Q&A at Earnings Results Briefing for FY2018

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Date Wednesday, May 8, 2019 4:00 pm - 5:30 pm
Speakers 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)
  • Not taking into consideration the consolidation of Yahoo Japan Corporation (“Yahoo Japan”), what factors are accounted for the expectations of limited growth in your earnings forecast for FY2019?

    We forecast operating income to grow steadily but modestly. This reflects various factors, including possible price plan reduction for telecom service and impact from announcements made by NTT Docomo, Inc. and Rakuten, Inc. In addition, brand licensing fee payments to the parent company ended in FY2018; this caused a one-time improvement to the operating income which will not be repeated in FY2019. However, please understand that we expect to see firm results year-on-year.

  • Can you please explain the monthly charges for the second and third years of the Smartphone Debut Plan?

    The monthly charge in the first year is 980 yen (excluding consumption tax). From the second year onward, the charge is 1,980 yen (excluding consumption tax).

  • Docomo will start the planned new price plan from June. How does SoftBank plan to differentiate itself from this?

    SoftBank's Ultra Giga Monster+ plan offers the lowest monthly charge. Going forward, I believe Docomo's new price plan for low capacity market will be compared with the Y!mobile plan, but as a measure of differentiation, we are considering features including PayPay point rewards.

  • Is it correct to understand that SoftBank has already completed addressing the MIC regulations on separation of handset payment and service fees?

    SoftBank brand introduced a plan that separates handset payment and service fees in September 2018. Y!mobile brand is also planning to launch a plan that separates handset payment and service fees in the first half of FY2019. In accordance with government policy, going forward we plan to respond in a manner that will provide user satisfaction.

  • The retail price for handsets rose due to plans for separating handset payments and service fees. How will SoftBank deal with the retail price?

    At this stage, no firm decision has been made for dealing with this issue. We have always been pursing ways to make it easier for consumers to purchase handsets. Moving forward we plan to consider additional methods including in-store services related to handset usage and handset installment payments. Since this is a strategic issue, I will refrain from going into detail at this moment.

  • What is the reason SoftBank brand instead of Y!mobile released the Smartphone Debut Plan?

    Based on customers survey, we believe introducing the plan in SoftBank brand would be attractive to users, including those who consider migrating to smartphone plans with family discount.

  • From the perspective of competing with Rakuten, what are your plans for the mobile communications business and in the fields that Yahoo Japan engages in?

    In terms of a comparison of Y!mobile and LINE MOBILE with Rakuten as an MVNO, we see no need to make major changes from our current operations. We will consider changes in the event Rakuten becomes an MNO.

  • What is your forecast for handset prices going forward given the separation of handset payments and service fees?

    We are considering prices for 5G handsets with various vendors, and planning to make some announcements around autumn. The procurement power to cover a wide range of handsets, from low-end to high-end models, is also important. We plan to offer a wide lineup of handsets, including 5G smartphones.

  • What synergistic benefits do you expect from making Yahoo Japan a subsidiary?

    There are numerous synergistic benefits, including offerings of free Yahoo! Premium membership and rewards of 10-times the T-points for Yahoo! Shopping for SoftBank users compared to users of other carriers. We see numerous returns for our existing businesses, including acquisition of SoftBank customers. We also anticipate substantial returns to new businesses going forward. The business forecasts we announced today do not factor in the benefits from synergies with Yahoo Japan.

  • Do you plan to change the name of Yahoo Japan after consolidation?

    Yahoo Japan is a publicly listed company. This is not a question we are able to answer.

  • Regarding earnings forecasts going forward, is it correct to assume that earnings will be substantially impacted by the changes in the telecommunications industry environment, which includes a reduction in telecom service fees?

    The environment in the telecommunications industry is definitely undergoing change, but we believe that the introduction of 5G will bring about further change in the environment. We are considering launching services that utilize a 5G network in or around 2021. We believe that this will generate new opportunities for us.

  • When will the consolidation of Yahoo Japan, and new businesses including PayPay, become earnings sources?

    We are in the process of building platforms with our new businesses, and this will naturally incur investment cost. We are actively investing to increase customer volume and traffic. Over the next five years or so, we believe these new businesses will create a significant growth in earnings. In the initial stage, investments will come first so we plan to steadily carry out investment.

  • Is there a possibility SoftBank will consider implementing a significant price cut owing to the mobile communications market and price plans of competitors?

    For the past three years, SoftBank has been offering low-priced smartphones and large volume data price plans for heavy users. We appropriately review our service plans in accordance with market trends. Looking at current trends, we can adapt by making minor revisions. We will continue to promote our three brand strategy.

  • What is SoftBank's scheme for acquiring additional shares in Yahoo Japan?

    Yahoo Japan will implement a third-party allotment of new shares and SoftBank will be the recipient. SoftBank will purchase shares of Yahoo Japan at yesterday's (May 7) closing price of 302 yen, which will give SoftBank a 45% stake in Yahoo Japan and make Yahoo Japan a consolidated subsidiary. Concurrently, Yahoo Japan will implement a tender offer for its own shares. In regard to this, please direct your questions to Yahoo Japan. Amid discussions on how to strengthen the alliance between Yahoo Japan and SoftBank, both companies talked and agreed to this acquisition. Yahoo Japan independently consulted with SoftBank Group Corp. on possibly conducting a TOB.

  • Was there a third-party advisor involved in the acquisition of Yahoo Japan shares?

    We each used different financial advisors.

  • Thus far Yahoo Japan has been under the wing of SoftBank Group Corp. I think this made it possible for SoftBank to achieve synergies with Yahoo Japan up until now. Why did SoftBank need to acquire a larger stake in Yahoo Japan?

    A parent-subsidiary relationship is quite different from a sister company relationship. By turning Yahoo Japan into a subsidiary, the profits generated by Yahoo Japan would also be SoftBank's profits. This organizational arrangement was arrived at after discussions with Yahoo Japan, taking into account the benefits for both companies, such as the launch of PayPay.

  • I believe that Chairman Son is a director of these companies. What measures were taken to secure information barriers?

    We consulted with SoftBank Group Corp. after having carried out discussions between Yahoo Japan and SoftBank, and considering a potential scheme. Chairman Son did not participate in the discussions and voting held by the Board of Directors of Yahoo Japan and SoftBank. Considerations by the SBG Board of Directors were also being properly carried out.

  • I believe WeWork is owned by both SoftBank Group Corp. and SoftBank. Is there a possibility in the future of cases, such as with the recent Yahoo Japan acquisition, where SoftBank will convert companies into subsidiaries?

    In regard to new businesses, it is our policy to bring globally successful “unicorns” to Japan and leverage the resources of Yahoo Japan and SoftBank to create numerous joint ventures together with SoftBank Vision Fund at the initial phase.