Japan’s Deregulated Phone Giant Is Scrambling : Communications: NTT, facing competition for the first time, has seen its share price fall by 80%.

Masashi Kojima looks and sounds like a worried man--and for good reason.

He is president of mammoth Nippon Telegraph & Telephone Corp., once the world’s most valuable company. At its peak, it was worth $260 billion and its shares sold for an astounding 3.18 million yen apiece, or $25,040.

Now the fallen star of the Tokyo Stock Exchange sells for only 609,000 yen a share, or $4,795. And it may be headed even lower as the company faces serious competition from newcomers to telecommunications and a market saturated with telephones.

“If I were president of an American company where management is judged by quarterly performance instead of a relatively tolerant Japanese company, I might not be sitting here talking to you,” Kojima said at a June 10 luncheon.

NTT reported a second straight year of falling profit in the fiscal year ended March 31--down 19% to 190.9 billion yen, or $1.5 billion.

Kojima, 62, has won some victories in his unenviable task of turning things around. Two years after he vowed to get the government to lift a ban on foreign ownership of stock in the former telecommunications monopoly, he got what he wanted.

Officials are expected to set a date soon for allowing foreign investors to buy up to 20% of NTT’s 15.6 million shares outstanding. The government decided that foreign ownership is less a threat to the national interest than no buyers at all.

Market analysts in Tokyo, however, say they don’t expect foreigners to rush in.

“They think that if the Japanese people won’t buy it, maybe foreigners will,” said Kathy Matsui, market strategist for Barclays de Zoete Wedd in Tokyo. “We aren’t getting any requests for reports on NTT from our clients.”

The Finance Ministry still holds 65% of NTT. It has repeatedly postponed plans to sell 500,000 shares a year because of falling stock prices.

“Please buy 5 million shares of our stock,” Kojima joked to a foreign reporter during a recent group interview.

But the chain-smoking executive with the intense look of concentration behind his glasses wasn’t joking about the competition that NTT faces six years after becoming a semiprivate corporation.

The competition from domestic long-distance companies set up since 1989 has forced NTT to lower its long-distance rates, cutting into profits, while its local telephone services still run up large deficits.

Its competitors, which include DDI, Japan Telecom Co. and Teleway Japan Corp., have targeted profitable urban markets, while NTT continues to maintain nationwide service to many areas that are unprofitable, Kojima complained.

“They are cream skimming or cherry picking,” he said. “This is not an appropriate kind of competition.”

NTT has also been forced to spin off many of its most profitable businesses, including its mobile phone service.

So far, the company has successfully resisted pressure to split its principal telephone business into smaller divisions--a move that Kojima said would hurt its ability to invest heavily in research and development and to develop international business ties.

It has cut bonuses and frozen wages for its board members and managers, reduced the number of new employees recruited annually from 3,000 to 1,000 and used early retirement plans to slash its work force by 64,000 to 253,000.

Kojima said NTT will continue to lobby for an increase in local call rates as it seeks a way out of its predicament.

“We’re doing everything within the law that we can,” he said. “From now on, it’s up to the politicians.”