The Company is guided by a corporate philosophy of “Information Revolution — Happiness for everyone.” The Company aims to be a provider of the most essential technologies and services to people around the world through its endeavors in various businesses in the information industry, while maximizing its enterprise value.
Target Management Index
The Company focuses on the medium- to long-term growth of adjusted EBITDA.*1
Medium- to long-term strategies
Focus on mobile Internet
In the ICT market, the rapid penetration of smartphones is causing a shift from PCs to mobile devices as the preferred means of accessing the Internet.*2
The Company will realize sustainable growth by concentrating on business development in the field of mobile Internet, which is growing in line with these changes. Specifically, the Company is working to strengthen its communications network and provide high-speed data communications services, enhance its lineup of smartphones and tablets, expand its mobile content such as games, optimize services such as e-commerce for mobile devices, and enhance its cloud services, among other initiatives. By promoting mobile Internet usage, the entire Company will increase revenues from the use of data communications services and other services and content.
Aggressive Investment in Internet-related Companies
The information industry is characterized by rapid changes in technology, business models, and market needs. To become a provider of the most essential technologies and services to people around the world, it is imperative that the Company be flexible regarding any specific technologies or business models, and continue transforming itself repeatedly in line with the changes in the times, expanding and changing its lines of businesses.
To overcome these challenges, the Company aggressively invests in Internet-related companies possessing outstanding technologies and business models that are expected to achieve strong growth. The Company will leverage its extensive insights and networks to support the growth of investees. At the same time, the Company will continuously expand and change its business offerings by organically combining its own strengths with those of its investees to create synergies. Through this process, the Company will realize sustainable growth.
Important management issues
Steady Profit Growth in the Domestic Telecommunications Business
The Japanese mobile communications market is expected to grow at a slower pace than before going forward, given that the domestic mobile communications service subscribers reached 158.59 million*3 with the population penetration rate of 125.1%.*4
To ensure steady profit growth in the Japanese telecommunications market in this environment, the Company has identified users of smartphones, feature phones, tablets, and mobile data communication devices, which are all sources of revenue and profit, as the “main subscribers” of its mobile communications service and concentrates its efforts on acquiring and maintaining such users. Among these, the strongest emphasis is on strengthening the acquisition and the reduction of the churn rate of smartphone subscribers, and the Company is therefore focusing on increasing sales of Home Bundle Discount Hikari Set, which offers a discount on the communication charges of mobile communications services to customers subscribing to both mobile communications services and broadband services such as SoftBank Hikari.
Moreover, the Company is working to develop new peripheral services such as video streaming, electricity provision, and robotics. The Company is also pursuing further operational efficiency and cost reductions by leveraging the effects of integrating its four domestic telecommunication subsidiaries in April 2015.
Revamp of the Sprint business
In the Sprint business, Sprint aims to return to a growth trajectory by turning around the ongoing declining trend in net sales while promoting large-scale cost reductions and available liquidity improvement. As for net sales, Sprint is focusing on increasing the number of postpaid phone subscribers, which are the largest source of revenue. Signs of a turnaround have begun to appear with net subscriber additions for three consecutive quarters from the second quarter of the year ended March 2016.
Meanwhile, in cost reduction, Sprint began to transform its cost structure (the “Transformation”) to reduce operating expenses during the fiscal year. Through the Transformation, Sprint expects to achieve a run rate*5 operating expense reduction of USD2 billion or more exiting the fiscal year ending March 2017, with the cost reduction effect projected to continue in the following fiscal years. With this turnaround in net sales and cost reduction, Sprint is pursuing positive free cash flow for the first time since its acquisition by the Company in July 2013.
To improve available liquidity, Sprint will not only improve cash flow by reducing costs, but also diversify its sources of financing, such as handset sale-leaseback transactions. Sprint expects to maintain an adequate amount of available liquidity to fully fund the repayment of the USD3.3 billion of note maturities that come due in the fiscal year ending March 2017 and to execute its current business plan.
- *1 Adjusted EBITDA = operating income (loss) + depreciation and amortization – gain from remeasurement relating to business combination ± other operating income (loss)
- *2 GSMA Intelligence
- *3 The number of mobile communications service subscribers for NTT DOCOMO, KDDI, and SoftBank as of December 31, 2015 published by the Telecommunications Carriers Association plus the number of PHS service subscribers at SoftBank as of December 31, 2015.
- *4 The rate is calculated by dividing the above number of mobile communications service subscribers by the population of Japan estimated by the Ministry of Internal Affairs and Communications Statistics Bureau (provisional estimates as of January 1, 2016).
- *5 Estimated future figures based on the assumption that current trends continue