Presentation Materials

It seems that distributor comission is expected to decrease this fiscal year. How do you hold down the distributor comission?

We would like to avoid a constant increase in distributor commissions, and instead control it by varying the amount of commissions, for example, depending on the timing such as before and after the introduction of number portability. Going forward, we plan to reduce handset procurement costs by reviewing the procurement method and sharing R&D expenses with the manufacturers, and cut our operating expenses by actively introducing less expensive models, e.g., the SIMPURE series.

Give us your projections on the number of handsets to be sold this fiscal year.

The number of handsets to be sold this fiscal year is expected to increase more than the previous fiscal year.

You explained that your are planning to cut distributor commissions per unit this fiscal year, while the handset procurement cost per unit is expected to increase. Do you think this is truly achievable?

We aim to reduce our overall expenses through a more efficient use of commissions, e.g., by targeting specific segments in sales. Also, the expenses for FY2005 grew higher than usual because of extraordinary events like the "50 million subscriber campaign" etc.

How many HSDPA handsets do your plan to sell this fiscal year?

At the time of service launch, we plan to offer one model in the handset-type form factor, and one PC card-type model. We will first start the service in the 23 Wards of Tokyo, and thereafter expand the coverage to 70% of the populated areas in Japan by the end of March 2007. We, therefore, are not expecting a huge uptake of HSDPA handsets during this fiscal year.

For more details concerning HSDPA service, please see "HSDPA Presentation Material" below.

(Open a PDF file)HSDPA (PDF format:153KB) 2 pages

Are there any further price cuts planned for this fiscal year?

With the rate revisions implemented during the last 12 months, e.g., the introduction of new billing plans and lifting the subscription restrictions relating to the flat-rate package, we believe we have undertaken all necessary measures in the area of pricing plans for the time being.

Is the contribution from "DCMX" business included in your revenue projections for this fiscal year?

Yes, it is included in our business plan for this fiscal year, but we cannot disclose the concrete figures. Our near-term goal is to grow its membership to 10 million, and we made our first step toward this goal this fical year.

How do you consider the risks of irrecoverable debts and/or reputation risks that may arise as a result of offering "DCMX" service?

Certain risks associated with the provision of financial services are factored in our business plans, and we believe these risks are manageable through our collaboration with Sumitomo Mitsui Card, Co. Ltd.

Will DoCoMo be ethe primary entity in the NTT Group to study the introduction of WiMAX?

We are carrying out experiments on WiMAX technology together with NTT East, NTT West and NTT-BP. We plan to experiment and study various possibilities, including fixed and mobile communications as well as other communications service that lie in between the two.

Does your capital expenditures forecast for this fiscal year (905 billion yen) include expenses related to the roll-out of NGN (Next Generation Network) facilities?

No, they are not included.

Will DoCoMo's IMS (IP Multimedia Subsystem) core network be integrated into the NGN concept advocated by the NTT Group in the future?

We need to decide after looking into the benefits from integration, but a simple integration of all networks may not necessarily be the right solution.

Do you have concrete results from surveys concerning users' willingness to switch carriers after the introduction of number portability?

Different surveys have been carried out by various institutions, and DoCoMo is also conducting surveys every three months. What we know as a general trend from these surveys is that respondents, who were previously more eager to port numbers, have become less interested as the actual conditions became clearer. Also, previously there was a general perception that our rate plans are more expensive compared to the competition's, but we successfully elimiated this percepetion with the series of rate revisions, which we believe contributed to the improvement in the survey results.

When will you start to see quantitative results from your cost-cutting measures?

In this fiscal year's business plan, we have already factored in savings of several tens of billion yen from the reduction of distributor commissions, network costs and other costs, and we are committed to continuing our efforts to further reduce costs.

Adjusted free cash flow for this fiscal year is expected to drop to 280 billion yen. What are the major reasons behind this sharp year-on-year reduction?

In our results forecasts for this fiscal year, under ordinary circumstances, free cash flow can be estimated at approximately 400 billion yen after subtracting capital expenditures of approximately 900 billion yen from EBITDA of approximately 1,600 billion yen, and estimating the corporate taxes based on an operating income of approximately 800 billion yen. However, for this fiscal year, we appropriated the cost for investments that have already been decided, the impact resutling from the launch of credit business and other increases in expenses associated with strategic business activities. The corporate taxes, which reduced temporarily last fiscal year owing to the losses from the sale of AT&T Wirelss shares in FY2004, are also expected to increase in the current fiscal year. Because of these factors, we estimated the free cash flow for this fiscal year to be approximately 280 billion yen.

Will there be an impact from the launch of credit business to your free cash flow for next fiscal year (FY2007) and subsequent years?

It depends on how we expand the credit business next fiscal year and beyond, but the risks of an increase in current liabilities cannot be ruled out.