Presentation Materials
Analyst Meeting Q&A (Earnings Release For the Three Months Ended June 30, 2014)
Announced on July 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 The operational indicators (e.g., churn rate, net additions, etc.) for FY2014/1Q have shown positive results and this trend will likely continue going forward. It would be even better if you can turn around your ARPU as well. Your aggregate ARPU excluding the impact of the Monthly Support discount program for FY2014/1Q was 5,120 yen, while you set a target to achieve 5,240 yen for the full year. In light of the impact of the new billing plan, how do you plan to boost your ARPU in the future? Please also comment on its outlook.
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Q2 Does that mean because you are succeeding in the acquisition and retention of subscribers leveraging the new billing plan, the termporary decrease of ARPU at the outset is not percieved as a major problem so long as you devise and implement various usage-boosting measures afterwards? In other words, is it correct to construe that, for the time being, you are not so concerned about the negative revenue impact caused by the introduction of the new billing plan?
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Q3 You achieved nearly 60% of your full-year cost reduction target in the first quarter alone. Do you think you can deliver on your full-year guidance ahead of schedule?
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Q4 You have not raised your dividends for several years. For the current fiscal year, I believe you will be able to cope with investors' expectations through the 500 billion-yen share buy-back program. However, if your operating income turns around after hitting a bottom in the next fiscal year or beyond, a dividend hike should be the natural outcome. What are your views concerning shareholder returns?
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Questioner No. 2
Q1 You mentioned that the uptake of the new billing plan is growing faster than your projections. Do you foresee a rebound of ARPU will happen at a timing earlier than previously expected, because, as far as I understand, the new billing structure is designed to generate greater revenues over time as the adoption increases? Your ARPU has been on a constant decline, but do you have any idea when it will start rising again driven by the expanded adoption of the new billing plan?
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Q2 Top-line growth is now coming into sight as a result of improved operational performance. When you unveil your new medium-term business plan later this year, can we expect a V-shape recovery?
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Q3 When can we expect to see your packet ARPU crossing the inflection point and start rising again? Will it be within this fiscal year or the next year?
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Q4 The new iPhone model is expected to come out in the fall, and I believe its main purchasers will be the existing 10-15 million iPhone 4S and iPhone 5 users making a handset upgrade. DOCOMO does not have to worry about any subscriber outflow because you basically do not have any customers using iPhone 4S or iPhone 5 on your network, which makes me believe that the launch of the next model will provide you with a great opportunity to acquire fresh subscribers. What do you think?
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Questioner No. 3
Q1 Please give us a breakdown of the 6 million new billing plan subscribers. Can you share with us some numbers that will explain the subscriber attributes, such as "number of subscribers who switched from another plan" or "percentage of subscribers who joined the new billing plan in conjunction with the purchase of a new handset?"
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Q2 The new billing plan allows users to subscribe only to the unlimited voice package. In actuality, what is the percentage of subscribers who opted to join only the unlimited voice service?
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Q3 Was the progress of cost reduction in line with your earlier assumptions? You mentioned that you achieved a reduction of 32 billion yen in FY2014/1Q, or 58% of your full-year budget, and that you will aim for further upside for the full year. Have you set a new target to strive for, e.g., 300% or 200% of the initial budget?
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Questioner No. 4
Q1 When I look at your recent performance indicators, ARPU appears to be weak. How do you analyze your ARPU?
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Q2 Your packet ARPU excluding the impact of Monthly Support discounts have been on a constant decline since FY2013/4Q. I assume MVNOs and the new billing plan are the key factors behind this drop, but can you provide us with an explanation?
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Q3 Can you give us some indication concerning the percentage of users who have joined the new billing plan out of the total new subscribers after Jun. 1, 2014?
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Questioner No. 5
Q1 Among the total new billing plan subscriptions, what is the proportion of feature phone users?
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Q2 You said that the negative revenues impact from the Monthly Support program is expected to expand by 120-130 billion yen this fiscal year, and the impact for FY2014/1Q amounted to 45.8 billion yen. Can we expect that the negative impact will shrink sharply on a year-on-year basis going forward? Or, if the current trend continues, isn't there a possibility that the actual impact will outgrow your original projection of 130 billion yen?
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Q3 You and SoftBank have announced to stop accepting applications for the conventional billing plans as of August 31, thereafter handling applications only for the new billing plan. As far as I understand, au, by contrast, will continue accepting subscriptions for their traditional billing plans. Because the new billing plan is very well designed, frankly speaking, I believe the vast majority of users can receive greater benefits if they stayed on the traditional plan. Won't this have any impact on your marketing?
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Questioner No. 6
Q1 Your packet ARPU has been stagnant despite the progress of subscriber migration to smartphones. Is this because of your customer mix? I notice that the introduction of the new billing plan has induced some changes, but I must say the amount of information provided in your explanation is insufficient for us to lay out the prospects for the second half of this year and the next fiscal year. Can you provide us with some hints or additional data that will allow us to make future projections, such as the profile of your net additions/new billing plan subscribers?
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Q2 In the first quarter of last fiscal year, the progress of operating income to full-year forecast was a little higher. You commented that you got off to a good start in the first quarter, but on what grounds have you made such an assessment? Is it based on a projection that the competition for subscriber acquisition in the spring peak sales season will become milder in the future? Or is it because you are expecting positive ARPU effects from the introduction of the new billing plan? Please share with us your current views.
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Q3 Your mobile communications services revenues decreased by some 50 billion yen in FY2014/1Q. Do you expect the circumstances will improve each quarter?
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Questioner No. 7
Q1 You said that you achieved greater progress in cost efficiency improvement compared to your initial plan. What are the key drivers behind this? Can you also explain why you recorded net loss of "dmarket" subscribers?
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Q2 Wasn't it because of the changes in sales commissions?
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