Good afternoon, everyone. Mickey Mikitani from Rakuten Group is speaking. I think the microphone's audio echo is too high, so could you lower the volume? Then let me talk about the FY 2023 third quarter consolidated financial results. Let me start my presentation. First of all, so the current status from the big point of view, and as you know, Rakuten Group, we excluding overseas businesses, we have internet business and fintech business. And now what we've been working on, the mobile business, these are segments under our businesses. And looking at the overall thing, the internet business and the fintech business, both of them are keeping good momentum. And as for the mobile business, the number of subscribers started to pick up, and then cost has been reducing largely. And then company-wide, we have revisited the cost structure.
Without damaging the top line, we tried to reduce our cost. As a result of these efforts, first of all, so December 2023, non-GAAP operating income, finally, monthly profitability will be achieved. Now, we see signs for that. And secondly, consolidated EBITDA, we can increase more profitability. And another point is non-fintech business, EBITDA, and then we set to achieve profitability in Q4. So we have been working this on 10 years, and we are increasing our top line and also strengthen our profitable this characteristic, and I think it's working well. And let me get into detail.
So first starting with the Q3 consolidated performance. More details will be explained later, but for the sales and the revenue, year-on-year, it is up by 10.1%. We have Ichiba and Travel, as well as the overseas business, and Rakuten Payment, Rakuten Bank. All these sectors are growing very steadily. Regarding the fintech segment, the revenue has gone up by 13% plus. In regards to mobile segment, we have been able to make a JPY 36.4 billion improvement. So we're trying to make the... our initiatives more robust. We are able to grow our subscriber base very strongly. In terms of consolidated revenue, this is what you can see here. Compared to previous year, the same quarter, it is up by 10.1%. So as you can see, in the last 26 years, we have continuously marked an improvement in terms of the revenue growth, and we are expected to see this speed of growth. It is...
The growth pace is increasing rapidly, as you can see, and we want to keep accelerating this trend. What other businesses are mainly focusing on are basically the bottom line. What we're doing at Rakuten is that we're looking at the growth, and we're also going to be aiming for a better operating income profit. In December, we're going to be aiming for profitability in December 2023 for consolidated non-GAAP OI. In the first three quarters, due to various factors, the many improvements have taken place, but for the fourth quarter, that improvement is expected to be bigger. As mentioned earlier, the internet service segment, which is our core business, has seen a revenue growth of 13.9%. This is year-on-year.
And non-GAAP OI has also grown by 16.2% year-on-year. So you can see how robust this growth has been. Now, looking at each geo within Japan and also outside of Japan, these are the key topics. The domestic EC is at +15.7%. The last year was not so bad, but we still saw another growth spurt this year, year-on-year. The growth has been even stronger in travel, and I think Amazon has been the main focus, but we have advertising sales that has gone up by 15.3%. With the overseas business, we have Rakuten TV subscription users at 84.4 million people, plus 42.1% year-on-year.
We have Rakuten Kobo plus 6.6%, Rakuten Viber plus 5.7% at JPY 1.5 billion. And also Rakuten Viki, this has already turned profitable. It's close to 80 million users, registered users. So Rakuten Rewards business in U.S. is growing very strongly, and also the content business as such are also steadily becoming our sources of profit. Moving on to the fintech for Rakuten Card, securities and payments, these are strongly contributing to our profit. Rakuten Bank will be explained more in detail later. Looking at the non-GAAP OI, yeah, the profit has grown much stronger compared to last year. For the revenue, is at JPY 184.6 billion. The revenue is at plus 13.6%. So year-on-year, yeah, non-GAAP OI growth has been 35.8%.
Now, looking at each, the key KPIs for the Fintech segment, the cards issuance are growing. Our initial target has been 30 million cards, and we're very close to achieving this goal. We think that this might be achievable within this quarter. Also, Rakuten Card shopping GTV is at an astonishing JPY 5.3 trillion, you know, which is going to easily excel 20 trillion JPY if you convert that to an annual GTV. Rakuten Securities general accounts. We're going to be talking about the zero interest rate, but this business has also grown very steadily at +15.8%, 9.68 million users. Rakuten Securities deposited assets, not just trading, but we also want to look at the asset.
This is another pillar of profit for us, and this has reached JPY 23.2 trillion year-on-year, 34.1%, a very healthy growth. This is Rakuten Bank. This is separately listed company with announcements made, so I will quickly go over this. The ordinary profit growth in the first half is at roughly JPY 66 billion year-on-year, +12.8%, and the ordinary profit was at JPY 22.5 billion. And this is in midterm, not quarterly, so in six months, but still the numbers are very strong. So year-on-year, it is an improvement by 25.4%. And ROE, very important for banking institutions, ROE is at 13.7%.
Number of bank accounts is 13.3 million, and of that, people using these Rakuten Bank accounts as main account is at 31%, which is another improvement. Total deposit balance is close to JPY 10 trillion, and G&A expense ratio is 43.5%. Capital adequacy ratio is 11.3%. It's a very healthy and very profitable business we have been able to carry on.
