Main Q&A at Earnings Results Briefing
for Q3 FY2023
Date | Wednesday, February 7, 2024 4:00 pm - 5:30 pm |
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Speakers | SoftBank Corp.: Junichi Miyakawa (President & CEO) Kazuhiko Fujihara (Board Director, Executive Vice President & CFO) |
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SoftBank Corp.'s standalone full-year net income for FY2023 is forecast to increase by around ¥100.0 billion year on year. What are the main reasons for this increase? What is your outlook for standalone net income in FY2024 and FY2025?
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The projected FY2023 increase of around ¥100.0 billion includes dividends from subsidiaries from whom we had not previously received dividends. Aside from that, the increase also incorporates the utilization of certain loss carryforwards.
We expect that standalone net income will continue moving toward an improving trajectory from FY2024 onward, based on forecasts for dividends from subsidiaries, as well as loss carryforwards that have not yet been fully utilized. We believe that standalone net income can continue to exceed dividends at the FY2023 level.
We want to reassure you that whenever management discusses dividend-related matters, we are always mindful of ensuring that consolidated net income exceeds dividends, that dividends can be paid with free cash flows, and that we have adequate profits available for dividend.
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Why is mobile revenue expected to return to growth one year earlier than the forecast announced in the Medium-term Management Plan?
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SoftBank Corp. has long focused on both increasing the number of subscribers and improving ARPU, with the aim of expanding mobile revenue, which may be represented as the total area found by multiplying the number of subscribers and ARPU. As we have put the brakes on the decline in ARPU, we have successfully increased the number of subscribers.
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Have Pay-toku and Merihari Unlimited + contributed significantly to the smaller decline in ARPU?
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Looking at Q3 alone, ARPU decreased by ¥210 in FY2022 Q3 compared with the same period of the previous fiscal year, but the decline was contained to ¥100 in FY2023 Q3, showing a smaller decline. While I cannot provide quantitative data, Pay-toku and Merihari Unlimited + have been well received by customers, and have helped to push up ARPU.
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What are your thoughts on maintaining LY Corporation's listing on the Prime Market? Also, what are your expectations for how you would like LY Corporation to grow in the future?
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As a company, we understand the belief that it is important for LY Corporation to maintain its Prime Market listing. We are willing to cooperate, so we plan to engage in an ongoing dialogue.
LY Corporation is a company that offers the best services in every sector. We expect that its efforts to boldly tackle challenges and maximize the unique qualities of LINE and Yahoo! JAPAN will lead to growth.
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When will PayPay Corporation achieve profitability on an operating income basis? What are your thoughts on its listing? Do you expect PayPay Corporation to list its shares within FY2024?
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PayPay Corporation is now well on track to achieve full-year profitability on a consolidated EBITDA basis in FY2023. Because its depreciation is not large, we are also fairly confident about its prospects for achieving profitability on an operating income basis. However, we cannot comment on the timing for when PayPay Corporation will return to profitability on an operating income basis.
Nothing has been decided yet on PayPay Corporation's listing. Listing is an important option for realizing PayPay Corporation's corporate value. We believe that PayPay Corporation has evolved to the point where it is now “unrivalled” in the payment field. While continuously growing value-added services for merchants and financial services, we will carefully consider the timing of listing.
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Cubic Telecom's business is in competition with that of KDDI CORPORATION. What are your aims and how likely are you to succeed?
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We believe that Cubic Telecom's platform is structured differently from that of KDDI CORPORATION. Telecommunications carriers often build IoT platforms for automobiles specific to each country. Meanwhile, Cubic Telecom offers a standard IoT platform for automobiles that may be used in over 190 countries. Automakers that use this platform will be able to supply connected car services immediately in a variety of countries without the need for complex contract procedures and other country-specific processes. This constitutes a departure from previous approaches taken by telecommunications carriers, and we believe that it has enormous future potential.
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SoftBank Corp. has announced an investment in Cubic Telecom. Are you considering any additional mergers and acquisitions in this field?
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We do not have anything specific right now, but we are open to evaluating any good opportunities that may emerge.
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What are the aims of New Top-Value Support? How are users and the Ministry of Internal Affairs and Communications (MIC) reacting to this service?
