Main Q&A at Earnings Results Briefing
for FY2023

< Back

Date Thursday, May 9, 2024
4:00 pm - 5:35 pm
Speakers SoftBank Corp.:
Yasuyuki Imai (Director & Chairman)
Junichi Miyakawa (President & CEO)
Jun Shimba (Representative Director & COO)
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
  • I believe that SoftBank Corp. is in talks with NAVER Corporation (NAVER) to acquire shares of A Holdings Corporation, LY Corporation's parent company, from NAVER, with a view to increasing its equity interest in A Holdings Corporation. Assuming that SoftBank Corp. increases its equity interest, how does it expect to change the management of LY Corporation?

    SoftBank Corp. has already made LY Corporation a subsidiary through A Holdings Corporation. For this reason, we believe that a slight increase in SoftBank Corp.'s equity interest in A Holdings Corporation will not make a big difference. Based on strong requests from LY Corporation, we are currently in discussions with NAVER to review the capital relationship in terms of security governance and business strategies.

  • How much equity interest does SoftBank Corp. want to hold in A Holdings Corporation?

    Currently, SoftBank Corp. and NAVER each hold a 50% equity interest in A Holdings Corporation. We would like to discuss with NAVER changes to the capital relationship in a way that does not affect our business development. While I cannot go into detail, please be aware that SoftBank Corp. will not subscribe to a capital increase by LY Corporation as there is an agreement between SoftBank Corp. and NAVER. In addition, SoftBank Corp. will not use its own equity to complete transactions. We fully rule out these two options.

  • The Ministry of Internal Affairs and Communications (MIC) has requested that LY Corporation submit countermeasures to prevent the recurrence of the leakage of LINE user information and other data by July 1, 2024. What sort of timeline do you have in mind for reviewing the capital relationship of LY Corporation?

    Although we will be working toward that deadline, we see this as a very difficult undertaking. We cannot provide specific timelines due to the involvement of a counterparty. We plan to continue our discussions with NAVER.

  • There is some opposition inside South Korea to the capital relationship of LY Corporation. What are the key points for both companies to reach an acceptable outcome?

    We understand that both SoftBank Corp. and NAVER have numerous stakeholders as both of them are listed companies. We do not want to reach an unfair conclusion in which either side is obligated to tolerate a less-than-ideal outcome as a result of reviewing the capital relationship.

  • LY Corporation has announced a policy of terminating business outsourcing to NAVER. To what extent is it necessary to review the capital relationship?

    The administrative guidance issued by MIC on March 5, 2024 requested that LY Corporation separate its shared systems with NAVER and review its business outsourcing to the company. We understand that MIC has stated that it is difficult to establish that proper management and supervision are being conducted because NAVER, which has significant capital influence over LY Corporation, is a business outsourcing partner. First, we want to respect LY Corporation's wishes to terminate business outsourcing to NAVER. Because we have received strong requests from LY Corporation to review the capital relationship, we believe that we must deal with the matter in earnest and good faith as a parent company.

  • Is NAVER hesitant to review the capital relationship of LY Corporation?

    We do not regard NAVER as being hesitant. We believe that SoftBank Corp. and NAVER both share the common goal of making the best possible choice to achieve LY Corporation's medium- and long-term growth.

  • How does SoftBank Corp. want to be involved in the security governance of LY Corporation in the future?

    We would like to fully cooperate in areas where we can. In fact, SoftBank Corp.'s Chief Information Security Officer (CISO) has joined LY Corporation's “Group CISO Board.”

  • The schedule for linking “LINE” and “PayPay” accounts has been revised. Will this have any impact on the creation of Group synergies?

    It's regrettable that the schedule for linking accounts has been postponed. However, we would first like LY Corporation to strengthen its security measures. Steady progress has been made on linking “PayPay” and our mobile business.

  • Nippon Telegraph and Telephone Corporation (NTT) has stated that it would like to put mobile services at the core of universal services. What are your thoughts on this position?

    Looking ahead, as humanity becomes more interconnected with data, I believe that only optical fiber should be chosen for universal services. I would like to continue to deepen discussions about this issue.

  • The Revised NTT Law was passed by the National Diet. What are your thoughts on the passage of this law?

    I have no major objections to easing regulations on matters such as abolishing disclosure obligations for research accomplishments and changing the company's name. I believe that it was very important that a supplementary resolution requesting a cautious examination of future amendments was adopted from the standpoint of protecting national interests and people's daily lives. I plan to continue emphasizing the importance of this supplementary resolution in the future.

  • Why has the number of smartphone subscribers been increasing?

