Presentation Materials
Principal Questions and Answers Earnings Release for FY2011 2Q (ended September 30, 2011)
Announced on November 2, 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 Regarding the newly introduced voice flat-rate billing plan for Xi service, which looks like an effective price hike of voice charges, did you introduce it with the aim of stemming the decline of voice revenues or even achieving an increase in such voice revenues over the medium to long term?
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Q2 I found it difficult to figure out whom the messages contained in this medium-term vision were intended for. Frankly speaking, as an investor, it is hard to make an evaluation of this vision as it does not contain any financial targets.
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Q3 In your medium-term vision, you set a target of raising your packet revenues to 1.5 times the level of the current fiscal year by FY2015. By simple calculation, this implies that your operating income could reach 1.8 trillion yen in FY2015, once the decline of voice revenues comes to a halt and starts rising again. Is this an appropriate estimate?
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Questioner No. 2
Q1 I understand you made an upward revision to your full-year smartphone sales forecast in light of the brisk sales recorded in recent months. How did you estimate the competitive impact of iPhone 4S, which was launched recently by your competitors, in the revised forecast?
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Q2 How do you analyze your performance in the acquisition of net additions for October?
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Q3 Regarding your medium-term vision, based on the assumption that you will maintain your current operating income margin of approximately 20%, I calculate that operating revenues for FY2015 would be expected to increase by 1.5 trillion yen (including 900.0 billion yen in packet revenues and 600.0 billion in revenues from new businesses) and operating income by 300.0 billion yen compared to current levels. Is this understanding correct?
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Q4 Would it be fair to understand that you will be able to maintain a 20% operating income margin in your cellular services business, after achieving the 900.0 billion yen income target for FY2012?
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Questioner No. 3
Q1 Can you explain your rationale for bringing down your full-year aggregate ARPU forecast by 20 yen compared to the initial forecast? I believe you had an option to maintain the aggregate ARPU forecast at an unchanged level, because the upward revision to the full-year smartphone sales forecast to 8.5 million units can be considered a positive factor boosting your packet ARPU.
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Q2 The decrease of voice ARPU was in line with my expectations and I don't find anything awkward about your explanation. Do you foresee any chance of your packet ARPU ending up higher than your forecast?
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Q3 Does your forecast factor in a further increase in sales promotion expenses for the high-sales season in the coming spring?
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Q4 I would like to hear your comments concerning your medium-term revenue outlook. Your full-year cellular service revenues are estimated to be approximately 3.4 trillion yen, and you mentioned in your vision that you will aim to increase your packet revenues by 900.0 billion yen by FY2015. In my estimate, if you are able to grow your packet revenues by approximately 700.0 billion yen from the current level, you should be able to record a year-on-year increase in your operating revenues from FY2015 onwards, at which point it is estimated that the ratio of voice and packet revenues will be 20:80. Is my understanding correct?
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Questioner No. 4
Q1 Do you think you would have been able to achieve over 900.0 billion yen in operating income this fiscal year if you had not implemented the system modifications made, given both the upward revision to the full-year income forecast and the impact of system modifications implemented during the previous fiscal year?
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Q2 Was your medium-term vision developed based on the premise that you will restore Xi rates to normal levels when the current introductory campaign offering discounted rates expires? Do you foresee any risks of increased churn or subscriber liquidity resulting from the termination of these special discounts? Or do you have plans to extend the discount period?
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Q3 Do you have any plans to counter the competition by maneuvering your handset prices?
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Questioner No. 5
Q1 You have delivered a message on a number of occasions that you plan to achieve a rebound in aggregate ARPU during the next fiscal year. I am rather skeptical about its achievability given the recent drop in voice ARPU. What is your view?
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Q2 The billable MOU decreased by seven minutes year-on-year in FY2011/1Q. What was the decline for the FY2011/2Q?
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Q3 I remember that Mr. Yamada previously commented that you have an ambition to raise your operating revenues to 5.0 trillion yen in the future. Is your medium-term vision aligned with that statement?
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Questioner No. 6
Q1 With respect to measures for accommodating the growth of traffic, your medium-term vision expects a 12-fold increase in traffic volume in the period between FY2011 and FY2015. Do you think you can completely absorb this growth only with your current mobile phone network?
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Q2 By employing those measures, do you think you will be able to maintain your corporate image as a carrier that offers high-quality service with a robust infrastructure?
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Q3 I expect that you will increase the number of mergers and acquisitions in the future to expand new businesses. Will that result in a slowdown in the pace of dividend hikes?
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Questioner No. 7
Q1 Listening to your medium-term vision presentation, I found it difficult to estimate the size of your voice revenues for FY2015. Is it correct to understand that although your cellular services revenues are on a downtrend, under your basic scenario toward FY2015 you will aim to achieve an increase in total revenues by making up for the decline of cellular service revenues through increases in other revenues?
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Q2 You mentioned that you will aim to raise the total number of smartphone subscriptions to 40.00 million within FY2015, of which Xi subscriptions are projected to account for 30.00 million. Can you give us a breakdown of the number of data cards, Wi-Fi routers, tablets and smartphones included in this forecast?
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