Presentation Materials
Analyst Meeting Q&A (Earnings Release For the Nine Months Ended December 31, 2016)
Announced on January 27, 2017
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 Your packet ARPU recorded a 30-yen decrease over the previous quarter, which I believe was due largely to the impact of the "Ultra Pack". Can you comment on how you are faring with the subscriber acquisition of "Ultra Pack" and its projected impact on your results for the next fiscal year?
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Q2 The selling revenues and expenses in the presentation represent the cumulative results for nine months through December 31, 2016. When I calculate the numbers for the three-month period of FY2016/3Q, your selling revenues and expenses have dropped by 18.2 billion yen. I believe this was due to your strategic decision to lower handset wholesale prices to suppress the amount of future "Monthly Support" discounts. In my understanding, I believe you are planning to use the savings generated by these subsequent-year impact mitigation measures for stepped up customer returns. Can give us an overall picture as to how you plan to balance these measures with other initiatives such as your cost efficiency improvement activities?
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Q3 Please explain your basic philosophy towards capital expenditures in the age of 5G.
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Questioner No. 2
Q1 Please share with us your current views concerning the Internet of Things (IoT) business, including its financial impact and prospects for the future.
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Q2 Is it correct to understand that you will attach a greater focus on cellular IoT when you roll out your business?
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Questioner No. 3
Q1 With respect to cost efficiency improvement, your progress is faster than planned and you revised your annual target upward by 10 billion yen. In which areas do you plan to achieve the additional amount? Also, how much room do you think you will have for further cost reduction in the next fiscal year and beyond?
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Q2 According to your plan, you are projecting a 40 billion yen increase in free cash flow compared to the previous fiscal year. Can you elaborate on your basic philosophy concerning the use of cash, such as for investments or shareholder returns? For example, this year marks your 25th anniversary. I understand that any decision is subject to the resolution of the board of directors, but can you share with us any thoughts you have concerning shareholder returns to commemorate this occasion?
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Questioner No. 4
Q1 The year-on-year increase of mobile communications services revenues was limited to 8.5 billion yen. Can you explain how subscribers' migration to the "Ultra Pack" affected your FY2016/3Q ARPU?
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Q2 Please describe the reason why EBITDA for the three-month period of FY2016/3Q recorded a negative growth over the same period of the previous fiscal year. Negative EBITDA growth could be explained by such factors as increased communications services revenues and expanded income from Smart life and Other businesses, which were more than offset by the deterioration of handset sales profitability. But adding cost reduction effects to this would result in an year-on-year increase in EBITDA. Have you made any cash outlays?
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Q3 The amount of cost reduction achieved in FY2016/3Q was 39 billion yen, so does this mean you have spent a comparable amount of cash in FY2016/3Q?
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Q4 This time around, you expanded the amount of customer returns to 150 billion yen. The incremental 40 billion yen outweighs the additionally identified cost savings of 10 billion yen. As the customer returns represent the scale over a 12-month period, I know it is difficult to make a straightforward comparison, but do you plan to manage these customer return measures in a manner that they will have neutral impact on your profits?
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Q5 According to my calculation based on the total amount for a 12-month period, I believe the amount of customer returns will increase in the next fiscal year. Do you think you can absorb that growth also through cost reductions?
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Q6 The total number of your credit card subscriptions has grown to 17 million. One of your peers in the credit business is generating 30 billion yen in profits with a subscriber base of 13 million. Although you do not disclose the income from your credit card business, can you let us know if you are generating profits comparable to the level of your peers?
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Questioner No. 5
Q1 Please discuss your subscriber acquisition performance in FY2016/3Q. The number of net additions decreased by half compared to the previous quarter, which I understand to be mostly attributable to reduced module sales. Can you elaborate on how you fared in the acquisition of devices other than modules, such as handsets, tablets and MVNO users?
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Q2 Did net additions decrease compared to the previous quarter?
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Q3 Regarding mobile communications services revenues, in order for you to achieve your full-year guidance, you will have to increase your revenues by some 3% year-on-year in the fourth quarter. Do you foresee any factors that will contribute to boosting revenues in FY2016/4Q, considering the impact of the expanded applicability of "Kake-hodai Light" plan?
Further, for the next fiscal year, do you expect to see a greater improvement than this fiscal year, now that the "Monthly Support" discount program has begun to provide positive effects?Open
Q4 Do you think your mobile communications services revenues will grow at a faster pace next fiscal year than this year?
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