Presentation Materials
Principal Questions and Answers Earnings Release for FY2007 1H (ended Sep. 30, 2007)
Announced on October 26, 2007
Please be advised that the following text has been edited/modified from the original Q&A conversations for the sake of clarity.
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Revised full-year results forecasts and business management policies
Q1 You revised your full-year forecasts for cellular services revenues and operating expenses. Please give us a breakdown of the revisions made to each item.
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Q2 You revised your full-year free cash flow forecast downwards by 100 billion yen. How much of this decrease is attributable to the introduction of the installment payment system for the purchase of handsets?
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Q3 Given the current circumstances, do you think it is more sensible to make all-out efforts to retain your existing customers rather than trying to recover your market share of net additions?
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Q4 I think it is about time for you to introduce attractive new services, rather than to defend your position through the retention of subscribers. When we look at the peripheral industries, search services, portal, SNS and other new capabilities are expanding. How do you incorporate these capabilities in your services?
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New handset sales schemes (financial impact)
Q5 How do you expect the new handset sales schemes will impact your financial results? Also, please give us a breakdown of the percentage of subscribers who will choose the Value Course and Basic Course, respectively.
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Q6 DoCoMo prepares its financial statements in accordance with US GAAP. How do you think the introduction of the new handset sales schemes will affect the amount subject to EITF01-09 rule? How will the 200 billion-yen increase in operating income be represented when split between revenues and expenses?
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Q7 If all users choose Value Course, your revenues could be negatively affected by as much as 500 to 600 billion yen. Have you designed the handset sales scheme in such a way that the projected reduction in incentive costs would be greater than the revenue loss resulting from the discounts? Additionally, how much growth in income do you foresee achieving from the reduction in the number of handsets sold?
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Q8 Do you think the reduction in handset incentives will result in a sharp increase in equipment sale revenues from next fiscal year?
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New sales schemes (handsets)
Q9 At what price do you think your handsets will be marketed after the introduction of the new sales schemes?
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Q10 Is it correct to understand that your handset prices will be marked higher in the stores, but the basic monthly charge will be reduced in return?
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Q11 If your main focus is on the Value Course, is it correct to assume that the reduction of handset procurement costs will become an important factor in strengthening your competitiveness?
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Q12 Can we expect that the percentage of 7-series handsets to total handsets sold will increase going forward?
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Q13 In the market today, we see "reverse pricing" between 9-series and 7-series phones, i.e., 9-series phones are sometimes sold cheaper than 7-series handsets. Do you plan to change the sales strategy for each FOMA handset series following the introduction of the new sales schemes?
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Q14 Explain your current inventory level. Can we expect that most of your handsets will be sold using the new handset sales scheme from the fourth quarter of FY2007?
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New sales schemes (other)
Q15 Compared to the subscriber acquisition cost based on the current level of subsidies, the amount of discount you offer under the Value Course seems to be smaller. Do you plan to provide this differential to the users in some other way?
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Q16 Why did you decide to offer an 8,400-yen discount as an introductory campaign immediately from the launch of Value Course? Do you foresee any risks that you may end up having to continue this discount for a long time, making the new sales schemes effectively no different from the conventional sales scheme in terms of cost burden?
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Q17 When do you plan to start allowing customers to use DoCoMo Points to pay the remaining installment payments? Are users allowed to use the points to pay the cancellation charges for the Basic Course?
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Q18 KDDI allows users to use royalty points to pay the cancellation charges of its "Full Support" service, if subscribers wish to replace the handsets in less than two years. DoCoMo's Basic Course, on the other hand, does not allow users to use points for cancellation charges. Don't you think this could provide a new motivation for users to cancel their contracts with you?
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ARPU/churn rate
Q19 Your packet ARPU is growing at a higher rate compared to your competitors'. How do you analyze the reasons behind this growth?
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Q20 I believe there are a considerable number of users who cancel their existing contract and newly join your service as a new subscriber due to the large gap between the market price of new and replacement handsets. What was the number of such "cancel-and-newly join" subscribers for the first half of FY2007?
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Others (WiMAX/DoCoMo group reorganization)
Q21 How enthusiastic are you about the acquisition of mobile WiMAX spectrum?
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Q22 To what extent do you think you can improve your cost efficiency by integrating the nine DoCoMo companies into a single entity? Specifically, what kind of measures do you plan to implement to cut costs?
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Q23 If the regional subsidiaries are integrated into a single entity, will the distributor commissions, which currently vary by region, be standardized?
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