Okay, another thing that, drawing attention in the market is our payment business, Rakuten Pay. And in the Japanese Customer Satisfaction Index survey, and the customer expectation, the perceived quality, and the customer satisfaction, intention to recommend, loyalty, perceived value, we have been ranked as number one. There might be some ups and downs, but as of October 25th, so as for the free application downloaded in ranking, Rakuten Pay has become number one. So this is in a good shape. And then recap, the Rakuten Fintech is not just supporting the members. So as for the money flow, well, is circulated within our ecosystem. So like a self-funding, we are able to grow ourselves, just like a self-funding.
Then recently, Rakuten, we have the Rakuten Pay below the Rakuten Card, so the payment business, not just for the QR, but also for the credit card and the FeliCa, and Rakuten Pay, Rakuten Point payment, including those payment methods, integrated way is something we would like to operate this. Therefore, we have been working on the online. Now, we are having a more impact even in the offline business by this payment scheme. The cashless payment in Japan is accelerated. So 36%, it's above the JPY 100 trillion, but still, credit card percentage is very high, which is 85%. And the e-money, such as the QR code payment, barcode payment, and the similar same, and in China and in India, QR payment grew a lot.
One of the reasons is because of the credit card or debit card penetration rate was low. That is one of the reasons, so here in Japan. So the sustainable growth perspective, this credit card portion, and also e-money or debit card and QR code payment, and also the point, we are the only one who are integrating those different payment method. That's our strength. So, this is the drawing attention about the zero commission trades for domestic stocks, and we have made this announcement with SBI. And basically, for the domestic stocks, commission becomes zero in exchange to enhance the loyalty so that we can increase the customer base. That is the basic strategy. On top of that, so those users can purchase or use other product for this other commission area.
So in 2024, our revenue was JPY 95.4 billion, but in 2028, we are targeting JPY 190 billion. So, about the margin of finance in finance trade here in Japan, and but we will have the NISA, and then making an investment into Japanese industry would be very important. But, personal asset or national asset, so the assets such as the overseas or the stocks or NISA are the way to make an investment for those areas. That is very important. And with that, the number of account would be increasing, therefore, the selling the mutual fund or delivery of the trade to be increased, included. And what is the most recent performance after this announcement? So the revenue with this announcement, so we anticipated there's more than our expectation anticipated.
What we didn't see the negative impact as we anticipated. So when we made the zero commission trade and Y-o-Y basis, +3.4% increase was made, and the number of accounts is increasing. So this is in line with our expectation. And then I think you are quite interested in this. This was featured in the Nikkei newspaper and Mizuho Securities. More than Rakuten the securities there is the holdings, and then Rakuten Securities is below that holdings. So Rakuten Securities has a stock 29%, which is equivalent to JPY 87 billion, and they made announcement that they will make additional investment here. And then Rakuten Securities is 100% subsidiary to Rakuten Securities Holdings. And so this is for mutual benefits.
So Mizuho have the 24 million retail accounts, and in personal banking and the bank, and they are able to do the consultation and consulting, and the strong wholesale customership and the partnership, and they have the trust, the total of financing finance function. Our strength is that we have more than 100 million accounts, and we are strong in digital and online, so we have a low-cost channel. The number of NISA account, we are number one market share, and then we also have the Rakuten ecosystem. So digital is excellent, UX, and then the Mizuho is strong in terms of in-person consultation. So Mizuho Group and the Rakuten would like to strengthen the partnership. That is included in this deal. The next is about the Rakuten Mobile.
Rakuten Mobile, the revenue grew by 21.6%, and then the JPY 55.7 billion, and non-GAAP operating income on a quarter basis, we improved by JPY 35.1 billion, and non-GAAP EBITDA is JPY 77.2 billion, which is a substantial increase. As you can see, this bar chart, this is the progress of the Rakuten Mobile. So the Rakuten Mobile, which is expressed in the parenthesis, Symphony, is Symphony, is on top of the Rakuten Mobile portion bar chart. So we are making it stable, the profit improvement. And now, September and October, around this timing, we, our number of subscribers has been increasing, and the October net increase of subscriber was the 192,000.
So we are quite honest and open to say things, so of which this 192,000, about the 110,000... No, sorry. Sorry, 110,000 out of 105.42. So the BCP of that, which is the secondary SIM. So this is another SIM that you can use for additional purpose. So this is the contribution to the revenue is quite limited. Although we exclude that portion, still we see growth and the number of subscribers, and we target 8-10 million subscribers by the end of 2024, and the population coverage, well, including KDDI roaming, 99.9%. Could you control the air conditioner? Sorry. And the population coverage, 99.9%.
