCOMO can use are limited, and it is possible that it will not be able to secureadequate frequency spectrum for its operations.

NTT DOCOMO has limited frequencies available for its services. In areas such as the vicinity of

major train stations in Tokyo and Osaka, NTT DOCOMO’s mobile communications network maysuffer deterioration of service quality at peak times, when use of available frequencies is at or near its

limit.

In addition, while the number of NTT DOCOMO subscribers and the traffic from such

subscribers increases in conjunction with the expansion of devices, such as smartphones and tabletdevices, there may be a decline in the quality of services if government agencies do not allocate the

frequency spectrum required for unhindered operation, or if changes are made to the frequency

spectrum allocation system, for example, by the introduction of reallocation through an auction

system, and the necessary frequency spectrum cannot be obtained. Currently, government agencies are

conducting internal deliberations regarding the implementation of an auction system, which has

included the submission of a ‘‘bill to amend a portion of the Radio Act’’ to the Diet in March 2012.

If the auction system is implemented and the amounts paid by NTT DOCOMO to obtain the

frequencies under the system rise, it is possible that NTT Group’s financial condition or results ofoperations will be affected.

NTT DOCOMO is making efforts to obtain new frequencies and to improve efficiency of

frequency use through the application of its technologies, such as LTE, and through the promotion of

migration to LTE. However, there can be no assurance that NTT DOCOMO’s efforts will besufficient to avoid a deterioration in service quality. If NTT DOCOMO is unable to address such

problems sufficiently and in a timely manner, it is possible that NTT Group’s financial condition or

results of operations will be materially affected due to constraints in providing its wireless services or

to the loss of subscribers to competitors.

NTT Group may be impacted by laws, regulations and systems relating to the reduction of greenhouse gasemissions.

In conjunction with the increasing diversification and sophistication of subscriber services, NTThas been expanding its telecommunication facilities and data centres, and, as a result, its power usage

has trended upwards. NTT Group has implemented measures directed at reducing its greenhouse gas

emissions, including the deployment of power-saving ICT devices, highly efficient power sources and

air conditioning devices, as well as natural energy systems. It is possible, however, that the

- 16 -


introduction of regulations for reducing greenhouse gases will result in cost increases, which may have

an impact on the financial condition and results of operations of NTT Group.

The Government owns enough NTT shares to give it considerable influence over whether resolutions at NTTshareholder meetings are adopted, and rules and regulations in Japan provide the Government with regulatoryauthority over NTT Group companies.

The Government, through the Minister of Finance, currently owns 32.59% of NTT’s issued

Shares (35.24% of NTT’s outstanding Shares excluding treasury stock), which equates to 35.29% of

the voting rights, calculated on the basis of issued shares minus treasury stock and less-than-one-unit

shares. The Government, in its capacity as a shareholder, votes at shareholder meetings of NTT and,

by virtue of its statutorily mandated position as the largest shareholder, has the power to exert

considerable influence over decisions made at such meetings. In 1997, in a statement at the Diet, it

was stated that the Government did not intend to actively use its position as a shareholder to directthe management of NTT. In fact, the Government has not used its power as a shareholder to direct

the management of NTT in the past.

System and network disruptions and issues with system architecture may affect NTT Group’s financialcondition and operating results.

In order to provide fixed and mobile voice and data communications services to subscribers,

NTT Group has built, deployed nation-wide and maintains fixed-line subscriber telephone, fibre-optic

access, W-CDMA and LTE networks. With respect to NTT Group’s networks and systems necessary

for service provision, NTT Group has implemented a variety of measures to ensure safe and stable

services, including strengthening the durability of exchange offices and establishing multipletransmission lines, but it is possible that notwithstanding these measures, natural disasters such as

earthquakes, tsunamis, typhoons and floods, security-related issues including hardware and software

failure, terrorism, cyber-terrorism and various other events could cause system and network failure or

result in an inability to provide stable services. In such event, NTT Group’s financial condition and

results of operations may be affected.

In particular, the occurrence of a large scale disaster could cause severe damage to NTT

Group’s telecommunications networks which could take a long time to restore, and emergency

electricity use restrictions which could hinder NTT Group’s ability to provide stable services. These

events may result in the deterioration of NTT Group’s reputation for reliability and its corporate

image, reductions in income and substantial repair costs.

NTT Group services and products using advanced technology have increased, resulting in

increased quality control risk. In particular, smartphone and tablet device applications contain

elements which could increase the load on NTT Group’s network facilities beyond the level

contemplated, such as communications applications that can secure or cut off connections, which

cause an increase in control signals between a device and the network.

While NTT Group is making efforts to enhance service quality and reliability by making capital

investments in its network facilities to strengthen network resilience and to accelerate response time, if

such traffic cannot be processed or a service or product of NTT Group has a defect or a human

error, such as an error in equipment settings, NTT may be held liable for damages, and the

reputation of NTT Group services and products may be affected.

In addition, in recent years, information security countermeasures for smartphones, cloud

services and other new ICT services are becoming an increasing concern. NTT Group is thoroughly

working on security countermeasures as a responsible service provider in the information and

communications industry, but if an unforeseeable event occurs, it is possible that there will be cases

of unauthorized access and virus infections, causing customers’ trust in NTT Group to diminish.

Further, NTT DOCOMO’s mobile phones are equipped with various functions, such as paymentsettlement functions, and NTT DOCOMO provides the services of many other service providers on

its mobile phones, which may increase the risk of malfunctions, defects, leaking of personal

information from phones and other issues caused by flaws or deficiencies in the services of such

service providers.

- 17 -


With respect to the solutions business, NTT Group generally assumes full contractual

responsibility at all stages-from the receipt of orders to delivery-for the building of systems and their

delivery to clients. There is the possibility that a deviation from initial estimates or problems in

project management at the development stage could result in cost overruns or losses due to deliverydelays.

NTT’s reputation and credibility may be affected by fraud or misconduct in Japan or abroad, or by aninappropriate use or leak of confidential business information and personal information.

NTT Group is subject to a wide variety of related laws and regulations because of its network

of offices which handle a variety of products and services both in Japan and abroad. As a result,

some of NTT Group’s business activities require licenses, notifications, and permit approvals. In

addition, with respect to overseas business operations, there is a possibility that the burden on the

overseas business will increase from, among other things, the rules and regulations of the local

country, or the lack thereof, the unpredictable interpretations of such local laws, the adoption of newlaws and the revision of existing laws.

NTT Group considers legal compliance to be an extremely important corporate responsibility

and works to strengthen its compliance systems and ensure thorough compliance. In addition, in lightof the recent tightening of bribery and anti-corruption laws in foreign countries, particularly the

United States and the United Kingdom, NTT is working towards further strengthening its compliance

systems. However, even with such countermeasures, there may be cases where it is not possible to

eliminate compliance risks and reputation risks, including cases of improper personal behaviour on

the part of an employee. In such cases, there may be an impact on NTT Group’s financial conditions

and results of operations.

In addition, mindful of its position of responsibility in the telecommunications business, NTT

Group has historically made efforts to protect confidential information obtained in the course of its

business, including the personal information of customers. At the same time, NTT Group is currently

implementing the ‘‘NTT Group Information Security Policy’’, which includes enhanced internalinformation management, training and awareness-raising for officers and employees, publication of

manuals and other measures intended to fully address the issue of protection of confidential

information including personal information. NTT Group expects to be able to ensure proper

management of confidential information including personal information in accordance with its policy.

However, if such confidential information is leaked or otherwise misused, there is a risk that such

action may affect NTT Group’s business, including its reputation and credibility, and NTT Group’s

ability to obtain new subscribers or secure governmental contracts.

Misuse of products and services offered by NTT Group may have an adverse impact on the credibility andcorporate image of NTT Group and could expose NTT Group to liabilities.

Inappropriate use of NTT Group’s products and services by users may result in a decrease inthe credibility of NTT Group’s products and services and tarnish NTT Group’s corporate image,

which may in turn affect NTT Group’s financial condition and results of operations.

A representative example is the occurrence of unsolicited bulk e-mails being sent through NTT

DOCOMO’s e-mail services, including ‘‘i-mode’’ mail service, ‘‘sp-mode’’ mail service and ‘‘Short

Message Service’’. Despite NTT DOCOMO’s extensive efforts to address this issue by protecting its

subscribers from incurring any economic disadvantage caused by unsolicited bulk e-mails, including

notifying its subscribers via various brochures, providing unsolicited bulk e-mail filtering functions

with its handsets and suspending the use of or terminating contracts with companies which distribute

large amounts of such unsolicited bulk e-mails, the problem has not yet been eliminated. If NTT

DOCOMO’s subscribers receive a large amount of unsolicited e-mail, it may cause a decrease incustomer satisfaction and damage NTT DOCOMO’s corporate image, leading to a reduction in the

number of ‘‘i-mode’’ and ‘‘sp-mode’’ subscriptions.

Further, there has been a wide range of debate regarding issues such as the possibility that a

minor’s access to illegal or harmful websites will have a negative impact and regarding the

effectiveness of filtering services intended to restrict minors from accessing such harmful sites. These

issues may similarly damage NTT DOCOMO’s corporate image.

- 18 -


Mobile phones have also been used in crimes such as the ‘‘it’s me’’ fraud, whereby callers

request an emergency bank remittance pretending to be a relative. To combat these misuses of NTT

DOCOMO’s services, NTT DOCOMO introduced various measures such as more strict identification

confirmation requirements at points of purchase, and ending the provision of pre-paid mobile phonescapable of making voice calls as of the end of March 2012 because such 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 this may lead to an increase in the cancellation of subscriptions.

In addition, as handsets and services become more sophisticated, new issues may arise when

subscribers are charged higher fees for packet transmission than they are aware of as a result of using

handsets without fully recognising the extent of their use of packet transmission in terms of frequency

and volume. There are also concerns over the occurrence of accidents caused by the use of mobile

phones while operating vehicles or bicycles. In addition, there are issues concerning the high feescharged from the excess use of paid content by subscribers and, in conjunction with the spread of

smartphones, the leaking of private information by fraudulent applications (software) on the Internet.

NTT Group believes that it has properly addressed these social issues, but it is not certain

whether NTT Group will be able to continue to carry out proper measures in the future. If NTT

Group is unable to address these issues in an appropriate manner, this may result in an increasing

number of cancellations among current subscribers and an inability to acquire the anticipated number

of new subscribers, which may impact NTT Group’s financial condition and results of operations.

Risks Related to the Notes

Notes subject to optional redemption by the Issuer

An optional redemption feature is likely to limit the market value of Notes. During any period

when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise

substantially above the price at which they can be redeemed. This also may be true prior to any

redemption period.

The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the

interest rate on the Notes. At those times, an investor generally would not be able to reinvest the

redemption proceeds at an effective interest rate as high as the interest rate on the Notes being

redeemed and may only be able to do so at a significantly lower rate. Potential investors should

consider reinvestment risk in light of other investments available at that time.

Fixed/Floating Rate Notes

Fixed/floating rate Notes may bear interest at a rate that the Issuer may elect to convert from a

fixed rate to a floating rate, or from a floating rate to a fixed rate. The Issuer’s ability to convert the

interest rate will affect the secondary market and the market value of such Notes since the Issuer

may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If

the Issuer converts from a fixed rate to a floating rate, the spread on the fixed/floating rate Notes

may be less favourable than then prevailing spreads on comparable floating rate Notes tied to thesame reference rate. In addition, the new floating rate at any time may be lower than the rates on

other Notes. If the Issuer converts from a floating rate to a fixed rate, the fixed rate may be lower

than then prevailing rates on its Notes.

Notes issued at a substantial discount or premium

The market values of securities issued at a substantial discount or premium to their nominal

amount tend to fluctuate more in relation to general changes in interest rates than do prices for

conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the

greater the price volatility as compared to conventional interest-bearing securities with comparable

maturities.

Modification and waivers and substitution

The Conditions and the Agency Agreement (as defined in the Conditions) contain provisions for

calling meetings of Noteholders to consider matters affecting their interests generally. These provisions

- 19 -


permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote

at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

The Terms and Conditions of the Notes also provide that the Issuer may, without the consent

of Noteholders, substitute another company as principal debtor under any Notes in place of theIssuer, in the circumstances described in Condition 11(c) of the Terms and Conditions of the Notes.

EU Savings Directive

EC Council Directive 2003/48/EC on the taxation of savings income (the ‘‘Savings Directive’’)

requires Member States to provide to the tax authorities of other Member States details of payments

of interest and other similar income paid by a person established within its jurisdiction to or collected

by such a person for an individual or to certain non-corporate entities in that other Member State,

except that Austria and Luxembourg are operating a withholding system for a transitional period

(subject to a procedure whereby, on meeting certain conditions, the beneficial owners of the interestor other savings income may request that no tax be withheld) unless during such period they elect

otherwise (the end of that transitional period is dependent upon the conclusion of certain agreements

relating to information exchange within certain non-EU countries). A number of non-EU countries

and territories including Switzerland have adopted similar measures (a withholding system in the case

of Switzerland).

Investors should note that the European Commission has announced proposals to amend the

Savings Directive, which may, if implemented, broaden the scope of the requirements described above.

If a payment to an individual were to be made or collected through a Member State which has

opted for a withholding system and an amount of, or in respect of, tax were to be withheld fromthat payment pursuant to any law implementing the Savings Directive or any other European Council

Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November, 2000 on

the taxation of savings income, neither the Issuer nor any Paying Agent nor any other person would

be obliged to pay additional amounts with respect to any Note as a result of the imposition of such

withholding tax. The Issuer is required to maintain a Paying Agent with a specified office in an

Member State that is not obliged to withhold or deduct tax pursuant to any law implementing the

Savings Directive or any other European Council Directive implementing the conclusions of the

ECOFIN Council meeting of 26-27 November, 2000.

Change of law

The Conditions are based on English law in effect as at the date of issue of the relevant Notes.

No assurance can be given as to the impact of any possible judicial decision or change to English law

or administrative practice after the date of issue of the relevant Notes.

Delisting

The Issuer will use its best endeavours to maintain the listing of all Notes on the Official List of

the UK Listing Authority, except where (a) the Issuer, after using all reasonable endeavours, isunable to comply with the requirements for maintaining such listing; (b) the Issuer determines that

the application of the UK Listing Authority rules would make the maintenance of such listing unduly

onerous; or (c) for any reason other than (b) above, the maintenance of such listing is agreed by all

Permanent Dealers to have become unduly onerous. In such circumstances, the Issuer will be entitled

to delist the Notes from the Official List of the UK Listing Authority and will use its best

endeavours to seek an alternative listing for the Notes on a major stock exchange as it may decide.

The secondary market generally

Notes may have no established trading market when issued, and one may never develop. If a

market does develop, it may not be liquid. Therefore, investors may not be able to sell their Notes

easily or at prices that will provide them with a yield comparable to similar investments that have adeveloped secondary market. This is particularly the case for Notes that are especially sensitive to

interest rate, currency or market risks, are designed for specific investment objectives or strategies or

have been structured to meet the investment requirements of limited categories of investors. These

types of Notes generally would have a more limited secondary market and more price volatility than

- 20 -


conventional debt securities. Illiquidity may have a severely adverse effect on the market value of

Notes.

Exchange rate risks and exchange controls

The Issuer will pay principal and interest on the Notes in the Specified Currency. This presents

certain risks relating to currency conversions if an investor’s financial activities are denominated

principally in a currency or currency unit (the ‘‘Investor’s Currency’’) other than the SpecifiedCurrency. These include the risk that exchange rates may significantly change (including changes due

to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that

authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls.

An appreciation in the value of the Investor’s Currency relative to the Specified Currency would

decrease (i) the Investor’s Currency-equivalent yield on the Notes, (ii) the Investor’s Currency

equivalent value of the principal payable on the Notes and (iii) the Investor’s Currency equivalent

market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange

controls that could adversely affect an applicable exchange rate. As a result, investors may receive less

interest or principal than expected, or no interest or principal.

Interest rate risks

Investment in fixed rate Notes involves the risk that subsequent changes in market interest rates

may adversely affect the value of fixed rate Notes.

Credit ratings may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to an issue of Notes.

The ratings may not reflect the potential impact of all risks related to structure, market, additional

factors discussed above, and other factors that may affect the value of the Notes. A credit rating isnot a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating

agency at any time.

Definitive Notes

In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall,

be issued in Specified Denominations(s) only. A noteholder who holds a principal amount of less than

the minimum Specified Denomination will not receive a definitive Note in respect of such holding. If

the noteholder requires a definitive note for such holding, a noteholder would need to purchase a

principal amount of Notes such that it holds an amount equal to one or more SpecifiedDenominations.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions that, save for paragraphs in italics and

subject to completion by Part A of the relevant Final Terms, shall be endorsed on the Notes in definitive

form (if any) issued in exchange for the Global Note(s) representing each Series. Either (i) the full

text of these terms and conditions together with the relevant provisions of Part A of the Final Terms or

(ii) these terms and conditions as so completed (and subject to simplification by the deletion of non-

applicable provisions), shall be endorsed on such Bearer Notes or on the Certificates relating to such

Registered Notes. All capitalised terms that are not defined in these Conditions will have the meanings

given to them in Part A of the relevant Final Terms. Those definitions will be endorsed on the definitive

Notes or Certificates, as the case may be. References in the Conditions to ‘‘Notes’’ are to the Notes of

one Series only, not to all Notes that may be issued under the Programme.

The Notes are issued pursuant to an amended and restated agency agreement (as amended,

restated or supplemented from time to time, the ‘‘Agency Agreement’’) dated 1 November, 2012

between Nippon Telegraph and Telephone Corporation (the ‘‘Issuer’’), The Bank of Tokyo-Mitsubishi

UFJ, Ltd., London Branch as fiscal agent and paying agent and the other agents named in it and

with the benefit of a deed of covenant dated 1 November, 2012 executed by the Issuer (as amended,

restated or supplemented from time to time, the ‘‘Deed of Covenant’’). The fiscal agent, the paying

agents, the registrar, the transfer agents and the calculation agent(s) for the time being (if any) arereferred to below respectively as the ‘‘Fiscal Agent’’, the ‘‘Paying Agents’’, the ‘‘Registrar’’, the

‘‘Transfer Agents’’ and the ‘‘Calculation Agent(s)’’. The Noteholders (as defined below), the holders

of the interest coupons (the ‘‘Coupons’’) relating to interest bearing Notes in bearer form and, where

applicable in the case of such Notes, talons for further Coupons (the ‘‘Talons’’) (the

‘‘Couponholders’’) and the holders of the receipts for the payment of instalments of principal (the

‘‘Receipts’’) relating to Notes in bearer form of which the principal is payable in instalments are

deemed to have notice of all of the provisions of the Agency Agreement applicable to them.

