JAPANESE

Risk Factors

The major risks envisaged by the management of SoftBank Corp. (the “Company”) and its subsidiaries (the “Group”) that could significantly affect the financial position, results of operations, and cash flows of the Group are stated herein. Moreover, these risks do not include all of the risks that the Group could face in the course of carrying out its future business operations. Forward-looking statements in this text were determined by the Group as of March 31, 2026, unless otherwise stated.

Refer to our Risk Management website for the Group's risk management structure and methods.

(1) Risks related to management strategies

Under our growth strategy, “Activate AI for Society,” we aim to maximize corporate value by activating the potential of AI across all our businesses and driving its implementation in society. We will commercialize AI infrastructure and AI services, while promoting the evolution and growth of all of our business segments with AI in pursuit of sustainable business growth for the entire Group.
In relation to those management strategies, the major risks that management believes could have a significant effect on the financial position, results of operations, and cash flows of the Group are outlined below.

a. Changes in economic conditions, regulatory environment,
market environment, and competition

(a) Changes in the market environment

With Japan's population trending downwards due to aging and a low birthrate, the outlook for continued expansion of the Japanese markets is uncertain in some respects. Moreover, these changes in the business environment could impact the continued growth of the Group’s businesses.

  • Telecommunications-related markets

    The Group deploys products, services and sales methods that fit consumer preferences with three clearly differentiated brands (SoftBank, Y!mobile, and LINEMO). However, if the Group is unable to meet the expectations of consumers for price plans, voice and data communications quality and so forth, or if the products and services provided by the Group have significant defects, the Group’s competitiveness may decline. Moreover, the introduction, amendment, or change in interpretation or application of laws, regulations, systems, and so forth, could result in the effective restriction of products and services that the Group can deliver to its customers, or of sales methods and price plans, etc., causing the Group to experience a decline in revenue and to incur a larger financial burden. This could impact the Group's businesses, financial condition, and results of operations. In addition, the Group could incur rising costs due to unforeseeable changes in the market environment, or may be unable to streamline costs as planned.

  • DX & business solutions-related markets

    In response to increasingly sophisticated demand for corporate digital transformation (DX) solutions and the rapid advance of AI utilization, the Group is working to expand its Enterprise business by selling DX & business solutions products that meet the digitalization needs of enterprises and fostering co-creation with partners. However, if the products and services provided by the Company fail to meet the needs of enterprises, this could have an impact on the Group’s businesses, financial position, and results of operations.

  • Internet-related markets

    The Group’s businesses could be impacted by factors such as overall internet usage, economic trends, the number of paid members and usage of paid services in Japan. The Group strives to retain and increase the number of users primarily by providing accurate and beneficial services for users, a secure and safe user experience, conducting activities to improve the value of its platform as an advertising medium, raising awareness, and providing attractive benefits and content to paid members. Moreover, the Group is also working to expand its economic zone and earnings opportunities by strengthening cooperation and promoting cross-use between group services. However, if these measures do not prove sufficiently effective, and the Group is unable to respond appropriately to changes in the market environment and changes in users preferences and needs, or if the synergetic effects and so forth between Group services are not obtained as expected, this could impact the Group’s businesses, financial position, and results of operations.

  • Financial-related markets

    In Japan, the shift to cashless payments has been driven by the progress of economic measures taken by the government and municipalities. In order to provide highly convenient services for users in this market environment, the Group is working to review and expand the functions of its cashless payment services, as well as to increase the number of merchants where the Group's cashless payment services can be used. Moreover, by strengthening cooperation with financial services, such as payment services and cards, banking, and securities, the Company is also working to expand the provision for highly convenient financial services and expansion of earning opportunities. However, if the Group is unable to respond to changes in the market environment or regulations in a timely and appropriate manner, or if for some reason the Group is unable to provide services or retain or acquire customers as expected, or if these cooperative measures do not proceed as expected, the Group's businesses, financial condition and results of operations could be adversely affected.

  • New business-related markets

    The Group will leverage the customer base and business base that it has cultivated in multiple business domains that are expected to grow going forward such as telecommunications, e-commerce, payment, and social media, aiming to create and expand new businesses in areas such as AI, FinTech, mobility, healthcare, and energy. However, the Group’s business may not develop as expected due to factors such as changes in economic conditions, the regulatory environment and the market environment. This could have an impact on the Group’s businesses, financial condition, and results of operations.

(b) Competition

In Japan’s market, the Group's competitors may have a competitive advantage over the Group in terms of capital, products and services, technology development capabilities, price competitiveness, customer base, sales capability, brands, public recognition, or overall capability in all of these, for example. If these competitors were to strengthen sales of products and services that harness these competitive advantages to a greater extent than at present, the Group may be placed at a disadvantage in sales competition, including price competition, may be unable to acquire or retain customers, or may experience a decrease in ARPU* with a resultant decline in profitability. Consequently, this could impact the Group's businesses, financial position, and results of operations.
Furthermore, in the telecommunications, internet and cashless payment related markets, newly emergent products and services offered by recently founded startup companies and new entrants can occasionally achieve widespread adoption by garnering the support of users. The Group strives to provide products and services that can garner user support by grasping the opinions and trends of users; however, these companies could become competitors. Moreover, the Group may experience an increase in expenses related to the development of new products and services and the promotion of sales, and so forth, for maintaining and securing its competitiveness, which could impact the Group’s businesses, financial position, and results of operations.

