Main Q&A at Earnings Results Briefing
for Q2 FY2024

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• NTT DOCOMO, INC. has raised the data allowance for ahamo to 30 GB since October. What impact will this have on SoftBank Corp.?

  We have updated the price plans for Y!mobile and LINEMO, and by doing so, we believe we have maintained our competitiveness. When even a single company takes competitive measures, we are compelled to respond. While prices for all kinds of goods and services are increasing, only mobile service prices are decreasing. Given that we have many business partners and employees, I believe that the entire industry needs to consider whether the current situation is acceptable. In the medium- to long-term, we would welcome a market environment in which prices can be raised in line with broader inflationary trends as a matter of course.

• Do you have any measures in place to encourage brand conversion from Y!mobile to SoftBank?

  Users are motivated to convert from the Y!mobile to SoftBank brand because the SoftBank brand provides an unlimited data plan and also grants PayPay points based on the amount of money spent on PayPay when subscribing to the Pay-toku plans. We would like to further enhance the appeal of Pay-toku.

• The method of calculating the projected purchasing price for devices purchased through Device Purchase Programs will be revised due to rule changes by the Ministry of Internal Affairs and Communications (MIC). What impact will this revision have?

  We do not anticipate this revision to have a significant impact on our business. While adhering to the rules, we have so far implemented a wide range of creative initiatives, such as the New Top-value Support service. Meanwhile, with the recent surge in mobile device prices, we question whether the current discount rules are still appropriate for today's market.

• Will you maintain your target for 1 million net additions of smartphone subscribers each year, as set forth in your current Medium-term Management Plan?

  For the current fiscal year, we are forecasting net additions of around 1 million. While we will continue to emphasize net additions, we also intend to focus on improving ARPU, rather than concentrating management efforts solely on pursuing net additions through excessive acquisition costs.

• KDDI Corporation (KDDI) has earned a high evaluation in Opensignal's Japan Mobile Network Experience report. Could you please discuss SoftBank Corp.'s future efforts and improvements in communications quality?

  We believe that KDDI's network improvement efforts received a certain degree of positive recognition in this report. Due to the impact of the Noto Peninsula Earthquake that occurred in January 2024, SoftBank Corp. postponed the discontinuation of 3G service by about three months (in areas outside Ishikawa Prefecture) and six months (in Ishikawa Prefecture only) from its original schedule. As a result, we experienced delays in planned network configuration modifications and other measures, which had some impact on our communications quality. We are working to address these issues and regain lost ground by the end of December 2024.

• Rakuten Mobile, Inc. has seen an increase in the number of subscribers. What are your thoughts on this trend?

  We believe that it will have a minimal impact on SoftBank Corp.

• Nippon Telegraph and Telephone Corporation (NTT) and Toyota Motor Corporation (Toyota) have announced a collaboration to jointly develop a mobility AI platform. What are your thoughts on this joint initiative?

  Before the media announcement, we were contacted by Toyota. This is an excellent initiative, and we would be interested in participating if approached. SoftBank Corp. is also engaged in the development of cellular V2X (cellular vehicle-to-everything) and AI technologies for autonomous driving. In addition, we are working on the development of foundational technologies for future transportation systems, including AI-RAN. We aim to create a world free of traffic accidents and congestion.

• KDDI announced that it would convert LAC Co., Ltd., a cybersecurity company, into a wholly owned subsidiary. Could you please share your perspective on this action?

  Given the increasing importance of security, we see this action as reflecting KDDI's commitment to strengthening its position in the cybersecurity field. Based on the same thinking, SoftBank Corp. made SB Technology Corp. a wholly owned subsidiary in September 2024.

• You mentioned that there was robust growth in revenue from AI servers for external customers in the Distribution segment. Could you please explain the reasons behind this growth? Additionally, what types of demand exist for these AI servers?

  Currently, certain industries with a strong interest in generative AI, such as the pharmaceutical sector, are deploying AI servers. In addition, we have received requests from numerous enterprise customers seeking to make bulk purchases of AI servers. We expect AI servers to continue being a significant source of demand.

• What are the main reasons for PayPay Corporation's growth, and do you have plans to list the company?