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There was a possibility that the amendment to the Telecommunications Business Act would make it more difficult for customers to purchase devices. Therefore, we rolled out this measure as a way to meet customer needs. We also wanted to increase the uptake of 5G-compatible devices. The reactions of customers have been positive. MIC has not expressed any particularly negative feedback about this measure.
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What effect did the Noto Peninsula Earthquake have on your financial results?
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The projected impact on financial results is around ¥2.0 billion in FY2023. This impact has already been factored into the upward revisions to our forecasts we have just announced.
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KDDI CORPORATION has made an investment in Lawson, Inc. What do you think of this investment?
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We were surprised by KDDI CORPORATION's bold decision. However, we feel that it differs from SoftBank Corp.'s strategic direction. Our ideal business ecosystem is one that is open and does not impose constraints on the telecommunications carriers that may be used. In addition, rather than focusing on a single retail business, we would like to aim for the digital transformation (DX) of Japan's whole retail sector.
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What is your position on and rationale for wage increases, and who will be eligible?
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We are preparing to offer a 5.5% increase, up from 5.4% in FY2022, combining regular salary increases, base pay raises, and lump sum payments. Furthermore, by utilizing stock options in the future, we hope to develop a structure that allows management and employees to work together to increase corporate value.
All direct employees of SoftBank Corp., which number about 24,000, are expected to be eligible. The rationale for wage increases is to provide an environment where employees can work with peace of mind, considering rising prices and other economic conditions, government requests for wage increases, and social factors.
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KDDI CORPORATION has announced that it will raise the output of the 5G-only band (Sub-6) beginning in FY2024 in step with the alleviation of interference with satellite communications and expand the 5G service area in the Tokyo metropolitan area all at once. Does SoftBank Corp. have similar plans?
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SoftBank Corp. is also expected to be able to increase its output. As a result, we anticipate that the communication environment in the Tokyo metropolitan area will improve even further.
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During the previous earnings results briefing, you stated that SoftBank Corp. was willing to support the development of the platinum band (700 MHz band / 3 MHz bandwidth × 2) allocated to Rakuten Mobile, Inc. Has there been any progress on this front since then?
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We have had several discussions on the frontline level, but there has been no significant progress. The platinum band allocated to Rakuten Mobile, Inc. is an incredibly valuable bandwidth. Therefore, it is our hope that having received the allocation, Rakuten Mobile, Inc. will properly develop it. That is what it means to effectively use radio waves, and it is a Mobile Network Operator's responsibility to do so. We would like to continue discussions with Rakuten Mobile, Inc. on this important issue.
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What are your thoughts on the latest developments surrounding the Act on Nippon Telegraph and Telephone Corporation (the NTT Law)?
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We are highly concerned about the current climate, which presupposes that the NTT Law will be abolished in FY2025. Looking ahead, three working groups on fair competition, universal service, and economic security will be established at MIC, and discussions will begin in earnest. During these discussions, we would like to raise SoftBank Corp.'s concerns. Furthermore, if the NTT Law is to be abolished and replaced with other laws, regulations, or rules, we would like to thoroughly review them to verify that they will function properly.
To preserve Japan's future as a nation, we would like to carefully discuss what the optimal structure would be to prevent the special assets owned by Nippon Telegraph and Telephone Corporation from being exposed to risks.
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What are your views on participation in the IOWN Global Forum?
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We support the IOWN framework itself. Although we cannot discuss details, we are not currently participating because there are contractual issues that could impose constraints on a wide range of technological development currently being carried out by the Group as a whole. However, SoftBank Corp. is prepared to participate at any time on a standalone basis. Meanwhile, we believe that discussions related to abolishing the NTT Law have complicated the situation.
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Have you considered direct communication between smartphones and satellites (Mobile Direct)? Satellite communications played an important role in the Noto Peninsula Earthquake. Has this made you reconsider using Mobile Direct?
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We have had a major change of heart. SoftBank Corp. would also like to explore the possibilities of Mobile Direct. We are conducting discussions with companies that own satellites from many different angles. Because there are some differences in what can be accomplished with satellites and HAPS, we would like to work on both at the same time.
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