[Note]
  1. *
    ARPU (Average Revenue Per User): Measures the average monthly revenue generated per subscriber.

b. Response to technology and business models

The Group's primary business domain is the information technology industry, which is subject to rapid changes in technology and business models. In the information technology industry, the use of AI, IoT, and big data has been advancing rapidly in recent years, and the DX movement is accelerating at an increasing rate. There is an increasing need to supply more diverse and advanced services that cross industry boundaries. Notably, technologies related to generative AI and AI agents have been evolving dramatically and have significantly impacted existing business models. The Group is constantly undertaking measures such as surveying the latest technology and market trends, conducting verification trials to introduce services with highly competitive technologies, and considering alliances with other companies. However, there are no assurances that the development of new technologies will proceed on time or results will be delivered as planned, or that common standards or specifications will be established and commercial viability will be achieved. Even if the aforementioned measures are undertaken, the Group may be unable to develop or introduce outstanding services, technologies and business models in keeping with market trends due to the inability to appropriately adapt to changes in the market environment in a timely manner, such as the emergence of new technologies and business models, or due to the inability to deploy equipment and facilities rapidly and efficiently. In this case, the Group's service offerings could lose competitiveness in the market, possibly curtailing the number of subscribers that the Group is able to maintain or obtain, or reducing ARPU. This could impact the Group's businesses, financial position, and results of operations.

c. Leakage or inappropriate use of information and inappropriate use of products and services supplied by the Group

In its business operations, the Group handles customer information (including personal information) and other confidential information. Under the leadership of the Chief Information Officer (CIO) and the Chief Information Security Officer (CISO), the Group implements strict physical security control measures such as restricting access to work areas that involve customer information and other confidential information, and establishing room access management rules specific to those restricted areas. In terms of technology-based management, the Group maintains and controls the level of information security through various measures. At the Security Operation Center (SOC) and so forth within the restricted areas, the Group has strengthened AI-based detection of signs of internal irregularities (behavior detection), and monitors matters such as the use of business devices, usage of the intranet, and the status of access to internal servers by officers and employees. The Group also conducts monitoring and defensive measures against unauthorized access via cyberattacks from outside the company. In accordance with the information security level, the Group implements separation and independence of the access rights, networks used, and other matters pertaining to such information. Moreover, under the leadership of the officer responsible for data management and the relevant division, the Group establishes policies and rules for management and strategic use of internal and external data, and strengthens the Company's internal management framework for handling confidential and personal information regarding communications. The Group also complies with laws and regulations in each country regarding protection of personal information, and so forth, as necessary for developing its business in Japan and overseas. In implementing these measures, the Group provides rigorous educational and training sessions on information security for officers and employees as it strives to build a framework that allows all SoftBank Corp. personnel involved in information assets to fulfill their duties with a high degree of information literacy, along with strengthening management of the office automation environment and business-use smartphones. Even with these measures in place, this information could be leaked, lost, or involved in a similar incident, either intentionally or accidentally by the Group (including officers and employees of the Group and people related to subcontractors), or through a malicious cyber-attack, hacking or other form of unauthorized access or other means by a third party.
Moreover, if the products and services supplied by the Group are used inappropriately for crimes such as fraud and the like, it could impair public trust in the Group and the Group's credibility.
Such an occurrence could reduce the Group's competitiveness, and give rise to significant costs to the Group for payment of damages and modification of security systems, in addition to having an adverse impact on the Group's credibility or corporate image and making it difficult to retain and acquire customers. These outcomes could impact the Group's businesses, financial position, and results of operations.
Furthermore, LY Corporation, a significant Group company, has submitted reports concerning the incident of unauthorized access it announced on November 27, 2023 to the Ministry of Internal Affairs and Communications (MIC) and the Personal Information Protection Commission of Japan (PPC). Based on the administrative guidance and recommendations, as of March 31, 2026, LY Corporation completed the implementation of major technical and organizational measures to prevent recurrence. These measures include the decoupling of system networks from associate companies and other relevant entities that shared the system infrastructure, the introduction of multifactor authentication across the entire LY Corporation environment, and the enhancement of subcontractor management. The measures have since transitioned to a phase of routine and ongoing operation. Additionally, in November 2024, a malfunction occurred in LINE Album, a service provided by LY Corporation, in which image data from other users was mistakenly included in album thumbnail images. As a result, on March 28, 2025, LY Corporation received administrative guidance from MIC. LY Corporation has designed recurrence prevention measures, and has completed its report to MIC. Furthermore, since its reorganization as LY Corporation, LY Corporation and its group companies have been working to develop and continuously strengthen a framework to ensure the efficient and proper functioning of its group's overall data governance. On the other hand, recent trends in cybersecurity threats include increasing damage due to ransomware and so forth. In October 2025, LY Corporation’s consolidated subsidiary, ASKUL Corporation, experienced an impact on some of its business activities caused by a system outage due to a ransomware attack. LY Corporation and its group companies are taking this new threat environment and the incident that occurred at a group company seriously. In addition to their existing general security measures, they are also promoting focused measures specifically to address system outages caused by ransomware and related attacks, such as data preservation and verification of effective recovery procedures. However, if the measures of LY Corporation and its group companies and the Group governance response by the Company are judged to be inadequate or insufficient, this could lead to impairment of trust in the Group, a decrease in demand for the Group's services or other such consequences. Such outcomes could have an impact on the Group's businesses, financial position, and results of operations.

