Japanese

Presentation Materials

• Discount packages

  Q1 What are the aims to introducing the "Fami-wari MAX 50" and the "Hitoridemo Discount 50" services?

  Open

  A1 We believe our existing billing plans compare favorably with those of our competitors. However, to counter the recent offensive by Softbank, we decided to launch billing plans with more impact ("Fami-wari MAX" and "Hitoridemo Discount") and made an announcement thereof. Subsequently, KDDI announced a new plan offering higher discount rates, so we decided to catch up with their rates.
  With the new discount packages, users are required to enter into a two-year contract. Because the total number of net additional subscribers in the market is decreasing year by year, our ability to curb churns will be a crucial point. We expect the new billing plans to help reduce churns, as users will have to commit to a two-year service contract under these plans (and cancellation before the end of the contract term will incur cancellation charges).

  Q2 Do you plan to take a step further, to not only have your subscribers sign up for a two-year service period contract, but also bind them to use the same handset for two years?

  Open

  A2 At this time, the newly announced billing plans are not conditional upon the usage "period" of handsets, but we are still considering this issue. In general, Japanese mobile phone users are not familiar with the concept of "periods". We hope the newly announced billing plans will serve to enhance their awareness of "periods".

  Q3 How do you expect the new discount packages, which bind customers for two years, to impact your churn rate?

  Open

  A3 We believe it will reduce the churn rate to some extent, but our estimates on its revenue impact do not factor in any decrease in the distributor commissions to be achieved through reduced churns. The negative impact on our revenues for this fiscal year resulting from these new billing plans is currently estimated to be approximately 40 billion yen. This estimate calculates only the downside of the new billing plans.

  Q4 Do you plan to introduce more pricing measures going forward?

  Open

  A4 We have not decided on any details as to when or what kinds of measures will be implemented because plans will be affected by the state of competition. However, every year we prepare reserves that will allow us to discount our rates to a certain extent. The negative impact from the new discount packages announced this time (approximately 40 billion yen) is within the range expected in our original business plan, and we have therefore made no changes to our full-year operating income guidance of 780 billion yen.

  Q5 I believe your revenues will be negatively affected by as much as 150 to 160 billion yen over the next few years with the introduction of these new billing plans. How do you plan to recover this? Do you plan to fundamentally change your business model of handset distribution to bring down costs?

  Open

  A5 As you correctly point out, the new discount packages will likely impact our revenues by more than 100 billion yen over the next few years. However, we plan to alter our business model of handset sales within the next few years. We need to carefully study which method to take and the timing for the introduction of the new scheme.

• Net additions

  Q6 Give us your analysis on the reasons why you are facing difficulty in growing net additions for each segment—corporate and residential users.

  Open

  A6 While we have not made a detailed analysis, we are not losing corporate subscribers to our competitors as far as the Mobile Number Portability (MNP) market is concerned. The number of net additional subscribers that we acquired was slightly lower than our target, but the principal reasons for the sluggish performance in the share of net additions include the following: 1) the subscriber growth in the overall market was greater than our projections, and 2) our churn rate was higher than expected while the number of new handsets sold was almost in line with our projections. Going forward, we aim to curb the churn rate by leveraging the new discount packages.

• Network

  Q7 Describe the current state of your network quality, which has been considered one of the major reasons why you have been losing subscribers in the MNP market.

  Open

  A7 The coverage of our FOMA network has been expanded to a level at least comparable or even superior to that of our mova network. We have been working to improve our coverage by installing base stations in response to customers' requests. We will continue to invest in quality enhancement this fiscal year, because responding to customers' requests for coverage improvement is an endless effort.
  Network-related concerns accounted for approximately 20% of the reasons for subscribers' port-out from DoCoMo to other carriers immediately after the launch of MNP. That number has recently come down to approximately 10%. Nevertheless, because as many as 10% of port-out subscribers cite dissatisfaction with our network as their reason for leaving, we are committed to continuing our quality improvement endeavors.

• Capital expenditures

  Q8 Give us your forecast on capital expenditures following the introduction of Super 3G.

  Open

  A8 As opposed to the roll-out of 3G, for which we needed to construct a completely separate network from 2G, Super 3G will be overlaid onto our existing 3G network. In addition, we will be able to flexibly adjust the speed of its roll-out, keeping pace with the availability of services and demand from users. We therefore do not foresee a significant increase in capital expenditures over the current level.

• Organization

  Q9 You announced the establishment of a Corporate Branding Division to be headed directly by the CEO. What kinds of results can we expect from this new organization?

  Open

  A9 The new team will be responsible for studying the branding and channels suitable for the new business models. We cannot resolve our current challenges simply by adding new branding onto the existing distribution structure of DoCoMo Shops/external distributors. The market environment is changing, so we must carry out our marketing and branding activities in a uniform and concentrated manner, because they will lose their appeal if conducted individually by different units in the company. The appointment of the CEO as Managing Director of the new division demonstrates our resolve in this undertaking, and the entire company is committed to working proactively on these issues.

  Q10 Will the promotions that are currently implemented individually by regional DoCoMo subsidiaries be unified as well?

  Open

  A10 Efforts to unify our approach are already underway. Going forward, we plan to promote branding which gives an even stronger impression of unity.

  Q11 Why was this particular timing chosen for the establishment of the DCMX Department?

  Open

  A11 The mobile credit business we are promoting can be separated into a branding business (iD) and an issuing business (DCMX). The business models used for the two businesses are totally different, and we had wanted to clearly differentiate between the two at some point. The reason why we established a new department at this juncture is because we decided to strengthen the issuing business by separating it into an independent unit with separate P/L accounting, now that we have increased the variety of our card lineup with the addition of Gold/Family/ETC cards and created the foundation for further expansion of DCMX membership.

• Return to Shareholders

  Q12 What are your thoughts on the possibility of dividend hikes?

  Open

  A12 We are aware of our shareholders' expectations for dividends. This fiscal year, we plan to raise our dividends by 20% over the previous term to 4,800 yen per share. As this will raise our payout ratio to approximately 44%, we do not believe our dividend payout rank among the low levels.

• Others ("2in1" service/spectrum license)

  Q13 You mentioned that the number of "2in1" subscribers has reached 100,000 — are these users newly acquired from your competition or your existing subscribers?

  Open

  A13 While I cannot comment on the details, 90% of "2in1" subscribers are users who added another subscription (circuit) to their existing cellular contract, and those who bundle multiple subscriptions into a single handset account for 10%. The service is primarily subscribed to by the younger generation.

  Q14 Do you plan to apply for the 2.5GHz band license as an investor owning less than 1/3 of the applicant, or not?

  Open

  A14 I guess the question refers to the WiMAX license. Because we are allowed to apply for the license if our stakeholding in the applicant is less than 1/3, we will be considering this matter within the NTT Group.