    Over the past few years, we have received strong user support by strengthening Group synergies, such as collaboration with the e-commerce services of “Yahoo! JAPAN.” Another reason for the increase in smartphone subscribers is that we responded to rising device prices by providing services that meet user needs, such as “New Top-value Support.” Moreover, our focus on relationships with SoftBank/Y!mobile shops and mass merchandisers has proven successful. Furthermore, we feel that our comprehensive initiatives, such as revived sales activities following the removal of COVID-19 restrictions, and enhanced evaluation of our network qualities, have helped to increase the number of smartphone subscribers.

  • The Consumer segment has posted an increase in profit, and it seems that there is finally light at the end of the long tunnel of mobile service price reduction. How do you see the situation?

    We feel that we have finally emerged from the tunnel. We are overjoyed that we were able to turn things around earlier than we had initially planned. We pondered all kinds of measures to mitigate the impact of mobile service price reduction, including how to grow the Enterprise segment and how to cut costs. Now that we have passed through the tunnel, we think the effort was well worthwhile. We will continue to strive for even higher goals by enhancing customer satisfaction through providing services that fit lifestyles of customers and by reducing costs through utilizing AI.

  • Is the expansion of “5G JAPAN” activities, a collaboration between KDDI CORPORATION and SoftBank Corp., related to discussions about the NTT Law? Also, could there be an increase in the number of other participating companies?

    The “5G JAPAN” activities were launched to maximize the efficiency of large-scale investment in 5G. It is not directly related to discussions about the NTT Law. We plan to continue cooperating with KDDI CORPORATION in areas where we can work together and competing in areas where we should compete against one another. If other companies would like to join us, it will be possible to conduct discussions.

  • How far will PayPay Corporation's growth continue? If growth starts to slow down, what kinds of synergies will you generate and how will you expand this business?

    PayPay Corporation offers substantial growth potential through collaboration with financial services, as well as further growth in payment services. We believe it is still too early to discuss possibilities such as growth starting “to slow down.”

  • You said that SoftBank Corp. will invest approximately ¥150.0 billion in AI computing infrastructure (before consideration of up to ¥42.1 billion in subsidies associated with certification under the “Cloud Program” by the Ministry of Economy, Trade and Industry). What are the specific uses of the funds?

    The funding will basically be used to invest in hardware, specifically the “NVIDIA H100 Tensor Core GPU” and the “NVIDIA B200 Tensor Core GPU.” The funds do not include the personnel expenses associated with constructing the AI computing infrastructure.

  • You mentioned that investing in AI computing infrastructure will be a key component of the next mid-term management plan. However, SoftBank Corp. is a company that can generate operating income of around ¥1 trillion. Does this imply that it won't be a key component unless you invest much more?

    If we were aiming for growth only in the Infrastructure as a Service (IaaS) field, where AI computing infrastructure is leased out, we would need to boost capital expenditures even more. However, we are aiming for growth in the Platform as a Service (PaaS) field. In other words, it is a business that will offer a large language model (LLM) based on the Japanese language, enriched with 1 trillion parameters, as solutions and applications. We estimate that the aforementioned capital expenditures will be sufficient to increase the parameters to 1 trillion. To achieve growth in the PaaS field, we feel that having a sufficient number of engineers and expertise will be more important than the amount of capital expenditures.

  • I have the impression that 5G investment has settled down, and you are shifting to investment in generative AI. What is your policy for medium- and long-term capital expenditures?

    In anticipation of era when facilities used for telecommunications and generative AI will be shared via “AI-RAN,” we are actively advancing research and development from a medium- and long-term perspective. When AI is integrated into radio access networks (RANs), consisting of antenna facilities and base stations, etc., we believe that AI will be used not only for the sophisticated operation of RANs, but also for dynamic allocation of idle resources to the processing of generative AI. Because we are in a period of transition, these may appear to be different investments. However, please be aware that capital expenditures in 5G/6G and generative AI will have more common investment components in the future.

  • The Bank of Japan has ended its negative interest rate policy and is said to have begun a policy of raising interest rates. Will this affect SoftBank Corp.'s fund procurement?

    We expect there will be no significant impact in the short term. We started moving our borrowings to long-term maturities several years ago in order to be ready for an anticipated rise in interest rates. Currently, long-term debt makes up approximately 90% of our borrowings.

  • There has been a problem in which counterfeit My Number Cards are used as identification to steal smartphone SIM cards. What kinds of countermeasures will you implement?

    At mobile phone shops, we use a double-checking process that verifies both the original My Number Card and personal identification. However, in certain shops, this process was not properly implemented. We deeply regret that this has happened. We have instructed shops to redouble their strict adherence to the double-checking process, and we have decided on system-based measures and will be implementing those measures in stages.