Copies of the Agency Agreement and the Deed of Covenant are available for inspection free of

charge, at the specified offices of each of the Paying Agents, the Registrar and the Transfer Agents.

1. Form, Denomination and Title

The Notes are issued in bearer form (‘‘Bearer Notes’’, which expression includes Notes that are

specified to be Exchangeable Bearer Notes (as defined below)), in registered form (‘‘Registered

Notes’’) or in bearer form exchangeable for Registered Notes (‘‘Exchangeable Bearer Notes’’) in each

case in the Specified Denomination(s) shown hereon.

Where Exchangeable Bearer Notes are issued, the Registered Notes for which they are

exchangeable shall have the same Specified Denomination as the lowest denomination of Exchangeable

Bearer Notes.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or an Instalment

Note, a combination of any of the foregoing or any other kind of Note, depending upon the Interest

and Redemption/Payment Basis shown hereon.

Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a

Talon) attached, save in the case of Zero Coupon Notes in which case references to interest (other

than in relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are

not applicable. Instalment Notes are issued with one or more Receipts attached.

Registered Notes are represented by registered certificates (‘‘Certificates’’) and, save as provided

in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same

holder.

Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by delivery. Title to

the Registered Notes shall pass by registration in the register that the Issuer shall procure to be keptby the Registrar in accordance with the provisions of the Agency Agreement (the ‘‘Register’’). Except

as ordered by a court of competent jurisdiction or as required by law, the holder (as defined below)

of any Note, Receipt, Coupon or Talon shall be deemed to be and may be treated as its absolute

owner for all purposes, whether or not it is overdue and regardless of any notice of ownership, trust

- 22 -


or an interest in it, any writing on it (or on the Certificate representing it) or its theft or loss (or that

of the related Certificate) and no person shall be liable for so treating the holder.

In these Conditions, ‘‘Noteholder’’ means the bearer of any Bearer Note and the Receipts

relating to it or the person in whose name a Registered Note is registered (as the case may be),‘‘holder’’ (in relation to a Note, Receipt, Coupon or Talon) means the bearer of any Bearer Note,

Receipt, Coupon or Talon or the person in whose name a Registered Note is registered (as the case

may be) and capitalised terms have the meanings given to them hereon, the absence of any such

meaning indicating that such term is not applicable to the Notes.

2. Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes

(a) Exchange of Exchangeable Bearer Notes:

Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be exchanged for thesame nominal amount of Registered Notes at the request in writing of the relevant Noteholder

and upon surrender of each Exchangeable Bearer Note to be exchanged, together with all

unmatured Receipts, Coupons and Talons relating to it, at the specified office of any Transfer

Agent; provided, however, that where an Exchangeable Bearer Note is surrendered for exchange

after the Record Date (as defined in Condition 7(b)) for any payment of interest, the Coupon in

respect of that payment of interest need not be surrendered with it. Registered Notes may not

be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be

exchanged for Bearer Notes of another Specified Denomination. Bearer Notes that are notExchangeable Bearer Notes may not be exchanged for Registered Notes.

(b) Transfer of Registered Notes:

One or more Registered Notes may be transferred upon the surrender (at the specified office of

the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be

transferred, together with the form of transfer endorsed on such Certificate, (or another form of

transfer substantially in the same form and containing the same representations and certifications

(if any), unless otherwise agreed by the Issuer), duly completed and executed and any other

evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of

part only of a holding of Registered Notes represented by one Certificate, a new Certificate shallbe issued to the transferee in respect of the part transferred and a further new Certificate in

respect of the balance of the holding not transferred shall be issued to the transferor.

(c) Exercise of Options or Partial Redemption in Respect of Registered Notes:

In the case of an exercise of an Issuer’s or Noteholders’ option in respect of, or a partial

redemption of, a holding of Registered Notes represented by a single Certificate, a new

Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the

balance of the holding not redeemed. In the case of a partial exercise of an option resulting in

Registered Notes of the same holding having different terms, separate Certificates shall be issued

in respect of those Notes of that holding that have the same terms. New Certificates shall only

be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. Inthe case of a transfer of Registered Notes to a person who is already a holder of Registered

Notes, a new Certificate representing the enlarged holding shall only be issued against surrender

of the Certificate representing the existing holding.

(d) Delivery of New Certificates:

Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) shall be available for

delivery within three business days of receipt of the request for exchange, form of transfer or

Exercise Notice (as defined in Condition 6(e)) and/or surrender of the Certificate for exchange.

Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or

of the Registrar (as the case may be) to whom delivery or surrender of such request forexchange, form of transfer, Exercise Notice or Certificate shall have been made or, at the option

of the holder making such delivery or surrender as aforesaid and as specified in the relevant

request for exchange, form of transfer, Exercise Notice or otherwise in writing, be mailed by

uninsured post at the risk of the holder entitled to the new Certificate to such address as may

- 23 -


be so specified, unless such holder requests otherwise and pays in advance to the relevant Agent

(as defined in the Agency Agreement) the costs of such other method of delivery and/or such

insurance as it may specify. In this Condition (d), ‘‘business day’’ means a day, other than a

Saturday or Sunday, on which banks are open for business in the place of the specified office ofthe relevant Transfer Agent or the Registrar (as the case may be).

(e) Exchange Free of Charge:

Exchange and transfer of Notes and Certificates on registration, transfer, partial redemption or

exercise of an option shall be effected without charge by or on behalf of the Issuer, the

Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges

that may be imposed in relation to it (or the giving of such indemnity as the Registrar or therelevant Transfer Agent may require).

(f) Closed Periods:

No Noteholder may require the transfer of a Registered Note to be registered or an

Exchangeable Bearer Note to be exchanged for one or more Registered Note(s) (i) during the

period of 15 days ending on the due date for redemption of, or payment of any Instalment

Amount in respect of, that Note, (ii) during the period of 15 days before any date on whichNotes may be called for redemption by the Issuer at its option pursuant to Condition 6(d), (iii)

after any such Note has been called for redemption or (iv) during the period of seven days

ending on (and including) any Record Date. An Exchangeable Bearer Note called for

redemption may, however, be exchanged for one or more Registered Note(s) in respect of which

the Certificate is simultaneously surrendered not later than the relevant Record Date.

3. Status

The Notes, Receipts and Coupons constitute direct and unsubordinated general obligations and

will rank pari passu and without any preference among themselves and with all of the Issuer’s

other unsubordinated indebtedness in the form of bonds, notes or debentures (which fall within

the meaning of shasai as referred to in Article 9, paragraph 1, of the Nippon Telegraph and

Telephone Corporation Law (the ‘‘NTT Law’’)) from time to time outstanding that is unsecured

except for the preferential right referred to in Article 9, paragraph 1, of the NTT Law. Under

the NTT Law, all holders of such bonds, notes and debentures (including the Notes) issued bythe Issuer have the preferential right to be paid prior to other unsecured indebtedness of the

Issuer, but the rights of such holders are subordinated to obligations in respect of national and

local taxes and certain other exceptions and certain rights provided in the Japanese Civil Code,

such as preferential rights of employees to wages.

4. Negative Pledge

(a) So long as any of the Notes remains outstanding (as defined in the Agency Agreement),

the Issuer may not create or permit to subsist any mortgage, charge, pledge or other

security interest upon the whole or any part of its property, assets or revenues, present or

future, to secure, for the benefit of the holders thereof, any External Indebtedness, without

at the same time securing the Notes equally and rateably with such External Indebtedness

or such other security or guarantee as shall be approved by an Extraordinary Resolution

(as defined in the Agency Agreement) of the Noteholders.

(b) For the purposes of this Condition, the expression ‘‘External Indebtedness’’ means anyindebtedness in the form of or represented by bonds, notes, debentures or other securities

which:

(i) either:

(a) are, or may at the option of the person entitled thereto be or become,

denominated or payable in, or by reference to, a currency or currencies other

than yen; or

- 24 -


(b) are denominated or payable in yen and more than 50 per cent. of the aggregate

principal or face amount of which is initially distributed by the Issuer or with

its authorisation outside Japan; and

(ii) are not repayable (otherwise than at the option, or due to the default, of the Issuer)

within one year from the date of their issue; and

(iii) are, or are capable of being, quoted, listed or ordinarily traded on any stock

exchange or on any over-the-counter securities market.

5. Interest and other Calculations

(a) Interest on Fixed Rate Notes:

Each Fixed Rate Note bears interest on its outstanding nominal amount from the Interest

Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of

Interest, such interest being payable in arrear on each Interest Payment Date.

(b) Interest on Floating Rate Notes:

(i) Interest Payment Dates:

Each Floating Rate Note bears interest on its outstanding nominal amount from the

Interest Commencement Date at the rate per annum (expressed as a percentage) equal to

the Rate of Interest, such interest being payable in arrear on each Interest Payment Date.

The amount of interest payable shall be determined in accordance with Condition 5(f).

Such Interest Payment Date(s) is/are either shown hereon as Interest Payment Dates or, if

no Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each

date which falls the number of months or other period shown hereon as the InterestPeriod after the preceding Interest Payment Date or, in the case of the first Interest

Payment Date, after the Interest Commencement Date.

(ii) Business Day Convention:

If any date referred to in these Conditions that is specified to be subject to adjustment in

accordance with a Business Day Convention would otherwise fall on a day that is not a

Business Day, then, if the Business Day Convention specified is (A) the Floating Rate

Business Day Convention, such date shall be postponed to the next day that is a Business

Day unless it would thereby fall into the next calendar month, in which event (x) such

date shall be brought forward to the immediately preceding Business Day and (y) each

subsequent such date shall be the last Business Day of the month in which such datewould have fallen had it not been subject to adjustment, (B) the Following Business Day

Convention, such date shall be postponed to the next day that is a Business Day, (C) the

Modified Following Business Day Convention, such date shall be postponed to the next

day that is a Business Day unless it would thereby fall into the next calendar month, in

which event such date shall be brought forward to the immediately preceding Business Day

or (D) the Preceding Business Day Convention, such date shall be brought forward to the

immediately preceding Business Day.

(iii) Rate of Interest for Floating Rate Notes:

The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period

shall be determined in the manner specified hereon and the provisions below relating to

either ISDA Determination or Screen Rate Determination shall apply, depending uponwhich is specified hereon.

(A) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified hereon as the manner in which the Rate of

Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be

determined by the Calculation Agent as a rate equal to the relevant ISDA Rate plus or

minus (as indicated hereon) the Margin (if any). For the purposes of this sub-paragraph

- 25 -


(A), ‘‘ISDA Rate’’ for an Interest Accrual Period means a rate equal to the Floating Rate

that would be determined by the Calculation Agent under a Swap Transaction under the

terms of an agreement incorporating the ISDA Definitions and under which:

(x) the Floating Rate Option is as specified hereon

(y) the Designated Maturity is a period specified hereon and

(z) the relevant Reset Date is the first day of that Interest Accrual Period unless

otherwise specified hereon.

For the purposes of this sub-paragraph (A), ‘‘Floating Rate’’, ‘‘Calculation Agent’’,

‘‘Floating Rate Option’’, ‘‘Designated Maturity’’, ‘‘Reset Date’’ and ‘‘Swap Transaction’’

have the meanings given to those terms in the ISDA Definitions.

(B) Screen Rate Determination for Floating Rate Notes

Where Screen Rate Determination is specified hereon as the manner in which the Rate ofInterest is to be determined, the Rate of Interest for each Interest Accrual Period shall be

determined by the Calculation Agent at or about the Relevant Time on the Interest

Determination Date in respect of such Interest Accrual Period in accordance with the

following:

(x) if the Primary Source for Floating Rate is a Page, subject as provided below, the

Rate of Interest shall be:

(I) the Relevant Rate (where such Relevant Rate on such Page is a composite

quotation or is customarily supplied by one entity) or

(II) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates

appear on that Page,

in each case appearing on such Page at the Relevant Time on the Interest

Determination Date

(y) if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph

(x)(I) applies and no Relevant Rate appears on the Page at the Relevant Time on the

Interest Determination Date or if sub-paragraph (x)(II) applies and fewer than two

Relevant Rates appear on the Page at the Relevant Time on the Interest

Determination Date, subject as provided below, the Rate of Interest shall be thearithmetic mean of the Relevant Rates that each of the Reference Banks is quoting

to leading banks in the Relevant Financial Centre at the Relevant Time on the

Interest Determination Date, as determined by the Calculation Agent and

(z) if paragraph (y) above applies and the Calculation Agent determines that fewer than

two Reference Banks are so quoting Relevant Rates, subject as provided below, the

Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a

percentage) that the Calculation Agent determines to be the rates (being the nearest

equivalent to the Benchmark) in respect of a Representative Amount of the Specified

Currency that at least two out of five leading banks selected by the Calculation

Agent in the principal financial centre of the country of the Specified Currency or, ifthe Specified Currency is euro, in Europe as selected by the Calculation Agent (the

‘‘Principal Financial Centre’’) are quoting at or about the Relevant Time on the date

on which such banks would customarily quote such rates for a period commencing

on the Effective Date for a period equivalent to the Specified Duration (I) to leading

banks carrying on business in Europe, or (if the Calculation Agent determines that

fewer than two of such banks are so quoting to leading banks in Europe) (II) to

leading banks carrying on business in the Principal Financial Centre; except that, if

fewer than two of such banks are so quoting to leading banks in the PrincipalFinancial Centre, the Rate of Interest shall be the Rate of Interest determined on the

previous Interest Determination Date (after readjustment for any difference between

any Margin, or Maximum or Minimum Rate of Interest applicable to the preceding

Interest Accrual Period and to the relevant Interest Accrual Period).

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(c) Zero Coupon Notes:

Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to

the Maturity Date and is not paid when due, the amount due and payable prior to the MaturityDate shall be the Early Redemption Amount of such Note. As from the Maturity Date, the

Rate of Interest for any overdue principal of such a Note shall be a rate per annum (expressed

as a percentage) equal to the Amortisation Yield (as described in Condition 6(b)(i)).

(d) Accrual of Interest:

Interest shall cease to accrue on each Note on the due date for redemption unless, upon due

presentation, payment is improperly withheld or refused, in which event interest shall continueto accrue (as well after as before judgement) at the Rate of Interest in the manner provided in

this Condition 5 to the Relevant Date (as defined in Condition 8).

(e) Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption Amounts and

Rounding:

(i) If any Margin is specified hereon (either (x) generally, or (y) in relation to one or more

Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case

of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y),calculated in accordance with (b) above by adding (if a positive number) or subtracting the

absolute value (if a negative number) of such Margin, subject always to the next

paragraph.

(ii) If any Maximum or Minimum Rate of Interest, Instalment Amount or Redemption

Amount is specified hereon, then any Rate of Interest, Instalment Amount or RedemptionAmount shall be subject to such maximum or minimum, as the case may be.

(iii) For the purposes of any calculations required pursuant to these Conditions (unless

otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if

necessary, to the nearest one hundred-thousandth of a percentage point (with halves being

rounded up), (y) all figures shall be rounded to seven significant figures (with halves beingrounded up) and (z) all currency amounts that fall due and payable shall be rounded to

the nearest unit of such currency (with halves being rounded up), save in the case of yen,

which shall be rounded down to the nearest yen. For these purposes ‘‘unit’’ means the

lowest amount of such currency that is available as legal tender in the country or countries

(in the case of euro) of such currency.

(f) Calculations:

The amount of interest payable per Calculation Amount in respect of any Note for any period

shall be equal to the product of the Rate of Interest, the Calculation Amount specified hereon,

and the Day Count Fraction for such Interest Accrual Period, unless an Interest Amount (or a

formula for its calculation) is specified in respect of such period, in which case the amount of

interest payable per Calculation Amount in respect of such Note for such period shall equal

such Interest Amount (or be calculated in accordance with such formula). Where any Interest

Period comprises two or more Interest Accrual Periods, the amount of interest payable per

Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amountspayable in respect of each of those Interest Accrual Periods. In respect of any other period for

which interest is required to be calculated, the provisions above shall apply save that the Day

Count Fraction shall be for the period for which interest is required to be calculated.

(g) Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption Amounts,

Early Redemption Amounts, Optional Redemption Amounts and Instalment Amounts:

The Calculation Agent shall as soon as practicable after the Relevant Time on such date as the

Calculation Agent may be required to calculate any rate or amount, obtain any quotation ormake any determination or calculation, determine such rate and calculate the Interest Amounts

of the Notes for the relevant Interest Accrual Period, calculate the Final Redemption Amount,

Early Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such

quotation or make such determination or calculation, as the case may be, and cause the Rate of

- 27 -


Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest

Payment Date and, if required to be calculated, the Final Redemption Amount, Early

Redemption Amount, Optional Redemption Amount or any Instalment Amount to be notified

to the Fiscal Agent, the Issuer, each of the Paying Agents, the Noteholders, any otherCalculation Agent appointed in respect of the Notes that is to make a further calculation upon

receipt of such information and, if the Notes are listed on a stock exchange and the rules of

such exchange so require, such exchange as soon as possible after their determination but in no

event later than (i) the commencement of the relevant Interest Period, if determined prior to

such time, in the case of notification to such exchange of a Rate of Interest and Interest

Amount, or (ii) in all other cases, the fourth Business Day after such determination. Where any

Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition

5(b)(ii), the Interest Amounts and the Interest Payment Date so published may subsequently beamended (or appropriate alternative arrangements made by way of adjustment) without notice in

the event of an extension or shortening of the Interest Period. If the Notes become due and

payable under Condition 10, the accrued interest and the Rate of Interest payable in respect of

the Notes shall nevertheless continue to be calculated as previously in accordance with this

Condition but no publication of the Rate of Interest or the Interest Amount so calculated need

be made. The determination of any rate or amount, the obtaining of each quotation and the

making of each determination or calculation by the Calculation Agent(s) shall (in the absence of

manifest error) be final and binding upon all parties.

