Presentation Materials

There is a 1,575 yen difference in monthly charges between the flat-rate plans for i-mode phones and smartphones. I believe users are using your service nowadays without being so aware of the difference between i-mode and smartphones. How much longer do you think you can maintain your current rate structure whereby you charge a 1,575 yen premium for smartphones? Please share your thoughts on future rate settings, including the possibility of a reduction in rates.

Rate setting is one of the fundamental building blocks of our business, and we plan to consider our rates after comprehensively reviewing various factors, including the upcoming introduction of LTE. While it may not be easy to reach any conclusion on this, we plan to study this matter taking into full account the opinions of our customers and others.

Can you quantify the negative revenue impact of reducing the minimum rate of flat-rate packet billing plans?

We do not believe reducing the minimum monthly rate of the flat-rate packet billing plans has negatively affected our revenues. The minimum rate reduction enabled us to significantly increase the total number of flat-rate subscriptions and capture many low-ARPU users. Our challenge going forward will be how to boost the usage of these low-ARPU users who have joined flat-rate packages, and we intend to prepare content and services that can stimulate the data usage of low-ARPU users.

The naming of services for smartphones is too complicated. Different names are applied to each individual element of services you offer, which makes them difficult to understand. Can't these be more streamlined?

We would like to review services and billing plans that are difficult to understand from our customers' viewpoint.

How do you plan to steer medium and light users toward increasing their usage? What kind of steps have you taken during FY2009?

We have placed advertisements introducing the Auto-GPS function in an airport setup using Haneda Airport as part of our mass media advertisements. We have also expanded the variety of local information content. In addition, we have encouraged customers to subscribe the "i-concier" service when they visit our shops, and assist customers that have signed up for the service by configuring the initial phone setup at our shop counters. These efforts have led to a marked decrease in the number of churns. We believe it is important to continually sustain these kinds of small steps. Furthermore, we also intend to enrich the variety of content offered in the i-mode business that is relevant to our users' everyday life.

You project acquiring 175,000 net additional i-mode subscribers during this fiscal year. Can you explain how this relates to your smartphone sales plan?

Of the total new subscribers joining FOMA service, some 95% also subscribe to i-mode simultaneously. Although we have not yet made any estimate concerning the breakdown of smartphone subscriptions (as to the number of new subscribers and subscribers migrating from FOMA) due to the fact that users switching from i-mode to smartphones only constitute a small portion of smartphone user numbers, we believe that the number of net additional new FOMA i-mode subscriptions will be almost equal to the amount of total net gains. In addition, we also include subscribers migrating from mova to FOMA in the i-mode net additions forecast as we are currently facilitating the migration of these subscribers.

In concrete terms, how do you plan to incorporate i-mode in open OS devices?

We are studying ways to realize i-mode compatibility with both new and existing devices. Specifically, we believe we can achieve this through over-the-air downloading or the use of applications. In the case of over-the-air downloading, we need to resolve issues regarding billing, etc. Currently, we are still at the stage of researching the optimal way to incorporate i-mode capabilities in these devices.

Although India's TTSL has successfully expanded its subscriber base, I understand that its revenues have not increased relative to its competitors. Do you think TTSL is making a favorable progress in their business?

TTSL's success at acquiring new subscribers is due mainly to the second-based billing scheme, which they introduced ahead of the competition. If their performance looks inferior compared to other operators, we believe it is because the second-based billing system has affected their business for a longer period of time than its competitors. Growth in the number of subscribers generally has a diluting effect on ARPU, but this is not something unique to TTSL, and we believe TTSL's performance is making progress in line with the business plan.

How do you plan to respond to the removal of SIM lock?

Based on the premise that we will basically follow the guidelines set out by the Ministry of Internal Affairs and Communications, we will decide on our approach after carefully ascertaining the needs of our customers. Even if SIM lock is removed, the communication systems, services and spectrum used by each carrier varies, and so it is important to ensure that customers understand these conditions beforehand.

You mentioned that you do not intend to finance auction costs in India, but do you have any plans to shoulder TTSL's capital expenditures? Can you also comment on the possibility of making any additional investment in your Indian partner?

The auction results are expected to become clear in mid-May, and we will not be able to anticipate the format of TTSL's business operations until the bidding is finished. The subsequent operation of the business will only start from the fall at the earliest. Since there is still time before that occurs, we would like to thoroughly consider our strategies first.
We decided on our investment in TTSL after internally conducting studies on expected returns and the number of years required to recover our investment, and these studies were predicated upon TTSL business operations using GSM not 3G. If TTSL is granted a license as a result of the auction, they will build a new network on top of GSM, for which we will have to conduct a separate study.

You recorded approximately 830 billion yen in operating income for both FY2008 and FY2009, and you mentioned that the outlook for FY2010 is 840 billion yen, which you plan to achieve by raising the data ARPU. What are your views at this point on the likelihood of attaining the 900 billion yen operating income target for FY2012?

FY2009 was the year of "sowing the seeds" and FY2010 is the first year of "execution" of our "Challenge" programs. During these years, we will secure profitability by also working on improving our operational efficiency. As we move forward, we will strive to bring these efforts to fruition. With respect to the "Challenge" programs, we intend to secure revenues of 300 billion yen by cultivating business in three areas. Assuming that these efforts bear fruit, we believe we can achieve growth in packet ARPU and reach our operating income target for FY2012.