Achieved Increases in Operating Revenues and Operating Income Exceeding Forecast

We positioned the fiscal year ended March 31, 2018 (FY2017) as the year to "Challenge to Evolve" by taking the first steps toward the realization of our Medium-Term Strategy 2020 "Declaration beyond." We have accordingly worked to reinforce our business foundation and achieve stable and sustainable profit growth.

As a result, we attained increases in operating revenues and operating income in FY2017, both exceeding our forecast. We posted operating revenues of ¥4,769.4 billion, an increase of 4.0% year-on-year, and operating income of ¥973.3 billion, up 3.0%. Net income attributable to NTT DOCOMO, INC. also increased 14.1% over the previous fiscal year to ¥744.5 billion.

While maintaining our ongoing efforts for cost efficiency improvement, we will continue to channel management resources into growth investment toward the realization of "Declaration beyond" and commit ourselves to ensuring "continuous increases in dividends" as returns to shareholders.

Attaching Equal Importance to Income-Based Business Indicators

In the fiscal year ended March 31, 2017 (FY2016), DOCOMO shifted its management focus from income-based targets to those emphasizing cash generation capability and started using operating free cash flow (FCF), which is calculated by subtracting capital expenditures from earnings before interest, taxes, depreciation and amortization (EBITDA), as a new business target. The reason for the shift was to provide an indicator that is easier to compare over time following a change in our depreciation method in FY2016, as we expected a large fluctuation in operating income after the change.

Nevertheless, even though operating FCF is an important indicator, we have come to rethink that investors and other stakeholders may prefer simpler indicators after all, such as operating income and net income. In the fiscal year ending March 31, 2019 (FY2018), our accounting standards will transition from the U.S. Generally Accepted Accounting Principles (U.S. GAAP) to the International Financial Reporting Standards (IFRS). Given that the transition is not expected to cause a significant impact on our financial status, we have decided to attach equal importance to profit-based business indicators in the future.

More Efficient Use of Capital Expenditures to Further Reinforce Our Management Foundation

Building telecommunications networks requires large capital expenditures. Recently, network traffic tends to increase among smartphone users as contents become more diverse and new services are launched. We are required to respond to the rising traffic demand and increase the speed of our networks.

DOCOMO has been promoting the establishment of a powerful network with an eye to providing greater ease of access and has provided a high-quality telecommunications environment for customers. In FY2017, we increased the number of "PREMIUM 4G" base stations from 69,700 to 108,300 to make our network more reliable and stress-free. We also increased the number of LTE base stations from 161,900 to 185,000 throughout Japan with the aim of expanding the area coverage of our LTE service.

As a result, DOCOMO's total capital expenditures for FY2017 amounted to ¥576.4 billion, down ¥20.7 billion, or 3.5%, from the previous fiscal year. The decrease was attributable to our pursuing more efficient use of capital expenditures in relation to telecommunications networks for further strengthening our business foundation. Specifically, we reduced equipment procurement and other costs and improved the efficiency of telecommunications facilities construction. In addition, we proactively promoted the consolidation and capacity expansion of our facilities through the introduction of high-performance equipment for the purpose of reducing our future network operation costs.

In FY2018, we will promote investment to ensure our competitive advantage in terms of network quality by responding to the increasing traffic and expanding the service area of "PREMIUM 4G" as well as to gain competitiveness through the introduction of cutting-edge technologies. In FY2019, we will also start making the necessary investment to prepare ourselves for the introduction of 5G. We plan to maintain our annual capital expenditures at around ¥570.0 billion by continuing to ensure efficient investment through appropriate management while effectively utilizing our existing facilities.

Entering a Phase to Translate the Outcomes of "Declaration beyond" into Profits

We position FY2018 as the year to "innovate and take action" and will encourage business innovation centered on our membership base and make investments with an eye to growth as the two pillars of our efforts in implementing "Declaration beyond."

In FY2018, during which we launched our "Declaration beyond" strategy, we carried out trial projects mainly focusing on co-creation with partners. In FY2018, we will move on to the next phase of the strategy to yield substantial results and translate them into profits. DOCOMO engages in a stable subscription-based business, which is underpinned by one of the largest customer bases in the industry and is characterized by its relatively low financial risk. To maximize profit in and after FY2018, my duty is to make sure to carry out the necessary investment in an efficient and timely manner while keeping our risk at an appropriate level.

For our medium-term plan, which we will be announcing this fall, we will have thorough discussion with each department and closely examine every figure in the plan so that we can create realistic business targets that are in agreement with stakeholders.

Increasing Corporate Capability through Dialogue

In holding dialogues with investors and analysts, I will take the lead myself and sincerely listen to their requests and comments in order to facilitate a level higher, more refined communications with them.

Institutional investors supporting the stock markets represent a pool of knowledgeable people who have been following the latest developments in the telecommunications industry. They were the ones to predict, before anyone else, that mobile phones will become the main player and dominate the telecommunications market. I hope to increase our corporate capability by obtaining their comments and advice based on their forward-looking perspective about our management and future vision.

As for shareholder returns, we are committed to a continuous increase in dividends and expeditious share repurchase. For FY2017, DOCOMO increased annual cash dividends by ¥20 over the previous fiscal year and paid annual cash dividends per share of ¥100, as well as carried out repurchase of its shares amounting to approximately ¥300 billion.

We will continue to meet the expectations of shareholders as a company that keeps taking on challenges and achieves steady growth.