Presentation Materials
Analyst Meeting Q&A (Earnings Release for the Fiscal Year Ended March 31, 2020)
Announced on April 28, 2020
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 explained that you decided not to provide any guidance for FY2020 at this juncture due to uncertainties for the future. However, I believe you already have some degree of visibility over some aspects, such as the positive or negative impacts on mobile communications services revenues caused by the new rate plans and the Monthly Support discount program, other upsell factors and the outlook for cost effciency improvement. Can you give us any concrete numbers or an explanation on their impact?
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Q2 Concerning your Smart life business, how do you assess the impact of “d Payment” campaign executed in FY2019? Are there any other items that are likely to affect your profit either positively or negatively?
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Q3 Can we expect your profit will start to grow from now because, when the impact from COVID-19 is excluded from the equation, the overall conditions do not seem to have changed significantly from what you explained six or three months ago.
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Q4 I guess it would have been difficult for you to give a guidance of a dividend increase without making any disclosure of sales and profit forecasts, but I believe that you have a basic policy to aim for continual dividend increase. I also believe you will push forward the liquidation of handset installment receivables and credit card receivables with a plan to use the proceeds mainly for shareholder returns. Since you did not make any announcement concerning share repurchase and the dividend level was kept unchanged, can you share with us your views on future shareholder returns? Is there a possibility that you will revise your shareholder return measures for this year when you provide the full-year guidance once the prospects of business becomes more visible?
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Questioner No. 2
Q1 I would like to confirm the trend of mobile communications services revenues excluding the COVID-19 impact. You explained that the FY2019/4Q mobile ARPU recorded an increase over the previous quarter and this uptrend is likely to continue. Can you elaborate on this point? As it is expected that you will continue to see a modest progress in the migration of subscribers to the new rate plans, a moderation of Monthly Support impact, customers’ migration from 3G and upsells in FY2020, what is your projection concerning the mobile ARPU after applying discounts?
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Q2 You mentioned that the FY2020 mobile ARPU (after discounts) was expected to reverse its downtrend in the second or third quarter if the impact of COVID-19 is not taken into consideration. Does that reflect the changes in the calculation method, e.g., the adoption of future cost method for the packet interconnection charges for MVNOs and the compliance with regulations calling for a reduction of wholesale charges for voice calls?
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Q3 Regarding your cash flow, you commented that you have not yet completed the preparations for the liquidation of handset installment receivables. Would you carry out liquidation once you finish the necessary preparations? Or would you rather take a wait-and-see approach this fiscal year given the uncertainties in the business outlook?
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Q4 Don’t you have any concerns about finding buyers in light of the current situation of the financial market?
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Questioner No. 3
Q1 Please let us know if you expect to see any impact from COVID-19 on your costs.
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Q2 Do your 5G subscriber targets of 2.5 million in FY2020 and 20 million in FY2023 include both consumers and enterprise accounts? If so, do they include module subscriptions as well?
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Questioner No. 4
Q1 Please comment on the impact from COVID-19 with respect to the traffic growth after April. In particular, can you share with us your views on how it has affected your data communications traffic and mobile communications revenues, as well as its impact on the competitive landscape such as Mobile Number Portability (MNP) customer acquisitions.
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Q2 Rakuten expanded its roaming data allowance from previously 2GB to 5GB in conjunction with the launch of commercial service. Has there been any impact from Rakuten in your recent performance including this decision? Also, have you changed your views of Rakuten’s competitiveness as a result of their decision to expand the roaming allowance to 5GB?
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Questioner No. 5
Q1 In your presentation, you stated that FY2020 will be the start year for growth in a new era. Is there any change to your ambition to achieve profit growth from this fiscal year onwards? Or, is there any change to your direction, e.g., prioritizing investments over profits to drive your future growth?
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Q2 You achieved a strong growth in free cash flow in FY2019 with your working capital showing a huge improvement. Can you elaborate on the reasons behind this together with your plans for the liquidation of credit card receivables?
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Q3 How do you foresee your free cash flow generation for FY2020, taking into consideration such factors as the trend of handset installment receivables in light of your handset sales, additional liquidation of credit card receivables and further reduction of inventory assets?
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Questioner No. 6
Q1 This is a question pertaining to your recent capital expenditures trend and prospects for this fiscal year. Has the impact from COVID-19 been caused by the late supply of network equipment, or the delay in your construction schedule? If you witness any delay in the progress of CAPEX due to COVID-19 despite initially anticipating an annual CAPEX comparable to FY2019, will you accelerate the outlays once the spread of COVID-19 infections starts to settle down?
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Q2 I guess one of the reasons behind the smaller-than-expected increase in mobile data traffic is the data offload to fixed broadband (Wi-Fi). Have you seen any increase in the number of docomo Hikari optical-fiber broadband subscriptions recently?
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Questioner No. 7
Q1 I had anticipated that you will suffer a decline in mobile data communications traffic due to offloads to Wi-Fi as many people are now refraining from going out and working from home. As you indicated a slightly upward impact on mobile data communications in your presentation, can you explain the reasons behind the growth? Has there been incremental usage from enterprise clients?
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Q2 There is a general trend in society to accelerate teleworking including the reinforcement of VPN, etc. Have you noticed any changes in the inquiries from your enterprise clients as they prepare for the future?
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Q3 I heard the adoption of smartphones has so far been slow among the enterprise segment. Do you think the current circumstances will help facilitate the adoption?
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