Evolving into a technology
company supporting a society
that coexists with AI

In the Medium-term Management Plan, the goal for mobile service revenue was to bottom out and then start increasing in FY2024. Fortunately, the net increase in smartphone subscribers remained strong, and the decline in ARPU narrowed faster than expected, resulting in a turnaround in revenue starting in FY2023.
One of the factors behind the strong net increase in subscribers was that we maintained our store network, which is an important point of contact with our customers. Over the past three years, we have been in a situation where drastic cost reductions were necessary due to the impact of the mobile service price reductions and the COVID-19 pandemic, so we thoroughly discussed whether we should reduce our store network as a short-term cost-cutting measure. However, when we considered our medium- to long-term strategy, we decided that it should be maintained.
The reason behind the decision to maintain the store network is that although their form may change with the advent of a society that coexists with AI, smartphones will continue to be one of the most familiar tools for people. There were concerns that if people were unable to easily access the benefits of smartphones, a digital divide would arise, which would then lead to disparities in wages and living standards. Understanding these concerns, we made efforts to thoroughly communicate the benefits of smartphones to as many people as possible. Currently, our stores and other locations hold about one million “smartphone classes” per year, teaching people about useful smartphone functions and how to use them, as part of our efforts to bridge the digital divide. We also began offering a flat-rate “in-store smartphone support service” in September 2022 which allows customers to receive various types of smartphone assistance at stores for a fixed monthly fee, and this service is being expanded based on user needs. This service has been well received by users and has contributed both to higher revenue for the distributors that operate the stores and to increasing our ARPU.
In FY2023, as part of efforts to increase ARPU and expand the Group ecosystem, we announced a new price plan called "Pay-toku" under the "SoftBank" brand. This price plan allows customers to use unlimited or high-capacity data plans at a discount when combined with "PayPay," helping to differentiate the "SoftBank" brand from its competitors and segregate it from the "Y!mobile" brand.
We will continue to work to expand our customer base and increase ARPU to maximize our mobile service revenue.

Riding the wave of corporate DX, the Enterprise segment, which provides a wide range of IT solutions combined with mobile services, has continued to grow profits at a double-digit average annual rate since FY2018, doubling its operating income in five years. We expect business solution revenue to continue to grow on a double-digit basis, but we will focus on two key areas to achieve further growth.
The first is strengthening human resources. The future will bring the widespread practical deployment of AI, accelerating the trend toward greater autonomy and efficiency in every aspect of people's lives. I expect the Enterprise segment to play a leading role in this and to achieve growth through the transformation of various industries by combining AI with the data and systems owned by a wide range of client companies. As I will explain in more detail later, SoftBank is developing a solution to automate call centers using AI. We would like to introduce the system in-house first, verify the results, and then offer it to our clients in due course. A lot of engineering resources will be needed to support client companies that adopt such a service, so we are now working to strengthen our capabilities in advance.
In April 2024, we announced a tender offer (TOB) for SB Technology Corp., which has abundant engineering resources and high technical capabilities. The company was originally a listed subsidiary in which the Company held 52.81% of shares (as of April 25, 2024), but in September 2024 we invested ¥27.1 billion to make it a wholly owned subsidiary. This decision was prompted by the company's strengths in cloud computing, security, and AI, and I believe that further synergies with the Enterprise segment can be generated for the widespread practical deployment of AI going forward.
The second area of focus is investment in new business fields. In March 2024 we acquired 51.0% (post-dilution) of the shares in Cubic Telecom Ltd., a global IoT platform provider for connected cars and SDCVs^*1, for ¥76.1 billion, making it a subsidiary. As the shift to EVs and autonomous cars progresses, software-based control of automobiles will expand, and “communications” will become the key to managing and deploying that software. This investment is a strategic move driven not only by the company's value as an IoT platform for automobiles, but also by its potential as a platform for globally deploying software.
Due in part to this upfront investment, I expect Enterprise segment income to grow 7% in FY2024 on an actual basis. While growth will be in the single digits for a time, we will strive to return to double-digit growth in the medium-term as a result of these investments.

