Main Q&A at Earnings Results Briefing for Q3 FY2024 | About Us

Date	Monday, February 10, 2025 4:00 pm - 5:30 pm
Speakers	SoftBank Corp.: Junichi Miyakawa (President & CEO) Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)

Could you please discuss the strategic significance of SoftBank Corp.'s partnership with OpenAI and how it fits in with the services that it already provides?: We see SoftBank Corp. as an operational company that drives the transformation of each enterprise in its own optimal way, utilizing a wide range of generative AI models. Therefore, we believe the establishment of the joint venture (SB OpenAI Japan) with OpenAI was a natural and inevitable step. “Cristal intelligence” will be an autonomous AI on a whole different level compared to any previous generative AI. By introducing this advanced AI to Japanese companies at the earliest opportunity, I am confident that we can contribute to an even brighter future for Japan.
Previously, we have also offered “Microsoft Azure,” provided by Microsoft, and “Gemini,” developed by Google. By offering optimal proposals based on customers' preferences, we have encouraged the growth of Japanese companies. We intend to continue these efforts moving forward. We are now at a stage where we will proactively engage with AI, without limiting our possibilities.

A press release issued on February 3, 2025, stated: “SoftBank Group Corp. will spend $3 billion US annually (approximately ¥450.0 billion) to deploy OpenAI's solutions across its group companies.” How much of this spending will be borne by SoftBank Corp.? Additionally, who will receive these payments, and what is your outlook for the impact on financial results?: SoftBank Corp. plans to use OpenAI solutions on a pay-for-use basis. This arrangement will be structured so that we can generate a return linked to the spending. We view this transaction as one in which SoftBank Corp. has everything to gain and nothing to lose. Discussions are underway to make “SB OpenAI Japan” the recipient of the payment, although further considerations still need to be discussed.
In terms of the impact on FY2025 financial results, we believe that the effects will be entirely positive, with no negatives. We will continue working toward the milestone of consolidated operating income of ¥1 trillion.
I have heard that OpenAI is a company with one thousand and several hundred employees. There is a global race to gain access to its human resources. We view this partnership as a significant opportunity to secure priority in utilizing these resources. We invite you to look forward to what lies ahead.

What are the strengths of SoftBank Corp. in implementing “Cristal intelligence”?: First, we believe that the superiority of Open AI's “Cristal intelligence” is a key strength. Currently, no AI agents surpass OpenAI, and we look forward to leveraging its strengths.
Furthermore, the knowledge we gain from deploying “Cristal intelligence” in-house and using it extensively is expected to become another strength. We plan to take the approach of proposing it to enterprise customers after we have demonstrated the positive effects of deploying it internally. We took a similar approach when the iPhone and iPad were first launched. Using ourselves as an example, we demonstrated how a company could be transformed by providing these devices to all employees. This demonstration of their positive effects led to tremendous growth in our enterprise business.

What will be the cost of introducing “Cristal intelligence” to enterprise customers and what is the time frame for doing so?: The cost has not yet been determined. We will first deploy “Cristal intelligence” at SoftBank Corp., measure the positive effects of business transformation, and then consider the costs based on the obtainable returns. Due to limitations on OpenAI's human resources, we plan to begin offering “Cristal intelligence” to enterprise customers within FY2025, starting with large companies that are the core of our earnings. However, since we have received inquiries from small and medium-sized enterprises, as well as local governments, we intend to ensure that they can also deploy it in the future.

Could you please provide details on the timeline for establishing “SB OpenAI Japan” and the assignment of approximately 1,000 employees to it?: We are currently in the final stage of discussions on the timeline for establishing “SB OpenAI Japan.” We believe that we can establish it within six months. Until then, engineers will collaborate to discuss methods for deploying “Cristal intelligence” and organize data in preparation for its deployment.
Regarding the assignment of around 1,000 employees to “SB OpenAI Japan,” we plan to send personnel from not only SoftBank Corp., but also from other Group companies. We are primarily considering bringing together engineers and sales personnel.

Will “Cristal intelligence” be a service exclusively for Japan? Could you also discuss the potential for overseas expansion and the strategic position of “SB OpenAI Japan”?: “SB OpenAI Japan” is a company that will exclusively sell “Cristal intelligence” to Japanese companies. Although it functions like a distributor, we negotiated the partnership with a focus on having exclusive rights. Currently, the scope of our exclusivity is limited to Japan; however, we are discussing potential overseas expansion for the future. SoftBank Corp.'s next goal is “Beyond Japan.” We are eager to expand our successful business model in Japan to the rest of the world.

I had expected SoftBank Corp. to develop homegrown large language models (LLMs) independently. Will your efforts with OpenAI now become the focus of your activities?: SoftBank Corp.'s policy is to rigorously pursue a “multi-model strategy,” offering multiple LLMs tailored to customer needs. We intend to continue developing homegrown LLMs. With the development of “Cristal intelligence,” we expect our LLMs to have a tremendous amount to learn from OpenAI. Furthermore, OpenAI CEO Sam Altman is an outstanding business leader, and partnering with OpenAI offers significant advantages. Going forward, we aim to achieve both independent development of LLMs and the partnership with OpenAI, as we strive for further growth.

Could you please discuss SoftBank Corp.'s AI data center initiatives and the partnership with the “Stargate Project”?: The distributed AI data center initiative that SoftBank Corp. is pursuing is a 10-year plan aimed at creating an environment that facilitates AI adoption for Japanese companies. Although the initial plan did not include the “Stargate Project,” we are currently engaged in various discussions as we move forward with the construction of the Sakai AI Data Center.
If OpenAI requires an AI data center in Japan, we anticipate that SoftBank Corp. will provide the infrastructure, including land, buildings, and electricity, while the “Stargate Project” will supply GPUs and other equipment. If this occurs, we expect the utilization rate of SoftBank Corp.'s data centers to increase.