  We believe this growth is due to the PayPay brand's widespread acceptance in society. This acceptance was gained through improved recognition rates and an increase in the number of merchants. Additionally, cost-conscious management has also contributed positively. We are not in a hurry to list the company. The listing decision should be made by PayPay Corporation's Board of Directors. We feel that SoftBank Corp.'s role is to oversee the process.

• It has been six years since the launch of PayPay service. What are your thoughts on PayPay's growth so far?

  PayPay Corporation is a new business launched through a group-wide effort, involving collaboration between SoftBank Group Corp., LY Corporation, and SoftBank Corp, and we have achieved solid results. We believe PayPay Corporation will serve as a model for future management teams when they launch new businesses.

• What is the current status of Perplexity, the generative AI service for consumers?

  Perplexity has been highly popular. To help customers fully understand the convenience of AI, SoftBank Corp. has been offering Perplexity Pro free of charge for one year^*1.

  [Note]

  1. *1
     Perplexity Pro, the paid version of Perplexity, is offered free of charge for one year (from June 19, 2024 to June 18, 2025) to SoftBank, Y!mobile, and LINEMO customers.

• How will you use the Large Language Model (LLM) with 460.0 billion parameters developed in-house for consumers?

  We would like to use it as one of the generative AI models incorporated into services like Perplexity. As a milestone, we believe that we were able to demonstrate that a 400.0 billion parameter-class LLM can be built in Japan.
  Looking ahead, we predict that generative AI for consumers, such as Apple Intelligence and Gemini, being installed on devices will become mainstream. As part of our responsibility as a telecom carrier, we aim to develop an environment where these generative AI services can be used anywhere.

• What is the status of negotiations on building an AI data center on the former site of Sharp Sakai Plant?

  We are currently advancing discussions toward a final agreement and intend to reach it by the end of 2024. Following discussions with Sakai City, we have received confirmation that there are no expected issues with converting the site into an AI data center.

• What is your perspective on the delays in building the AI data center in Sakai City, Osaka Prefecture compared to the initial schedule, and the delays in the supply of NVIDIA Blackwell GPUs (B200), the next-generation GPUs from U.S.-based NVIDIA?

  Operation of the AI data center in Sakai City, Osaka Prefecture is expected to start around one year behind the initial schedule. Meanwhile, SoftBank Corp. is expected to be one of the earliest companies in the world^*2 to deploy NVIDIA Blackwell GPUs (B200), which are scheduled to be delivered early next year.
  It may seem that SoftBank Corp. did not incur significant R&D expenses in the first half of FY2024. However, there has been no delay in upfront investments in generative AI and so forth. More of these investments are expected to be made in the second half of the fiscal year than in the first half. The full-year loss forecast for the Other segment in FY2024 has decreased, primarily because the risk factors anticipated at the start of the fiscal year have mitigated.

  [Note]

  1. *2
     One of the first companies in the world to introduce large-scale deployment of DGX SuperPOD, which is equipped with NVIDIA Blackwell GPUs (B200)

• What is the status of additional investment in Rapidus Corporation?

  I cannot disclose the exact monetary amounts, but it is true that we have expressed our intention to invest. We understand the Japanese government's desire to achieve domestic semiconductor production, and we are willing to cooperate as much as possible. However, since semiconductors are not our core business, there is a limit to the amount of investment we can make. As a shareholder, we would like to watch over Rapidus' success.

• Profits are growing at companies such as PayPay Corporation and LY Corporation. How do you intend to drive growth in the profits generated by SoftBank Corp. and its wholly owned subsidiaries?

  We plan to discuss this topic in detail at our full-year earnings results briefing and at the general meeting of shareholders in 2025, as well as when we announce our next Medium-term Management Plan in 2026. Therefore, we ask for your patience until then for the details.
  In recent years, we have made investments to grow areas beyond telecommunications. Notably, we have focused on software development, including data centers and AI-RAN-related areas. We hope you will have high expectations for our future growth.

• How will the outcome of the U.S. presidential election affect your businesses?

  I will refrain from commenting on political matters. However, we expect that the outcome will not have a significant impact on SoftBank Corp.'s businesses. We hope the political situation stabilizes soon, and that various issues, such as those related to the economy and national security, are addressed appropriately.