d. Destabilization of international conditions

The Group procures telecommunications devices and equipment, products for customers, and development materials and other items from suppliers around the world. To address the exchange rate fluctuation risks associated with these procurement activities, the Group utilizes foreign currency forward contracts as necessary. Additionally, in the course of providing telecommunications services, the Group uses large amounts of electricity through base stations, network equipment, data centers and so forth. In order to provide products and services in a stable manner, the Group strives to strengthen its supply chain through measures such as gathering information on international conditions and spreading out and diversifying its suppliers. The Group is also making efforts to minimize the effects of fluctuations in electricity prices on business management by working closely with the government and industry groups, in addition to conducting research and development focused on telecommunications infrastructure with a low environmental impact and commercialization of next-generation batteries from medium- and long-term perspectives. Even with these measures in place, supply chain disruptions or other such events could occur as a result of the stagnation or suspension of suppliers' business operations due to factors such as global shipping delays, shortages of semiconductors and other key materials, or cyberattacks caused by confrontation, regional conflicts, the use of armed force or other circumstances within the international community. Such occurrences could impact the Group's businesses, financial position, and results of operations. Moreover, the Group may incur costs to change suppliers of base stations, network equipment and related items and to replace such equipment, as a result of increased shipping costs and other factors caused by high crude oil prices and changes in national policies, laws, and regulations in response to shifting international conditions. Furthermore, if there are persistent increases in electricity prices, or if disruptions in the procurement of energy impede the stable supply of products and services, the Group's businesses, financial position, and results of operations may be affected. In addition, the annual impact of an increase in electricity prices by \1 per kWh is approximately \2.3 billion (calculated based on electricity usage of 2,286,427 MWh by the Company and consolidated subsidiaries in the fiscal year ended March 31, 2025).
Additionally, following the inauguration of the second Trump administration in the U.S., the recent policy situation has become extremely uncertain, including reciprocal tariffs and sector-specific levies on electronic products such as smartphones. Depending on future U.S. policies and the responses of other countries, there is a risk of higher device prices leading to decreased consumer purchasing sentiment and a resulting decline in demand, as well as supply-chain fractures and restructuring. Such developments could cause delays in procuring components and increases in costs, potentially hindering the provision of services and the supply of products. These outcomes could affect the Group's businesses, financial position, and results of operations.
Furthermore, in accordance with the Act on the Promotion of Ensuring National Security through Integrated Implementation of Economic Measures (hereinafter, the “Economic Security Promotion Act”), the Company and LY Corporation were designated as specified social infrastructure providers (core infrastructure providers) in the telecommunications business on November 16, 2023. From May 17, 2024, this new regulatory framework became effective. If the Company or LY Corporation fail to comply with a national government review mandated by the Economic Security Promotion Act, the authorities may impose administrative measures against them, such as recommendations or orders for business improvement or suspension. These administrative measures may potentially cause temporary business suspensions, delays, or additional capital expenditures, as well as extra measures and costs, and impairment of public trust in the Group. Such outcomes could have an impact on the Group's businesses, financial position, and results of operations.

e. Provision of stable networks

(a) Capacity enhancement in telecommunications networks

To maintain and enhance the quality of telecommunications services for the purpose of maintaining competitiveness and retaining and expanding the customer base, the Group needs to continuously increase the capacity of its telecommunications networks based on predictions of the amount of future network traffic. The Group's policy is to systematically increase network capacity in these ways. However, if the actual amount of network traffic were to drastically exceed the Group's predictions, or if the Group were not to carry out network capacity enhancement (including but not limited to securing the required spectrum) in a timely manner, service quality, along with the Group's credibility and corporate image, could be adversely affected, making it difficult to retain and acquire customers. In this case, the Group would also need to execute additional capital expenditure. These outcomes could impact the Group's businesses, financial position, and results of operations. In addition, the Group's ability to provide telecommunications services depends on the performance of network systems and securing sufficient spectrum. In the future, if the Group is unable to secure the required spectrum, the Group's service quality will be reduced compared with competitors or it may be unable to expand its network as planned, making it difficult to retain and acquire customers.
Furthermore, with the introduction of an auction system for spectrum allocation, the Group may be required to contribute large amounts of funds, as it could lead to substantially higher acquisition costs compared to the conventional method of allocation by the government, or create a requirement for a certain cost burden to be borne as a condition for spectrum allocation. This could impact the Group's businesses, financial position, and results of operations, along with facilitating the entry of new operators into the industry.