(h) Definitions:

In these Conditions, unless the context otherwise requires, the following defined terms shall have

the meanings set out below:

‘‘Benchmark’’ means either LIBOR, LIBID, LIMEAN or EURIBOR, as to be specified in the

Final Terms

‘‘Business Day’’ means:

(i) in the case of a currency other than euro, a day (other than a Saturday or Sunday) on

which commercial banks and foreign exchange markets settle payments in the principal

financial centre for such currency and/or

(ii) in the case of euro, a day on which the TARGET System is operating (a ‘‘TARGET

Business Day’’) and/or

(iii) in the case of a currency and/or one or more Business Centres, a day (other than aSaturday or a Sunday) on which commercial banks and foreign exchange markets settle

payments in such currency in the Business Centre(s) or, if no currency is indicated,

generally in each of the Business Centres

‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest on any

Note for any period of time (from and including the first day of such period to but excluding

the last) (whether or not constituting an Interest Period or Interest Accrual Period, the

‘‘Calculation Period’’):

(i) if ‘‘Actual/Actual’’ or ‘‘Actual/Actual — ISDA’’ is specified hereon, the actual number of

days in the Calculation Period divided by 365 (or, if any portion of that Calculation

Period falls in a leap year, the sum of (A) the actual number of days in that portion of

the Calculation Period falling in a leap year divided by 366 and (B) the actual number ofdays in that portion of the Calculation Period falling in a non-leap year divided by 365)

(ii) if ‘‘Actual/365 (Fixed)’’ is specified in the Final Terms, the actual number of days in the

Calculation Period divided by 365

(iii) if ‘‘Actual/360’’ is specified in the Final Terms, the actual number of days in the

Calculation Period divided by 360

(iv) if ‘‘30/360’’, ‘‘360/360’’ or ‘‘Bond Basis’’ is specified hereon, the number of days in the

Calculation Period divided by 360 calculated on a formula basis as follows:

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Day Count Fraction =

[360 6 (Y2 -Y1)] + [30 6 (M2 -M1)] + (D2 -D1)

360

where:

‘‘Y1’’ is the year, expressed as a number, in which the first day of the Calculation Period

falls;

‘‘Y2’’ is the year, expressed as a number, in which the day immediately following the last

day included in the Calculation Period falls;

‘‘M1’’ is the calendar month, expressed as a number, in which the first day of the

Calculation Period falls;

‘‘M2’’ is the calendar month, expressed as number, in which the day immediately following

the last day included in the Calculation Period falls;

‘‘D1’’ is the first calendar day, expressed as a number, of the Calculation Period, unlesssuch number would be 31, in which case D1 will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last day

included in the Calculation Period, unless such number would be 31 and D1 is greater than

29, in which case D2 will be 30

(v) if ‘‘30E/360’’ or ‘‘Eurobond Basis’’ is specified in the Final Terms, the number of days in

the Calculation Period divided by 360 calculated on a formula basis as follows:

Day Count Fraction =[360 6 (Y2 -Y1)] + [30 6 (M2 -M1)] + (D2 -D1)

360

where:


falls;





‘‘M2’’ is the calendar month, expressed as a number, in which the day immediately

following the last day included in the Calculation Period falls;

‘‘D1’’ is the first calendar day, expressed as a number, of the Calculation Period, unless

such number would be 31, in which case D1 will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31, in which case D2 will

be 30

(vi) if ‘‘30E/360 (ISDA)’’ is specified hereon, the number of days in the Calculation Period

divided by 360, calculated on a formula basis as follows:

Day Count Fraction =

[360 6 (Y2 -Y1)] + [30 6 (M2 -M1)] + (D2 -D1)

360

where:


falls;





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‘‘M2’’ is the calendar month, expressed as a number, in which the day immediately

following the last day included in the Calculation Period falls;

‘‘D1’’ is the first calendar day, expressed as a number, of the Calculation Period, unless (i)

that day is the last day of February or (ii) such number would be 31, in which case D1

will be 30; and

‘‘D2’’ is the calendar day, expressed as a number, immediately following the last day

included in the Calculation Period, unless (i) that day is the last day of February but notthe Maturity Date or (ii) such number would be 31, in which case D2 will be 30

(vii) if ‘‘Actual/Actual-ICMA’’ is specified hereon,

(a) if the Calculation Period is equal to or shorter than the Determination Period during

which it falls, the number of days in the Calculation Period divided by the productof (x) the number of days in such Determination Period and (y) the number of

Determination Periods normally ending in any year; and

(b) if the Calculation Period is longer than one Determination Period, the sum of:

(x) the number of days in such Calculation Period falling in the Determinationperiod in which it begins divided by the product of (1) the number of days in

such Determination Period and (2) the number of Determination Periods

normally ending in any year; and

(y) the number of days in such Calculation Period falling in the next Determination

Period divided by the product of (1) the number of days in such Determination

Period and (2) number of Determination Periods normally ending in any year

where:

‘‘Determination Period’’ means the period from and including a Determination Date in any

year to but excluding the next Determination Date

‘‘Determination Date’’ means the date(s) specified as such hereon or, if none are so

specified, each Interest Payment Date

‘‘Effective Date’’ means, with respect to any Floating Rate to be determined on an Interest

Determination Date, the date specified as such in the Final Terms or, if none is so

specified, the first day of the Interest Accrual Period to which such Interest Determination

Date relates

‘‘Euro-zone’’ means the region comprised of member states of the European Union that

adopt the single currency in accordance with the Treaty establishing the European

Community as amended by the Treaty on European Union

‘‘Interest Accrual Period’’ means the period beginning on (and including) the Interest

Commencement Date and ending on (but excluding) the first Interest Period Date and each

successive period beginning on (and including) an Interest Period Date and ending on (butexcluding) the next succeeding Interest Period Date

‘‘Interest Amount’’ means:

(i) in respect of an Interest Accrual Period, the amount of interest payable per

Calculation Amount for that Interest Accrual Period and which, in the case of FixedRate Notes, and unless otherwise specified hereon, shall mean the Fixed Coupon

Amount or Broken Amount specified hereon as being payable on the Interest

Payment Date ending the Interest Period of which such Interest Accrual Period forms

part; and

(ii) in respect of any other period, the amount of interest payable per Calculation

Amount for that period

‘‘Interest Commencement Date’’ means the date of Issue of the Notes (the ‘‘Issue Date’’)

or such other date as may be specified in the Final Terms

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‘‘Interest Determination Date’’ means, with respect to a Rate of Interest and Interest

Accrual Period, the date specified as such in the Final Terms or, if none is so specified, (i)

the first day of such Interest Accrual Period if the Specified Currency is Sterling or (ii) the

day falling two Business Days in London for the Specified Currency prior to the first dayof such Interest Accrual Period if the Specified Currency is neither Sterling nor euro or

(iii) the day falling two TARGET Business Days prior to the first day of such Interest

Accrual Period if the Specified Currency is euro

‘‘Interest Period’’ means the period beginning on (and including) the Interest

Commencement Date and ending on (but excluding) the first Interest Payment Date and

each successive period beginning on (and including) an Interest Payment Date and ending

on (but excluding) the next succeeding Interest Payment Date

‘‘Interest Period Date’’ means each Interest Payment Date unless otherwise specified in the

Final Terms

‘‘ISDA Definitions’’ means the 2006 ISDA Definitions as published by the International

Swaps and Derivatives Association, Inc., unless otherwise specified in the Final Terms

‘‘Page’’ means such page, section, caption, column or other part of a particular

information service as may be specified for the purpose of providing a Relevant Rate, or

such other page, section, caption, column or other part as may replace it on thatinformation service or on such other information service, in each case as may be

nominated by the person or organisation providing or sponsoring the information

appearing there for the purpose of displaying rates or prices comparable to that Relevant

Rate

‘‘Rate of Interest’’ means the rate of interest payable from time to time in respect of this

Note and that is either specified or calculated in accordance with the provisions hereon

‘‘Reference Banks’’ means four major banks selected by the Calculation Agent in the

interbank market (or, if appropriate, money, swap or over-the-counter index options

market) that is most closely connected with the Benchmark (which, if EURIBOR is the

relevant Benchmark, shall be the Euro-zone)

‘‘Relevant Financial Centre’’ means, with respect to any Floating Rate to be determined in

accordance with a Screen Rate Determination on an Interest Determination Date, thefinancial centre as may be specified as such in the Final Terms or, if none is so specified,

the financial centre with which the relevant Benchmark is most closely connected (which, in

the case of EURIBOR, shall be the Euro-zone) or, if none is so connected, London

‘‘Relevant Rate’’ means the Benchmark for a Representative Amount of the Specified

Currency for a period (if applicable or appropriate to the Benchmark) equal to the

Specified Duration commencing on the Effective Date

‘‘Relevant Time’’ means, with respect to any Interest Determination Date, the local time in

the Relevant Financial Centre specified in the Final Terms or, if no time is specified, the

local time in the Relevant Financial Centre at which it is customary to determine bid and

offered rates in respect of deposits in the Specified Currency in the interbank market in the

Relevant Financial Centre and if no such customary local time exists, 11.00 hours in the

Relevant Financial Centre and, for the purpose of this definition ‘‘local time’’ means, withrespect to the Euro-zone as a Relevant Financial Centre, Brussels Time

‘‘Representative Amount’’ means, with respect to any Floating Rate to be determined in

accordance with a Screen Rate Determination on an Interest Determination Date, the

amount specified as such in the Final Terms or, if none is specified, an amount that is

representative for a single transaction in the relevant market at the time

‘‘Specified Currency’’ means the currency specified as such in the Final Terms or, if none is

specified, the currency in which the Notes are denominated

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‘‘Specified Duration’’ means, with respect to any Floating Rate to be determined in

accordance with a Screen Rate Determination on an Interest Determination Date, the

duration specified in the Final Terms or, if none is specified, a period of time equal to the

relative Interest Accrual Period, ignoring any adjustment pursuant to Condition 5(b)(ii)

‘‘TARGET System’’ means the Trans-European Automated Real-Time Gross Settlement

Express Transfer (known as TARGET2) System which was launched on 19 November

2007 or any successor thereto.

(i) Calculation Agent and Reference Banks:

The Issuer shall procure that there shall at all times be four Reference Banks (or such other

number as may be required) with offices in the Relevant Financial Centre and one or more

Calculation Agents if provision is made for them in the Final Terms and for so long as anyNote is outstanding (as defined in the Agency Agreement). If any Reference Bank (acting

through its relevant office) is unable or unwilling to continue to act as a Reference Bank, then

the Issuer shall appoint another Reference Bank with an office in the Relevant Financial Centre

to act as such in its place. Where more than one Calculation Agent is appointed in respect of

the Notes, references in these Conditions to the Calculation Agent shall be construed as each

Calculation Agent performing its respective duties under the Conditions. If the Calculation

Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish

the Rate of Interest for an Interest Period or Interest Accrual Period or to calculate any InterestAmount, Instalment Amount, Final Redemption Amount, Early Redemption Amount or

Optional Redemption Amount, as the case may be, or to comply with any other requirement,

the Issuer shall appoint a leading bank or investment banking firm engaged in the interbank

market (or, if appropriate, money, swap or over-the-counter index options market) that is most

closely connected with the calculation or determination to be made by the Calculation Agent

(acting through its principal London office or any other office actively involved in such market)

to act as such in its place. The Calculation Agent may not resign its duties without a successor

having been appointed as aforesaid.

6. Redemption, Purchase and Options

(a) Redemption by Instalments and Final Redemption:

(i) Unless previously redeemed, purchased and cancelled as provided in this Condition 6, each

Note that provides for Instalment Dates and Instalment Amounts shall be partially

redeemed on each Instalment Date at the related Instalment Amount specified in the Final

Terms. The outstanding nominal amount of each such Note shall be reduced by the

Instalment Amount (or, if such Instalment Amount is calculated by reference to a

proportion of the nominal amount of such Note, such proportion) for all purposes with

effect from the related Instalment Date, unless payment of the Instalment Amount isimproperly withheld or refused on presentation of the related Receipt, in which case, such

amount shall remain outstanding until the Relevant Date relating to such Instalment

Amount.

(ii) Unless previously redeemed, purchased and cancelled as provided below, each Note shall

be finally redeemed on the Maturity Date specified in the Final Terms at its Final

Redemption Amount (which, unless otherwise provided, is its nominal amount) or, in the

case of a Note falling within paragraph (i) above, its final Instalment Amount.

(b) Early Redemption:

(i) Zero Coupon Notes:

(A) The Early Redemption Amount payable in respect of any Zero Coupon Note, upon

redemption of such Note pursuant to Condition 6(c) or upon it becoming due and

payable as provided in Condition 10 shall be the Amortised Face Amount (calculated

as provided below) of such Note unless otherwise specified in the Final Terms.

- 32 -


(B) Subject to the provisions of sub-paragraph (C) below, the Amortised Face Amount of

any such Note shall be the scheduled Final Redemption Amount of such Note on the

Maturity Date discounted at a rate per annum (expressed as a percentage) equal to

the Amortisation Yield (which, if none is shown in the Final Terms, shall be suchrate as would produce an Amortised Face Amount equal to the issue price of the

Notes if they were discounted back to their issue price on the Issue Date)

compounded annually.

(C) If the Early Redemption Amount payable in respect of any such Note upon its

redemption pursuant to Condition 6(c) or upon it becoming due and payable as

provided in Condition 10 is not paid when due, the Early Redemption Amount due

and payable in respect of such Note shall be the Amortised Face Amount of such

Note as defined in sub-paragraph (B) above, except that such sub-paragraph shall

have effect as though the date on which the Note becomes due and payable were theRelevant Date. The calculation of the Amortised Face Amount in accordance with

this sub-paragraph shall continue to be made (as well after as before judgement) until

the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in

which case the amount due and payable shall be the scheduled Final Redemption

Amount of such Note on the Maturity Date together with any interest that may

accrue in accordance with Condition 5(c).

Where such calculation is to be made for a period of less than one year, it shall be

made on the basis of the Day Count Fraction shown in the Final Terms.

(ii) Other Notes:

The Early Redemption Amount payable in respect of any Note (other than Notes

described in (i) above), upon redemption of such Note pursuant to Condition 6(c) or upon

it becoming due and payable as provided in Condition 10, shall be the Final RedemptionAmount unless otherwise specified in the Final Terms.

(c) Redemption for Taxation Reasons:

The Notes may be redeemed at the option of the Issuer in whole, but not in part, on any

Interest Payment Date or, if so specified in the Final Terms, at any time, on giving not less

than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), attheir Early Redemption Amount (as described in Condition 6(b) above) (together with interest

accrued to the date fixed for redemption), if the Issuer has or will become obliged to pay

additional amounts as provided or referred to in Condition 8 as a result of any change in, or

amendment to, the laws or regulations of Japan or any political subdivision or any authority

thereof or therein having power to tax, or any change in the application or official

interpretation of such laws or regulations, which change or amendment becomes effective on or

after the date of issue of the first Tranche of the relevant series of which the Notes form part.

(d) Redemption at the Option of the Issuer and Exercise of Issuer’s Options:

If Call Option is specified as being applicable hereon, the Issuer may, on giving not less than 30

nor more than 60 days’ irrevocable notice to the Noteholders (or such other notice period as

may be specified hereon) redeem, or exercise any Issuer’s option (as may be described in the

Final Terms) in relation to, all or, if so provided, some, of the Notes on any Optional

Redemption Date or Option Exercise Date, as the case may be. Any such redemption of Notes

shall be at their Optional Redemption Amount together with interest accrued to the date fixedfor redemption. Any such redemption or exercise must relate to Notes of a nominal amount at

least equal to the minimum nominal amount to be redeemed specified hereon and no greater

than the maximum nominal amount to be redeemed specified in the Final Terms.

All Notes in respect of which any such notice is given shall be redeemed, or the Issuer’s option

shall be exercised, on the date specified in such notice in accordance with this Condition.

- 33 -


In the case of a partial redemption or a partial exercise of an Issuer’s option, the notice to

Noteholders shall also contain the certificate numbers of the Notes to be redeemed or in respect

of which such option has been exercised, which shall have been drawn in such place and in such

manner as may be fair and reasonable in the circumstances, taking account of prevailing marketpractices, subject to compliance with any applicable laws and stock exchange requirements.

(e) Redemption at the Option of Noteholders and Exercise of Noteholders’ Options:

If Put Option is specified as being applicable in the Final Terms, the Issuer shall, at the option

of the holder of any such Note, upon the holder of such Note giving not less than 30 nor morethan 60 days’ notice to the Issuer (or such other notice period as may be specified in the Final

Terms) redeem such Note on the Optional Redemption Date(s) at its Optional Redemption

Amount together with interest accrued to the date fixed for redemption.

To exercise such option or any other Noteholders’ option that may be set out in the Final

Terms (which must be exercised on an Option Exercise Date) the holder must deposit (in the

case of Bearer Notes) such Note (together with all unmatured Receipts and Coupons and

unexchanged Talons) with any Paying Agent or (in the case of Registered Notes) the Certificate

representing such Note(s) with the Registrar or any Transfer Agent at its specified office,

together with a duly completed option exercise notice (‘‘Exercise Notice’’) in the form obtainable

from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the noticeperiod. No Note or Certificate so deposited and option exercised may be withdrawn (except as

provided in the Agency Agreement) without the prior consent of the Issuer.

(f) Purchases:

The Issuer and any subsidiary of the Issuer may at any time purchase Notes (provided that all

unmatured Receipts and Coupons and unexchanged Talons relating thereto are attached theretoor surrendered therewith) in the open market or otherwise at any price.

(g) Cancellation:

All Notes purchased by or on behalf of the Issuer or any subsidiary of the Issuer may be

surrendered for cancellation, in the case of Bearer Notes, by surrendering each such Note

together with all unmatured Receipts and Coupons and all unexchanged Talons to the FiscalAgent and, in the case of Registered Notes, by surrendering the Certificate representing such

Notes to the Registrar and, in each case, if so surrendered, shall, together with all Notes

redeemed by the Issuer, be cancelled forthwith (together with all unmatured Receipts and

Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so

surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in

respect of any such Notes shall be discharged.

