Presentation Materials

I would first like to express my deepest sympathy to those who have been affected by the new coronavirus (COVID-19). To fulfill our social responsibility as a telecommunications carrier, we will continue our endeavors to provide stable telecommunications services and respond to the diverse needs of society including the encouragement of telework.

FY2019 Results Overview

In the fiscal year ended March 31, 2020 (FY2019), which was positioned as the year to "execute change to propel further growth," we implemented various initiatives to adapt to the changes in external environment. As a result of our proactive customer return measures aimed at solidifying our customer base and other factors, we recorded a decrease in both operating revenues and profit, which were \4,651.3 billion (down 3.9% year-on-year) and \854.7 billion (down 15.7%), respectively. However, both operating revenues and profit came in higher than our initial guidance. The number of "d POINT CLUB" members, one of the key pillars in our transformation journey, grew by 7% from the level a year ago to 75.09 million.

In telecommunications business, our new rate plans, "Gigaho" and "Gigalight," launched in June 2019 garnered a total of 16.51 million applications as of March 31, 2020. Due to the impact of the customer returns provided through "Gigaho" and "Gigalight," operating profit from this business segment dropped by 18.4% from the previous fiscal year to \706.5 billion. On the other hand, the operating profit from Smart life business and Other businesses posted a year-on-year increase of 0.5% to \148.1 billion, due mainly to the favorable performance of finance/payment offerings including "d CARD" and "d Payment" cashless payment service, which was partly offset by the impact from proactive sales promotion of "d Payment" and video services, etc.

FY2020 Business Management Policy

Positioning this fiscal year ending March 31, 2021 (FY2020) as the "start year for growth in a new era" of the 2020s, we will focus on the three key pillars of (1) "Further reinforcement of customer base," (2) "Full-scale execution of a business foundation centered on our membership base," and (3) "New value creation for the 5G era," while firmly addressing structural reform that will underpin these actions.

(1) Further Reinforcement of Customer Base

As we enter a new dimension of competition with the launch of commercial 5G services and the full-scale market entry by a new network operator, we will continue to enrich our rate plans catering to the usage needs of customers and make steadfast efforts for an early buildout of 5G coverage, one of the sources of our competitiveness, to solidify our customer base even further.
We will pursue further reduction in the wait time and attendance time at docomo Shops. At the same time, we will ensure that basic support is properly provided to customers and offer various highly value-added support services (e.g., Mercari classes) in cooperation with external partners. Through these undertakings as well as the reinforcement of our web channel, we will strive to improve customers’ overall experience.

With respect to our membership base, we will pursue "quality" improvement by enriching our member programs and services, including the expansion of "d POINT" partner stores to make the point program even more accessible in customers’ everyday lives.

(2) Full-scale Execution of a Business Foundation Centered on Our Membership Base

We will go one step deeper in our pursuit of "a business foundation centered on our membership base"- one of the basic policies of our medium-term business management strategy, building stronger customer touchpoints at various entry points to our services, e.g., the apps and media used by customers on a daily basis, and making an optimal approach to customers through digital marketing, in an effort to garner usage of our and our partners’ services and lead it to an expansion in our solutions business.
Additionally, we will concentrate our resources in growth areas. In finance/payment services, we will step up our efforts to expand the number of participating stores and encourage the use of "d CARD" and "d Payment" in customers’ everyday activities. We will also work to strengthen our content services with a primary focus on video and entertainment content with the aim of achieving business expansion.
Furthermore, we plan to establish marketing solution business leveraging the solidified membership base. Specifically, we will expand the customer attribute-based advertisements provided via "dmenu" and "LIVE BOARD," etc., and press forward in earnest with our data utilization business, such as reinforcement of CRM through data coordination with strategic partners.

(3) New Value Creation for the 5G Era

For our sustained growth in the 2020s, we will tackle new value creation primarily through our commercial 5G service launched on Wednesday March 25, 2020. We plan to create and offer new sensory services and experiences centered on video, e.g., 8KVR lives, multi-angle viewing and gaming services.
Meanwhile, we will further expand our co-creation with partners, delivering in full scale solutions that leverage "DOCOMO Open Innovation Cloud" and other strengths of 5G to help solve the pain points of businesses and society.
We will also take on the challenge of creating new businesses looking into the future in the areas of XR, healthcare and MaaS, etc.

Structural Reform Underpinning the New Era

We will perform a constant review on our operations in order to establish a business structure that will allow us to stay competitive in both telecommunications and non-telecommunications businesses, thereby achieving maximum efficiency.
As a symbolic example of these undertakings, we will further accelerate the migration of 3G subscribers. We will reduce the burden of operating three generations of systems (3G, 4G and 5G) in parallel, and concentrate our managerial resources on 5G. In addition, pursing DX(digital transformation), we will improve the efficiency in every process of our operations, including shortening attendance at shops and work time reduction of shops staffs, adoption of AI for defect detection, and transfer the freed-up resources to growth areas.
shortening attendance time and work time reduction of shop staffs.

As for the guidance for FY2020, given the difficulty of making reasonable estimates on our financial results due to the impact of COVID-19 outbreak, we decided not to make any disclosures at this juncture*. After carefully assessing the impact on our financial performance, we will make a prompt announcement once it becomes possible to make reasonable estimates.

*As we have announced our FY2020 Guidance which takes into account the impact of COVID-19 at the first quarter results on August 3, 2020, the following has been added:

<FY2020 Guidance>

• Operating revenues4,570 billion(81.3 billion yen less than the previous year)
• Operating profit880 billion(25.4 billion yen more than the previous year)
•  Smart life business & Other businesses160 billion(11.9 billion yen more than the previous year)
• Adjusted free cash flow*730 billion(163.3 billion yen less than the previous year)
• Capital expenditures570 billion(2.8 billion yen less than the previous year)

*Adjusted free cash flow is calculated excluding the effects of changes in investment derived from purchases, redemption at maturity and disposals of financial instruments held for cash management purposes with original maturities of longer than three months