(b) Natural disasters, accidents and other unpredictable events

The Group constructs and maintains telecommunications networks, information systems and other systems necessary for the provision of various services, including Internet and telecommunications services. In recent years, due to the increased likelihood of an earthquake occurring in the Nankai Trough or directly under Tokyo, as well as the advance of climate change and other factors, the risk of suffering damage from a major natural disaster such as an earthquake or typhoon has increased. Natural disasters, such as earthquakes, typhoons, flooding, tsunamis, tornadoes, heavy rainfall, heavy snowfall, or volcanic activity, and the increase in scale of such disasters associated with climate change, as well as other unexpected disruptions such as fires, power outages or shortages, incidents such as terrorist attacks, or the global spread of infectious diseases could interfere with the normal operation of telecommunications networks and information systems and other infrastructure. This could hinder the provision of various services by the Group. In order to ensure that it can provide a stable telecommunications environment even in the aforementioned circumstances, the Group has introduced measures to build redundancy into networks, establish emergency restoration systems, and mitigate power outages at network centers and base stations. In addition, the Group has implemented measures such as spreading out network centers, data centers, and other key sites as well as IT monitoring system sites throughout Japan, as part of efforts to mitigate the impact of the aforementioned circumstances on the provision of various services. Even so, these and other related measures cannot avoid every possible type of disruption. If the provision of various services were actually hindered, and such disruptions of services or decline in quality were to become widespread or if significant time were required to restore services, the Group's credibility or corporate image could deteriorate, making it difficult to acquire and retain customers. The Group may also bear a substantial cost burden to restore and refurbish telecommunications networks, information systems and other infrastructure. This could impact the Group's businesses, financial position, and results of operations.

f. Acquisitions of other companies, business alliances, establishment of joint ventures, and internal group realignment, etc.

In the course of executing its strategies, the Group could acquire other companies and make other stock investments, through such means as establishing joint ventures and turning companies into subsidiaries.
In addition, the Group could acquire other assets believed to be strategically important to the Group's businesses, financial position, and results of operations. Furthermore, if deemed strategically necessary, the Group could conduct an internal realignment involving the transfer of shares or assets.
When considering the execution of various investments, the Group conducts necessary and sufficient due diligence, and then makes investment decisions following a prescribed approval process. If the Group's portfolio companies are unable to generate the anticipated results, the Group overestimates corporate valuations when making investments, or the integration of new businesses into existing businesses or the development of internal control systems after integration do not succeed, these outcomes could have an impact on the Group's results of operations and financial position. In addition, if the Group borrows funds to make acquisitions or investments in the future, or if it is found that an acquired company has unpaid liabilities, the Group's liability burden will increase and this could lead to a deterioration in cash flows and a shortage of operating funds.
The materialization of these risks could have an impact on the Group's businesses, financial position, and results of operations.
If the Group is to conduct joint businesses with business alliance or joint venture partners, these are generally premised upon the Group's acquisition of licenses and permits from the regulatory authorities and the Group's agreement with the business alliance and joint venture partners on the content of joint businesses. In addition, the Group will not necessarily have control over the business alliance and joint venture partners. These companies may drastically revise their business strategies without taking into account the Group's intentions. Furthermore, the Group's shareholding ratio in these companies could be reduced due to a third-party allotment of shares or the exercise of a call option by a shareholder other than the Group, or the results of operations and financial position of these companies could drastically deteriorate. In these situations, the business alliances, joint venture businesses and other arrangements may not generate the anticipated results, or they may find it difficult to continue their businesses. In addition, the Group may be restricted from undertaking business alliances, joint venture businesses and other such arrangements with other parties due to business alliances, joint venture businesses and other such arrangements formed with specific third parties. This could impact the Group's businesses, financial position, and results of operations.
If the Group is to conduct an internal realignment, it will be for purposes such as streamlining overlapping business resources, speeding up decision-making, and generating greater synergies among businesses. However, if the Group is unable to sufficiently capture the expected benefits of the realignment, or if authority becomes concentrated among a small number of management personnel, problems could arise, such as trouble with and delays in services to be rolled out, adverse effects on strategies and synergies, disruptions associated with the realignment, and inadequate governance. These problems could have an impact on the Group's businesses, financial position, and results of operations.