7. Payments and Talons

(a) Bearer Notes:

Payments of principal and interest in respect of Bearer Notes shall, subject as mentioned below,

be made against presentation and surrender of the relevant Receipts (in the case of payments of

Instalment Amounts other than on the due date for redemption and provided that the Receipt is

presented for payment together with its relative Note), Notes (in the case of all other payments

of principal and, in the case of interest, as specified in Condition 7(f)(vi)) or Coupons (in the

case of interest, save as specified in Condition 7(f)(vi)), as the case may be, at the specified officeof any Paying Agent outside the United States by a cheque payable in the relevant currency

drawn on, or, at the option of the holder, by transfer to an account denominated in such

currency with, a Bank. ‘‘Bank’’ means a bank in the principal financial centre for such currency

or, in the case of euro, in a city in which banks have access to the TARGET System.

- 34 -


(b) Registered Notes:

(i) Payments of principal (which for the purposes of this Condition 7(b) shall include final

Instalment Amounts but not other Instalment Amounts) in respect of Registered Notesshall be made against presentation and surrender of the relevant Certificates at the

specified office of any of the Transfer Agents or of the Registrar and in the manner

provided in paragraph (ii) below.

(ii) Interest (which for the purpose of this Condition 7(b) shall include all Instalment Amounts

other than final Instalment Amounts) on Registered Notes shall be paid to the person

shown on the Register at the close of business on the fifteenth day before the due date for

payment thereof (the ‘‘Record Date’’). Payments of interest on each Registered Note shall

be made in the relevant currency by cheque drawn on a Bank and mailed to the holder (or

to the first-named of joint holders) of such Note at its address appearing in the Register.Upon application by the holder to the specified office of the Registrar or any Transfer

Agent before the Record Date, such payment of interest may be made by transfer to an

account in the relevant currency maintained by the payee with a Bank.

(c) Payments in the United States:

Notwithstanding the foregoing, if any Bearer Notes are denominated in U.S. dollars, payments

in respect thereof may be made at the specified office of any Paying Agent in New York City inthe same manner as aforesaid if (i) the Issuer shall have appointed Paying Agents with specified

offices outside the United States with the reasonable expectation that such Paying Agents would

be able to make payment of the amounts on the Notes in the manner provided above when

due, (ii) payment in full of such amounts at all such offices is illegal or effectively precluded by

exchange controls or other similar restrictions on payment or receipt of such amounts and (iii)

such payment is then permitted by United States law, without involving, in the opinion of the

Issuer, any adverse tax consequence to the Issuer.

(d) Payments Subject to Fiscal Laws:

All payments are subject in all cases to any applicable fiscal or other laws, regulations and

directives, but without prejudice to the provisions of Condition 8. No commission or expenses

shall be charged to the Noteholders or Couponholders in respect of such payments.

(e) Appointment of Agents:

The Fiscal Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation

Agent initially appointed by the Issuer and their respective specified offices are listed below. The

Fiscal Agent, the Paying Agents, the Registrar, Transfer Agents and the Calculation Agent(s)

act solely as agents of the Issuer and do not assume any obligation or relationship of agency or

trust for or with any Noteholder or Couponholder. The Issuer reserves the right at any time to

vary or terminate the appointment of the Fiscal Agent, any other Paying Agent, the Registrar,

any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying

Agents or Transfer Agents, provided that the Issuer shall at all times maintain (i) a FiscalAgent, (ii) a Registrar in relation to Registered Notes, (iii) a Transfer Agent in relation to

Registered Notes, (iv) one or more Calculation Agent(s) where the Conditions so require, (v)

such agents as may be required by any stock exchange on which the Notes may be listed and

(vi) to the extent not satisfied by (v) above, a Paying Agent with a specified office in a

European Union member state that will not be obliged to withhold or deduct tax pursuant to

European Council Directive 2003/48/EC or any law implementing or complying with, or

introduced in order to conform to, such Directive, provided that there is a European Union

Member State in which no such obligation is imposed.

In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of

any Bearer Notes denominated in U.S. dollars in the circumstances described in paragraph (c)

above.

Notice of any such change or any change of any specified office shall promptly be given to the

Noteholders.

- 35 -


(f) Unmatured Coupons and Receipts and unexchanged Talons:

(i) Unless the Notes provide that the relative Coupons are to become void upon the due date

for redemption of those Notes, Bearer Notes should be surrendered for payment togetherwith all unmatured Coupons (if any) relating thereto, failing which an amount equal to the

face value of each missing unmatured Coupon (or, in the case of payment not being made

in full, that proportion of the amount of such missing unmatured Coupon that the sum of

principal so paid bears to the total principal due) shall be deducted from the Final

Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the

case may be, due for payment. Any amount so deducted shall be paid in the manner

mentioned above against surrender of such missing Coupon within a period of 10 years

from the Relevant Date for the payment of such principal (whether or not such Couponhas become void pursuant to Condition 9).

(ii) If the Notes so provide, upon the due date for redemption of any Bearer Note, unmatured

Coupons relating to such Note (whether or not attached) shall become void and nopayment shall be made in respect of them.

(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to

such Note (whether or not attached) shall become void and no Coupon shall be deliveredin respect of such Talon.

(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments,all Receipts relating to such Note having an Instalment Date falling on or after such due

date (whether or not attached) shall become void and no payment shall be made in respect

of them.

(v) Where any Bearer Note that provides that the relative unmatured Coupons are to become

void upon the due date for redemption of those Notes is presented for redemption without

all unmatured Coupons, and where any Bearer Note is presented for redemption without

any unexchanged Talon relating to it, redemption shall be made only against the provision

of such indemnity as the Issuer may require.

(vi) If the due date for redemption of any Note is not a due date for payment of interest,

interest accrued from the preceding due date for payment of interest or the Interest

Commencement Date, as the case may be, shall only be payable against presentation (and

surrender if appropriate) of the relevant Bearer Note or Certificate representing it, as the

case may be. Interest accrued on a Note that only bears interest after its Maturity Date

shall be payable on redemption of such Note against presentation of the relevant Note orCertificate representing it, as the case may be.

(g) Talons:

On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet

issued in respect of any Bearer Note, the Talon forming part of such Coupon sheet may be

surrendered at the specified office of the Fiscal Agent in exchange for a further Coupon sheet

(and if necessary another Talon for a further Coupon sheet) (but excluding any Coupons that

may have become void pursuant to Condition 9).

(h) Non-Business Days:

If any date for payment in respect of any Note, Receipt or Coupon is not a business day, the

holder shall not be entitled to payment until the next following business day nor to any interest

or other sum in respect of such postponed payment. In this paragraph, ‘‘business day’’ means aday (other than a Saturday or a Sunday) on which banks and foreign exchange markets are

open for business in the relevant place of presentation, in such jurisdictions as shall be specified

as ‘‘Financial Centres’’ hereon and:

(i) (in the case of a payment in a currency other than euro) where payment is to be made by

transfer to an account maintained with a bank in the relevant currency, on which foreign

exchange transactions may be carried on in the relevant currency in the principal financial

centre of the country of such currency or

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(ii) (in the case of a payment in euro) which is a TARGET Business Day.

8. Taxation

All payments of principal of (and premium, if any) and interest in respect of the Notes, the

Receipts and the Coupons will be made without withholding or deduction for or on account of any

present or future taxes, duties, assessments or governmental charges of whatever nature imposed orlevied by or on behalf of Japan, or any authority thereof or therein having power to tax (the

‘‘Japanese Taxes’’), unless such withholding or deduction of such Japanese Taxes is required by law.

In such event, the Issuer shall pay to the holders such additional amounts (‘‘Additional Amounts’’) as

will result in the receipt by or on behalf of the holders of such amounts as would have been received

by them had no such deduction or withholding been required, except that no Additional Amounts

shall be payable with respect to any Note, Receipt or Coupon:

(a) to, or to a third party on behalf of, a holder who is an individual non-resident of Japan or a

non-Japanese corporation and is liable for such Japanese Taxes in respect of such Note, Receiptor Coupon by reason of its (i) having some connection with Japan other than the mere holding

of such Note, Receipt or Coupon or (ii) being a person having a special relationship with the

Issuer as described in Article 6, paragraph 4 of the Special Taxation Measures Law of Japan

(the ‘‘Special Taxation Measures Law’’) (any such person being hereinafter referred to as a

‘‘specially-related person of the Issuer’’); or

(b) to, or to a third party on behalf of, a holder who would otherwise be exempt from any such

withholding or deduction but who fails to comply with any applicable requirement to provide

Interest Recipient Information (as defined below) or to submit a Written Application for Tax

Exemption (as defined below) to a Paying Agent to whom the relevant Note, Receipt orCoupon is presented, or whose Interest Recipient Information is not duly communicated

through the Participant (as defined below) and the relevant international clearing organisation to

such Paying Agent; or

(c) to, or to a third party on behalf of, a holder who is for Japanese tax purposes treated as an

individual resident of Japan or a Japanese corporation (except for a Designated Financial

Institution (as defined below) which complies with the requirement to provide Interest Recipient

Information or to submit a Written Application for Tax Exemption, or an individual resident of

Japan or a Japanese corporation that duly notifies (directly or through the relevant Participantor otherwise) the relevant Paying Agent of its status as not being subject to withholding or

deduction by the Issuer by reason of receipt by such individual resident of Japan or Japanese

corporation of interest on the Notes through a payment handling agent in Japan appointed by

the Issuer); or

(d) where such Note, Receipt or Coupon is presented for payment more than 30 days after the date

on which such payment first becomes due or after the date on which the full amount payable is

duly provided for, whichever occurs later, except to the extent that the holder of the Note,

Receipt or Coupon would have been entitled to such Additional Amounts on presenting thesame for payment on the last day of such 30-day period; or

(e) where such withholding or deduction is imposed on a payment to an individual holder and is

required to be made pursuant to European Council Directive 2003/48/EC on the taxation of

savings income or any law implementing or complying with, or introduced in order to conform

to, such Directive; or

(f) to, or to a third party on behalf of, a holder who would be able to avoid such withholding or

deduction by presenting such Note, Receipt or Coupon to another Paying Agent; or

(g) any combination of the above;

Where a Note, Receipt or Coupon is held through a participant of an international clearing

organisation or a financial intermediary (each, a ‘‘Participant’’), in order to receive payments free ofwithholding or deduction by the Issuer for, or on account of, Japanese Taxes, if the relevant holder is

(A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related

person of the Issuer) or (B) a Japanese financial institution or financial instruments business operator

falling under certain categories prescribed by the cabinet order under Article 6, paragraph 9 of the

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Special Taxation Measures Law (a ‘‘Designated Financial Institution’’), such holder shall, at the time

of entrusting such Participant with the custody of the relevant Note, Receipt or Coupon, provide

certain information prescribed by the Special Taxation Measures Law and the cabinet order and

other regulations thereunder to enable the Participant to establish that such holder is exempted fromthe requirement for Japanese Taxes to be withheld or deducted (the ‘‘Interest Recipient Information’’)

and advise the Participant if the holder ceases to be so exempted (including the case in which a

holder who is an individual non-resident of Japan or a non-Japanese corporation becomes a specially-

related person of the Issuer).

Where a Note, Receipt or Coupon is not held by a Participant, in order to receive payments

free of withholding or deduction by the Issuer for, or on account of, Japanese Taxes, if the relevant

holder is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a

specially-related person of the Issuer) or (B) a Designated Financial Institution, such holder shall,

prior to each receipt of interest, submit to the relevant Paying Agent a written application for tax

exemption (hikazei tekiyo shinkokusho) (a ‘‘Written Application for Tax Exemption’’) in a form

obtainable from the Paying Agent stating, inter alia, the name and address of the holder, the title of

the Note, Receipt or Coupon, the relevant Interest Payment Date, the amount of interest and the factthat the holder is qualified to submit the Written Application for Tax Exemption, together with

documentary evidence regarding its identity and residence.

Any reference in this Note or any Coupon to principal or interest shall be deemed also to refer

to any additional amount which may be payable under this Condition.

As used in these Conditions, ‘‘Relevant Date’’ in respect of any Note, Receipt or Coupon means

the date on which payment in respect of it first becomes due or (if any amount of the money payable

is improperly withheld or refused) the date on which payment in full of the amount outstanding is

made or (if earlier) the date seven days after that on which notice is duly given to the Noteholders

that, upon further presentation of the Note (or relative Certificate), Receipt or Coupon being made inaccordance with the Conditions, such payment will be made, provided that payment is in fact made

upon such presentation.

9. Prescription

Notes, Receipts and Coupons (which for this purpose shall not include Talons) will become void

unless presented for payment within 10 years (in the case of principal) or five years (in the case of

interest) from the appropriate Relevant Date in respect of them.

10. Events of Default

If any one or more of the following events shall have occurred and be continuing:

(a) a default is made in the payment of any interest in respect of any Note when it becomes

due and payable and such default continues for a period of 30 days thereafter; or

(b) a default is made in the payment of the principal of or any premium on any Note when it

becomes due and payable and such default continues for a period of 15 days thereafter; or

(c) a default is made in the performance or observance by the Issuer of any other obligation

under any Note and (except where such failure is not capable of remedy, when no such

notice shall be required) such default shall continue for 60 days after written notice

requiring such default to be remedied shall have been given to the Issuer by the holders of

not less than 10 per cent. in aggregate principal amount of any Note for the time being

outstanding; or

(d) (i) any indebtedness for borrowed monies contracted or incurred by the Issuer issued in

the form of notes, bonds or debentures exceeding in the aggregate U.S.$10,000,000

(or its equivalent in any other relevant currency or currencies) is accelerated as a

result of a default by any person or any event treated in effect as a default or

(ii) the Issuer defaults in the repayment or discharge of any such notes, bonds or

debentures when due or, if later, at the expiration of any grace period originally

applicable thereto or

- 38 -


(iii) the Issuer shall have failed to pay when properly called upon to do so or, if later, at

the expiration of any grace period originally applicable thereto any guarantee

exceeding in the aggregate US$10,000,000 (or its equivalent in any other relevant

currency or currencies) contracted by it in respect of any indebtedness issued in theform of notes, bonds or debentures for borrowed money in accordance with the

terms of any such guarantee

and such acceleration is not rescinded or annulled or such default or failure to pay is not

remedied within 60 days after written notice thereof shall have been given to the Issuer by

the holders of not less than 10 per cent. in aggregate principal amount of any Note for thetime being outstanding; or

(e) a final and non-appealable order is made or an effective resolution is passed for the

winding up or liquidation of the Issuer; or

(f) a receiver shall have taken possession, or a trustee or receiver shall have been appointed,

in bankruptcy, civil rehabilitation, reorganisation or insolvency of the Issuer, of all or

substantially all of its assets and undertakings and such possession or appointment shall

have continued undischarged and unstayed for a period of 60 days; or

(g) the Issuer shall cease to carry on business or shall be unable to pay its debts as and whenthey fall due; or

(h) a final and non-appealable decree or order that cannot be discharged or stayed shall have

been entered by a court having jurisdiction, adjudging the Issuer bankrupt or insolvent, or

approving a petition seeking with respect to the Issuer reorganisation or liquidation under

any applicable bankruptcy, civil rehabilitation, reorganisation, insolvency or insolvency-related law,

the holder for the time being of this Note may give notice to the Issuer that this Note is

immediately repayable, whereupon this Note shall become immediately repayable at its Early

Redemption Amount together with interest accrued to (but excluding) the date of actual

repayment, unless prior to the time when the Issuer receives such notice all events of defaultprovided for herein in respect of the Notes shall have been cured.

11. Meeting of Noteholders, Modifications and Substitution

(a) Meetings of Noteholders:

The Agency Agreement contains provisions for convening meetings of Noteholders to consider

any matter affecting their interests, including the sanctioning by Extraordinary Resolution (asdefined in the Agency Agreement) of a modification of any of these Conditions. Where the

business of such meeting includes consideration of proposals, inter alia, (i) to amend the dates

of maturity or redemption of the Notes, any Instalment Date or any date for payment of

interest or Interest Amounts on the Notes, (ii) to reduce or cancel the nominal amount of, or

any Instalment Amount of, or any premium payable on redemption of, the Notes, (iii) to reduce

the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating

the rate or rates or amount of interest or the basis for calculating any Interest Amount in

respect of the Notes, (iv) if a Minimum and/or a Maximum Rate of Interest, InstalmentAmount or Redemption Amount is shown hereon, to reduce any such Minimum and/or

Maximum, (v) to vary any method of, or basis for, calculating the Final Redemption Amount,

the Early Redemption Amount or the Optional Redemption Amount, including the method of

calculating the Amortised Face Amount, (vi) to vary the currency or currencies of payment or

denomination of the Notes, (vii) to modify the provisions concerning the quorum required at

any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, or

(viii) to modify (otherwise than in accordance with its terms) or cancel the Deed of Covenant,

the Extraordinary Resolution will only be binding if passed at a meeting of Noteholders (or anyadjournment thereof) at which a special quorum (provided for in the Agency Agreement) is

present. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or

not they were present at the meeting at which such resolution was passed) and on all

Couponholders.

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A resolution in writing signed by or on behalf of the holders of not less than 75 per cent. in

nominal amount of the Notes outstanding shall for all purposes be as valid and effective as an

Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a

resolution in writing may be contained in one document or several documents in the same form,each signed by or on behalf of one or more Noteholders.

(b) Modification of Agency Agreement:

The Issuer shall only permit any modification of, or any waiver or authorisation of any breach

or proposed breach of or any failure to comply with, the Agency Agreement, if to do so could

not reasonably be expected to be prejudicial to the interests of the Noteholders.

