Presentation Materials
Main Q&A (Analyst Meeting concerning Medium-Term Management Strategy)
Announced on December 11, 2018
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 If KDDI and SoftBank follow suit and lower their rates, you may end up only making an announcement on your rate reduction ahead of other companies. How do you view this?
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Q2 Pressure from the government is often rumored among investors. What concerns me is that this is developing into a pressure in the context of regulation on rates. If you come under the pressure of rate regulation in the future, will you be able to present strong grounds that support the argument that you can't get a stocking off a bare foot?
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Questioner No. 2
Q1 The regulator only asked operators to enhance the transparency of rates, so you did not necessarily have to cut down on your rates. What were the factors that lead to your decision on a 400 billion-yen rate cut? Can you also share with us your vision as to the level of rates you are targeting and the position you wish to secure as a result of competition?
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Q2 The various services you offer in the finance/payment category such as asset management and insurances, etc., have developed into good services that allow you to generate additional revenues from your existing mobile subscriber base, but they may not be compelling enough to attract new mobile subscriptions. What kind of measures can you contemplate to improve the attractiveness and competitiveness of each service? For example, what is the strength of your lending service compared to similar services offered by other players?
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Questioner No. 3
Q1 This is about the "revenue creation from +d" on slide no. 6.
We can roughly calculate the "revenues from members" by multiplying the total amount in circulation with the take rate, but what does the "length of use" indicator represent? Also, how much revenue do you envisage to generate from platform service? Please also let me know if there are any similar cases of other companies.Open
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Questioner No. 4
Q1 Regarding the graph describing the "revenue impact from launch of new rate structure" on the bottom right of P27, "Customer Returns," is it correct to understand that this envisages a recovery of revenues after the negative impact from the introduction of the new rate structure runs its course? Please elaborate why the curve indicates an upswing. Is it attributable to growth in traffic caused by increased data consumption, or an expansion of user base resulting from an increase in your market share?
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Q2 You explained that you will introduce micromarketing for cost efficiency improvement, but what are your views concerning the roles of docomo Shops and your store network in the future? Is it necessary to maintain the current store network as the proportion of online sales goes up in the future? Or, will you maintain the current store network for the purpose of optimizing customers' wait time?
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Questioner No. 5
Q1 With respect to cost efficiency improvement, NTT stated that they expect DOCOMO to deliver half of the 800 billion-yen cost efficiency improvement envisaged in their medium-term plan, but I am not sure if you can carry out a cost reduction of 400 billion yen. On the other hand, you gave a guidance of a cost efficiency improvement totaling 120 billion-yen for this fiscal year. If I multiply this amount by five (years), I can arrive at a cost efficiency improvement of some 600 billion yen. How much potential do you really have for further cost reduction?
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Q2 I thought the 400 billion-yen efficiency improvement did not include DOCOMO's 120 billion planned cost reduction for FY2018. Is this correct?
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Q3 Then, the remaining amount that you need to achieve would be 280 billion yen. Am I correct?
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Questioner No. 6
Q1 Once you shift to a "separation model," you can naturally make savings in your marketing spend, such as the commissions you pay to sales agencies for handset upgrade and handset subsidies. Is it correct to assume that you have good visibility in achieving cost efficiency improvement at an early stage because of this?
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Questioner No. 7
Q1 Do you think DOCOMO's current service charges (when "Monthly Support" discounts are applied) are more or less expensive when compared among the three Mobile Network Operators (MNOs)? When you divide the rates between those for high-end and low-end users, do you think your rates are higher or lower compared to the two other MNOs? Please give us your assessment based on the final rates after reflecting the handset costs, network charges and various discounts.
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Q2 Are you suggesting that with the rate reduction you announced this time around, you will lower the rates from the currently even level to make them more compelling over the competition?
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Q3 I got an impression that your medium-term management strategy is meticulously well developed from the perspective of different customer segments, attaching a focus on solutions for enterprise clients and rate reduction for consumers. On the other hand, where in your company should shareholders and investors find attractiveness? If you only cite the recovery of profit in five years from now, that does not sound sufficiently compelling.
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Questioner No. 8
Q1 You have a track record of losing market share in an environment where all three MNOs offer similar rates. I believe the key reason for that is the difference of appeal to potential and existing users. Your new rounds of rate revisions may lead to gaining recognition that your rates are inexpensive, but what kind of measures will you employ to improve the appeal of your brand?
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Questioner No. 9
Q1 You mentioned that you made this decision also "in view of countering the new entrant, Rakuten Mobile." Was this comment made from a rather defensive context, because you still have a large base of feature phone users who may find attractiveness in Rakuten's lower prices? On the other hand, when NTT explained their medium-term plan, they clearly mentioned that you will aim to expand your market share. Therefore, I sensed a little difference in perspectives between NTT and DOCOMO. What are your views?
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Questioner No. 10
Q1 Regarding 5G, we often hear about the IoT solutions for enterprises and its low latency property. Can you give us an indication on the size of traffic and revenue growth driven by the high-speed, large-capacity transmission capability, high-resolution images, AR and other property components relating to 5G?
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Q2 Which segment will drive the revenue growth from 5G? Will it be the consumer services or enterprise solutions?
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Questioner No. 11
Q1 How much cost is required for the operation of 3G network per year?
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Q2 Can you give us a ballpark amount of potential savings?
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Questioner No. 12
Q1 When do you plan to terminate 3G service?
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Q2 Can't you stop the service earlier?
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Questioner No. 13
Q1 If you successfully migrate all FOMA users to LTE, you will be able to terminate 3G and achieve cost savings, but that will take another 7-8 years. Rakuten has clearly declared to make a foray into the market with low prices. To simultaneously handle these two issues, you will introduce a simple rate plan and thereby lock in your existing customers. On the other hand, I believe you will also need to come up with measures to address the high-end segment. Do you think it is sufficient to introduce just one simple rate plan? Or, do you plan to offer a separate plan for the high-end market as well?
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Q2 You described in your medium-term management strategy that you will aim to expand your membership base capitalizing on the introduction of a new rate structure. The target number of members of 78 million, however, does not give me an impression of a significant expansion. This seems to be a target that can be achieved in the ordinary course of business just by defending your market share leveraging the launch of new rate plans. What do you think?
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Q3 I tried QR code payment at a chain restaurant recently; however, PayPay, Rakuten Pay and LINE Pay offered cash rebates of 20%, 10% and 5%, respectively. No matter how much rebate is provided to customers, customers only make one payment on the spot. Don't you think the QR code payment market is a red ocean?
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