Presentation Materials
Analyst Meeting Q&A (Earnings Release for the Fiscal Year Ended March 31, 2014)
Announced on April 25, 2014
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 Let me confirm the implications of your FY2014 business plan. Listening to your explanation concerning the write-off and sale of your equity stake in TTSL, planned roll-out of LTE-Advanced system and launch of a new billing plan as well as your target to acquire 3.7 million net additional subscribers and ambitions to properly control the amount of Monthly Support discounts and maintain the actual handset sales prices in a healthy range, I got the impression that you are now beginning to see better prospect of solving the challenges that you have faced hitherto. Is my understanding correct?
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Q2 If that is the case, execution becomes increasingly important. How confident are you of the achievability of your net additions target and control of Monthly Support discounts?
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Questioner No. 2
Q1 It has been a while since the last time we saw a large-scale share repurchase program by the Company. How do you plan to execute this? Can you comment on the planned split between the shares to be bought back from the parent company and those to be repurchased from the market, as I would assume that you had some negotiations with the parent company beforehand? Please also comment on the outlook as to the pace at which you plan to proceed with the program and the probability of using up the entire authorized budget.
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Q2 About half of the shares repurchased in 2003 and 2004 were from the parent company. Are you expecting a similar proportion this time?
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Q3 I am not really convinced about the attainability of your 3.7 million net additions target for FY2014. I assume various types of devices are included in that number, so please indicate the contribution of handsets, tablets and other devices used by human users, i.e., devices other than smart meters and modules.
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Q4 Does your net addition forecast include a large number of MVNO users of the order of hundreds of thousands?
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Q5 Regarding your new billing plan, the fact that DOCOMO unveiled a new concept ahead of the competition bears great significance. I believe you should launch a massive advertisement campaign in the run-up to its introduction. You should thoroughly promote the new package to gain broad recognition among consumers prior to the launch on June 1, 2014. What do you think?
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Questioner No. 3
Q1 Share repurchase is something that needs to be conducted based on a clear shareholder return policy; otherwise the program cannot be sustained. This time around, it seems that you decided to conduct share buyback to compensate for the disappointing FY2013 results and FY2014 guidance. If that is the case, this would merely be a one-shot program. What are your views concerning the continuity of the program? Also, any share buyback by the Company will have repercussions on NTT's ownership. Do you plan to repurchase the shares in accordance with the proportion of share ownership between the holding company and free float?
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Q2 What is the adequate leverage level in your view, i.e., what level of leverage do you think will give you the best capital efficiency? Also, how do you plan to manage share buyback vis-a-vis the overall balance sheet?
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Q3 In the slide entitled "Toward Medium-Term Growth," it seems that you are envisioning that your operating income will hit a bottom in FY2014 and then recover to around 900 billion yen in FY2016. Is that what you are aiming for?
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Questioner No. 4
Q1 Regarding your stake in India's TTSL, can you disclose the acquisition price and the book value as of March 31, 2014? The press release contains an expression "it is not certain how the option will be performed." Please elaborate what this means.
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Q2 For FY2014, you are projecting a steep increase in non-personnel expenses over the previous fiscal year. What are the factors driving this growth?
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Q3 During the last few years, you successfully trimmed your costs so the impact of such incremental outlays does not become visible. Is it right to understand that it would be difficult to offset the incremental expenses through cost reduction this fiscal year?
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Questioner No. 5
Q1 Can you explain the background as to how you came up with the decision to return profits to shareholders in the form of share repurchase in lieu of a dividend hike? Have you considered the option of raising your payout ratio through dividend increase and maintaining a stable payout at that level?
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Q2 Your investment in TTSL ended up generating losses of this magnitude. Please explain the rationale behind your decision to exit from the market.
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Q3 Toward your medium-term growth, you plotted a V-shape recovery in your presentation. I recall you presented a similar picture in the past but failed to deliver on it. Is there anything different this time around?
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