Q&A at Earnings Investor Briefing for Q1 FY2023

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Date Friday, August 4, 2023 6:00 pm - 6:52 pm
Speakers SoftBank Corp.:
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
Takashi Naito (Vice President, Head of Finance and Accounting Division)
Osamu Akiyama (Vice President, Head of Strategic Finance Division)
  • Are there any factors other than ARPU that contributed to mobile revenue increase in the Consumer business?

    Apart from ARPU, there was a one-time impact, albeit not substantial. This impact will not change the expectation that mobile revenue will return to growth in the next fiscal year.

  • When will the total ARPU decline bottom out?

    Mobile revenue is expected to return to growth in the next fiscal year, but the recovery of ARPU is expected to take more time.

  • By encouraging existing users to upgrade to 5G handsets, can we anticipate an increase in data usage and ARPU? Please tell us if you have considered any future strategies.

    We are working to provide measures to customers that make it easier for them to upgrade handsets, such as “New Toku Suru Support”, a handset upgrade support program. However, since the price of handsets is rising and there is no price difference between 5G and 4G service price plans, we do not excessively encourage customers to replace their handsets with 5G handsets, but remain flexible while watching our customers' behaviors.

  • With regard to mobile in the Consumer business, the ratio of the “Y!mobile” brand is increasing. How shall we think about the brand composition?

    Acquisition of the “Y!mobile” brand continues to be very strong. However, compared to two years ago, the transition from the “SoftBank” brand to the “Y!mobile” brand has decreased, and the “SoftBank” brand is becoming more stable. How to make the “SoftBank” brand more attractive is an important theme, and we plan to take various initiatives in the future. On the other hand, we have not changed our view that smartphones are an important gateway for our group's services. We will increase the acquisition of the “Y!mobile” brand as well as promote the transition from the “Y!mobile” brand to the “SoftBank” brand, and strengthen smartphone services on top of them.

  • What is the outlook for the customer acquisition-related costs for the current fiscal year? How will it affect the business performance in the next fiscal year?

    Customer acquisition-related costs in Q1 were almost the same as last year, and full-year customer acquisition-related costs are basically the same as well. In Q1, we did not take the form of deducting from mobile revenue, but we may implement such customer acquisition measures (deduction from mobile revenue) as in the second half of last fiscal year during the high demand period. Since the progress rate toward full-year forecasts set at the beginning of this fiscal year is better than we expected, we hope to create a positive trend for the next fiscal year.

  • Please tell us about your policy for customer acquisition in the next fiscal year and how you will use expenses.

    The number of subscribers is extremely important for our growth, and we will continue to focus on this area on the premise that the level of acquisition costs is profitable in terms of the customers' lifetime value. The operating income target for FY2025 is ¥970 billion, with the goal of returning to the level before mobile service price reductions. It is necessary for the Consumer business to make a significant contribution to achieving this goal, and the theme for the next fiscal year will be to focus on acquiring new customers while steadily increasing profit.

  • Has there been any change in the KPIs that you focus on since PayPay's EBITDA turned profitable for the first time in a standalone quarter?

    The thinking that the number of payments is the most important KPI has not changed.

  • When will the ¥20 billion investment on servers be recorded as a capital investment? What is your outlook for future investment scale and timing?

    The server is expected to start operation in the fall of 2023, so it is scheduled to be recorded in the current fiscal year. Since there is considerable capacity, we would like to make a careful assessment in the future rather than making the next investment right away. In the future, there is a possibility of making a slightly larger investment, so we would like to consider financing methods such as using bond-type class shares.

  • Regarding sales expansion of generative AI, please tell us about your sales targets and personnel allocation plans, etc.

    We are still in the study phase in terms of specific sales targets and personnel allocation. At the research and development stage, we will start with a few dozen people, and we plan to expand as we move to the next phase, which is application development for enterprise customers.

  • Is there any possibility of collaboration or support from SoftBank Vision Fund, a subsidiary of SoftBank Group Corp., for the generative AI-related business?

    We do not anticipate direct support or collaboration from SoftBank Vision Fund in the in-house development of generative AI. However, we expect that there will be various possibilities in the future at the stage of specific service provision using the in-house-developed generative AI.

  • Regarding the buyback of treasury stock, please tell us about the background behind why you have not implemented the ¥100 billion announced in May 2023.

    Since there was insider information related to bond-type class shares, we were not able to execute the buyback until June. We have gradually started the share buybacks and will disclose the results.

  • What is the reason for issuing bond-type class shares instead of perpetual bonds? I think the cost will be higher.

    We have been actively working on various financing methods. This product is the first of its kinds in Japan in the sense that it is a bond-type class shares and is scheduled to be listed on the Tokyo Stock Exchange. We would like to take on the challenge of expanding the class share market in Japan. Since the dividend level and the difficulty of sales are important factors, we would like to confirm the results of this year's issuance before considering the future move.