Aug. 5 (Bloomberg) -- Nippon Telegraph & Telephone Corp., Japan’s largest fixed-line phone operator, said first-quarter profit fell 20 percent because of lower earnings at its mobile phone unit.

Net income declined to 139.6 billion yen ($1.47 billion) in the three months ended June 30, from 175.5 billion yen a year earlier, the Tokyo-based company said today.

Operating profit, or sales minus the cost of goods sold and administrative expenses, dropped 12 percent to 325.8 billion yen from a year earlier, the company said. Revenue slipped 3.5 percent to 2.5 trillion yen.

NTT, which derives 75 percent of its profit on the mobile- phone unit, is forecasting annual operating income that’s unchanged from a year earlier, as revenue in the business declines. NTT DoCoMo Inc., 63 percent-owned by the parent, last month reported lower earnings after it cut data transmission charges to match competition.

NTT, in which the Japanese government holds a 34 percent stake, added 1 percent to close at 3,970 yen in Tokyo trading before the earnings release. The stock has lost 15 percent this year, compared with a 16 percent gain by the benchmark Nikkei 225 Stock Average.

NTT DoCoMo, Japan’s largest mobile-phone operator, last month reported net income in the quarter declined 15 percent to 147.4 billion yen. Operating profit fell 15 percent to 251.8 billion yen, as revenue dropped 7.3 percent to 1.08 trillion yen.

Mobile Charges Cut

DoCoMo in May slashed its minimum data charges to as low as 490 yen per month and further to 390 yen starting August 1, to bolster demand for data service as revenue from voice traffic slumps. The cheaper tariffs will trim operating profit by 40 billion yen this year, the company said in April.

NTT’s net income for the 12 months to March 31 will probably decline 15 percent to 460 billion yen from a year earlier, when the company had a lighter tax burden, the carrier said. Operating profit may be unchanged at 1.11 trillion yen, as revenue falls 1.1 percent to 10.3 trillion yen, it said.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: August 5, 2009 02:40 EDT