Japanese

Presentation Materials

• Questioner No. 1

  Q1 You explained that you plan to increase the amount of discounts provided under the "Monthly Support" program to expand your smartphone sales. However, I believe your success in acquiring subscriptions is conditioned on the availability of a strong product lineup. In light of your current lineup, I am skeptical about the achievability of sufficient number of subscribers that can make up for the projected decline in revenues from the increased "Monthly Support" discounts. I would like to ask how you evaluate your products. In addition, although there was an irregular factor of PDC service termination, your FY2011/4Q churn rate was very high. Don't you think this is an indication that your competitiveness is diminishing?

  Open

  A1 We intend to compete in the market leveraging our unique advantage of having comprehensive strengths. I do not believe our competitive edge has been eroded. According to a survey we conducted on subscribers who have switched to other carriers, the vast majority cited handset prices or cash rebates as the primary reason behind their decision, and those lured by the iPhone accounted for less than 20% of the total. Therefore, I do not consider that our products are inferior to those of our competitors.
  The average amount of discounts to be provided under the "Monthly Support" program is estimated to be about 40,000 yen per unit. So far, user's migration from a feature phone to a smartphone has resulted in boosting the packet ARPU from 3,500 yen to 5,200 yen. This fiscal year, feature phone users with even lower ARPU will likely upgrade to a smartphone, so we can expect an even larger revenue-boosting effect from the migration. We plan to use such incremental revenues as a funding source for the increased "Monthly Support" discounts. We were not able to secure sufficient number of net additional handset subscriptions during FY2011, but we will strive to improve our performance in the acquisition of net additional handset users going forward.
  With respect to devices, we have conducted a thorough scientific analysis on the iPhone, such as the number of frames used when the screen makes a transition from one page to another, or the accuracy of detecting the touch points when a user taps on the device display. Based on the results of analysis, we have requested manufacturers to make modifications. Such improvements are expected to be reflected in some models to be released in the coming summer or later.

  Q2 You said that you do not believe your competitiveness has been eroded, but I heard that the number of your net additions for the month of April remains short of your target. How would you explain this?

  Open

  A2 The sales trends for March continued into the first week of April, but in the second and third weeks, the number of Mobile Number Portability (MNP) outflows gradually decreased to about half the level of the first week. I believe that this was because there was a time lag before the reduction in our effective handset prices was perceived by customers.

  Q3 Your decision on a dividend hike is encouraging. However, as far as I recall, you have not conducted any share repurchases during the last fiscal year. If general shareholders cannot expect you to conduct any share repurchases for the purpose of favoring some limited shareholders, I believe there should be other ways of rewarding general shareholders. I would like to hear your thoughts on whether you think that rewarding your shareholders with the dividend hike this time of 6,000 yen per share is sufficient.

  Open

  A3 We will continue to take a flexible approach toward share repurchases going forward. It is also true, however, that the majority of our shareholders have expressed a preference for dividend increases over share buybacks.

• Questioner No. 2

  Q1 Concerning your target of acquiring 2.80 million net additional subscriptions during FY2012, is it correct to understand that you aim to achieve this number by continuing to sell handsets in the price range of 10,000-20,000 yen per unit for the whole year based on the premise of not introducing the iPhone?

  Open

  A1 The numbers in our current plan are predicated on an assumption that does not include sales of the iPhone. As a telecommunications carrier, we intend to offer services that leverage the added-value in our network, such as our "Shabette-Concier" voice agent, which competes against the iPhone's "Siri," or our directly operated content market, "dmarket." Although we do not rule out the possibility of introducing the iPhone as one of many products in our lineup, at this juncture, we would rather like to create a situation in which we can compete favorably against other carriers with a lineup centered on Android devices without introducing the iPhone.

  Q2 I believe that we need to anticipate a constant increase in the negative revenue impact of the "Monthly Support" discounts in FY2012 and FY2013. Do you think the amounts of "Monthly Support" discounts for the next fiscal year will be similar to this fiscal year?

  Open

  A2 We intend to set the amounts of "Monthly Support" discounts in a flexible manner. We plan to offer our products at prices on par with the competition, which implies that we may change the amount of discounts depending on prevailing market conditions. Our goal is to acquire a 40% market share of the net additions.
  Regarding our basic approach to "Monthly Support," we execute this program not when we believe we have a powerful lineup of products, but when the market is in an expansionary phase and an increase of revenues can be expected from the acquisition of subscribers. We are currently offering "Monthly Support" discounts with the aim of expanding the smartphone market.

