Presentation Materials
Principal Questions and Answers Earnings Release for FY2011 1Q (ended June 30, 2011)
Announced on July 29, 2011
Please be advised that the following text has been edited/modified from the original Q&A conversations for the sake of clarity.
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Questioner No. 1
Q1 You mentioned that your operating income for FY2011/1Q made positive progress reaching 31.5% of your full-year forecast, which can be interpreted as meaning that your profits have slightly outperformed your expectations. Operating income for FY2011/1Q was 11% higher compared to the same period of the previous fiscal year, but I believe this number is inflated due to revisions made in loyalty program expenses in FY2010/2Q. Do you foresee any possibility of your FY2011/1H operating income growing more than the amount for the same period of the previous fiscal year?
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Q2 From my conversations with distributors and manufacturers, I understand that there is a great disparity in sales performance among the different smartphone models. In addition, I heard that your competitors have effectively reduced sales prices through cash rebates. I understand the importance of raising your data ARPU through smartphones, but amid this intensifying competition, do you foresee any risks of having to further increase the amount of "Monthly Support" discounts offered, which may result in diminishing your voice ARPU?
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Questioner No. 2
Q1 You mentioned that the total number of smartphones to be sold within this fiscal year may end up higher than your current forecast given the brisk sales recorded in recent months. Please comment on the future outlook.
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Q2 There was a media report that you plan to release two tablet models and four smartphone models compatible with LTE during this fiscal year. If you are able to offer six different well made devices, I believe you will easily meet your target of acquiring 1.00 million LTE subscriptions. Please comment on your expectations for LTE devices.
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Q3 How confident are you of the achievability of your target to acquire 1.00 million LTE subscriptions by March 31, 2012? Do you think you can outperform your plans?
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Questioner No. 3
Q1 With regards to the "50.0 billion yen incremental expenses for measures aimed at future growth" presented in your initial business plan, can you explain your progress with regards to spending in FY2011/1Q, and any concrete measures implemented?
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Questioner No. 4
Q1 I believe you are planning to cut costs by 40.0 billion yen in FY2011 through cost-efficiency improvement efforts. How was your progress toward this in FY2011/1Q? You explained that you have already achieved a reduction of 29.0 billion yen in "other expenses" alone in FY2011/1Q. Is there a possibility of achieving cost reductions in excess of 40.0 billion yen?
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Q2 Does that mean that the efficiency improvements you expect to achieve this fiscal year will be in line with your forecast of 40.0 billion yen and not any higher than that?
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Questioner No. 5
Q1 "Other expenses" for FY2011/1Q has not changed significantly compared to the same period of the previous fiscal year, but I believe you are factoring in an increase in "expenses for measures aimed at future growth" in your business plan. Are you expecting a significant increase in "other expenses" in FY2012/2Q or subsequent quarters?
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Q2 Your equipment sales revenues recorded a decrease in FY2011/1Q. Is it correct to understand that you will aim to increase your equipment sales revenues by expanding smartphone sales in FY2011/2Q and beyond?
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Q3 Changes in profitability of equipment sales business have significantly affected the FY2011/1Q results of your competitors. Do you have any plans to set your prices in a way that produces higher gross profits? Your competitors have already set higher gross margins and it seems that they are aiming to further expand the margin in FY2011/2Q and beyond. DOCOMO seems to be alone in moving in a different direction.
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Questioner No. 6
Q1 Going forward, I believe that an increasing number of low-usage i-mode users will begin to switch to smartphones. Do you think that these low-usage users will accept your current charges? I believe that your packet billing plans for smartphones are expensive by global comparison. Can you elaborate on your thoughts concerning future rate settings?
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Questioner No. 7
Q1 Was the 1,700-yen data ARPU boosting effect caused by subscriber migration to smartphones in line with your expectations? Can you also comment on the details concerning related user attributes as well as expected future changes in user profiles?
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Q2 Recently at your shops, I saw some elderly users, who are assumed to have lower ARPUs, showing an interest in smartphones. If you capture these elderly users, the average packet usage of 3,500 yen prior to migration may be diluted, but I believe you will be able to achieve an increase of ARPU of more than 1,500 yen because they will pay a flat monthly rate after migration. What do you think about this?
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Q3 If your annual smartphone sales exceed your forecast by more than 1.00 million units, and if we can expect ARPU boosting effect of 1,700 yen, by calculation, your revenues will likely end up more than 10.0 billion yen higher than your current estimate. How will this be reflected in your results?
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