How do you evaluate “DeepSeek”? Will there be any impact on SoftBank Corp.'s business strategy?: Traditionally, fine tuning has been done using human-generated data for post-deployment training of AI. However, a recent research paper from DeepSeek suggests that they are now conducting intensive training using AI-generated data. Notably, DeepSeek excels in logical reasoning tasks that have only one correct answer, such as mathematics, and we believe this merits a strong evaluation. We think DeepSeek's approach opens up possibilities for developing generative AI at an even lower cost. Based on this, we intend to incorporate all of its strengths into our own processes. We view DeepSeek as having a positive impact on our business. There is no impact on initiatives aimed at achieving our long-term vision.

Which requires more funding: investing in GPUs to build a model with 1 trillion parameters or investing in AI data centers?: SoftBank Corp. currently owns 6,000 GPUs and plans to increase this number to 10,000 during the current Medium-term Management Plan period. At present, we have no plans for GPU purchases other than this in the near future. However, if further GPUs are needed as discussions with the “Stargate Project” progress, we will make decisions based on a cost-benefit analysis.
With investing in AI data centers, we plan to convert existing buildings at Sakai into a data center, which may allow construction at a lower cost than usual. Additionally, land preparation work is currently underway at Tomakomai. Instead of constructing AI data center buildings on this expansive site, we intend to build container-based facilities as needed. Therefore, we do not anticipate any significant funding requirements to arise.

Do you expect the AI data centers you are constructing in Tomakomai, Hokkaido, and Sakai to meet your requirements?: Yes, we believe these AI data centers will be sufficient for supporting a homegrown LLM with 1 trillion parameters. However, if Japanese companies begin using reasoning services en masse, we will need to build additional infrastructure. In the past, it took four or five years to build a single data center, but container-based data center technologies have improved significantly. By applying these technologies effectively, we believe that we can phase in investments as needed.

SoftBank Corp. has competed against the ahamo price plan offered by NTT DOCOMO, INC. How do you evaluate the outcome of this competition? Additionally, as conversion to the SoftBank brand continues, how much progress have you made on competition in Y!mobile's 30 GB price range and in converting customers to Pay-toku under the SoftBank brand?: While a wide range of indicators can be cited to justify the outcome, we believe the key factor is that SoftBank Corp.'s Consumer segment has successfully increased both revenue and segment income. In response to revisions to the ahamo price plan in October, we revised the price plans for Y!mobile and LINEMO in November. As a result, the competitive landscape in terms of Mobile Number Portability (MNP) has returned to conditions in September and before.
Even as prices for all kinds of goods and services continue to rise, the telecommunications industry remains the only sector still discussing price reductions. Despite our ongoing cost-cutting efforts, raising prices due to increased costs remains challenging, as you cannot draw water from a dry well. We are concerned about whether employees of our small and medium-sized enterprise partners are receiving base pay increases, and we want to normalize conditions within the industry. We believe that Pay-toku has contributed to conversions from the Y!mobile to SoftBank brand. We will first expand our customer base with Y!mobile, and then, over time, encourage customers to convert to the SoftBank brand.

Are you considering raising mobile service prices?: One major component of costs in the mobile service business is electricity charges, which have been continuously rising in recent times. Moreover, we have employees and business partners, so we also must consider measures to address inflation. While we have absorbed costs through various methods so far, we are nearing a limit. Japan's telecommunications industry has long held a global leadership position, but we are deeply concerned that if current conditions persist, the industry will be recognized only for offering low mobile service prices. Given that relying on discounts alone will not create a sustainable business model, we believe that, at some point, we will need to raise prices in response to rising costs.

Am I correct in understanding that the reorganization of the Financial segment has been largely completed through the recent transaction involving PayPay Bank Corporation and PayPay Securities Corporation?: We believe that the reorganization has largely been completed. While PayPay Corporation has a strong position in the payments area, we feel it still has room to grow in merchant services and financial services. To draw an analogy with mountain climbing, we view PayPay Corporation as still early in the climb toward the summit, somewhere at the first or second station. Therefore, we want PayPay Corporation to fully realize its long-term aspirations for itself, rather than become fixated on short-term wins and losses.

How will you proceed with your efforts to secure electric power for AI data centers?: We have secured 300 megawatts of electric power in Tomakomai to meet the energy requirements for operating GPUs. Additionally, we plan to secure up to 250 megawatts in Sakai. Demand for electric power at data centers has increased substantially compared to previous levels, and we maintain a constant sense of urgency regarding electricity shortages. In certain regions, there are concerns about power outages due to these shortages, making it difficult to build large data centers. SoftBank Corp. also seeks to engage in the renewable power generation business in the future.

What is your perspective on the effects of the U.S. Trump administration's tariff policies?: While we will refrain from commenting on political matters, we expect no direct impact on SoftBank Corp.'s businesses.
When SoftBank Corp. was listed in 2018, we faced a challenging environment due to U.S.-China relations at the time. Currently, Masayoshi Son (Representative Director, Corporate Officer, Chairman & CEO of SoftBank Group Corp.) has a good relationship with President Trump, and we view this period as a favorable environment. SoftBank Corp. aims to make the most of this environment, paving the way for further growth.

What is SoftBank Corp.'s policy regarding the series of issues surrounding Fuji Television Network, Inc., and when will TV commercials resume?: The decision to pull TV commercials was made comprehensively based on a series of media reports on these issues. Since a third-party committee has been established, we will closely monitor its progress as we consider how to address the issues going forward.