Presentation Materials

Analyst Meeting Q&A (Earnings Release For the Three Months Ended June 30, 2019)

Announced on Jul. 26, 2019

Please be advised that the following text has been edited/modified from the original Q&A conversations for the sake of clarity.

Opening comments

Before going into the Q&A session, I would like to add a few comments to explain the reasons behind the 13.8 billion-yen year-on-year increase in operating expenses in FY2019/1Q. Because some of you may have concerns about our ability "to properly control costs" as we recorded this rise in operating expenses when the full-fledged impact from the new "Gigaho" and "Gigalight" rate plans is about to become apparent in the periods ahead, I would like to make a few comments to address those concerns.
A year-on-year comparison of only the three-month period of the first quarter tends to show large volatility depending on the prevailing business conditions of the time. In FY2019/1Q, we incurred expenses that did not exist in the same quarter of the previous fiscal year due to the following reasons:
(1) Aggressive promotion of new rate plans, "Gigaho" and "Gigalight";
(2) Impact from cashless payment promotion campaigns, and the one-off irregular factor of point expiry in FY2018/1Q; and
(3) Acceleration of technical and service development to prepare for the scheduled launch of 5G pre-commercial service in September.

However, these factors were already anticipated when we developed our business plan for this fiscal year. Therefore, as I mentioned during my presentation, we factored these impacts in our plan and the progress of operating expense generation in FY2019/1Q was in line with our projections. Further, while the 20 billion-yen cost efficiency improvement achieved in FY2019/1Q was smaller than the amount delivered in the same period of last fiscal year, this year's cost efficiency improvement program assumes a larger amount of cost reduction in the second half of the year, and we made progress as planned in FY2019/1Q toward the attainment of our full-year guidance of 130 billion yen. In any event, we will properly control our expenses throughout the year through meticulous management of various initiatives and solid delivery of our cost efficiency improvement target.

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