Summary of Earnings Results Briefing for FY2018

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Date Wednesday, May 8, 2019 4:00 pm - 5:20 pm
Venue CONRAD TOKYO, 2F (Kazanami)
Speakers SoftBank Corp: Ken Miyauchi (President & CEO), Jun Shimba (Representative Director & COO), Yasuyuki Imai (Representative Director & COO), Junichi Miyakawa (Representative Director & CTO), Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
Yahoo Japan Corporation: Kentaro Kawabe President & Representative Director President Corporate Officer, CEO

Summary

Mr. Ken Miyauchi, President & CEO of SoftBank Corp., discussed four themes at the earnings results briefing: (1) consolidated results for FY2018, (2) progress on growth strategy (3) acquisition of Yahoo Japan Corporation shares and (4) consolidated forecasts for FY2019.

1. Consolidated Results for FY2018

In the fiscal year ended March 31, 2019 (FY2018), revenue increased by 5% year on year to a record-high 3,746.3 billion yen. Operating income rose by 13% year on year to a record-high 719.5 billion yen. Net income attributable to owners of the Company was 430.8 billion yen. Each of these financial indicators surpassed forecasts for FY2018.

2. Progress on Growth Strategy

Drive further growth in the telecommunications business

SoftBank Corp.'s strong business performance has been underpinned by solid growth in the telecommunications business.

Cumulative smartphone subscribers increased by 10% year on year to 22.08 million.

SoftBank supports a wide range of customer needs through three differentiated brands: SoftBank, Y!mobile and LINE MOBILE. With the SoftBank brand, we provide Ultra Giga Monster Plus, a large-capacity 50 GB data usage plan with unlimited use of eligible video and SNS, at a monthly rate starting from 3,480 yen. This plan is a great deal, offering large-capacity data usage at the lowest price compared with the latest large-capacity data plans announced by other major mobile network operators (MNOs). Meanwhile, in the area of small and medium-capacity data plans, the Y!mobile brand provides simple and low-priced plans in comparison with the plans for light users offered by other major MNOs. Additionally, in the fourth quarter of FY2018, the number of subscribers migrating from Y!mobile to SoftBank exceeded the number of subscribers migrating from SoftBank to Y!mobile for the first time. Moreover, our smartphone churn rate has hit a record low of 0.83% since Home Bundle Discount Hikari Set contributed significantly to reducing the churn rate, which around one in every two smartphone subscribers are enrolled in this service. The Home Bundle Discount Hikari Set is a bundle discount service that combines broadband service and mobile communications service.

Furthermore, today we will announce the “Smartphone Debut Plan,” a new plan under the SoftBank brand to realize “100% smartphone penetration.” With this plan, customers switching from feature phones to smartphones through Mobile Number Portability (MNP) or upgrades will receive a discount on their basic charges to a rate of 980 yen per month for 1 year. Moreover, customers joining by September 30, 2019 will receive a bonus equivalent to 6,000 yen in “PayPay” Points that can be used with PayPay, a QR code payment service that is now attracting a lot of attention.

In these ways, SoftBank Corp. will maintain strong competitiveness in mobile communications services through three strategies focused on heavy data users, light users, and feature phone users shifting to smartphones.

In broadband services, cumulative subscribers for our mainstay SoftBank Hikari fiber-optic service increased by 19% year on year.

In business for enterprise customers, we delivered steady growth in “Business solution and others” revenue, which encompasses areas such as robotics, AI, robotic process automation (RPA), security and cloud services, with revenue up 12% year on year, in addition to our core businesses such as mobile communications, fixed-line telephone, and virtual private network (VPN) services. Notably, the IoT business has been expanding steadily. In this business, we provide a total service ranging from AI-based robotics and network services to cloud and API (interface for external collaboration) services.

In 5G (fifth generation mobile communications system) technology, we will soon roll out services on a full scale. In the process, we are aiming for over 90% 5G population coverage at an early stage.

Expand new businesses

Our new business fields have also been growing steadily.

WeWork, a provider of cutting-edge work spaces using AI, is growing at the world's fastest pace. WeWork plans to open more than 30 locations in Japan by FY2019. DiDi is a taxi-hailing platform that uses AI to predict the demand for taxis. DiDi has commenced services in Tokyo and Kyoto, following Osaka. SoftBank Corp. established a joint venture with OYO, a fast-growing global hotel brand, marking its full-scale entry into Japan's hotel industry. PayPay, a QR code payment service, has recently seen total registrations exceed 7 million. Currently, competition is intensifying in the QR payment services market. PayPay has already surpassed its competitors in terms of brand recognition and service understanding through proactive promotional campaigns. SoftBank Group Corp. has now decided to go forward with capital participation in PayPay Corporation. Through a concerted effort by the entire SoftBank Group, we aim to rise above the competition and build the No.1 payment platform in Japan. With MONET, our next generation Mobility as a Service (MaaS) initiative, Honda Motor Co., Ltd. and Hino Motors, Ltd. have entered into capital participation in MONET Technologies Corporation. As part of the MaaS Japan Alliance, the alliance members will seek to offer a wide range of mobility services. In other areas, the High Altitude Platform Station (HAPS) business is an initiative to fly large unmanned aircraft in the stratosphere to deliver mobile communications network connectivity across wide areas. In the HAPS business, we formed a strategic alliance with a subsidiary of Alphabet Inc., with the aim of achieving commercialization of this technology at an early stage.

3. Making Yahoo Japan Corporation a Consolidated Subsidiary

SoftBank Corp. will today announce that it will make Yahoo Japan Corporation a consolidated subsidiary.

Yahoo Japan Corporation is Japan's No.1 big data company, offering more than 100 services and boasting more than 90 million users. In June 2019, SoftBank Corp. will purchase additional shares of Yahoo Japan Corporation for 456.5 billion yen, in order to reinforce new business (non-telecommunications); integrate strategies, services and resources; and accelerate Yahoo Japan growth and maximize synergy. Technology is evolving on a daily basis. The key technologies in the upcoming era will be 5G, big data and AI. We seek to redefine various industries by harnessing (1) the cutting-edge business models of the AI companies that the SoftBank Group has invested in; (2) the 5G and smartphone technologies held by SoftBank Corp.; and (3) the big data held by Yahoo Japan Corporation, which has been made a consolidated subsidiary. Moreover, we will enable users to navigate seamlessly through daily life with smartphones centered on payment platforms such as PayPay. We intend to use smartphones to redefine various scenes of daily life.

4. Consolidated Forecasts for FY2019

Looking at the consolidated financial forecasts for FY2019 after Yahoo Japan Corporation becomes a consolidated subsidiary, SoftBank Corp. is forecasting revenue of 4,800.0 billion yen, operating income of 890.0 billion yen, and net income attributable to owners of the Company of 480.0 billion yen. SoftBank Corp. aims to achieve both growth and shareholder returns. Revenue and profits are expected to increase in FY2019, even in comparison to the simple sum of the respective financial results of SoftBank Corp. and Yahoo Japan Corporation for FY2018. Additionally, SoftBank Corp. expects to increase annual dividends for FY2019 by 10 yen per share. We seek to be an enterprise that generates operating income of 1,000 billion yen within the next three to five years. To reach this goal, SoftBank Corp. will continue to make a concerted effort to drive further growth.