(c) Substitution:

In the case of Notes issued by the Issuer or any previous substituted company, the Issuer or

any such previous substituted company, may at any time, without the consent of the

Noteholders or the Couponholders, substitute for itself as principal debtor under the Notes, the

Receipts, the Coupons and the Talons any company that has succeeded to substantially all the

rights, obligations and assets of the Issuer or any such previous substituted company (the‘‘Substitute’’), provided that no payment in respect of the Notes, the Receipts or the Coupons is

at the relevant time overdue. The substitution shall be made by a deed poll, to be substantially

in the relevant form scheduled to the Agency Agreement as Schedule 8 (the ‘‘Deed Poll’’), and

may take place only if (i) the Substitute shall, by means of the Deed Poll, agree to indemnify

each Noteholder and Couponholder against any tax, duty, assessment or governmental charge

that is imposed on it by (or by any authority in or of) the jurisdiction of the country of the

Substitute’s residence for tax purposes and, if different, of its incorporation with respect to any

Note, Receipt, Coupon, Talon or the Deed of Covenant (as the case maybe) and that would nothave been so imposed had the substitution not been made, as well as against any tax, duty,

assessment or governmental charge, and any cost or expense, relating to the substitution, (ii) all

action, conditions and things required to be taken, fulfilled and done (including the obtaining of

any necessary consents) to ensure that the Deed Poll, the Notes, Receipts, Coupons, Talons and

Deed of Covenant represent valid, legally binding and enforceable obligations of the Substitute

have been taken, fulfilled and done and are in full force and effect, (iii) the Substitute shall have

become party to the Agency Agreement, with any appropriate consequential amendments, as if

it had been an original party to it, (iv) legal opinions addressed to the Noteholders shall havebeen delivered to them (care of the Fiscal Agent) from appropriate law firms in each jurisdiction

referred to in (i) above and in England as to the fulfilment of the preceding conditions of this

paragraph (c) and the other matters specified in the Deed Poll and (v) the Issuer shall have

given at least 14 days’ prior notice of such substitution to the Noteholders, stating that copies,

or pending execution the agreed text, of all documents in relation to the substitution that are

referred to above, or that might otherwise reasonably be regarded as material to Noteholders,

shall be available for inspection at the specified office of each of the Paying Agents. References

in Condition 10 to obligations under the Notes shall be deemed to include obligations under theDeed Poll.

12. Replacement of Notes, Certificates, Receipts, Coupons and Talons

Should any Note, Certificate, Receipt, Coupon or Talon be lost, stolen, destroyed, mutilated or

defaced, it may be replaced at the principal office in London of the Fiscal Agent (in the case of

Bearer Notes, Receipts, Coupons and Talons) and of the Registrar (in the case of Certificates), upon

payment by the claimant of the expenses incurred in connection therewith and on such terms as to

evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons

must be surrendered before replacements will be issued.

13. Further Issues

The Issuer may from time to time without the consent of the Noteholders or the Couponholders

create and issue further securities having the same terms and conditions as the Notes in all respects

(or in all respects except for the first payment of interest on them) (so that for the avoidance of

- 40 -


doubt, references in the Conditions of such Notes to ‘‘Issue Date’’ shall be to the first issue date of

the Notes) and so that such further issue shall be consolidated and form a single series with the

Notes. In such case the expressions ‘‘Notes’’ and ‘‘Coupons’’ in these Conditions and the Agency

Agreement shall, unless the context otherwise requires, include any further securities issued pursuantto this Condition and forming a single series with the Notes and the Coupons appertaining thereto.

14. Notices

Notices to the holders of Bearer Notes will be published in a leading daily newspaper of general

circulation in London (expected to be the Financial Times) (or in such other manner that complies

with the rules and regulations of any stock exchange on which the Notes are, for the time being,

admitted to listing, trading and/or quotation or other applicable authority to which it is subject). If atany time publication in such a newspaper is not practicable, notices will be published in such other

newspaper or newspapers as the Issuer and the Fiscal Agent shall agree. Notices will be deemed to

have been given on the date of the first or only publication.

Couponholders shall be deemed for all purposes to have notice of the contents of any notice

given to the holders of Bearer Notes in accordance with this Condition.

Notices to the holders of Registered Notes shall be mailed to them at their respective addresses

in the Register and deemed to have been given on the fourth weekday (being a day other than a

Saturday or a Sunday) after the date of mailing.

15. Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Notes under the

Contracts (Rights of Third Parties) Act 1999 except and to the extent (if any) that the Notesexpressly provide for such Act to apply to any of their terms.

16. Governing Law and Jurisdiction

The Agency Agreement, the Notes, the Receipts, the Coupons, and the Talons and any non-

contractual obligations arising out of or in connection with them are governed by, and shall be

construed in accordance with English law. The Issuer hereby irrevocably and unconditionally submits

to the jurisdiction of the English courts for all purposes in connection with this Note, the Receipts,the Coupons and the Talons appertaining hereto and in relation thereto the Issuer hereby irrevocably

appoints the principal office in London of NTT Europe Limited, presently being at 3rd Floor, Devon

House, 58-60 St. Katherine’s Way, London E1W 1LB as its authorised agent upon whom process

may be served in any action or proceeding of or in the courts of England arising out of or relating

to this Note or such Receipts, Coupons and Talons. If for any reason such process agent ceases to be

able to act as such or no longer has an address in London, the Issuer irrevocably agrees to appoint a

substitute process agent and shall immediately notify Noteholders of such appointment in accordance

with Condition 14. Nothing shall affect the right to serve process in any manner permitted by law.

- 41 -


USE OF PROCEEDS

The net proceeds from the issue of each Tranche of Notes will be applied by NTT for general

corporate purposes or may be lent to NTT’s subsidiaries.

- 42 -


SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE INGLOBAL FORM

Initial Issue of Notes

Upon the initial deposit of a Global Note with a Common Depositary for Euroclear and

Clearstream, Luxembourg or registration of Registered Notes in the name of any nominee for

Euroclear and Clearstream, Luxembourg and delivery of the relative Global Certificate to the

Common Depositary, Euroclear or Clearstream, Luxembourg will credit each subscriber with a

nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid.

Notes that are initially deposited with the Common Depositary may also be credited to the

accounts of subscribers with (if indicated in the relevant Final Terms) other clearing systems through

direct or indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearingsystems. Conversely, Notes that are initially deposited with any other clearing system may similarly be

credited to the accounts of subscribers with Euroclear, Clearstream, Luxembourg or other clearing

systems.

Relationship of Accountholders with Clearing Systems

Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other

clearing system as the holder of a Note represented by a Global Note or a Global Certificate must

look solely to Euroclear, Clearstream, Luxembourg or such clearing system (as the case may be) for

his share of each payment made by the Issuer to the bearer of such Global Note or the holder of the

underlying Registered Notes, as the case may be, and in relation to all other rights arising under the

Global Notes or Global Certificates, subject to and in accordance with the respective rules and

procedures of Euroclear, Clearstream, Luxembourg, or such clearing system (as the case may be).Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes

for so long as the Notes are represented by such Global Note or Global Certificate and such

obligations of the Issuer will be discharged by payment to the bearer of such Global Note or the

holder of the underlying Registered Notes, as the case may be, in respect of each amount so paid.

Exchange

Temporary Global Notes

Each temporary Global Note will be exchangeable, free of charge to the holder, on or after its

Exchange Date:

(i) if the relevant Final Terms indicates that such Global Note is issued in compliance with

the C Rules or in a transaction to which TEFRA is not applicable (as to which, see

‘‘Overview of the Programme — Selling Restrictions’’), in whole, but not in part, for the

Definitive Notes defined and described below and

(ii) otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the

form set out in the Agency Agreement for interests in a permanent Global Note or, if so

provided in the relevant Final Terms, for Definitive Notes.

Each temporary Global Note that is also an Exchangeable Bearer Note will be exchangeable for

Registered Notes in accordance with the Conditions in addition to any permanent Global Note or

Definitive Notes for which it may be exchangeable and, before its Exchange Date, will also be

exchangeable in whole or in part for Registered Notes only.

Permanent Global Notes

Each permanent Global Note will be exchangeable, free of charge to the holder, on or after its

Exchange Date in whole but not, except as provided under ‘‘Partial Exchange of Permanent Global

Notes’’, in part for Definitive Notes or, in the case of (i) below, Registered Notes:

(i) if the permanent Global Note is an Exchangeable Bearer Note, by the holder giving notice

to the Fiscal Agent of its election to exchange the whole or a part of such Global Note

for Registered Notes and

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(ii) otherwise, (1) if the permanent Global Note is held on behalf of Euroclear or Clearstream,

Luxembourg or any other clearing system (an ‘‘Alternative Clearing System’’) and any such

clearing system is closed for business for a continuous period of 14 days (other than by

reason of holidays, statutory or otherwise) or announces an intention permanently to ceasebusiness or in fact does so or (2) if principal in respect of any Notes is not paid when due,

by the holder giving notice to the Fiscal Agent of its election for such exchange.

In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall

be issued in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than

the minimum Specified Denomination will not receive a definitive Note in respect of such holding. Ifthe noteholder requires a definitive note for such holding, a noteholder would need to purchase a

principal amount of Notes such that it holds an amount equal to one or more Specified

Denominations.

Permanent Global Certificates

If the Final Terms state that the Notes are to be represented by a permanent Global Certificate

on issue, the following will apply in respect of transfers of Notes held in Euroclear or Clearstream,

Luxembourg or an Alternative Clearing System. These provisions will not prevent the trading of

interests in the Notes within a clearing system whilst they are held on behalf of such clearing system,but will limit the circumstances in which the Notes may be withdrawn from the relevant clearing

system.

Transfers of the holding of Notes represented by any Global Certificate pursuant to Condition

2(b) may only be made in part:

(i) if the relevant clearing system is closed for business for a continuous period of 14 days

(other than by reason of holidays, statutory or otherwise) or announces an intention

permanently to cease business or does in fact do so or

(ii) if principal in respect of any Notes is not paid when due or

(iii) with the consent of the Issuer

provided that, in the case of the first transfer of part of a holding pursuant to (i) or (ii) above, the

Registered Holder has given the Registrar not less than 30 days’ notice at its specified office of the

Registered Holder’s intention to effect such transfer.

Partial Exchange of Permanent Global Notes

For so long as a permanent Global Note is held on behalf of a clearing system and the rules ofthat clearing system permit, such permanent Global Note will be exchangeable in part on one or

more occasions (1) for Registered Notes if the permanent Global Note is an Exchangeable Bearer

Note and the part submitted for exchange is to be exchanged for Registered Notes, or (2) for

Definitive Notes if principal in respect of any Notes is not paid when due.

Delivery of Notes

On or after any due date for exchange the holder of a Global Note may surrender such Global

Note or, in the case of a partial exchange, present it for endorsement to or to the order of the Fiscal

Agent. In exchange for any Global Note, or the part thereof to be exchanged, the Issuer will (i) inthe case of a temporary Global Note exchangeable for a permanent Global Note, deliver, or procure

the delivery of, a permanent Global Note in an aggregate nominal amount equal to that of the whole

or that part of a temporary Global Note that is being exchanged or, in the case of a subsequent

exchange, endorse, or procure the endorsement of, a permanent Global Note to reflect such exchange

or (ii) in the case of a Global Note exchangeable for Definitive Notes or Registered Notes, deliver, or

procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated

Definitive Notes and/or Certificates, as the case may be. In this Offering Circular, ‘‘Definitive Notes’’

means, in relation to any Global Note, the definitive Bearer Notes for which such Global Note maybe exchanged (if appropriate, having attached to them all Coupons and Receipts in respect of interest

or Instalment Amounts that have not already been paid on the Global Note and a Talon). Definitive

Notes will be security printed and Certificates will be printed in accordance with any applicable legal

and stock exchange requirements in or substantially in the form set out in the Schedules to the

- 44 -


Agency Agreement. Definitive Notes will only be issued in Specified Denominations. No Certificates

will be issued in less than the Specified Denomination. On exchange in full of each permanent Global

Note, the Issuer will, if the holder so requests, procure that it is cancelled and returned to the holder

together with the relevant Definitive Notes.

Exchange Date

‘‘Exchange Date’’ means, in relation to a temporary Global Note, the day falling after the

expiry of 40 days after its issue date and, in relation to a permanent Global Note, a day falling not

less than 60 days, or in the case of an exchange for Registered Notes five days, or in the case of

failure to pay principal in respect of any Notes when due 30 days, after that on which the notice

requiring exchange is given and on which banks are open for business in the city in which the

specified office of the Fiscal Agent is located and in the city in which the relevant clearing system islocated.

Amendment to Conditions

The temporary Global Notes, permanent Global Notes, and Global Certificates contain

provisions that apply to the Notes that they represent, some of which modify the effect of the terms

and conditions of the Notes set out in this Offering Circular. The following is a summary of certain

of those provisions:

Payments

No payment falling due after the Exchange Date will be made on any Global Note unless

exchange for an interest in a permanent Global Note or for Definitive Notes or Registered Notes is

improperly withheld or refused. Payments on any temporary Global Note issued in compliance with

the D Rules before the Exchange Date will only be made against presentation of certification as to

non-U.S. beneficial ownership in the form set out in the Agency Agreement. All payments in respect

of Notes represented by a Global Note will be made against presentation for endorsement and, if no

further payment falls to be made in respect of the Notes, surrender of that Global Note to or to theorder of the Fiscal Agent or such other Paying Agent as shall have been notified to the Noteholders

for such purpose. A record of each payment so made will be endorsed on each Global Note, which

endorsement will be prima facie evidence that such payment has been made in respect of the Notes.

Conditions 7(e)(vi) and 8(f) will apply to the Definitive Notes only. For the purpose of any payments

made in respect of a Global Note, the relevant place of presentation shall be disregarded in the

definition of business day set out in Condition 7(h) (Non-Business Days).

Record Date: All payments in respect of Notes represented by a Global Certificate will be made

to, or to the order of, the person whose name is entered on the Register at the close of business on

the Clearing System Business Day immediately prior to the date for payment, where Clearing System

Business Day means Monday to Friday inclusive except 25 December and 1 January.

Prescription

Claims against the Issuer in respect of Notes that are represented by a permanent Global Note

will become void unless it is presented for payment within a period of 10 years (in the case of

principal) and 5 years (in the case of interest) from the appropriate Relevant Date (as defined in

Condition 8).

Meetings

For the purposes of any quorum requirements of a meeting of Noteholders and, at any such

meeting, the holder of a permanent Global Note shall be treated as having one vote in respect ofeach integral currency unit of the Specified Currency of Notes for which such Global Note may be

exchanged. (All holders of Registered Notes are entitled to one vote in respect of each integral

currency unit of the specified currency of each Note comprising such Noteholder’s holding, whether

or not represented by a Global Certificate.)

- 45 -


Cancellation

Cancellation of any Note represented by a permanent Global Note that is required by the

Conditions to be cancelled (other than upon its redemption) will be effected by reduction in thenominal amount of the relevant permanent Global Note.

Purchase

Notes represented by a permanent Global Note may only be purchased by the Issuer or any of

their respective subsidiaries if they are purchased together with the rights to receive all future

payments of interest and Instalment Amounts (if any) thereon.

Issuer’s Option

Any option of the Issuer provided for in the Conditions of any Notes while such Notes are

represented by a permanent Global Note shall be exercised by the Issuer giving notice to the

Noteholders within the time limits set out in and containing the information required by theConditions, except that the notice shall not be required to contain the serial numbers of Notes drawn

in the case of a partial exercise of an option and accordingly no drawing of Notes shall be required.

In the event that any option of the Issuer is exercised in respect of some but not all of the Notes of

any Series, the rights of accountholders with a clearing system in respect of the Notes will be

governed by the standard procedures of Euroclear, Clearstream, Luxembourg or any other clearing

system (as the case may be).

Noteholders’ Options

Any option of the Noteholders provided for in the Conditions of any Notes while such Notes

are represented by a permanent Global Note may be exercised by the holder of the permanent GlobalNote giving notice to the Fiscal Agent within the time limits relating to the deposit of Notes with a

Paying Agent set out in the Conditions substantially in the form of the notice available from any

Paying Agent, except that the notice shall not be required to contain the serial numbers of the Notes

in respect of which the option has been exercised, and stating the nominal amount of Notes in

respect of which the option is exercised and at the same time presenting the permanent Global Note

to the Fiscal Agent, or to a Paying Agent acting on behalf of the Fiscal Agent, for notation.

Events of Default

Each Global Note provides that the holder may cause such Global Note, or a portion of it, to

become due and repayable in the circumstances described in Condition 10 by stating in the notice tothe Fiscal Agent the nominal amount of such Global Note that is becoming due and repayable. If

principal in respect of any Note is not paid when due, the holder of a Global Note or Registered

Notes represented by a Global Certificate may elect for direct enforcement rights against the Issuer

under the terms of a Deed of Covenant executed as a deed by the Issuer on 1 November, 2012 (as

amended and restated from time to time) to come into effect in relation to the whole or a part of

such Global Note or one or more Registered Notes in favour of the persons entitled to such part of

such Global Note or such Registered Notes, as the case may be, as accountholders with a clearing

system. Following any such acquisition of direct rights, the Global Note or, as the case may be, theGlobal Certificate and the corresponding entry in the register kept by the Registrar will become void

as to the specified portion or Registered Notes, as the case may be. However, no such election may

be made in respect of Notes represented by a Global Certificate unless the transfer of the whole or a

part of the holding of Notes represented by that Global Certificate shall have been improperly

withheld or refused.

Notices

So long as any Notes are represented by a Global Note and such Global Note is held on behalf

of a clearing system, notices to the holders of Notes of that Series may be given by delivery of therelevant notice to that clearing system for communication by it to entitled accountholders in

substitution for publication as required by the Conditions or by delivery of the relevant notice to the

holder of the Global Note.

- 46 -


FORM OF FINAL TERMS

The form of Final Terms that will be issued in respect of each Tranche, subject only to the

deletion of non-applicable provisions, is set out below:

Final Terms dated *

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] (the ‘‘Notes’’)

[to be consolidated and form a single series with the existing [title of notes] issued on [*]

(the ‘‘Existing Notes’’)]

under the U.S.$10,000,000,000 Euro Medium Term Note Programme

PART A – CONTRACTUAL TERMS

[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set

forth in the Offering Circular dated * [and the supplemental Offering Circular dated *] which

[together] constitute[s] listing particulars for the purposes of Chapter 4 of the Financial Services

Authority’s Listing Rules. This document constitutes the Final Terms of the Notes described herein

and must be read in conjunction with the Offering Circular [as so supplemented]. [The OfferingCircular [and the supplemental Offering Circular] [is] [are] available for viewing at [ * ] during

normal business hours [and] [ * ] and copies may be obtained from [ * ].]]

