Presentation Materials

Basic policy of our medium-term management strategy for sustainable growth in 2020's:
Strategic shift to focus on "transformation into business management pivoted on membership base" and "5G rollout and business creation"

FY2018/1H Results Highlights

For the first six months of the fiscal year ending March 31, 2019 (FY2018/1H), we recorded an increase in both operating revenues and profit, which amounted to 2,389.5 billion yen (up 4.1% year-on-year) and 610.5 billion yen (up 9% year-on-year), respectively. Profit attributable to shareholders of NTT DOCOMO, INC. was 407.1 billion yen, up 3.8% year-on-year.

In telecommunications business, although we continued to actively implement various customer return measures such as the addition of new handset models to "docomo with" discount program and introduction of new rate plans "Basic Share Pack/Basic Pack," we managed to increase our operating profit by 7.2% from the same period of the previous fiscal year to 524.5 billion yen as a result of successfully expanding the number of "docomo Hikari" optical-fiber broadband service subscriptions and improving our handset selling revenues and expenses.

Operating profit from Smart life and Other businesses combined reached 86 billion yen, up 21.9% year-on-year, due mainly to the steadfast expansion of our finance and payment services and other factors. In FY2018/1H we achieved cost efficiency improvement totaling 74 billion yen, making a favorable progress toward our full-year target of 120 billion yen. We successfully delivered results as planned in every aspect of our business, and made a solid progress toward the attainment of our full-year operating profit guidance of 990 billion yen.

Accelerated initiatives for 5G pre-commercial service and enrichment of disaster preparedness measures

In light of the planned launch of commercial 5G service in the spring of 2020, we initiated from this fiscal year the preparations for its pre-commercial service, which is scheduled to commence in September 2019. To further accelerate 5G network development and rollout, we decided to allocate incremental capital expenditures totaling 10 billion yen during this fiscal year.
In the aftermath of Typhoon No. 21 and the Hokkaido Eastern Iburi Earthquake of 2018, we made swift disaster response capitalizing on our past experience. In Hokkaido, we activated our large-zone base stations for the first time to restore communications over a wide area, mobilized mobile base station vehicles to the disaster-stricken areas and provided free battery charging and Wi-Fi services to minimize the impact from the disruption of service.
Due to the measures that we plan to implement to accelerate 5G pre-commercial service and to reinforce our disaster preparedness, we revised our annual CAPEX projection upwards by 20 billion yen to 590 billion yen.

Medium-term management strategy

To speed up the execution of "Declaration beyond" announced in April 2017 and to achieve sustainable growth in the 2020's, we unveiled our new medium-term management strategy that is grounded in the following two basic policies; "Transformation into business management pivoted on membership base" and "5G rollout and business creation." These policies are built on the three pillars of "revenue opportunity creation centered on customer base," "growth driven by 5G" and "execution of customer returns and evolution of customer touchpoints." For more details, please see our FY2018/1H results presentation material.
With respect to customer returns, listening seriously to customers' voices that our rate plans are "complex and difficult to understand," we decided to perform a bold review on our rate plans to make them simpler and easier to understand. Further, in conjunction with the introduction of a new rate structure, we plan to lower our service charges by approximately 20-40%* to return some 400 billion yen per annum to the hands of customers. The new rate structure is planned be announced and introduced in the first quarter of FY2019.
The execution of the aforementioned customer return measure is expected to result in a decline in profit, which may cause concerns among our valued shareholders. However, we believe customer returns are indispensable to have customers appreciate the value and savings that we can offer and to garner their long-term usage, which in turn will help us further solidify our customer base. Leveraging our customer base as a foundation, we aim to grow our Smart life, Enterprise and 5G businesses with the goal of generating 5 trillion yen in operating revenues in FY2021 and recovering our operating profit to 990 billion yen (a level comparable to FY2017) in FY2023.

The actual level of reduction may be different from the description herein depending on customer's usage behavior.

Shareholder returns

We celebrated our 20th anniversary of our listing on the Tokyo Stock Exchange in October. I would like to renew my appreciation for all the support and patronage we enjoyed from our valued shareholders and other stakeholders over these years.
To meet the expectations of investors, in October 2018 we received an authorization for a 600 billion yen share repurchase program-one of the largest scale buybacks in our history, and we will also review our treasury share cancellation policy with the view to retire all treasury shares in our possession in the future.
Through the execution of our medium-term management strategy, we will aim to achieve sustainable growth, while accelerating the returns to shareholders through continuous increase in dividends and expeditious share repurchases.