g. Dependence on management resources of other companies

(a) Consignment of operations

The Group consigns in whole or part to subcontractors customer sales activities, retention and acquisition of customers, and telecommunications network construction and maintenance for various products and services, along with the execution of other related operations. In addition, the Group's information search services make use of other companies' search engines and paid search advertising distribution systems. When selecting suppliers, including subcontractors, the Group evaluates and selects suppliers in accordance with our purchasing rules. At the time of commencement of new business transactions, the Group concludes a basic transaction agreement that incorporates the supplier's compliance with our Supplier Ethics and Rules of Conduct. Even after commencement of business transactions, the Group strives to reduce risks in the supply chain by establishing a PDCA cycle that includes conducting risk assessments through the Sustainability Procurement Survey, evaluating suppliers and identifying issues, and conducting interviews with suppliers. If these subcontractors (including their directors and employees, or related parties) are unable to execute operations in line with the Group's expectations, or if a human rights infringement-related issue occurs, such as a case where the information of the Group’s customers is obtained without authorization, it could have an impact on the Group's businesses.
Moreover, any damage to the credibility or corporate image of these subcontractors as a result of the kind of incident described above would also have an impact on the Group's credibility or corporate image. This could hinder business development and the retention and acquisition of customers, which could have an impact on the Group's businesses, financial position, and results of operations.
Furthermore, if these subcontractors should fail to comply with laws and regulations, the Group could receive a warning or administrative guidance from the regulatory authorities, or be investigated for non-fulfillment of its supervisory responsibility, and the Group's credibility or corporate image could deteriorate as a result, making it difficult to retain and acquire customers. These could impact the Group's businesses, financial position and results of operations.

(b) Use of facilities, etc., of other companies

The Group makes use of certain telecommunications lines and facilities owned by other operators when constructing the telecommunications networks required for providing telecommunications services. In principle, the Group has adopted a policy of using telecommunications lines and facilities of several operators. The Group's businesses, financial position, and results of operations could therefore be impacted if it becomes difficult to continue to use those facilities, or if the usage agreement is revised on disadvantageous terms for the Group, such as by increasing utilization or connection rates for those facilities.

(c) Procurement of various equipment

The Group procures telecommunications equipment, network devices and so forth (including but not limited to mobile devices and radio equipment for mobile phone base stations). The Group has adopted a policy of procuring equipment from multiple suppliers, in principle. Even under this policy, the Group can be expected to remain heavily reliant on specific suppliers for equipment. The Group may be unable to switch suppliers or equipment in a timely manner without incurring substantial costs should problems occur with the procurement of equipment for which the Group is heavily reliant on specific suppliers. Such problems could include supply interruptions, delivery delays, order volume shortfalls and defects. Suppliers may also cease to provide the maintenance and inspection services required for telecommunications equipment to maintain performance. Either of these situations could impede the Group's provision of services, making it difficult to retain and acquire customers or cause the Group to incur additional costs for changing a supplier, or cause a decline in sales of various equipment. This could impact the Group's businesses, financial position, and results of operations.

h. Usage and infringement of the SoftBank brand

Based on an agreement between the Company and SoftBank Group Corp. concluded in March 2018, the Company has been granted indefinite brand usage and sublicensing rights to the SoftBank brand, in principle, from March 31, 2018 through the payment of a lump-sum licensing charge. In accordance with this agreement, the Company may use the SoftBank brand in the Company’s name, emblems, trademarks and domain name, and may also sublicense the use of the SoftBank brand to its subsidiaries. Furthermore, the Company is also allowed exclusive use of trademarks related to mobile communications and telecommunications services and mobile phones, etc.
The Group is implementing a variety of brand protection measures as part of its efforts to preserve and enhance the SoftBank brand's image and safeguard customers' trust. However, if the Company or its subsidiary that has received a sublicense continues to violate the agreement for a certain period of time, or act in a way that damages the credibility or interest of SoftBank Group Corp., SoftBank Group Corp. would have the right to cancel the contract. Consequently, the Company would no longer be able to use and sublicense the SoftBank brand and could recognize an impairment loss on trademarks. If intellectual property held by SoftBank Group Corp., such as the SoftBank brand, were infringed upon by a third party, such an infringement could impair the Group's credibility or its corporate image.

i. Service disruptions or decline in quality due to faults in
related systems and other factors

In the provision of various services by the Group, including telecommunications networks and systems for customers such as Yahoo! JAPAN, LINE and PayPay, there is a possibility that a major problem could occur if the Group were to become unable to continuously provide the services, or were to suffer a decline in the quality of the services, due to human error or serious problems with equipment or systems, or cyber-attack, hacking or other form of unauthorized access or other causes by a third party.
The Group has appointed officers with responsibilities based on services provided, such as the CTO, Chief Network Officer (CNO) and Chief Information Officer (CIO). Under the leadership of these officers, the Group has built redundancy into its networks, along with clearly defining restoration procedures in preparation for systems faults and other incidents. In the event of a system fault or other incident, the Group conducts restoration activities with appropriate capabilities in place, such as setting up an Incident Response Headquarters according to the scale of the incident. Even with these measures in place, the Group may be unable to avoid disruptions of services or declines in quality. If such disruptions of services or declines in quality were to become widespread or significant time were required to restore services, the Group's credibility or corporate image could deteriorate, making it difficult to retain and acquire customers. This could impact the Group's businesses, financial position and results of operations.