In October 2023, LY Corporation was launched after an intra-group reorganization centered on Z Holdings Corporation, LINE Corporation, and Yahoo Japan Corporation. In FY2023, after better-than-expected progress in streamlining its operations, which had been a theme of focus, the segment was able to achieve a 24% increase in profit.
However, in November 2023, LY Corporation announced an information leakage incident due to unauthorized access, which is a matter that SoftBank takes very seriously. LY Corporation received administrative guidance from Japan's Ministry of Internal Affairs and Communications (MIC) in March and April 2024, and request for reports, etc. and recommendations from Japan's Personal Information Protection Commission in March 2024. It is my understanding that the administrative guidance from the MIC concluded that LY Corporation failed to properly manage an outsourcing partner, a subsidiary of NAVER Corporation (“NAVER”), which owns a large stake in LY Corporation. In response to this criticism, LY Corporation announced that it will gradually wind down its outsourcing of operations to NAVER and will not outsource any new business operations to them, and SoftBank intends to respect this decision of the company. As LY Corporation's parent company, SoftBank will continue to cooperate with LY Corporation to ensure even more effective security governance.
As of March 31, 2024, SoftBank and NAVER own 64.4% of LY Corporation's shares through A Holdings Corporation, in which both companies hold 50% of the shares respectively. Recognizing that revising this capital relationship is not feasible in the short term, we will continue to hold discussions based on the future of LY Corporation and the business strategies of NAVER and SoftBank.
SoftBank, which has a nationwide store network and approximately 16,000 sales employees, has an advantage in offline operations, which makes LY Corporation, with its strength in online operations, a perfect fit and an important partner. There are many things I would like to accomplish by leveraging the strengths of both companies. A representative success story is "PayPay," where SoftBank supported the offline aspects, such as merchant sales development, while LY Corporation provided the online aspects, such as system development. Today, with AI poised for widespread deployment, the timing is right for a major change in the competitive environment. We are working to promptly overcome security governance issues, and aiming to co-create a second and third type of business like "PayPay" to achieve significant growth together.
The other day, I gave a presentation at the annual Employee Town Hall meeting for all Group company employees on the story of five young men (the Choshu Five) who made a major contribution to the modernization of Japan in the 1800s. These five young men studied abroad in Europe, mastering various specialized fields such as modern constitutions, parliamentary cabinet systems, railway technology, minting technology, modern industry, and diplomacy. It was precisely because these five individuals brought their respective strengths together under the vision of modernizing Japan that the subsequent development of Japan occurred. SoftBank too possesses strengths in a range of fields including telecommunications, e-commerce, media, payments, and finance, and I believe that these business areas will play an important role in the future of Japan, I want us to accomplish great things by joining forces under our common corporate philosophy of “Information Revolution — Happiness for everyone.”

PayPay Corporation, the core company of the Financial segment, increased its gross merchandise value by 22% year on year to ¥12.5 trillion in FY2023 thanks to its seamless integration of QR code and credit card payments. As of the end of March 2024, the number of registered users increased 11% year on year to 63.04 million, and even at this scale, growth continues at a double-digit rate.
In Japan, "PayPay" has maintained its position as number one in terms of gross merchandise value and number of payments. Going forward, we will leverage this advantage to further expand "PayPay" as a financial platform. In addition, we will further strengthen ties with financial services within the Group, and leverage our mobile business infrastructure to promote the expansion of our customer base for "PayPay Card" and other services.
PayPay Corporation achieved its first positive consolidated EBITDA in FY2023. In FY2024, we are working to achieve profitability on an operating income basis as well, and I am highly confident that PayPay Corporation's management will achieve this goal.
Since "PayPay" was launched in October 2018, we have prioritized the expansion of its customer base and have continued to make upfront investments without fear of losses, but I am very pleased to see that we are now on track to achieve positive operating income. I want people to highlight that a startup launched in Japan can achieve such a remarkable level of growth.

As I noted earlier, I view FY2023, the first year of the current Medium-term Management Plan, as a very good start. Our Medium-term Management Plan sets a target of ¥970 billion in operating income in FY2025, but our business foundation has become solid enough to generate more than ¥1 trillion on an actual basis. Thus, although we could have revised the targets in the Medium-term Management Plan upward, to become a market leader in the rapidly expanding field of generative AI, we decided to adopt a policy of balancing upfront investments for medium- and long-term growth with the achievement of the targets set forth in the current Medium-term Management Plan.
One specific investment for medium- to long-term growth is the building of AI computing infrastructure. We have decided to invest approximately ¥110 billion (after taking into account subsidies from Japan's Ministry of Economy, Trade and Industry's “Cloud Program”) to increase the computing power of our AI computing infrastructure to 37 times its current level. There is very robust demand from governments, universities, and companies wanting to use AI computing infrastructure with high computing performance, and I believe that the investment can be recouped simply by providing it in the form of Infrastructure as a Service (IaaS). We will first utilize this AI computing infrastructure to build our own Japanese-based Large Language Model (LLM) with approximately 1 trillion parameters. This LLM is intended to be offered as a Platform as a Service (PaaS) and will be rapidly deployed to companies and municipalities.
We will also invest in developing generative AI-based Software as a Service (SaaS). In March 2024, we made a joint announcement with Microsoft Japan regarding the joint development of a solution for call center automation using generative AI. We aim to create a solution that goes beyond simple question-and-answer capabilities based on pre-learned information to one where the AI can respond autonomously by understanding changing situations in real time.
As we develop various business models in this way, there will be temporary costs associated with initial investments, but we will strive to achieve a higher growth trajectory over the medium- to long-term.

