Japanese

Presentation Materials

• Questioner No. 1

  Q1 Regarding the return to shareholders, we appreciate your decision to raise dividends for this fiscal year, but how much do you plan to spend on share repurchases?

  Open

  A1 Traditionally, we have conducted repurchases of our shares after obtaining approval through a resolution at the general meeting of shareholders. Going forward, however, we plan to carry out share buy-backs more flexibly through a resolution by the Board of Directors. The total amount to be spent for share repurchases during this fiscal year is not likely to exceed 100 billion yen.

• Questioner No. 2

  Q1 You mentioned that you plan to implement various initiatives in FY2009. How do you plan to grow your operating income in the next fiscal year and beyond to achieve the 900 billion yen target stated in your medium-term vision, from the level of 830 billion yen for FY2009?

  Open

  A1 Toward the goal of achieving 900 billion yen in operating income, we aim to expand the revenue size of each of the three new businesses defined in the medium-term vision to approximately 100 billion yen. At the same time, we will work to gradually increase packet ARPU, and anticipate that it will overtake voice ARPU sometime during FY2011. Based on this, although only a slight growth can be expected for FY2010, we expect to realize a higher rate of growth in operating income for FY2011 and FY2012.

  Q2 With respect to packet ARPU, I think you are aiming to increase the flat-rate subscription rate by luring more light-usage users to the packages through a reduction of flat-rate charges. Even when this is factored, don't you think your FY2009 full-year packet ARPU forecast of 2,420 yen is too low?

  Open

  A2 Packet ARPU for FY2008 grew by 8% year-on-year. However, this is inclusive of the 100-yen increase in the i-mode basic monthly charge. Excluding this impact, the effective packet ARPU growth for FY2008 would have been approximately 4%. The number of mova subscribers migrating to FOMA is decreasing, and growth in packet ARPU has slowed—in fact, the most recent data (FY2008/4Q) shows that growth in packet ARPU excluding the impact of i-mode basic charge increase was limited to 2.6%. Therefore, to achieve growth in packet ARPU for the future, we have high expectations for video services and revised billing plans designed to allow customers to utilize our services without concerns about their phone bills. Through the provision of a wide range of content and promoting the use of Deco-mail and other services, we would like to create more usage opportunities for customers.

• Questioner No. 3

  Q1 I believe the revisions to various packet billing plans were aimed at increasing your data ARPU. Please elaborate on, the projected ARPU growth rate and the timeframe for achieving it.

  Open

  A1 Currently, 39% of total FOMA i-mode subscribers have already joined the "pake-hodai" flat-rate package, and we aim to increase the percentage to 47% by March 31, 2010. We also would like to grow packet ARPU to a higher level than voice ARPU within FY2011. To achieve these goals, we believe it is necessary to set our rates at a level that will make customer feel easier to join and use our data service. While we cannot comment on the details concerning how the rates were designed, please understand that the revisions were made taking into account enhanced customer satisfaction.

  Q2 In FY2009, you are forecasting an increase of approximately 20 billion yen in equipment sales and a decrease of some 66 billion yen in distributor commissions before EITF deductions compared to the previous fiscal year. How do you plan to achieve an increase in equipment sales while cutting distributor commissions?

  Open

  A2 We plan to streamline distributor commissions in the future by increasing the proportion that is not linked with the sale of handsets and other measures. The handset sale-linked commissions will also be more targeted for each segment.

• Questioner No. 4

  Q1 You explained that this fiscal year will continue to be "a year for loading the pipeline" toward future growth, thus the growth rate for FY2009 and FY2010 will be moderate, but a significant increase in income can be expected for the subsequent years. How do you assess your current position vis-a-vis your plan to achieve "a moderate growth" (as explained at the time of medium-term vision announcement)?

  Open

  A1 Operating income for FY2009 is currently estimated to be 830 billion yen, but we have not given up hope to achieve a moderate increase.

  Q2 Specifically, what kind of measures do you plan to employ for "loading the pipeline" toward future growth and for enhanced customer satisfaction?

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  A2 To secure income for the future, a budget totaling some 30 billion yen is allocated for various measures, including R&D and trial costs for new services.
  To further enhance customer satisfaction, we plan to spend a total of approximately 40 billion for the measures we recently announced (reduction of entry rates for various flat-rate packages, provision of free battery pack or battery charger and others), to express our gratitude to customers and earn their satisfaction and long-term loyalty.

• Questioner No. 5

  Q1 Please give us an outlook on the handset procurement cost per unit for FY2009.

  Open

  A1 The handset procurement cost per unit is expected to increase by 1,000-2,000 yen compared to FY2008, due to an increase in component costs resulting from functional enhancements and a reduction in the projected number of handsets to be sold. Going forward, we will continue our endeavors to bring down the cost of handsets through the introduction of Operator Pack and other initiatives.

• Questioner No. 6

  Q1 It has been nearly one year since you took office as President and CEO. How do you assess your achievements so far?

  Open

  A1 Under the banner of "Change and Challenge", a thoroughly "hands-on approach" has been taken. I have visited more than 100 branches and shops since I took office, and I recognized that DOCOMO's problems and their answers can be found in the field, where we are face-to-face with the customer. Particularly, I realized the following three points through these visits: (1) The field provides us with a place to learn. In particular, I strongly realized that theory does not necessarily match the reality. (2) Direct communication is always important. My conversations with the field staff have helped to boost their motivation. (3) Raising Board Members' awareness on what is happening in the field is important. This has led to decision-making taking into consideration the actual circumstances at customer fronts.
  The message that I always convey when I visit the branches and shops is the importance of "unity". I believe we have considerably eliminated the perception of "DOCOMO being the sole loser"—our position back in FY2007. The voices from customers appreciating the improvement of our services also make me feel that we are delivering tangible results.