j. Securing and developing human resources

The Group believes that developing and retaining human resources who can respond swiftly to trends in technological innovation is crucial. Based on this belief, the Group is making efforts to develop human resources. However, the Group may occasionally require a certain period of time to produce the desired effects in terms of human resources development. In addition, the cost of human resources investments needed to develop and secure personnel may increase in the future.
Under the leadership of managers such as the Chief Human Resource Officer (CHRO) and the General Manager of the Human Resources Division, the Group is working to secure human resources by instituting a remuneration structure for high-market-worth personnel that recognizes their advanced expertise. In addition, the Group aims to retain high quality talent that can support sustainable business growth by conducting periodic interviews and surveys with each employee about their adaptation to the workplace and their future careers. If the Group is unable to secure engineers and other such personnel required in its business operations, despite these initiatives, this could impact the Group's businesses, financial position, and results of operations.
Furthermore, the Company is also making an effort to promote diversity, preparing environments where diverse personnel can participate, ensuring that understanding of diversity is promoted internally, and conducting training and so forth. However, if the Group is unable to meet social expectations regarding respect for diversity and participation of diverse personnel, it could impact public trust in the Group and the Group's corporate image, and the Group may be unable to secure human resources as planned, which could impact the Group's businesses, financial position, and results of operations.

k. Climate change

The Group is engaged in the telecommunications business, which uses large amounts of electricity for base station equipment and so forth, and therefore considers its essential to respond to climate change. For this reason, the Group has identified climate change initiatives as one of its material issues, and seeks to achieve its “Net Zero” goal of achieving net zero greenhouse gas emissions for the entire supply chain. To achieve this goal, the Group has established a carbon neutrality target of reducing greenhouse gas emissions from electricity used in its business operations and so forth*1 to net zero by fiscal year 2030, in addition to working to reduce “supply chain emissions,” which encompass greenhouse gas emissions from suppliers and other business partners*2, to net zero by fiscal year 2050. The Group will also strive to proactively disclose information, and enhance its disclosure, in accordance with a framework of governance, strategy, risk management, and metrics and targets. The results of these evaluations and environmental impact data such as greenhouse gas emissions are disclosed in the Company's sustainability report and on its website.
However, despite these countermeasures, if significant damage occurs due to natural disasters associated with the progression of climate change, or if new laws and regulations are introduced or strengthened to realize a carbon-free society, it could impact the Group's businesses, financial position, and results of operations, including an increase in the burden of expenses related to the Group's telecommunications network and information system equipment.

[Notes]
  1. *1
    Scope 1 (direct greenhouse gas emissions from the company itself) and Scope 2 (indirect emissions associated with the use of electricity, heat and steam supplied by other companies)
  2. *2
    Scope 3 (other companies' emissions that are related to a business entity's activities)

(2) Risks related to laws, regulations and compliance

a. Laws, regulations and systems

The Group is subject to laws and regulations pertaining to its businesses, such as the telecommunications, finance, electric power, digital platforms, and AI, as well as various laws, regulations and systems pertaining to general corporate business activities (including but not limited to laws, regulations and systems related to the environment, fair competition, transaction transparency, consumer protection, personal information and privacy protection, anti-bribery, labor affairs, intellectual property, taxation, foreign exchange, and import and export activities). Moreover, various conditions can be attached to many of the licenses and permits required to operate business, and the Group is required to comply with all of these conditions.
If the Group (including officers and employees) conducts activities in breach of those laws, regulations, systems and so forth, the Group may be subject to administrative guidance or sanctions by government agencies (including but not limited to deregistration, revocation of licenses and fines), or may face cancellation of business agreements by business partners, regardless of whether the violation was deliberate or not. Under the leadership of the Legal Division, the Group conducts monitoring of amendments to guidelines based on various laws and regulations. In parallel, if there are amendments, the Group undertakes measures such as changing how operations are implemented, as necessary. Additionally, the Group consults with external experts such as lawyers, as necessary. Even with these measures in place, the Group may be unable to prevent all activities in breach of laws and regulations. As a result, the Group's credibility and corporate image may be impaired, or its business development may be hindered. In addition, the Group may incur a financial burden and it could impact the Group's businesses, financial position, and results of operations. However, as of March 31, 2026, there were no grounds for revoking these licenses and registrations, or denying the renewal thereof.
Moreover, the Company is strengthening systems for reporting and communication from subsidiaries and associates and working to ascertain risks at its subsidiaries and associates by conducting risk assessments and so forth. However, if it is unable to prevent fraud or similar incident, it could impair public trust in the Group and cause a decrease in demand for the Group's services and other effects that could impact the Group's businesses, financial position, and results of operations.
In the future, laws, regulations and systems that have a disadvantageous impact on the Group's businesses could be introduced, or existing laws could be reformed with such a disadvantageous impact. In the mobile communications business, which constitutes the Company's business foundation, the Company receives wireless spectrum allocations from government agencies, and businesses involving AI and other new technologies may be subject to the introduction of new laws, regulations, and systems. Therefore, the mobile communications business is highly susceptible to the direct and indirect influences of changes in laws, regulations, and systems. Going forward, it is difficult to accurately predict whether laws, regulations and systems that have a disadvantageous impact on the Group's businesses will be introduced and the impact of the introduction thereof on the Group's businesses. If such laws, regulations and systems are introduced, the services, products, and price plans, etc. that the Group can deliver to customers may be effectively restricted, causing the Group to experience a decline in revenue and to incur a larger financial burden. This could impact the Group's businesses, financial position and results of operations.

