Jan. 4 (Bloomberg) -- Nippon Telegraph & Telephone Corp., Japan's biggest phone operator, fell the most in almost eight months in Tokyo trading after the Nikkei newspaper reported the company will cut leasing fees for its fiber-optic lines.

NTT's stock dropped 5.6 percent to 528,000 yen in the first trading session since Dec. 28. That was the biggest decline for the shares since May 14. The Tokyo-based company plans to cut leasing fees by as much as 7 percent from the fiscal year starting April 1, the Japanese-language newspaper said on Dec. 29.

NTT, a former phone monopoly, is Japan's sole operator of nationwide fiber-optic networks and currently charges 5,074 yen ($46) per cable for other carriers to use its system. Lower fees may help rivals including KDDI Corp. to lower costs of offering fiber-optic services.

``A fee reduction isn't positive for the company'' as lower rates will make it easier for other operators to enter the fiber- optic market, said Hiroshi Suyama, an analyst at Mizuho Investors Securities Co. ``Increased competition will affect the company's earnings though it's still unclear to what extent.'' He rates NTT's shares ``neutral.''

NTT East Corp. and NTT West Corp., the company's regional units, will file proposed new rates by Jan. 15 with the telecommunication ministry, spokesman Masaya Suzuki for NTT East and Yasuhiro Iida for NTT West said today. An advisory panel will discuss NTT's leasing fees on that day, according to the ministry's Web site.

The current fees, which have been in force since April 2001, will expire on March 31 this year, Suzuki said.

NTT East and West had a combined share of 71 percent in the nation's 10.5 million-subscriber market for fiber-optic services at the end of September, according to MM Research Institute Ltd. KDDI, the second-largest fiber-optic operator, had 668,000 subscribers, the Tokyo-based researcher said.

NTT shares fell 4.6 percent in 2007, with the benchmark Nikkei 225 Index slipping 11 percent.

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

Last Updated: January 3, 2008 22:45 EST