Q&A at Earnings Results Briefing for Q2 FY2022

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Date Friday, November 4, 2022 4:00 pm - 5:00 pm
Speakers SoftBank Corp.:
Junichi Miyakawa (President & CEO)
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
  • What are your thoughts on requests by Rakuten Mobile, Inc. to reallocate a portion of the Platinum Band (mobile frequency band with strong connectivity) held by NTT DOCOMO, INC., KDDI CORPORATION, and SoftBank Corp.?

    For 6 years from its entry into the mobile phone industry in 2006 to the time when it received Platinum Band allocation in 2012, SoftBank Corp. had requested the Ministry of Internal Affairs and Communications (MIC) to allocate a portion of the Platinum Band, so we can understand Rakuten Mobile, Inc.'s position. However, the Platinum Band used by SoftBank Corp. has already been used by many customers. Hypothetically speaking, if a portion of SoftBank Corp.'s Platinum Band were to be reallocated, we would require a considerable preparation period to ensure that we would not cause any inconvenience to our customers who are currently using SoftBank Corp.'s Platinum Band.

  • What is your position on roaming (interconnectivity of mobile networks among telecommunications carriers) when a communication failure occurs?

    We are positively considering roaming. The “call back” feature, in which police, firefighters, and other such agencies call back callers who make emergency calls, should be implemented as soon as roaming is enabled, but there are many unresolved issues. We would like to discuss these issues with the national government and other telecommunications carriers and take innovative actions. Additionally, we would like to discuss with other telecommunications carriers the widespread adoption of Dual SIM, which allows smartphone users to use the networks of two different telecommunications carriers on a single smartphone.

  • One issue is that some dealers of mobile carriers are selling smartphones at excessively low prices, such as “¥1.” What are your views on the mobile carriers' sales incentives, which are currently set at ¥20,000?

    As a result of lowering the prices of mobile devices to attract users, “resellers” have emerged who generate a profit by reselling inexpensive mobile devices. We believe that these sorts of issues are a troubling trend in society. It is difficult for SoftBank Corp. to address this issue on its own due to competition from other companies. For this reason, if a rule could be formed to set a lower limit on the selling prices of smartphones, we would be willing to support it.

  • Do you expect the Financial segment or PayPay Corporation to become profitable in FY2023?

    PayPay Corporation is seeking a public listing of its shares, so we will refrain from commenting on its future.

  • Can I correctly assume that PayPay Corporation is preparing for a public listing of its shares?

    Currently, nothing has been decided on the public listing. We are working to develop governance and other structures in the sense of making PayPay Corporation a company that can pursue a public listing at any moment.

  • How much growth potential does PayPay Corporation have going forward?

    As of September 30, 2022, the number of PayPay registered users surpassed 51 million. We believe that the number of users can be increased further. PayPay Corporation's revenue structure has three layers. Currently, the cashless payment business, the layer 1, is the core operation. In the future, we intend to drive further growth in services for merchants, which is the layer 2, and financial services, which is the layer 3.

  • Smartphones are becoming capable of communicating with satellites. How will growth be achieved at HAPSMobile Inc.?

    HAPSMobile Inc. aims to provide communications services from aircraft systems flown in the stratosphere and other assets. Because these aircraft systems operate at a lower altitude than satellites, their communications quality is stable, which is a key strength. Therefore, we would like to turn this strength into services. In providing services, we recognize that we must overcome several issues. In the short term, we aim to provide OneWeb, which is a Low Earth Orbit satellite communications service.

  • How will social conditions such as the weaker yen and soaring prices affect your business?

    Given that we conclude yen-denominated contracts for major procurement from overseas, the weaker yen will have only a small impact on our business for the foreseeable future. The impact of rising prices is also not large, but surging electricity costs have had a negative impact on our operating results because we consume a lot of electricity as a telecommunications carrier. We will work to address these impacts as an ongoing issue.

  • Which businesses do you expect to contribute to your V-shaped recovery in FY2023?

    We are targeting a V-shaped recovery through a mix of factors, including growth in the Enterprise segment and Yahoo! JAPAN/LINE segment, as well as cost reductions.

  • Equity has increased modestly, due partly to PayPay Corporation's re-measurement gain. In addition, I believe that you will have a little more leeway with funds given your plans to reduce capital expenditures in the Consumer and Enterprise segments in FY2023 by ¥100.0 billion compared to FY2022. What is your approach to future capital allocation, including shareholder returns?

    The revenue structure of the telecommunications business is different before and after the mobile service price reduction. Because of this change, we intend to reduce capital expenditures in FY2023 by ¥100.0 billion as planned. The shareholder return policy for FY2023 has not yet been determined at this time, but we have no intention of making any significant, unexpected changes. The shareholders' equity ratio, which was 13.2% as of March 31, 2022, is expected to surpass 16% as a result of the conversion of PayPay Corporation into a subsidiary. The ratio of total equity to total assets, which was 22.7% as of March 31, 2022, is expected to improve to more than 25%.

  • How did PayPay Corporation's re-measurement gain and the operating results of each segment compare with your initial forecasts?

    In the Enterprise segment, our forecast of segment income was revised downward by approximately ¥9.0 billion due to the recording of a provision for litigation. Our initial forecasts were maintained for all other segments, which performed firmly. PayPay Corporation's re-measurement gain was several tens of billion yen higher than initial forecast.