I believe that it is our responsibility as a company to help resolve climate change issues in order to create a sustainable society. The Medium-term Management Plan sets a target for the ratio of renewable energy of electricity consumption by the Company^*2, aiming for 50% by FY2025 and 100% by FY2030 (of which more than half will be procured from power generated from renewable energy sources). In FY2023, this ratio was 48%, showing steady progress versus the target.
In the future, as AI becomes a part of everyday life, the large-scale data processing required to run AI systems will create voracious demand for electricity. Estimates from various publicly available information sources suggest that in 2030, the scale of data processing in Japan will be several hundred times larger than it was in 2020. Assuming a 300-fold increase in AI data processing compared to 2020, as many as six new large thermal power plants would need to be built. However, expanding the use of thermal power plants, which emit carbon dioxide, a cause of global warming, is not a realistic option. Furthermore, large cities such as Tokyo and Osaka would have difficulty accommodating the introduction of renewable energy required to power data centers for AI data processing. Given these circumstances, we hope to help mitigate climate change by distributing AI data centers in areas with abundant potential for introducing renewable energy and, in the future, by being involved in renewable energy generation.

We promote Diversity, Equity & Inclusion (DE&I) and aim to create an organization where each employee understands each other's differences and leverages their strengths while freely sharing ideas and bringing forth innovations on their own.
One of our special focus themes in DE&I is the empowerment of women. We have set a target of tripling the ratio of women in management positions from 7.1% as of April 2021 to more than 20% by FY2035. To achieve this, we have established the Committee for the Promotion of Women in the Workforce, which I personally chair, to take the lead in creating an environment where women can actively participate. In April 2024, the ratio of women in management positions reached 9.2%. It takes a considerable amount of time to develop human resources, but we are approaching it with a long-term perspective.

Directors were appointed at our 38th Annual General Meeting of Shareholders held on June 20, 2024, and for the first time since our listing, independent external directors now make up the majority of all directors (6 out of 11).
Our parent company, SoftBank Group Corp., owns 40.7% of our voting rights, which means we have a controlling shareholder. We have therefore long recognized that we need to have a stricter governance system in place to protect minority shareholders. On the other hand, we never thought that simply having a sufficient number of external directors was enough; we were looking for people with specialized knowledge who could contribute to enhancing our corporate value. Now, we are pleased to announce the appointment of two new independent external directors: Maki Sakamoto, who has extensive knowledge and experience in AI and other technologies, and Hiroko Sasaki, who has knowledge and experience in corporate transformation and the promotion of diversity. Under this new governance structure, we will continue to strive to enhance corporate value.

Considering that mobile service revenue began to turn around in the summer of 2023 and that overall performance has recovered better than expected, I feel that shareholders and investors' concerns about whether we will be able to maintain this high level of shareholder returns in the face of the mobile service price reductions have receded. I believe they have shifted their interest to securing new growth opportunities and how the company will grow in the medium- to long-term.
How should we address medium- to long-term growth opportunities such as generative AI and AI data centers while continuing to meet continued expectations for high shareholder returns? We decided to pursue these two goals, which are normally contradictory, at the same time, and in November 2023 we listed Bond-type Class Shares on the Tokyo Stock Exchange Prime Market, the first Japanese company to do so, raising ¥120 billion of growth capital. Bond-type Class Shares have the characteristics of both corporate bonds and shares, and can increase equity capital without diluting the voting rights of ordinary shares. We decided to use the funds raised for the aforementioned growth investment in the AI computing platform. These Bond-type Class Shares are eligible to be acquired for a cash consideration (a call option) five years after issuance. I would like to see these growth investments bear fruit as soon as possible, increase net income, and increase room for future shareholder returns and growth investments.
Based on this approach, we kept our dividend per common share forecast for FY2024 at ¥86. At this time, we have not decided on our shareholder return policy for FY2025 onward, but we fully understand the expectations of our shareholders and investors, and we intend to manage our business in a manner that will enable us to meet those expectations by continuing to focus on both medium- to long-term growth and shareholder returns.

Now that we have managed to overcome the very steep challenge of mobile service price reductions, I truly feel that the entire Company has become much stronger. The telecommunications business remains the backbone of SoftBank, and viewing this moment positively, I see it as a good opportunity to comprehensively revisit every aspect of our business.
AI continues to evolve, and a society in which humans and AI coexist is becoming a reality. I believe that, because we have been driving the Information Revolution as a leader in the telecommunications business, we are uniquely positioned to tackle society-wide issues, and this includes what I call “Next-generation Social Infrastructure,” specifically the infrastructure capable of handling the massive amount of data processing and accompanying energy consumption required by AI. Since assuming the position of CEO, I have been making various preparations and drawing up a blueprint for this. We are now entering the building phase according to that blueprint. By building this Next-generation Social Infrastructure and evolving into a technology company that supports a society that coexists with AI, SoftBank aims to realize its vision of becoming “the corporate group needed most by people around the world” and to further enhance its corporate value.
SoftBank has always used technology to help solve a wide range of emerging social issues. We are also looking ahead to the specific impact that the evolution of AI will have on society, and working to resolve social issues that may arise in the future. Since June 2024, we have been working to communicate these initiatives and our intentions to the world under the slogan “Providing Answers to Social Issues.”
I would like to ask our shareholders, investors, and other stakeholders for their understanding of our medium- to long-term value and for their continued guidance and support.