Nov. 9 (Bloomberg) -- Nippon Telegraph & Telephone Corp., the second-slowest growing company listed on Japan's Nikkei 225 Stock Average, posted a 69 percent decline in second-quarter profit as earnings fell at its mobile-phone unit.

Net income slipped to 45.6 billion yen ($405 million) in the three months ended Sept. 30 from 146.8 billion yen a year earlier, according to the figures provided by Tokyo-based NTT, Japan's largest phone company. One-time losses related to taxes at its regional unit contributed 68.6 billion yen to the profit decline.

The company seeks to attract users to a fiber-optic network for Internet access and calls to reduce reliance on its mobile unit NTT DoCoMo Inc., whose second-quarter profit fell 15 percent. NTT today said it will miss an original target for users at the fiber network, undermining efforts to bolster earnings outside of mobile services, which account for 77 percent of operating profit.

``Bad results have been already expected and the stock price has already reflected them,'' said Fumiyuki Nakanishi, an equity strategist at SMBC Friend Securities Co. in Tokyo.

NTT's stock fell 3 percent to 494,000 yen at the close on the Tokyo Stock Exchange, taking losses this year to 16 percent. The company reported earnings after markets shut.

The former state-run monopoly today cut its forecast for users at the fiber network to 20 million for the year ending March 31, 2011, from an original target of 30 million.

``We considered our three-year progress, future demand and competition we will face in the high-speed Internet market,'' Chief Executive Officer Satoshi Miura told reporters at a news briefing in Tokyo.

Stock Buyback

Subscribers to NTT's fiber-network services rose 9.5 percent to 7.42 million as of Sept. 30 from the end of June. The growth slowed from 12 percent in the first quarter.

The telephone operator plans to buy back as much as 1.45 percent of its own shares for 100 billion yen, the company said.

NTT said annual net income will rise 11 percent to 530 billion yen, reversing from a May forecast for a decline, because of a one-time reduction in pension payments after a regulatory change. Sales are estimated to drop 1.5 percent to 10.6 trillion yen, compared with an earlier forecast 10.7 trillion yen, because of revenue loss from unused telephone cards, NTT said.

Second-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, dropped 20 percent to 264.8 billion yen. Sales declined 0.9 percent to 2.6 trillion yen.

The company's sales rose 0.18 percent in the last fiscal year ended March 31. That makes NTT the slowest-growing among members on the Nikkei 225 Stock Average whose revenue increased last year, behind watch maker Citizen Holdings Co., according to data compiled by Bloomberg.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net

Last Updated: November 9, 2007 04:56 EST