1 Issuer: Nippon Telegraph and Telephone Corporation

2 [(i)] Series Number: [*]

[(ii) Tranche Number: [*]

[The Notes will be consolidated, form a single

series and be interchangeable for tradingpurposes with the Existing Notes [upon issue/

upon certification as to non-US beneficial

ownership, expected to occur on or around the

date which is 40 days after the Issue Date]]

3 Specified Currency or Currencies [*]

4 Aggregate Nominal Amount of Notes

[admitted to trading]:

[(i)] Series: [*]

[(ii) Tranche: [*]]

5 Issue Price: [*] per cent. of the Aggregate Nominal Amount

[plus accrued interest from [*]]

6 Specified Denominations: [*]

Calculation Amount [*]

7 (i) Issue Date: [*]

[(ii) Interest Commencement Date: [*]

8 Maturity Date: [*]

[Interest Payment Date falling in or nearest to

month and year]

- 47 -


9 Interest Basis: [[*] per cent. Fixed Rate]

[[duration][currency][LIBOR/LIBID/LIMEAN/EURIBOR] +/- [*] per cent.

Floating Rate]

[Zero Coupon]

(further particulars specified below under

Provisions Relating to Interest (if any) payable)

10 Redemption/Payment Basis: [Redemption at par]

[Instalment]

11 Change of Interest Basis: [*]

12 Put/Call Options [Put Option][Call Option]

[(further particulars specified below under

Provisions Relating to Redemption)]

13 [Date of [board] approval for issuance of

Notes obtained:

[*]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

14 Fixed Rate Note Provisions [Applicable/Not Applicable]

(i) Rate[(s)] of Interest: [*] per cent. per annum [payable

[annually/semi-annually/quarterly/monthly] in

arrear]

(ii) Interest Payment Date(s): [*] in each year

(iii) Fixed Coupon Amount[(s)]: [*] per Calculation Amount [payable on each

Interest Payment Date from (and including) [*]

to (and including) [*]]

(iv) Broken Amount(s): [*] per Calculation Amount payable on the

Interest Payment Date fall [in/on] [*]

(v) Day Count Fraction (Condition 5(h)): [*]

(vi) Determination Date(s)

(Condition 5(h)):

[*] in each year

15 Floating Rate Note Provisions [Applicable/Not Applicable]

(i) Interest Period(s) [*]

(ii) Interest Payment Dates: [*]

(iii) Interest Period Date: [*]

(iv) Business Day Convention: [Floating Rate Business Day

Convention/Following Business Day

Convention/Modified Following Business Day

Convention/Preceding Business Day

Convention]

(v) Business Centre(s) (Condition 5(h)): [*]

(vi) Manner in which the Rate(s) of Interest

is/are to be determined:

[Screen Rate Determination/ISDA

Determination]

(vii) Party responsible for calculating the

Rate(s) of Interest and Interest

Amount(s) (if not the [Calculation

Agent]):

[*]

- 48 -


(viii) Screen Rate Determination

(Condition 5(b)(iii)(B)):

* Relevant Time: [*]

* Interest Determination Date: [[*] [TARGET] Business Days in [city] for

[currency] prior to [the first day in each Interest

Accrual Period/each Interest Payment Date]]

* Primary Source for Floating Rate: [relevant screen page] [Reference Banks]

* Relevant Financial Centre: [*]

* Benchmark: [LIBOR/LIBID/LIMEAN/EURIBOR]

* Representative Amount: [*]

* Effective Date: [*]

* Specified Duration: [*]

(ix) ISDA Determination

(Condition 5(b)(iii)(A)):

* Floating Rate Option: [*]

* Designated Maturity: [*]

* Reset Date: [*]

* ISDA Definitions: if different from

those set out in the Conditions:

[*]

(x) Margin(s): [+/-] [*] per cent. per annum

(xi) Minimum Rate of Interest: [*] per cent. per annum

(xii) Maximum Rate of Interest: [*] per cent. per annum

(xiii) Day Count Fraction (Condition 5(h)): [*]

(xiv) Fall-back provisions, rounding

provisions, denominator and any other

terms relating to the method ofcalculating interest on Floating Rate

Notes, if

different from those set out in the

Conditions

[*]

16 Zero Coupon Note Provisions [Applicable/Not Applicable]

(i) Amortisation Yield (Condition 6(b)): [*] per cent. per annum

(ii) Day Count Fraction (Condition 5(h)): [*]

PROVISIONS RELATING TO REDEMPTION

17 Call Option [Applicable/Not Applicable]

(i) Optional Redemption Date(s): [*]

(ii) Optional Redemption Amount(s) of each

Note and method, if any, of calculationof such amount(s):

[*] per [*] Calculation Amount

(iii) If redeemable in part:

(a) Minimum nominal amount to be

redeemed:

[*]

(b) Maximum nominal amount to be

redeemed:

[*]

(iv) Option Exercise Date(s): [*]

- 49 -


(v) Notice period: [*]

18 Put Option [Applicable/Not Applicable]

(i) Optional Redemption Date(s): [*]

(ii) Optional Redemption Amount(s) of each

Note and method, if any, of calculation

of such amount(s):

[*] per [*] Calculation Amount

(iii) Option Exercise Date(s): [*]

(iv) Notice period: [*]

19 Final Redemption Amount of each Note [*] per Calculation Amount

20 Early Redemption Amount of each Note

(i) Early Redemption Amount(s) per

Calculation Amount payable on

redemption for taxation reasons

(Condition 6(c)) or an event of default

(Condition 10) and/or the method of

calculating the same (if required):

[*]

(ii) Redemption for taxation reasons

permitted on days other than InterestPayment Dates (Condition 6(c)):

[Yes/No]

(iii) Unmatured Coupons to become voidupon early redemption (Bearer Notes

only) (Condition 7(f));

[Yes/No/Not Applicable]

GENERAL PROVISIONS APPLICABLE TO THE NOTES

21 Form of Notes: [Bearer Notes/Exchangeable Bearer Notes/

Registered Notes]

Temporary or permanent Global Note/

Certificate:

[temporary Global Note/Certificate exchangeable

for a permanent Global Note/Certificate which is

exchangeable for Definitive Notes/Certificates/

only in the limited circumstances specified in the

permanent Global Note/Certificate]

[permanent Global Note/Certificateexchangeable for Definitive Notes/Certificates/

only in the limited circumstances specified in the

permanent Global Note/Certificate]

22 Financial Centre(s) (Condition 7(h))or other special provisions relating to payment

dates:

[Not Applicable]/[*]

23 Talons for future Coupons or Receipts to be

attached to Definitive Notes (and dates on

which such Talons mature):

[Yes/No]

- 50 -


24 Details relating to Instalment Notes: [Not Applicable]

(i) Instalment Amount(s): [*]

(ii) Instalment Date(s): [*]

Signed on behalf of the Issuer:

By:

Duly authorised

- 51 -


PART B – OTHER INFORMATION

1. LISTING

(i) Listing: London PSM

(ii) Admission to trading: Application has been made for the Notes to be

admitted to trading on The Professional

Securities Market of the London Stock Exchange

with effect from [*].

(iii) Estimate of total expenses related to

admission to trading

[*]

2. RATINGSRatings: [*]/[This issue has not been individually rated]

3. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER]

[‘‘Save as discussed in ‘‘Subscription and Sale’’ in the Offering Circular, so far as the Issuer is

aware, no person involved in the offer of the Notes has an interest material to the offer.’’]

4. YIELD

Indication of yield: [*]

The yield is calculated at the Issue Date on the

basis of the Issue Price. It is not an indication of

future yield.]

5. OPERATIONAL INFORMATION

ISIN Code: [*]

Common Code: [*]

Any clearing system(s) other than Euroclear

Bank S.A./N.V. and Clearstream Banking

societe anonyme and the relevant identification

number(s):

[Not Applicable][*]

Delivery: Delivery [against/free of] payment

Names and addresses of additional Paying

Agent(s) (if any):

[*]

6 GENERAL

Applicable TEFRA exemption: [C Rules/D Rules/Not Applicable]

- 52 -


NIPPON TELEGRAPH AND TELEPHONE CORPORATION

On 1 April, 1985, NTT was incorporated as a limited liability, joint-stock company in Japanunder the Commercial Code of Japan (Law No. 48 of 1899) and the Nippon Telegraph andTelephone Corporation Law (Law No. 85 of 1984) (the ‘‘NTT Law’’), subject to taxation and withauthority to engage in domestic telecommunications and related business. On the same day, pursuantto the NTT Law and the Telecommunications Business Law (Law No.86 of 1984), all assets andliabilities of the predecessor corporation, Nippon Telegraph and Telephone Public Corporation (the‘‘Public Corporation’’), a public corporation incorporated under the Nippon Telegraph and TelephonePublic Corporation Law (Law No. 250 of 1952) in August 1952 to take over from the JapaneseGovernment the provision of national telephone, telegraph and related telecommunications services inJapan, were assumed by NTT.

The registered office of NTT is 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, and thegeneral telephone number at its registered office is +81 3 5205 5451 (Finance and AccountingDepartment Finance Office).

At least one-third of the issued share capital of NTT is required to be held by the JapaneseGovernment. NTT is subject to supervision and regulation by the Japanese Government in a similarmanner to the Public Corporation, albeit on a reduced basis. Some of NTT’s Shares previouslyowned by the Japanese Government have been sold to the public in Japan and overseas on severaloccasions and as of 31 March, 2012 the Japanese Government owned approximately 32.59% ofNTT’s issued Shares (35.24% of issued shares excluding treasury stock). Since February 1987, theShares of NTT have been listed on the Tokyo Stock Exchange and are also listed on the Osaka,Nagoya, Fukuoka and Sapporo stock exchanges in Japan. The NTT Law restricts foreign ownershipto less than one-third of the outstanding share capital of NTT. The Shares of NTT are also listed onthe New York Stock Exchange in American Depositary Receipt form and on the London StockExchange.

In March 1990, the Japanese Government announced the measures to be adopted pursuant toArticle 2 of the Supplementary Provisions of the NTT Law relating to the review of the situation ofNTT under the NTT Law. Among them were measures designed to promote fair competition andimprove the operations of NTT.

In June 1997, the Japanese Parliament passed the Law Concerning Partial Amendment to theNippon Telegraph and Telephone Corporation Law (the ‘‘Amendment to NTT Law’’). This new lawimplemented a plan proposed by the Minister of Posts and Telecommunications (‘‘MPT’’), andaccepted in principle by NTT, to reorganise NTT.

On 1 July, 1999, NTT was reorganised into a holding company structure. The NTT parentcompany transferred its local and long-distance businesses to three new wholly-owned subsidiaries:Nippon Telegraph and Telephone East Corporation (‘‘NTT East’’), Nippon Telegraph and TelephoneWest Corporation (‘‘NTT West’’) and NTT Communications Corporation (‘‘NTT Com’’). NTT Eastand NTT West operate the regional telecommunications services in eastern Japan and western Japan,respectively, and NTT Com operates the long-distance telecommunications and other network servicesthroughout Japan. NTT Com also offers international telecommunications services.

The NTT Group is the largest provider of fixed and mobile voice related services, IP/packetcommunications services, sales of telecommunications equipment, system integration and othertelecommunications-related services in Japan and operates one of the largest telephone networks inthe world. The NTT Group consists of NTT (Holding Company), its 772 subsidiaries and 106affiliated companies (as of 31 March, 2012). The principal businesses of the NTT Group are itsregional communications business, long-distance and international communications business, mobilecommunications business and data communications business.

NTT Group provides fixed-line broadband and fixed-line telephone services through NTT Eastand NTT West, and is the biggest provider of such services in Japan. As of 31 March 2012, thenumber of combined NTT East and NTT West broadband service subscriptions, for the FTTHservice ‘‘FLET’S Hikari’’ and for the ADSL service ‘‘FLET’S ADSL’’ was 16,564 thousandsubscriptions and 2,322 thousand subscriptions, respectively. The aggregate of subscriber linesubscriptions, which is the sum of fixed-line telephone service subscriptions and ISDN servicesubscriptions, was 31,672 thousand subscriptions. In addition, NTT Group provides ISP services

- 53 -


through NTT Com and others. As of 31 March, 2012, the number of ISP service subscriptions was11,882 thousand subscriptions.

The NTT Group provides mobile broadband and mobile voice communications services throughNTT DOCOMO. This service is provided through two networks, LTE and W-CDMA (the PDCservice was terminated as of 31 March, 2012). As of 31 March, 2012, NTT DOCOMO had 60,129thousand subscribers and was the largest provider of mobile phone services in Japan..

The NTT Group provides data communications services through NTT DATA. NTT DATA is

the leading provider of data communications systems and information systems using computer

networks as a platform in Japan. NTT DATA primarily engages in strategic planning, designing,

installing and operating data communications systems and information systems using computernetworks as a platform, and providing IT services.

In addition, NTT Group provides through its subsidiaries financial services, including issuing

leases and credit cards, real estate services, including building rentals and apartment sales, systemsdevelopment services, and construction-related services, including the design, construction and

maintenance of buildings.

The company number of NTT is 0199-01-065142. The purposes of NTT’s business are contained

in the Commercial Register and the Articles of Incorporation and are as follows:

1. To hold all the shares which NTT East and NTT West (together, the ‘‘Regional

Companies’’) respectively issues and to ensure proper and stable provision of

telecommunications services by the Regional Companies as well as to conduct research

relating to telecommunications technologies that will form the foundation for

telecommunications.

2. To engage in the following business activities:

(i) subscribing for and holding shares of the Regional Companies as well as exercising

its rights as holder of such shares;

(ii) providing advice, mediation and other assistance to the Regional Companies;

(iii) conducting research relating to telecommunications technology that will form thefoundation for telecommunications; and

(iv) such business activities as are incidental to the business activities of the precedingthree items.

NTT has no partly paid up Shares outstanding.

As at 31 March, 2012,

Title of Class

Identity of Person

or Group

Amount of

Shares Owned

Percent

of Class

Common stock Government of Japan

(Minister of Finance)

431,232,572 32.59%*

Common stock Directors and officers

(12 persons)

70,750 —**

* 35.24% of outstanding Shares.

** Less than 0.1% of outstanding Shares.

The Government, in its capacity as a shareholder, votes at shareholder meetings of NTT and,

by virtue of its statutorily mandated position as the largest shareholder, has the power to exert

considerable influence over decisions made at such meetings. In 1997, in a statement at the Diet, it

was stated that the Government did not intend to actively use its position as a shareholder to direct

the management of NTT. In fact, the Government has not used its power as a shareholder to directthe management of NTT in the past.

- 54 -


NTT is the parent company for the NTT Group. As at 31 March, 2012, NTT had

772 subsidiaries and 106 affiliated companies. A table of NTT’s principal consolidated subsidiaries as

at 31 March, 2012 is set out below.

Name

Country of

Incorporation

Equity Held

by NTT as at

31 March,

2012 directly

or indirectly*1

Regional Communications Business

NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION Japan 100.0%

NIPPON TELEGRAPH AND TELEPHONE WEST

CORPORATION................................................................................. Japan 100.0%

NTT EAST-TOKYO CORPORATION.................................................. Japan 100.0%

NTT-ME CORPORATION..................................................................... Japan 100.0%

NTT INFRASTRUCTURE NETWORK CORPORATION................. Japan 100.0%

NTT WEST-KANSAI CORPORATION................................................ Japan 100.0%

NTT NEOMEIT CORPORATION......................................................... Japan 100.0%

NTT MARKETING ACT CORPORATION......................................... Japan 100.0%

NTT DIRECTORY SERVICES Co........................................................ Japan 100.0%

NTT Quaris Corporation ......................................................................... Japan 100.0%

TelWel East Japan Corporation ............................................................... Japan 98.1%

NTT Solco Corporation ........................................................................... Japan 96.3%

NTT CARD SOLUTION CORP ............................................................ Japan 79.7%

NTT TELECON Co., Ltd........................................................................ Japan 86.5%

NTT SOLMARE CORPORATION........................................................ Japan 100.0%

NTT WEST ASSET PLANNING CORPORATION............................. Japan 100.0%

TelWel West Nippon Corporation ........................................................... Japan 98.1%

Long-Distance and International Communications Business

NTT COMMUNICATIONS CORPORATION ..................................... Japan 100.0%

Dimension Data Holdings plc .................................................................. UK 100.0%

NTT PC Communications Incorporated.................................................. Japan 100.0%

NTT Plala Inc........................................................................................... Japan 95.4%

NTT Resonant Inc.................................................................................... Japan 88.9%

NTT America, Inc .................................................................................... USA 100.0%

NTT EUROPE LTD ................................................................................ UK 100.0%

NTT COM ASIA LIMITED ................................................................... China 100.0%

NTT Australia PTY. LTD ....................................................................... Australia 100.0%

Verio Inc ................................................................................................... USA 100.0%

Integralis AG ............................................................................................ Germany 80.2%

NTT WORLD ENGINEERING MARINE CORPORATION ............. Japan 75.0%

NTT WORLDWIDE TELECOMMUNICATIONS CORPORATION. Japan 100.0%

Spectrum Holdings Inc .............................................................................

