Presentation Materials
Analyst Meeting Q&A (Earnings Release for the Fiscal Year Ended March 31, 2017)
Announced on April 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 Regarding the managerial targets in the Medium-Term Strategy 2020 "Declaration beyond," you mentioned that you will aim to further improve your operating free cash flow and shareholder returns, but I would like to ask you for some concrete numerical targets for 2020. With the assumption that your targets for FY2017 are met, it is natural to expect that the management team will aim for further improvements beyond that. Please give us some indication as to the pace at which you plan achieve improvements. If you have any plans to publicly disclose the quantitative targets for the KPIs of your Medium-Term Strategy, when can we expect them to be announced?
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Q2 Can we expect that you will disclose the KPIs at some point in the future?
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Q3 When I look at the six declarations comprising "Declaration beyond," the spheres of business that you plan to address are quite extensive. Are there any areas that you plan to stay away from? Please comment from the perspective of initiatives that are unique to DOCOMO, i.e., things that cannot be done by the competition.
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Questioner No. 2
Q1 In your FY2017 guidance, you are projecting a 130 yen increase in mobile ARPU alone, which gives me an impression that you are expecting favorable performance as far as revenues are concerned. On the other hand, I note that there is a possibility we will see a considerable rise in expenses. On which particular items do you plan to spend money? Also, you have made cost efficiency improvements until now, but do you foresee a change of pace in cost reduction?
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Q2 In my opininon "docomo Hikari"-related expenses and depreciation costs are not really controllable. You mentioned that you are planning to spend expenses for the point program in addition to the customer return measures. What kind of ecosystem do you aim to create in the next 12 months or so? Please give us an image as to how you plan to roll out the program.
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Q3 Can you provide us with a qualitative explanation on what you want to achieve in the next one year?
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Questioner No. 3
Q1 Regarding your FY2017 plan, despite the projected year-on-year increase in packet ARPU, the total packet communications revenues are forecast to decline. Does this imply you are expecting a decrease in your mobile subscriptions excluding the MVNO contracts? If so, please let us know if you have devised any measures to grow subscriptions other than through MVNOs.
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Q2 In "Declaration beyond," you assume that there is a need to construct platforms compatible with the 5G network through "+d" activities. Please elaborate on your approach to "platform investments" that are separate from network investments. If you find any technology or know-how that cannot be sufficiently provided by DOCOMO alone, would you consider M&A as a possible option?
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Questioner No. 4
Q1 Concerning the mobile communications services revenues for FY2017, is it correct to construe that you are projecting a growth of 44 billion yen after factoring in the second wave of customer return measures?
Also, according to my calculations based on your forecast of revenue-linked expenses and equipment sales revenues and your explanation concerning the point program-related expenditures, it seems that there will not be any significant changes in the equipment sales P/L. Is my understanding correct? Please also explain for what measures do you plan to allocate the 40 billion yen increase in point program-related expenses.Open
Q2 In "Declaration beyond," I interpreted that you will aim to achieve constant growth in operating free cash flow (calculated by subtracting capital expenditures from EBITDA) every year from the starting level of 910 billion yen projected for FY2017. That means, even after paying out dividends of 100 yen per share as planned for this fiscal year, you will still have extra cash on hand. How do you plan to allocate the remaining cash between business investments and shareholder returns?
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Q3 Do you plan to manage that within the limits of operating free cash flow, or would you also consider using leverage?
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Questioner No. 5
Q1 The dividend hike for FY2017 of 20 yen per share is larger than the projected growth of operating free cash flow. How did you arrive at this wonderful decision of a significant dividend increase? Because you mentioned that you will seek "continuous increase in dividends," can you also explain how you plan to improve your dividends, as well as your plans for share repurchases going forward?
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Questioner No. 6
Q1 Your decision to set operating free cash flow as one of your managerial targets gives me an impression that you are leaving room for large-scale acquisitions. Hypothetically, if you were to carry out a large-scale acquisition, would you be able to maintain your financial discipline? Also, looking at your "Declaration beyond" strategy, it seems that you are not interested in purchasing media/content companies like the telecommunications carriers in the United States. Please confirm if I am correct.
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Q2 Do you have any benchmark concerning the minimum rating for the Company?
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Questioner No. 7
Q1 When I look at the KPIs, your performance appears to be favorable. However, the mobile communications revenues for FY2016/4Q show a year-on-year decrease when the irregular positive impact from "Packet CarryOver" is excluded. Also, looking at the slide entitled "Transformation of Business Structure" in the "Declaration beyond" presentation, it seems that you are projecting a decline in telecommunications business in the future. Can you describe the factors causing the gap between the KPI numbers and the actual mobile communications service revenues? Please also share with us the background that led to the projection of declining revenues in "Declaration beyond."
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