Presentation Materials
Principal Questions and Answers Earnings Release for FY2010 3Q (ended December 31, 2010)
Announced on January 28, 2011
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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Questioner No. 1
Q1 It was reported in today's newspaper that you aim to sell 6.00 million units of smartphones in the next fiscal year. What is your current sales forecast amount?
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Q2 Concerning the packet ARPU of smartphone users, can you provide us with some concrete data that shows the difference of usage before and after migration from i-mode?
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Q3 It seems that some of the features carried in globally marketed smartphones, such as tethering capability, are disabled in the models you offer. Going forward, as you enrich your smartphone lineup, do you intend to offer global models on an "as is" basis, or do you plan to add local customization as you did with i-mode phones?
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Questioner No. 2
Q1 When we look at the cumulative amount of capital expenditures incurred in the first three quarters of FY2010, the progress seems slow compared to your full-year forecast. Can you share with us your current estimate of full-year CAPEX for FY2010? Please also give us your guidance on full-year CAPEX for the next fiscal year, and the amount you plan to appropriate for LTE-related investments.
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Q2 You have reduced your annual capital expenditures over the last several years. If the adoption of smartphones and data cards expands further in the future, do you think you can maintain your CAPEX at the current level? If possible, please provide us with a quantitative explanation regarding your network capacity.
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Q3 In your medium-term business plan, you mentioned you target of achieving over 900.0 billion yen in operating income and an operating profit margin of 20% in FY2012. With the recent surge in the uptake of smartphones, do you feel more bullish or bearish about the achievability of these targets?
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Questioner No. 3
Q1 Given that you set a target to achieve an operating income of 900.0 billion yen in FY2012, I would assume that you will aim for approximately 870.0 billion yen for the next fiscal year. Can you give us guidance on expected income levels for the next fiscal year? Because you decided to introduce the "Monthly Support" program and set a target of selling 6.00 million units of smartphones, I believe the more smartphones you sell, the more likely you will achieve an increase in operating income in the next fiscal year. Doesn't this mean that you will have to anticipate its impact in the subsequent years in the form of reduced profits?
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Q2 The newly announced "Monthly Support" program and the reduction of the maximum rate of the full flat-rate billing plan gave me an impression that you started steering towards expanding the smartphone business in full throttle. The smartphone sales target of 6.00 million units for the next fiscal year seems to be somewhat challenging. If there is any chance of falling short of this target, and what would be the potential risks?
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Questioner No. 4
Q1 Your operating income for the first three quarters of FY2010 posted an increase compared to the same period of the previous fiscal year, but you did not revise your full-year forecast. Does this imply that you are expecting a huge year-on-year drop in FY2010/4Q? If so, why will that happen?
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Q2 Can you elaborate on the amount of discounts you plan to provide under the "Monthly Support" program?
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Q3 How strongly do you plan to promote tablet devices in the next fiscal year?
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Q4 It seems that some of your smartphone models still face a supply shortage. Do you think you can procure products without problems in the future?
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Questioner No. 5
Q1 With respect to your organizational structure, what kind of challenges are you facing today and what kind of discussions are being made to strengthen your smartphone sales in the future?
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Q2 Can you give us an indication regarding the revenue/profit impact of the expanded use of smartphones, and the resulting increase of network load?
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Q3 Your domestic mobile phone business is achieving positive results, but do you think the returns from your overseas investments will grow in the future? If they are expected to increase, when do you think this will become visible?
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Questioner No. 6
Q1 You mentioned that you will aim to sell 6.00 million units of smartphones the next fiscal year, but do you foresee any chances of achieving upsides? Also, if the market expands at a pace faster than your expectations, how far do you think you can respond to such growth?
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Q2 Do you think you can sell smartphones in the order of 6.00 million units if you improve the accuracy of your demand forecasts?
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Questioner No. 7
Q1 Is it correct to understand that you will not increase your capital expenditures in the future, even if the traffic increases at a pace faster than your current projections? Or, do you foresee a situation in which you will have to increase your CAPEX to a level higher than where they stand today over the medium to long term?
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Q2 Up until now, you have worked toward the goal of receiving the No. 1 customer satisfaction ranking. Now that you achieved that goal, from the perspective on an investor, I would like to hear your views on how this will contribute to your revenues or income. Please give us a qualitative assessment or some other explanation of how this rating should be evaluated.
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Q3 At present, your churn rate is fairly low at 0.4%. I believe it will be difficult for you to seek further reduction, but do you think there is still room for improvement? Or do you need to incur expenses on a continual basis to maintain it at the current level?
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