British

Virgin

Islands 100.0%

Dimension Data Commerce Centre Ltd................................................... Isle of Man 100.0%

Dimension Data (US) II Inc..................................................................... USA 100.0%

Dimension Data (US) Inc......................................................................... USA 100.0%

Dimension Data North America, Inc....................................................... USA 100.0%

Datacraft Australia Pty Ltd...................................................................... Australia 100.0%

NTT Com CHEO CORPORATION ....................................................... Japan 100.0%

NTT Com Technology Corporation......................................................... Japan 100.0%

NTT BizLink, Inc ..................................................................................... Japan 100.0%

NTT Com Solution & Engineering Corporation*2 .................................. Japan 100.0%

- 55 -


Name

Country of

Incorporation

Equity Held

by NTT as at

31 March,

2012 directly

or indirectly*1

Mobile Communications BusinessNTT DOCOMO, INC.............................................................................. Japan 66.7%

DOCOMO Service Inc.............................................................................. Japan 66.7%

DOCOMO Engineering Inc...................................................................... Japan 66.7%

DOCOMO Mobile Inc ............................................................................. Japan 66.7%

DOCOMO Support Inc ............................................................................ Japan 66.7%

DOCOMO Systems, Inc ........................................................................... Japan 66.7%

DOCOMO Technology, Inc ..................................................................... Japan 66.7%

DOCOMO Business Net Inc .................................................................... Japan 66.7%

DOCOMO PACIFIC, INC ...................................................................... USA 66.7%

net mobile AG .......................................................................................... Germany 58.1%

OAK LAWN MARKETING, INC......................................................... Japan 34.0%

D2 Communications Inc.*3....................................................................... Japan 37.0%

DOCOMO.COM, INC............................................................................. Japan 66.7%

mmbi, Inc.................................................................................................. Japan 40.3%

Radishbo-ya Co., Ltd ............................................................................... Japan 49.7%

DOCOMO interTouch Pte. Ltd ............................................................... Singapore 66.7%

Data Communications BusinessNTT DATA CORPORATION................................................................ Japan 54.2%

NTT DATA SYSTEM TECHNOLOGIES INC..................................... Japan 55.5%

NTT DATA i CORPORATION ............................................................. Japan 54.2%

NTT DATA INTERNATIONAL L.L.C................................................. USA 54.2%

NTT DATA FINANCIAL CORE CORPORATION ............................ Japan 54.2%

NTT DATA FORCE CORPORATION ................................................. Japan 54.2%

NTT DATA WAVE CORPORATION................................................... Japan 43.4%

Nihon Card Processing Co., Ltd .............................................................. Japan 38.8%

NTT DATA FRONTIER CORPORATION .......................................... Japan 30.9%

NTT DATA BUSINESS SYSTEMS CORPORATION*4 ...................... Japan 54.2%

NTT DATA Getronics Corporation ........................................................ Japan 38.0%

NTT DATA EUROPE GmbH & Co. KG .............................................. Germany 54.2%

itelligence AG............................................................................................ Germany 52.1%

NTT DATA CCS CORPORATION ....................................................... Japan 32.5%

Cirquent GmbH........................................................................................ Germany 40.3%

NTT DATA MSE CORPORATION ...................................................... Japan 32.5%

JSOL CORPORATION ........................................................................... Japan 27.1%

XNET Corporation .................................................................................. Japan 27.7%

NJK Corporation...................................................................................... Japan 27.9%

NTT DATA International Services, Inc.*5 .............................................. USA 54.2%

NTT DATA, Inc.*6 .................................................................................. USA 54.2%

Value Team S.p.A.*7 ................................................................................ Italy 54.2%

JBIS Holdings, Inc.................................................................................... Japan 39.5%

NTT DATA SMS CORPORATION....................................................... Japan 54.2%

NTT DATA CUSTOMER SERVICE CORPORATION....................... Japan 54.2%

Other BusinessesNTT URBAN DEVELOPMENT CORPORATION.............................. Japan 67.3%

UD EUROPE LIMITED......................................................................... UK 67.3%

NTT FINANCE CORPORATION ......................................................... Japan 96.4%

NTT FACILITIES, INC .......................................................................... Japan 100.0%

NTT COMWARE CORPORATION ...................................................... Japan 100.0%

- 56 -


Name

Country of

Incorporation

Equity Held

by NTT as at

31 March,

2012 directly

or indirectly*1

NTT ADVANCED TECHNOLOGY CORPORATION ....................... Japan 100.0%

NTT Electronics Corporation................................................................... Japan 95.8%

NTT Software Corporation ...................................................................... Japan 100.0%

NTT ADVERTISING, INC .................................................................... Japan 100.0%

InfoCom Research, Inc............................................................................. Japan 97.0%

NTT Human Solutions Corporation ........................................................ Japan 100.0%NTT LEARNING SYSTEMS CORPORATION ................................... Japan 98.4%

NTT BUSINESS ASSOCIE Corporation ................................................ Japan 100.0%

NTT LOGISCO Inc ................................................................................. Japan 100.0%

NTT Investment Partners, Inc.................................................................. Japan 100.0%

Other 676 .................................................................................................. Various Various

*1 Percentage of equity held shown represents the equity held by NTT, directly or indirectly, in relation to each of the companies’outstanding shares (excluding treasury stock). Percentages are rounded to the nearest tenth.

*2 NTT FANET SYSTEMS Corp. changed its name to NTT Com Solution & Engineering Corporation on November 1, 2011.

*3 D2 Communications Inc. changed its name to D2C Inc. on June 1, 2012.

*4 NTT DATA SYSTEMS CORPORATION merged with NTT DATA QUICK CORPORATION, and changed its name to NTTDATA BUSINESS SYSTEMS CORPORATION on April 1, 2011.

*5 Keane International, Inc. changed its name to NTT DATA International Services, Inc. on January 31, 2012.

*6 Keane, Inc. changed its name to NTT DATA, Inc. on January 31, 2012.

*7 Value Team S.p.A. changed its name to NTT DATA Italia S.p.A. on April 2, 2012.

- 57 -


The names of the Directors and Corporate Auditors of NTT are as follows:

Directors

Satoshi Miura (Chairman)

Hiroo Unoura* (President)

Yasuyoshi Katayama* (Senior Executive Vice President)

Hiroki Watanabe* (Senior Executive Vice President)

Hiromichi Shinohara (Executive Vice President)

Yoshikiyo Sakai (Senior Vice President)

Mitsuyoshi Kobayashi (Senior Vice President)

Akira Shimada (Senior Vice President)

Hiroshi Tsujigami (Senior Vice President)

TsunehisaOkuno (Senior Vice President)

Katsuhiko Shirai

Sadayuki Sakakibara

Corporate Auditors

Yoshitaka Makitani (Full-time Corporate Auditor)

Kiyoshi Kosaka (Full-time Corporate Auditor)

Toru Motobayashi

Michiko Tomonaga

Seiichi Ochiai

* Representative Director

NTT has no management or supervisory bodies other than the board of directors.

All the Directors of NTT, other than Mr. Katsuhiko Shirai and Mr. Sadayuki Sakakibara, are

engaged in the business of NTT or its subsidiaries on a full-time basis. Mr. Katsuhiko Shirai is also

Chairperson of the Foundation for the Open University of Japan; and Executive Advisor for

Academic Affairs of Waseda University and Mr. Sadayuki Sakakibara is also Chairman of the Board,

Chief Executive Officer and Representative Member of the Board of Toray Industries, Inc. and

Director of Mitsui O.S.K. Lines, Ltd. None of the Directors or Corporate Auditors of NTT have anypotential conflict between their duties to NTT and their private interests and or other duties. The

head office of NTT is situated at, and the business address of the Directors named above, is 3-1,

Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan.

NTT’s Articles of Incorporation provide that the board of directors shall have no more than 15

members.

The board of directors nominates candidates for the board of directors, who are elected by

resolution adopted by a majority vote of shareholders present at a general meeting of shareholdersattended by shareholders entitled to exercise voting rights holding shares representing in the aggregate

one-third or more of the voting rights of all shareholders. Under NTT’s Articles of Incorporation, the

term of office of a director expires at the conclusion of the general meeting of shareholders relating

to the last fiscal year ending within two years from the director’s assumption of office. Directors may

be reappointed upon expiration of their term of office. By resolution, the board of directors may

designate, from among its members, one president and one or more representative directors, who

have authority to represent the company generally in the conduct of its affairs. NTT’s board of

directors may appoint one chairman and one or more senior executive vice presidents and executivevice presidents. In addition, the Corporation Law provides that resolutions adopted by a majority

vote of shareholders present are necessary to remove directors from office unless a higher threshold is

provided under the articles of incorporation. Under NTT’s Articles of Incorporation, resolutions

adopted by a majority vote of shareholders present are required for this purpose.

- 58 -


The board of directors is responsible for decisions regarding important management issues and

for supervising the directors’ execution of their duties. As a general rule, the board of directors meets

once a month. Under the Corporation Law, board members are prohibited from engaging in any

transaction in competition with any of NTT’s businesses for themselves or on behalf of any thirdparty, and from engaging in certain other transactions involving a conflict with NTT’s interests,

unless the transaction is approved by a board resolution. No board member may vote on a proposal

in which that board member is deemed to be materially interested. In addition, the Corporation Law

requires a resolution of the board of directors for NTT to decide on material business matters

including, but not limited to, acquisition or disposal of material assets, substantial borrowings,

issuance of bonds and establishment of internal control systems.

The following table sets out selected historical audited consolidated financial information of

NTT for the last two financial years ended 31 March, 2012.

As at and for the yearended 31 March,

2011 2012(In millions of yen)

Statement of IncomeOperating revenues ¥10,305,003 ¥10,507,362Operating expenses 9,090,094 9,284,396

Operating income 1,214,909 1,222,966Other income (expenses) (39,112) 16,364

Income before income taxes and equity in earnings (losses) of affiliatedcompanies 1,175,797 1,239,330

Income tax expense (benefit) 475,592 587,793Equity in earnings (losses) of affiliated companies 1,670 (2,986)Net income 701,875 648,551

Less – Net income attributable to non controlling interests 192,246 180,850

Net income attributable to NTT ¥509,629 ¥467,701

Per share of common stock: (In yen, except share amount)

Net income attributable to NTT 385.16 366.67Cash dividends to be paid to shareholders of record date ¥120.00 ¥140.00Weighted average number of shares outstanding 1,323,173,389 1,275,519,400

As at and for the yearended 31 March,

2011 2012(In millions of yen)

Balance SheetTotal current assets ¥4,770,297 ¥4,711,931Net property, plant and equipment 9,900,640 9,806,356Total assets 19,665,596 19,389,699Total current liabilities 3,689,072 3,494,253Total long-term liabilities 5,895,592 5,847,717Capital stock (common stock plus additional paid-in capital) 3,771,979 3,770,115Total NTT shareholders’ equity 8,020,734 7,882,587

Total equity ¥10,080,932 ¥10,047,729

- 59 -


The following table sets out consolidated unaudited financial results for NTT for the three

months ended 30 June, 2011 and 2012.

For the

three months ended

30 June,

2011

30 June,

2012

(In millions of yen)

Statement of Income

Operating revenues ¥2,537,352 ¥2,575,932

Operating expenses 2,188,077 2,223,625

Operating income 349,275 352,307

Other income (expenses) 2,553 (5,734)

Income before income taxes and equity in earnings (losses) of affiliated

companies 351,828 346,573

Income tax expense (benefit) 141,502 132,973

Equity in earnings (losses) of affiliated companies (79) 2,918

Less-Net income attributable to non controlling interests (57,177) (59,958)

Net income attributable to NTT ¥153,070 ¥156,560

Per share of common stock:

(In yen, except number

of Shares)

Weighted average number of shares outstanding 1,323,134,547 1,223,765,662

Net income attributable to NTT ¥115.69 ¥127.93

As of

31 March

2012

30 June,

2012

(In millions of yen)

Balance Sheet

Total current assets ¥4,711,931 ¥4,424,710

Net property, plant and equipment 9,806,356 9,744,411

Total assets 19,389,699 19,087,587

Total current liabilities 3,494,253 3,260,640Total long-term liabilities 5,847,717 5,637,663

Capital stock (common stock plus additional paid-in capital) 3,770,115 3,770,115

Total NTT shareholders’ equity 7,882,587 7,998,805

Total equity ¥10,047,729 ¥10,189,284

NTT has not made any principal investments since the date of its last published financial

statements, and has made no firm commitments regarding future principal investments.

- 60 -


JAPANESE TAXATION

The following description of Japanese taxation (limited to national taxes) applies to interest and

the Issue Differential (as defined below) with respect to the Notes that will be issued by the Issuer

outside Japan and the interest on which will be payable outside Japan, as well as certain aspects of

capital gains, inheritance and gift taxes. It does not address the tax treatment of the original issue

discount of the Notes that fall under ‘‘discounted bonds’’ as prescribed by the Special Taxation Measures

Law of Japan (the ‘‘Special Taxation Measures Law’’). It is not intended to be exhaustive, and it is

recommended that Noteholders and/or Couponholders consult their tax advisers as to their exact tax

position.

Interest and Issue Differential

Interest payments on the Notes will be subject to Japanese withholding tax unless the holder

establishes that the Note is held by or for the account of a holder that is (i) for Japanese tax

purposes, neither (x) an individual resident of Japan or a Japanese corporation, nor (y) an individual

non-resident of Japan or a non-Japanese corporation that in either case is a person having a special

relationship with the Issuer as described in Article 6, paragraph 4 of the Special Taxation Measures

Law (any such person hereinafter referred to as a ‘‘specially-related person of the Issuer’’) or (ii) a

Japanese designated financial institution as described in Article 6, paragraph 9 of the Special Taxation

Measures Law which complies with the requirement for tax exemption under that paragraph.

Interest payments on the Notes to an individual resident of Japan, to a Japanese corporation

not described in item (ii) of the preceding paragraph, or to an individual non-resident of Japan or a

non-Japanese corporation that in either case is a specially-related person of the Issuer will be subject

to deduction in respect of Japanese income tax at a rate of 15 per cent. (for the period from and

including 1 January 2013 to and including 31 December 2037, an additional 0.315 per cent. will beadded thereto as special income tax for reconstruction) of the amount specified in subparagraph (a)

or (b) below, as applicable:

(a) if interest is paid to an individual resident of Japan, to a Japanese corporation, or to an

individual non-resident of Japan or a non-Japanese corporation that in either case is a specially-

related person of the Issuer (except as provided in subparagraph (b) below), the amount of suchinterest; or

(b) if interest is paid to a public corporation, a financial institution, a financial instruments business

operator or certain other entities through a Japanese payment handling agent as provided in

Article 3-3, paragraph 6 of the Special Taxation Measures Law in compliance with the

requirement for tax exemption under that paragraph, the amount of such interest minus the

amount provided in the Cabinet Order relating to said paragraph 6.

If a beneficial owner of any Notes is an individual non-resident of Japan or a non-Japanese

corporation that in either case is not a specially-related person of the Issuer, payment of interest on

such Notes outside Japan by the Issuer or the Paying Agent to such beneficial owner will not be

subject to Japanese withholding tax, provided that such beneficial owner complies with certain

requirements, inter alia:

(a) if such Notes are held through any of certain participants in an international clearing

organisation, such as Euroclear and Clearstream, Luxembourg, or through any of certain

financial intermediaries, in each case as prescribed by the Special Taxation Measures Law (each

such participant or financial intermediary being referred to as a ‘‘Participant’’), the requirement

to provide certain information prescribed by the Special Taxation Measures Law to enable theParticipant to establish that the beneficial owner is exempt from the requirement for Japanese

tax to be withheld or deducted; and

(b) if such Notes are held not through a Participant, the requirement to submit to the Paying Agent

a claim for exemption from withholding tax (hikazei tekiyo shinkokusho), together with certain

documentary evidence, at or prior to each receipt of interest.

Even if a beneficial owner of any Notes is an individual non-resident of Japan or a non-

Japanese corporation that in either case is not a specially-related person of the Issuer and has

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complied with the requirements described above, payment of interest on the Notes however, will be

subject to Japanese income or corporation taxes (including, where applicable, special taxes for

reconstruction) payable otherwise than by way of withholding if such beneficial owner has a

permanent establishment in Japan and payment of such interest is attributable to the business thereofcarried on in Japan through such permanent establishment.

The above-described exemption from Japanese income or corporation taxes with respect to

interest on the Notes will not be applicable to any Notes on which interest is calculated based on anyof certain indices, including the amount of profits or assets of the Issuer or a specially-related person

of the Issuer, as described in Article 6, paragraph 4 of the Special Taxation Measures Law and the

Cabinet Order relating to that paragraph.

The following legend will appear on the Temporary Global Note, the Permanent Global Note,

the Global Certificates, the Certificates, the definitive Notes, the Coupons, the Receipts and the

Talons:

INTEREST PAYMENTS ON THIS SECURITY WILL BE SUBJECT TO JAPANESE

WITHHOLDING TAX UNLESS THE HOLDER ESTABLISHES THAT THE SECURITY IS

HELD BY OR FOR THE ACCOUNT OF A HOLDER THAT IS (I) FOR JAPANESE TAX

PURPOSES, NEITHER (X) AN INDIVIDUAL RESIDENT OF JAPAN OR A JAPANESE

CORPORATION, NOR (Y) AN INDIVIDUAL NON-RESIDENT OF JAPAN OR A NON-

JAPANESE CORPORATION THAT IN EITHER CASE IS A PERSON HAVING A SPECIAL

RELATIONSHIP WITH THE ISSUER AS DESCRIBED IN ARTICLE 6, PARAGRAPH 4 OF

THE SPECIAL TAXATION MEASURES LAW OF JAPAN (A ‘‘SPECIALLY-RELATEDPERSON OF THE ISSUER’’) OR (II) A JAPANESE DESIGNATED FINANCIAL INSTITUTION

AS DESCRIBED IN ARTICLE 6, PARAGRAPH 9 OF THE SPECIAL TAXATION MEASURES

LAW OF JAPAN WHICH COMPLIES WITH THE REQUIREMENT FOR TAX EXEMPTION

UNDER THAT PARAGRAPH.