  Q3 Have you already set the "Monthly Support" discount rates for FY2013 based on a simulation of your financial performance that factors in the projected decrease in revenues resulting from this program?

  Open

  A3 We have already simulated our financial results for the years up to the FY2015 taking into consideration the negative revenues impact of "Monthly Support" program as well as the estimated revenues growth from the increase of net additions.

• Questioner No. 3

  Q1 You mentioned that you while you are expecting a decrease in cellular services revenues, there will be an increase in other revenues and equipment sales revenues. Can you elaborate, however, on the items comprising other revenues that are expected to grow in the future?

  Open

  A1 Let us give you an explanation on the factors behind the projected 60-70 billion yen year-on-year increase in other revenues for FY2012. A large portion of other revenues comes from our consolidated subsidiaries and the "Mobile Phone Protection & Delivery Service," each of which has a revenue size of approximately 100.0 billion yen. The subscriptions to the "Mobile Phone Protection & Delivery Service" will likely continue to increase in line with the growth of handset sales. Also, the revenues contribution from consolidated subsidiaries is also expected to expand because Radishbo-ya Co. Ltd., which has a revenue size of approximately 20.0 billion yen, will be included in our consolidated accounts starting this fiscal year, and the revenues from Oak Lawn Marketing and other subsidiaries are expected to grow by some 10.0 billion yen year-on-year.

  Q2 It was speculated in some media reports that you plan to increase your stake ownership in India's TTSL. What are your thoughts about your investment in TTSL? Please also comment on the prospects for improvements in performance.

  Open

  A2 We have not made any particular changes to our approach. ARPU levels in India have been lower than the projections we made at the time of investment, so we cannot say that the progress has been completely in line with our initial forecast. We are, however, seeing signs of improvement.

  Q3 Concerning the rate of traffic growth, I believe you are expecting faster growth in traffic volume for the future after a two-fold increase in FY2011 over the previous fiscal year. From the perspective of network load, don't you think you will end up strangling yourself if you continue to pursue the expansion of smartphone sales?

  Open

  A3 The volume of traffic increased by 2.1 times in FY2011 compared to the previous fiscal year, and we are expecting a 2.5-fold year-on-year increase this fiscal year. To accommodate this growth, we plan to promote the migration of subscribers to the Xi network, which offers greater spectral efficiency; and, we would like to move ahead with efficient data offloading. With respect to Xi service in particular, we expect that users will begin to use services more rationally after the commencement of usage-based billing for monthly usage in excess of a predefined threshold in October.

  Q4 I heard NTT group has a plan to increase the number of Wi-Fi hot spots owned by the whole group. Is there a target number for the entire group?

  Open

  A4 As far as DOCOMO is concerned, we intend to increase the number of hot spots from the current 30,000 to approximately 100,000 by the end of FY2012.

• Questioner No. 4

  Q1 You mentioned that you plan to commit funds for commission fees or "Monthly Support" discounts to meet the net additions target for FY2012. Is it correct to construe that you will reduce the amount of "Monthly Support" discounts if your achieve favorable performance in the acquisition of net additions; or, will you choose not to reduce the discounts so as to increase the number of net additions as much as possible?

  Open

  A1 We plan to take a flexible approach depending on the circumstances. At this point, it is not that we already made a decision of not changing the discount amounts by any means.

  Q2 Your competitors said they plan to reduce the amount of commission fees for new subscriptions depending on the competitive landscape. If that happens, would it be correct to understand that you will also bring down your commission fees again after a temporary increase?

  Open

  A2 We will study the levels of commission fees in a flexible manner. We are not fixated on the idea of keeping the amount of discounts constant.

  Q3 You are going to launch campaigns like "Plus Xi-wari" discounts that gives an impression of a rate reduction. On the other hand, you mentioned that you plan to finish the Xi monthly charge discount campaign in the fall and return to the tiered pricing structure to increase your revenues. Do you really think, however, that this is feasible? Given that you are effectively providing rate cuts through various promotions and campaigns, do you have a strong resolve to maintain a rate structure that can generate profits?

  Open

  A3 We do not think there is a price war going on in the area of communication charges. In addition, the tiered pricing scheme for the Xi service was originally designed for the purpose of encouraging heavy users to put self restraints on their usage or have them pay a proper amount for their actual usage.

  Q4 Is it correct to understand that you will finish the Xi discount campaign and return to the regular rate structure in the fall as planned?

  Open

  A4 That is the plan. However, we will also look into various other rate options that are easy to use for customers.