UPDATE 2-NTT underlying profit solid, may lift div - media

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TOKYO, May 12 (Reuters) - Underlying profits at Nippon Telegraph and Telephone Corp (9432.T: Quote, Profile, Research, Stock Buzz) will grow in the 2008/09 year and it may hike its dividend, the Nikkei business daily reported on Monday, and the shares rose 1.2 percent.

Operating profit for the just completed year to March 2008 was expected to rise 17 percent to about 1.3 trillion yen ($12.6 billion), the paper said, or around 1.1 trillion yen excluding 190 billion yen from pension savings and other one-off effects.

It said NTT's group operating profit was expected to be around 1.15-1.2 trillion yen in the year ending March 2009, boosted by subsidiaries such as NTT DoCoMo Inc (9437.T: Quote, Profile, Research, Stock Buzz), Japan's largest mobile operator.

The paper added the company, one third owned by the Japanese government, may hike its dividend by 11 percent to 10,000 yen per share in 2008/09.

Separately, a source familiar with the matter said on Saturday NTT planned to conduct a 100-for-1 stock split to eliminate fractional shares before electronic stock certificates are introduced next year. [ID:nT196682]

The Nikkei estimate for 2008/09 matches the average expectation of 15 analysts polled by Reuters Estimates for a 1.21 trillion yen operating profit in 2008/09.

The progress of its so-called next-generation network (NGN) service will be key for the company's outlook, analysts say. The NGN will enable the smooth transmission of movies, music and other heavy content. NTT started the commercial service in March.

For 2007/08, the paper said NTT's profit would top the company's own projection of 1.26 trillion yen. The Nikkei estimate is also higher than a consensus forecast of 1.28 trillion yen in a poll of 11 analysts by Reuters.