Presentation Materials
Analyst Meeting Q&A (Earnings Release for the Three Months Ended August 3, 2020)
Announced on August 3, 2020
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 FY2020/1Q ARPU reversed the downtrend and recorded an increase compared over the same period of last fiscal year, and you also predict a favorable trend for the full year. Can you explain the factors behind this improvement and the outlook for the next fiscal year? Also, despite the projected increase in full-year ARPU, you forecast a year-on-year decrease in mobile communications services revenues of approximately 71 billion yen. Please comment on the reasons for this huge drop and the prospects for the next fiscal year.
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Q2 Does your ARPU calculation include international roaming revenues? Haven’t you factored in a considerable decrease in mobile communications services revenues resulting from a reduction of voice and data rates for MVNOs and reduced MVNO subscriptions?
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Q3 Regarding your shareholder returns, you mentioned that you have decided on “a dividend increase due to good prospects for solid financial performance.” Please share with us your views concerning your overall shareholder return policy including share repurchases and dividend payments, as well as the prospects for receivables liquidation when things return to normal in the next fiscal year or beyond.
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Questioner No. 2
Q1 Your FY2020 full-year mobile ARPU is estimated to be 4,250 yen, which is exactly the same as the number for FY2020/1Q. However, your mobile ARPU has in fact improved since FY2019/3Q due mainly to the moderated impact of “Monthly Support” discounts and other factors, and I believe this trend will continue going forward. Please explain the reasons why you estimated your full-year mobile ARPU would remain unchanged from FY2020/1Q?
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Q2 When you introduced your new rate plans, President Yoshizawa declared to “recover operating profit to the 990 billion-yen level after a temporary deterioration caused by the launch of new rate plans.” He also commented on the likelihood of “achieving 990 billion yen in operating profit earlier than originally planned.” Can you confirm if there are any changes to the prospects of delivering 990 billion yen in operating profit in the year ending March 2024 in light of the impacts of COVID-19?
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Questioner No. 3
Q1 Can you elaborate on the elements driving the operating profit growth of Smart life business and Other businesses and its future outlook? Because the content/lifestyle and finance/payment services are likely to deliver a relatively large amount of profit growth this fiscal year, can you share with us your views on the factors behind this? In your full-year guidance, a 11.9 billion-yen increase in the operating profit is projected for Smart life business and Other businesses combined. As you have already achieved a profit growth of 13.6 billion yen in the first quarter alone, please explain why you do not forecast any further increase in the remaining periods?
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Q2 This is a question about your enterprise business. Please explain the recent trends of telework-related revenues that came under the spotlight due to COVID-19. Please also give us an explanation on the measures that are required to establish this into a major line of business.
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Questioner No. 4
Q1 In your Smart life business and Other businesses, what specifically contributed to the profit growth in FY2020/1Q? Can you also explain the profit contribution of NTT Plala? You explained the costs required for expansion of “d Payment” merchant network would be a factor that will likely suppress your profit in the periods ahead, but that contradicts with your recent performance where you have generated profits while cultivating the merchant network, so please give us a more detailed explanation.
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Q2 I believe the expression “usage promotion” refers to the reward of “d POINTs,” and I got an impression that you are lavishly giving away “d POINTs.” You might have suppressed the expenditures in FY2020/1Q, but haven’t you already spent a huge amount in the preceding periods?
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Q3 In your plan, the number of net additions for the full year is projected to be 715,000. In this projection, how did you estimate the number of existing Rakuten MVNO users moving out to Rakuten MNO service? I would appreciate if you can comment on this together with an update on the recent trends.
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Questioner No. 5
Q1 Your mobile communications services revenues recorded a drop of slightly less than 20 billion yen in FY2020/1Q compared to the same period of the previous fiscal year. Can you give us a breakdown of this decline? Particularly, your voice MOU increased by approximately 16 minutes year-on-year. While I do not think all of them are billable traffic, I guess this positively affected your revenues. So, please give us an explanation separating the trends for voice and data. Please also explain the impact of the new rate plans on your FY2020/1Q performance. Will it be correct to assume that the new rate plans had a net negative impact on your FY2020/1Q results more than cancelling out the positive impacts from the reduced “Monthly Support” discounts?
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Q2 Please share with us your current assessment on your price competitiveness. Compared with the rate plans of the competition, even after combining the discounts offered through your “Family Discount” or “Hikari Set Discount” packages, your rates are still more expensive. I therefore believe you may have to alter your conventional retention-oriented strategy and adopt of new approach to compete in the market. What are your views?
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Questioner No. 6
Q1 Please explain the progress of the credit card and other receivables liquidation program. I believe this will make a positive contribution to your working capital. How is this factored in your free cash flow projections?
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Q2 Previously, you hinted on the possibility of conducting receivables liquidation in a larger scale. Do you think 150 billion is a reasonable size?
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Q3 Can you explain the sales strategy you plan to employ for customer acquisition toward the second half of the year?
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Questioner No. 7
Q1 I believe your voice ARPU fared quite favorably in FY2020/1Q due to the impact of COVID-19, but you explained that the growth has begun to stabilize. Do you think the voice usage has already peaked out? Please inform us of the recent trends of voice and data ARPU in the new normal of society.
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Q2 Can you give with us the current number of new rate plan subscribers and the target for March 31, 2021?
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Q3 Some predict the spread of COVID-19 infections will subside, but others predict it will further increase as we head into winter. In the case of the latter, should we expect an increase in your profit as you will be able to save your marketing spend for the near term. Or, would you rather increase your marketing expenses if you foresee an upside in profit generation?
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