  Q2 Please comment on the current state and future plans concerning your investment in India's TTSL.

  Open

  A2 We invested a total of approximately 260 billion yen in India's TTSL and TTML. India's mobile phone market is expanding rapidly, posting an increase of 15.4 million subscribers in the single month of March alone. Under such circumstances, TTSL is now making preparations toward the launch of GSM service in June 2009 in addition to its existing CDMA network. Furthermore, three directors were nominated by DOCOMO, and we decided to send nearly ten of our employees as expatriates. We believe we have been making favorable progress.

  Q3 I heard from a foreign vendor that you are planning to add some functions unique to DOCOMO to your LTE equipment. Does that offer you benefits commensurate with the additional cost?

  Open

  A3 We have established an internal project team to prepare for the launch of LTE in FY2010. We are planning to introduce the system as one of a group of first adopters in the world. We plan to procure the equipment around the same timing with other overseas operators, and do not believe we are pursuing that equipment be built on specifications proprietary to us.
  As for capital expenditures, we assume we introduce the system while keeping our total annual CAPEX (inclusive of LTE-related investments) below 700 billion yen.

• Questioner No. 7

  Q1 Regarding your FY2008 results, had it not been for the accelerated depreciation of mova-related assets, do you think you would have been able to achieve an increase in operating income? Please also explain the future outlook following the accelerated depreciation in FY2008.

  Open

  A1 In FY2008, we accelerated the depreciation of mova-related assets following the decision to terminate the service. If we had not carried out this accelerated depreciation, our operating income would have been higher by approximately 60 billion yen r in FY2008, 8 billion yen in FY2009 and 10+ billion yen in FY2010. However, without the accelerated depreciation, a one-time write-off of the residual value of mova-related assets amounting to some 24 billion yen would have been required in FY2012.

  Q2 Regarding your dividend plans, can you consider raising your payout ratio to over 50% under the current business environment?

  Open

  A2 We have decided to raise our dividend for this fiscal year to respond to the mounting requests for a dividend hike. Going forward, we will continue our management efforts adhering to our basic policy to "continue stable dividend payment". As for shares repurchases, we have decided not to continue the program in the size as before, but to repurchase shares flexibly through a resolution of Board Members while keeping an eye on the progress of achievement of our income target presented in our medium-term vision.

• Questioner No. 8

  Q1 Do you think the current rate of handset replacement appropriate?

  Open

  A1 To raise the handset replacement rate, we believe it is indispensable to develop and offer attractive handsets. We would also like to focus on smartphones to cultivate the demand for a second handset.

  Q2 I heard that your handset procurement cost per unit is likely to increase in FY2009. Does it mean that you can no longer expect a reduction in procurement cost if the total number of handsets sold per annum remains at a level below 20 million?

  Open

  A2 We are committed working unceasingly to bring down the procurement cost per unit. In collaboration with various vendors, we will look into the ways to reduce the procurement costs despite total annual handset sales being limited to 19-20 million units, through measures such as common components and operating systems development.
  To bring down the overall procurement cost, the area that requires the largest reduction is software-related costs. It is necessary to install globally common applications to further cut down the costs, and we will steadily move ahead with our plan for the introduction of Operator Pack.

  Q3 I believe your subscriber base of flat-rate data service for PC access has been growing. How many of these users do you think are the ones who switched from fixed-line networks? Also, is it correct to assume that you perceive the current PC/Internet market as your future target?

  Open

  A3 There might be some users who have canceled their fixed-line subscription to switch to mobile data service, but we believe the number of such customers is quite limited. We rather think that increasing number of young users are now choosing mobile as the primary means to access the Internet without subscribing to fixed-line from the beginning, and the number of customers who prefer wireless over fixed-line is expected to increase in the future.
  We believe fixed-line PC access and mobile-based PC access are not in a substitutionary relationship; they are rather mutually supplementary. The transmission speeds of mobile access are expected to increase significantly with the launch of LTE in the near future, but the actual throughput in a mobile environment will vary depending on the state of traffic congestion. On the other hand, in fixed-line networks, installation of optical fibers is expected to progress. We therefore believe the two different networks will serve different needs depending on the usage scenario or content of service.

• Questioner No. 9

  Q1 There was a recent announcement concerning the merger of chip vendors, which I believe offers you an opportunity to facilitate streamlining. What is your view on this matter?

  Open

  A1 Renesas Technology is one of our chip suppliers, but its merger with NEC Electronics is not likely to have an immediate impact on our business. Over the medium- to long-term, however, the merger may benefit DOCOMO if it strengthens their operations.

• Questioner No. 10

  Q1 Netbooks with build-in SIMs card have been reported in news articles recently. This, I believe, could open up the possibility to expand the adoption of communication modules. What is your strategy concerning communication module business?

  Open

  A1 Communication modules have so far been used mainly by corporate clients, but introduction of new modules has become increasingly difficult due to the recent economic downturn. This is one example how the deterioration of economy has impacted our business. As a future application of communication modules, we are studying the possibility of offering converged services by installing them in automobiles and exploring their commercial introduction.