b. Litigation

In the course of conducting business activities, the Group confirms the applicable laws, regulations, and systems, as well as contractual conditions stipulated in contracts and other agreements, and pays careful attention to ensure that it does not breach the foregoing. If it breaches the rights (including intellectual property) or legally protected benefits of third parties, the Group may be prevented from using the rights, or subjected to claims for compensatory damages, consideration or other matters. These third parties may include customers, business partners, shareholders (including shareholders of subsidiaries, affiliates, and portfolio companies) and employees. The Group may also be subject to investigations and other actions by government agencies. Such actions may impair the Group's corporate image as well as compel the Group to revise its products and services as well as business practices, and impose a burden on management resources, including financial resources, which could impact the Group's businesses, financial position, and results of operations.

(3) Risks related to finance and accounting

a. Fund procurement

The Group procures funds through such means as bank loans, bonds, the securitization of receivables and leasing. Therefore, if interest rates rise, or the creditworthiness of the Company and its subsidiaries decreases, the Group's fund procurement costs will increase, which could impact the Group's businesses, financial position and results of operations. The Group has addressed this by having around 90% of its long-term interest-bearing debt in the form of borrowings at fixed interest, which controls the short-term impact of interest rate rises on interest payments to a certain extent*. In addition, under the leadership of the General Manager of its Finance Division, the Group has established a financial base that maintains sufficient cash and credit facilities through diverse means of fund procurement (including but not limited to bank loans, bonds, borrowings through the securitization of receivables and leasing), along with controlling fund procurement in consideration of the cash position. The Group may be unable to procure funds as envisioned by the Group depending on the status of financial market. This could impact the Group's businesses, financial position, and results of operations.
Additionally, restrictive financial covenants are attached to the Group's borrowings from financial institutions. For details, please see “23. Interest-bearing debt,” in “1. Consolidated Financial Statements, Notes to Consolidated Financial Statements,” in “Audited Consolidated Financial Statements for the Fiscal Year Ended March 31, 2026”.
To ensure that it does not infringe upon restrictive financial covenants, the Group has the Finance Division conduct across-the-board monitoring of the business plans of various business divisions. Concurrently, transactions that could infringe upon restrictive financial covenants such as credit guarantees and borrowings may only be executed with the prior approval of the Finance Division. Even with these measures in place, if the Group is unable to comply with the restrictive financial covenants, the Group may forfeit the benefit of term, which could require it to repay a portion or all of an outstanding debt, or impose restrictions on new borrowings.

[Note]
  1. *
    Long-term interest-bearing debt refers to interest-bearing debt (bank loans, corporate bonds, lease liabilities, and securitization of receivables) excluding short-term borrowings and the impact of applying IFRS 16 “Leases.” Borrowings at fixed interest rates include certain borrowings with variable interest that have had the interest payment fixed by means such as fixed interest and interest swap transactions, or other similar means.

b. Changes in accounting and taxation systems

The Group makes changes in accounting and taxation systems known to employees through training sessions and other means. The Group also consults with external experts such as accountants and tax advisors, as necessary. However, the introduction of new accounting standards or taxation systems, or changes to existing systems, and the occurrence of an additional tax burden due to differences of views with the tax authorities could impact the Group's businesses, financial position, and results of operations.

c. Impairment losses

In the course of doing business, the Group invests funds in various assets. As a result, the Group owns assets such as property, plant and equipment needed to build telecommunications networks, which include wireless equipment, switching equipment, towers, antennas, and other network equipment, and buildings and fixtures; intangible assets such as software, trademarks, spectrum-related costs and goodwill; and financial assets, such as shares of associates that the Group has invested in when forming business alliances with other companies and setting up joint ventures.
The Group has put a framework in place to conduct regular monitoring of these assets, and it assesses these assets appropriately to determine whether there is any impairment based on IFRS. As a result, if the Group determines that it does not expect the future economic benefits from an asset to be sufficient to recover the amount of investment in the asset, an impairment loss is recognized, and this could have an impact on the Group's businesses, financial position, and results of operations. This determination relies heavily on estimates made by the Group. Additionally, it is not possible to accurately predict the timing of recognition or the amount of impairment losses.