INTEREST PAYMENTS ON THIS SECURITY TO AN INDIVIDUAL RESIDENT OF

JAPAN, TO A JAPANESE CORPORATION NOT DESCRIBED IN ITEM (II) OF THE

PRECEDING PARAGRAPH, OR TO AN INDIVIDUAL NON-RESIDENT OF JAPAN OR A

NON-JAPANESE CORPORATION THAT IN EITHER CASE IS A SPECIALLY-RELATED

PERSON OF THE ISSUER WILL BE SUBJECT TO DEDUCTION IN RESPECT OF JAPANESE

INCOME TAX AT A RATE OF 15 PER CENT. (FOR THE PERIOD FROM AND

INCLUDING 1 JANUARY 2013 TO AND INCLUDING 31 DECEMBER 2037, ANADDITIONAL 0.315 PER CENT. WILL BE ADDED THERETO AS SPECIAL INCOME TAX

FOR RECONSTRUCTION) OF THE AMOUNT SPECIFIED IN SUBPARAGRAPHS (A) OR (B)

BELOW, AS APPLICABLE:

(A) IF INTEREST IS PAID TO AN INDIVIDUAL RESIDENT OF JAPAN, TO A JAPANESE

CORPORATION, OR TO AN INDIVIDUAL NON-RESIDENT OF JAPAN OR A NON-

JAPANESE CORPORATION THAT IN EITHER CASE IS A SPECIALLY-RELATED

PERSON OF THE ISSUER (EXCEPT AS PROVIDED IN SUBPARAGRAPH (B) BELOW),

THE AMOUNT OF SUCH INTEREST; OR

(B) IF INTEREST IS PAID TO A PUBLIC CORPORATION, A FINANCIAL INSTITUTION,

A FINANCIAL INSTRUMENTS BUSINESS OPERATOR OR CERTAIN OTHER

ENTITIES THROUGH A JAPANESE PAYMENT HANDLING AGENT AS PROVIDED IN

ARTICLE 3-3, PARAGRAPH 6 OF THE SPECIAL TAXATION MEASURES LAW OF

JAPAN IN COMPLIANCE WITH THE REQUIREMENT FOR TAX EXEMPTION UNDER

THAT PARAGRAPH, THE AMOUNT OF SUCH INTEREST MINUS THE AMOUNTPROVIDED IN THE CABINET ORDER RELATING TO SAID PARAGRAPH 6.

If the recipient of any difference between the issue price of Notes and the amount which the

holder receives upon redemption of such Notes, defined in Article 41-13 of the Special TaxationMeasures Law as issue differential (the ‘‘Issue Differential’’), is an individual non-resident of Japan or

a non-Japanese corporation with no permanent establishment in Japan that in either case is not a

specially-related person of the Issuer, no Japanese income or corporation taxes will be payable with

respect to the Issue Differential. If the receipt of the Issue Differential is attributable to the business

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carried on in Japan by an individual non-resident of Japan or a non-Japanese corporation through a

permanent establishment maintained by it in Japan and in certain other cases provided by Japanese

Cabinet Order, however, the Issue Differential will be subject to Japanese income or corporation

taxes.

Capital Gains, Inheritance and Gift Taxes

Gains derived from the sale of Notes by an individual non-resident of Japan or a non-Japanese

corporation with no permanent establishment in Japan in general will not be subject to Japanese

income or corporation taxes. Japanese inheritance and gift taxes at progressive rates may be payable

by an individual who has acquired Notes as a legatee, heir or donee. No stamp, issue, registration or

similar taxes or duties will, under present Japanese law, be payable in Japan by the Noteholders inconnection with the issue of the Notes.

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SUBSCRIPTION AND SALE

Summary of Dealer Agreement

The Dealers have in an amended and restated dealer agreement dated 1 November, 2012 (as

amended, restated or supplemented from time to time) (the ‘‘Dealer Agreement’’) agreed with the

Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any

such agreement will extend to those matters stated under ‘‘Form of the Notes’’ and ‘‘Terms and

Conditions of the Notes’’ above. In the Dealer Agreement, the Issuer has agreed to reimburse the

Dealers for certain of their expenses in connection with the establishment of the Programme and theissue of Notes under the Programme.

Selling Restrictions

United States of America

The Notes have not been and will not be registered under the Securities Act and may not be

offered or sold within the United States or to, or for the account or benefit of, U.S. persons except

in certain transactions exempt from the registration requirements of the Securities Act. Terms used in

this paragraph have the meanings given to them by Regulation S under the Securities Act.

Notes in bearer form having a maturity of more than one year are subject to U.S. tax law

requirements and may not be offered, sold or delivered within the United States or its possessions or

to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms

used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code andregulations thereunder.

Each Dealer has agreed that, except as permitted by the Dealer Agreement, it will not offer, sell

or deliver the Notes of any identifiable Tranche, (i) as part of their distribution at any time or (ii)

otherwise until 40 days after completion of the distribution of such Tranche as determined, andcertified to the Issuer, by the Fiscal Agent, or in the case of Notes issued on a syndicated basis, the

Lead Manager, within the United States or to, or for the account or benefit of, U.S. persons, and it

will have sent to each dealer to which it sells Notes during the distribution compliance period a

confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the

United States or to, or for the account or benefit of, U.S. persons.

In addition, until 40 days after the commencement of the offering of any identifiable Tranche,

an offer or sale of Notes within the United States by any dealer (whether or not participating in the

offering) may violate the registration requirements of the Securities Act.

European Economic Area

In relation to each EEA State which has implemented the Prospectus Directive (each, a

‘‘Relevant Member State’’), each Dealer has represented and agreed that with effect from and

including the date on which the Prospectus Directive is implemented in that Relevant Member State(the ‘‘Relevant Implementation Date’’) it has not made and will not make an offer of Notes which

are the subject of the offering contemplated by this Offering Circular as completed by the final terms

in relation thereto to the public in that Relevant Member State except that it may, with effect from

and including the Relevant Implementation Date, make an offer of such Notes to the public in that

Relevant Member State:

(i) if the final terms in relation to the Notes specify that an offer of those Notes may be

made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant

Member State (a ‘‘Non-exempt Offer’’) following the date of publication of a prospectus in

relation to such Notes which has been approved by the competent authority in that

Relevant Member State or, where appropriate, approved in another Relevant Member

State and notified to the competent authority in that Relevant Member State, provided

that any such prospectus has subsequently been completed by the final terms contemplatingsuch Non-exempt Offer, in accordance with the Prospectus Directive in the period

beginning and ending on the dates specified in such prospectus or final terms, as

applicable, and the Issuer has consented in writing to its use for the purpose of that Non-

exempt Offer;

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(ii) at any time to any legal entity which is a qualified investor as defined in the Prospectus

Directive;

(iii) at any time to fewer than 100 or, if the Relevant Member State has implemented the

relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other

than qualified investors as defined in the Prospectus Directive) subject to obtaining the

prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer;

or

(iv) at any time in any other circumstances falling within Article 3(2) of the ProspectusDirective.

provided that no such offer of Notes referred to in (ii) to (v) above shall require the Issuer or

any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or

supplement a prospectus pursuant to Article 16 of the Prospectus Directive

For the purposes of this provision, the expression ‘‘offer of Notes to the public’’ in relation toany Notes in any Relevant Member State means the communication in any form and by any means

of sufficient information on the terms of the offer and the Notes to be offered so as to enable an

investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member

State by any measure implementing the Prospectus Directive in that Member State, the expression

Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD

Amending Directive, to the extent implemented in the Relevant Member State), and includes any

relevant implementing measure in the Relevant Member State and the expression ‘‘2010 PD

Amending Directive’’ means Directive 2010/73/EU.

United Kingdom

Each Dealer has agreed that:

(1) in relation to any Notes which have a maturity of less than one year, (a) it is a person

whose ordinary activities involve it in acquiring, holding, managing or disposing of

investments (as principal or agent) for the purposes of its business and (b) it has not

offered or sold and will not offer or sell any Notes other than to persons whose ordinaryactivities involve them in acquiring, holding, managing or disposing of investments (as

principal or agent) for the purposes of their businesses or who it is reasonable to expect

will acquire, hold, manage or dispose of investments (as principal or agent) for the

purposes of their businesses where the issue of the Notes would otherwise constitute a

contravention of section 19 of the FSMA by the Issuer.

(2) it has only communicated or caused to be communicated and will only communicate orcause to be communicated any invitation or inducement to engage in investment activity

(within the meaning of section 21 of the FSMA) received by it in connection with the issue

or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply

to the Issuer and

(3) it has complied and will comply with all applicable provisions of the FSMA with respect

to anything done by it in relation to any Notes in, from or otherwise involving the United

Kingdom.

Japan

The Notes have not been and will not be registered under the Financial Instruments and

Exchange Act of Japan (Law No. 25 of 1948 (as amended) or successor legislation thereto (the

‘‘FIEA’’). Accordingly, each of the Dealers has represented and agreed that it has not, directly or

indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to or

for the benefit of any resident of Japan, or to others for re-offering or re-sale directly or indirectly in

Japan or to or for the benefit of any resident of Japan (which term means any person resident inJapan, including any corporation or other entity organised under the laws of Japan) or to others for

re-offering or re-sale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an

exemption from the registration requirements of, and otherwise in compliance with, the FIEA and

any other relevant laws, regulations and ministerial guidelines of Japan.

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In addition, the Notes will be subject to requirements under the Special Taxation Measures Law

of Japan. Accordingly, each of the Dealers has represented and agreed that it (i) has not, directly or

indirectly, offered or sold any of the Notes to, or for the benefit of, any person other than a Gross

Recipient (as defined below), and (ii) will not, directly or indirectly, offer or sell any of the Notes, (a)as part of the initial distribution by Dealers to, or for the benefit of, any person other than a Gross

Recipient, and (b) otherwise until 40 days after the date of issue, to, or for the benefit of, any

individual resident of Japan or Japanese corporation for Japanese tax purposes (except for (i) a

Japanese financial institution, designated in Article 3-2-2 paragraph (29) of the Cabinet Order relating

to the Special Taxation Measures Act (Cabinet Order No. 43 of 1957, as amended, the ‘‘Cabinet

Order’’) that will hold the Notes for its own proprietary account (a ‘‘Designated Financial

Institution’’) and (ii) an individual resident of Japan or a Japanese corporation whose receipt of

interest on the Notes will be made through a payment handling agent in Japan as defined in Article2-2 paragraph (2) of the Cabinet Order (an ‘‘Article 3-3 Japanese Resident’’)). A ‘‘Gross Recipient’’

as used herein means (a) a beneficial owner that is, for Japanese tax purposes, neither (x) an

individual resident of Japan or a Japanese corporation, nor (y) an individual non-resident of Japan or

a non-Japanese corporation that in either case is a person having a special relationship with the

Issuer as described in Article 6, paragraph (4) of the Special Taxation Measures Act, (b) a Designated

Financial Institution, or (c) an Article 3-3 Japanese Resident.

General

These selling restrictions may be modified by the agreement of the Issuer and the Dealers

following a change in a relevant law, regulation or directive.

No representation is made that any action has been taken in any jurisdiction that would permit

a public offering of any of the Notes, or possession or distribution of this Offering Circular or any

other offering material or any Final Terms in any country or jurisdiction where action for that

purpose is required.

Each Dealer has agreed that it will, to the best of its knowledge, comply with all relevant

securities laws, regulations and directives in each jurisdiction in which it purchases, offers, sells or

delivers Notes or has in its possession or distributes the Offering Circular, any other offering material

or any Final Terms and neither the Issuer nor any other Dealer shall have responsibility therefor.

Certain of the Dealers and their affiliates have engaged, and may in the future engage, in

investment banking and/or commercial banking transactions with, and may perform services to the

Issuer, and/or its affiliates in the ordinary course of business. They have received, or may in the

future receive, customary fees and commissions for these transactions. In addition, in the ordinarycourse of their business activities, the Dealers and their affiliates may make or hold a broad array of

investments and actively trade debt and equity securities (or related derivative securities) and financial

instruments (including bank loans) for their own account and for the accounts of their customers.

Such investments and securities activities may involve securities and/or instruments of the Issuer or its

affiliates. Certain of the Dealers or their affiliates that have a lending relationship with the Issuer

routinely hedge their credit exposure to the Issuer consistent with their customary risk management

policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into

transactions which consist of either the purchase of credit default swaps or the creation of shortpositions in the Issuer’s securities, including potentially any Notes to be offered under the

Programme. Any such short positions could adversely affect future trading prices of the Notes. The

Dealers and their affiliates may also make investment recommendations and/or publish or express

independent research views in respect of such securities or financial instruments and may hold, or

recommend to clients that they acquire, long and/or short positions in such securities and instruments.

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GENERAL INFORMATION

(1) The listing of the Notes on the Official List and admission to trading on the Market will be

expressed as a percentage of their nominal amount (exclusive of accrued interest). It is expected

that each tranche of the Notes which is to be admitted to the Official List and to trading on

the Market will be admitted separately as and when issued subject only to the issue of atemporary or permanent Global Note (or one or more Certificates) in respect of each Tranche.

The listing of the Programme in respect of the Notes is expected to be granted on or before

6 November, 2012. Prior to official listing and admission to trading, however, dealings will be

permitted by the Market in accordance with its rules. Transactions will normally be effected for

delivery on the third working day after the day of the transaction. However, unlisted Notes may

be issued pursuant to the Programme.

(2) No government consent, approval or authorisation in Japan is necessary for the update of the

Programme. The update of the Programme was duly authorised by NTT on 6 August, 2012.

(3) There has been no significant change in the financial or trading position of NTT or the NTT

Group since 30 June, 2012 and no material adverse change in the financial position or prospects

of NTT or the NTT Group since 31 March, 2012.

(4) Neither NTT nor any of NTT’s subsidiaries is or has been involved in any governmental, legal

or arbitration proceedings that may have, or have had during the 12 months preceding the date

of this document, a significant effect on the financial position or profitability of NTT or the

NTT Group nor is NTT or NTT and its consolidated subsidiaries aware that any such

proceedings are pending or threatened.

(5) Notes have been accepted for clearance through the Euroclear and Clearstream, Luxembourg

systems (which are the entities in charge of keeping the records). The Common Code, the

International Securities Identification Number (ISIN) and (where applicable) the identification

number for any other relevant clearing system for each Series of Notes will be set out in therelevant Final Terms. The address of Euroclear is 1, Boulevard du Roi Albert II, B-1210

Brussels, Belgium, and the address of Clearstream, Luxembourg is 42, Avenue JF Kennedy, L-

1855 Luxembourg. The address of any alternative clearing systems will be specified in the

applicable Final Terms.

The issue price and the amount of the relevant Notes will be determined before filing of the

relevant Final Terms of each Tranche, based on then prevailing market conditions. NTT does

not intend to provide any post-issuance information in relation to any issues of Notes.

(6) For so long as Notes may be issued pursuant to this Offering Circular, the following documents

will be available, during usual business hours on any weekday (Saturdays and public holidays

excepted), for inspection at the office of The Bank of Tokyo-Mitsubishi UFJ, Ltd., London

Branch:

(i) the Agency Agreement (which includes the form of the Global Notes, the definitive Bearer

Notes, the Certificates, the Coupons, the Receipts and the Talons) (as amended or

supplemented)

(ii) the Dealer Agreement (as amended or supplemented)

(iii) the Deed of Covenant (as amended or supplemented)

(iv) English translations of the Articles of Incorporation of NTT and the NTT Law

(v) the audited consolidated financial statements of NTT for the two financial years ended

31 March, 2011 and 2012 and the latest interim unaudited consolidated accounts of NTT.

(vi) each set of Final Terms for Notes that are listed on the Official List and admitted to

trading on the Market or any other stock exchange and

(vii) a copy of this Offering Circular together with any supplement to this Offering Circular or

further Offering Circular.

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(7) KPMG Azsa & Co. (registered by the Japanese Institute of Certified Public Accountants) has

solely audited the annual consolidated financial statements of NTT for the fiscal year ended

31 March, 2011 and 2012 without qualification.

(8) NTT has covenanted to the Permanent Dealers that, in respect of Notes listed on the Official

List of the UK Listing Authority, NTT will use its best endeavours to maintain the listing

thereof except where (a) the Issuer, after using all reasonable endeavours, is unable to complywith the requirements for maintaining such listing; (b) the Issuer determines that the application

of UK Listing Authority rules would make the maintenance of such listing unduly onerous; or

(c) for any reason other than (b) above, the maintenance of such listing is agreed by all

Permanent Dealers to have become unduly onerous. In such circumstances, NTT will be entitled

to delist the Notes from the Official List of the UK Listing Authority and would use its best

endeavours to seek an alternative listing for the Notes on a major stock exchange as it may

(with the consent of the Permanent Dealers in the case of (a) and (c) above) decide.

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ISSUER

Nippon Telegraph and Telephone Corporation

3-1, Otemachi 2-chomeChiyoda-ku

Tokyo 100-8116

ARRANGER

Merrill Lynch International2 King Edward Street

London EC1A 1HQ

DEALERS

Barclays Bank PLC5 The North Colonnade

Canary Wharf

London E14 4BB

BNP PARIBAS10 Harewood Avenue

London NW1 6AA

Citigroup Global Markets Limited

Citigroup Centre

Canada SquareCanary Wharf

London E14 5LB

Credit Suisse Securities (Europe) Limited

One Cabot Square

London E14 4QJ

Daiwa Capital Markets Europe Limited

5 King William Street

London EC4N 7AX

Deutsche Bank AG, London Branch

Winchester House

1 Great Winchester Street

London EC2N 2DB

Goldman Sachs International

Peterborough Court

133 Fleet Street

London EC4A 2BB

J.P. Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

Merrill Lynch International2 King Edward Street

London EC1A 1HQ

Mizuho International plcBracken House

One Friday Street

London EC4M 9JA

Morgan Stanley & Co. International plc

25 Cabot Square

Canary Wharf

London E14 4QA

Nomura International plc

1 Angel Lane

London EC4R 3AB

UBS Limited

1 Finsbury Avenue

London EC2M 2PP

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FISCAL AGENT AND PRINCIPAL PAYING AGENT

The Bank of Tokyo-Mitsubishi UFJ, Ltd., London Branch

Ropemaker Place25 Ropemaker StreetLondon EC2Y 9AN

REGISTRAR AND TRANSFER AGENT



CALCULATION AGENT



AUDITOR

KPMG Azsa & Co.

Azsa Center Building1-2 Tsukudo-cho

Shinjuku-ku, Tokyo, 162-8551

LEGAL ADVISERS

To the Issuer in respect of Japanese law

Anderson Mori & TomotsuneIzumi Garden Tower

6-1, Roppongi 1-chomeMinato-ku, Tokyo 106-6036

To the Dealersas to English law

Gaikokuho Kyodo-Jigyo Horitsu Jimusho LinklatersMeiji Yasuda Building 10F1-1, Marunouchi 2-chome

Chiyoda-ku, Tokyo 100-0005

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imprima — C107236