(4) Matters other than the above that could have a significant impact on investors' decisions

a. Management team

In preparation for unforeseen situations concerning key members of senior management, the Group has established a system that enables other officers to take over their duties. However, if the other officers are unable to effectively discharge the duties they take over, the Group's businesses could be impeded.

b. Relationship with the Parent

(a) The Parent has control and significant influence over matters requiring approval at the General Meeting of Shareholders

As of March 31, 2026, SoftBank Group Corp., the Parent, effectively holds 40.1%* of the voting rights of the Company through SoftBank Group Japan Corporation. The ratio of SoftBank Group Corp.'s ownership of the Company's shares and its voting interest in the Company vary with conditions such as the repurchase of own shares by the Company and the exercise of stock options by option holders. Accordingly, SoftBank Group Corp. has significant influence over matters requiring approval at the General Meeting of Shareholders, according to its voting interest in the Company at the time, including veto rights regarding matters requiring special resolutions. These include matters requiring special resolutions at the General Meeting of Shareholders (for example, such matters may include but are not limited to absorption-type mergers, business transfers, and changes in the Articles of Incorporation), and matters requiring ordinary resolutions of the General Meeting of Shareholders (for example, such matters may include but are not limited to the election and dismissal of directors, and the appropriation of surplus and dividends, etc.).
In regard to the composition of the Board of Directors, the Company has established a structure in which a majority of the members are external directors, in order to ensure independence. In addition, the Company strives to strengthen corporate governance by voluntarily establishing two committees: the Nominating Committee and the Remuneration Committee, both of which comprise independent external directors and the CEO and are chaired by independent external directors.
However, even with these measures in place, SoftBank Group Corp. may still have an impact on matters that require the approval of the General Meeting of Shareholders. There are no prior-approval matters or other such items.
Moreover, good relations with SoftBank Group Corp. lie at the core of the Group's business. If for some reason these relations deteriorate in practice or if they are perceived to have deteriorated, the Group's businesses, financial position, and results of operations could be impacted.
Details on the main relationship between the Company and SoftBank Group Corp., among related matters, are outlined in the sections titled "(b) Concurrent appointments of officers" to "(e) Business relationship with the SoftBank Group" below.

(b) Concurrent appointments of officers

One director of the Company, Masayoshi Son, concurrently serves as officer of SoftBank Group Corp. He serves as Representative Director, Corporate Officer, Chairman & CEO of SoftBank Group Corp., the Parent. These concurrent appointments have been made based on the belief that Mr. Son's extensive track record and experience in leading the SoftBank Group will contribute positively to strengthening the functions of the Company's Board of Directors.
Kazuko Kimiwada, one of the Company's Audit & Supervisory Board Members, concurrently serves as Corporate Officer, Senior Vice President of SoftBank Group Corp. This concurrent appointment is intended to strengthen the Company's audit system.

(c) Assignment and concurrent appointments of employees

From the standpoint of forming career paths based on operating efficiency, business necessity, human resources development, and the future prospects of each employee, the SoftBank Group facilitates the interaction of personnel within the Group. The Company takes onboard employees on assignment from other group companies, including SoftBank Group Corp.
However, in order to ensure independence from the Parent and management stability, the Group does not plan to concurrently assign to other group companies employees holding the post of Line Manager or above. Line Managers manage organizational units responsible for business operations (leaders of organizations in each organizational unit). Moreover, with regard to the assignment of employees between SoftBank Group Corp., the Group has ended concurrent assignments of employees other than Line Managers, with the exception of assignments determined to be necessary to the Company's business.
Assignments of employees from the Company to other group companies, including SoftBank Group Corp., are conducted only when the Group determines that the assignment is necessary to the Company's business. Going forward, the policy is to continue to conduct such assignments of employees only within the scope of business necessity.

(d) Competition with other companies in the SoftBank Group

Currently, the Group makes decisions on its policies and business development independently and does not compete with other companies in the SoftBank Group. However, SoftBank Group Corp. and its subsidiaries are involved in the management of various businesses around the world and consider new businesses and investments on a daily basis. For this reason, it is possible that the Group might compete with other companies in the SoftBank Group in the course of seeking investment opportunities. While the Group will respond by considering partnerships with those companies and so forth, this competition could impact the Group's businesses to a certain extent.

(e) Business relationship with the SoftBank Group

The Group conducts transactions with various companies in the SoftBank Group.
From the perspective of ensuring independence, the Company has established Related Party Regulations and Related Party Transactions Management Manual for transactions with related parties, including SoftBank Group Corp. In accordance with these regulations and manuals, the Company seeks the approval of the Board of Directors on a case-by-case basis for transactions of particular importance with related parties, from the perspectives of whether or not those transactions are based on a sound management rationale, and whether the transaction conditions are appropriate in comparison with conditions for similar arm's length transactions, among other matters.