ARPU increasing, so on a Y-o-Y basis, +JPY 590. The most important thing is the reduction of churn rate. So as of Q3 2023, 2.06%, and October, it's below 2%. So the portion, the churn within the month, excluding those people, so the current is 1.44% of the churn rate. It's a quite good situation. And then in Symphony, so the mobile phone players in the globe pay attention in this Rakuten Symphony, and so the virtualization and O-RAN, Open Radio Access Network, and would become a mainstream. And then we have developed that and widened the door so that many people can join it. And now the mega carrier players in the global market are paying attention in this technology.
Then we have been trying this kind of new things. That is our past path, but we changed the management of Rakuten Symphony and Sharad newly became the president of Rakuten Symphony, and I became CEO of Rakuten Symphony and roll this business out.
Okay, over to the mobile business, I would like to share some more details. So we're transforming, transitioning from phase two to phase three. Phase one was about establishing a foundation rapidly, and phase two was about lean and solid management. We've been very aggressive in building these base stations, and we have also worked on the virtualization. And now we are making us more robust, so we can run a marathon, if you will. But as I mentioned earlier, subscription increase is going well, very well, and so this year so far, we're already in growth phase. So these are the keywords that are going to be necessary for launching our phase three: quality and growth. So first, to talk about quality, network is going to be key. So talking about this, there are actually three pillars.
About expanding the, the existing bandwidth, and the second is, network optimization under the new roaming agreement. There's a little slight delay, but we're expecting this to be completed by the end of this year. And the third point is a Platinum Band that we have been awarded. This is going to be available for us to implement, in the coming spring. So we're talking about, many... So now there are many discussions about how viable our, investment is. But, basically, this is standing on top of, our base platform technologies. Depending on the situation, other companies might... When they build new radio units or, when they build stations, they have to install new radio units. But what we're doing is, to install this 700 MHz band in the existing antenna.
This is how, the same antenna could be used to, to make available the platinum band. We're doing this 500 bases. But can we do this at JPY 5.44 million? But we can easily cover that with some change to go back into our pocket. So, so what people will do is that they will just go to these places and pop these in, and then the platinum band, the 700 MHz, is going to be made available. And this is exactly, the personification of, the virtualization technology. So with the, the existing network, there has been a study done by OpenSignal, a very trusted, third-party assessment company. So video experience, live video experience, games experience, we're number one in these.
Voice app experience is pretty much at par at the top, top level, at 81.55%. Download speed experience, so this is improving rapidly, and we're catching up with our competitors. Upload speed experience, we're extremely fast. So YouTubers, Instagram, Instagrammers, influencers, they really like using this because, they, they're using up their storage, so we're at an advantage. Availability has gone up from 98.4% to 99.12%, so this is another rapid growth factor for us. So within the next 6 months to 12 months, we should be able to catch up, if not surpass them. Coverage experience, we're at par of, our co- our competitors. On the other hand, we talk about packet loss, consistency.
For Rakuten Mobile, we've been focusing on providing consistent quality, so we have been able to exceed the average of other MNOs at 83.4%. Now, over to the coverage within Japan. According to this OpenSignal survey, you can see that these dark pink areas are the prefectures that have the best coverage. They're ranked number one. So out of 47 prefectures, 21, Rakuten Mobile is number one. We're going to be working on how we can further improve this. The next is about the most considered options for switching is Rakuten, our plan. And as I mentioned briefly before, there's a progress update on network optimization based on the new roaming agreement. Basically, in most areas, this service is going to be available and updated.
There might be some spillovers, but those are going to be covered at earlier time next year. So that is a commitment that has been made. With the revenue, how can we keep growing this? The one thing we can say is to leverage the Rakuten ecosystem from a customer perspective. So Rakuten customers are going to use Rakuten Mobile if they're already using other Rakuten functions. And this is going to help increase how much and how frequently they use Rakuten. So ID and data are going to be at the core, and this has been the case previously, too. But now, mobile is going to be added to the picture with AI as well.
... So this time, we made changes to the point system and many people, I think this is a kind of the upgrade of the point program. For example, Rakuten Mobile users, so the ex, other than the diamond user, it was three times, but the everyone, every day, five times, that is a change. And once you become a mobile subscriber, then you can enjoy more synergy. And then the Rakuten Ichiba purchase rate increased by 60%. As for travel, it's almost double the growth. So when you become a subscriber of mobile, and then Rakuten Group service, uh, per user per year, they're using the more than JPY 2.5 trillion, and on a monthly basis, it's about the 721 JPY per user ecosystem ARPU.
So the price and points are Saikyo or strongest, and then we would like to provide the best content, strongest content. So we have the NBA games, and if you are Rakuten Mobile user, you'll be able to view this for free of charge. And Rakuten Music, Rakuten Magazine, and YouTube, we have a various premium. And Rakuten Card user, if the Rakuten Mobile subscriber start using the Rakuten Card, and then they will gain the double the point. So we have this privilege, so the switching and the 6,000 points will be granted. So basically, the more you use the services, for example, using the data 3 gig, and then we will reward them the the 5 months the points, so they can use the mobile for free virtually free of charge for 5 months.
Then if you can purchase more, you can use the, the mobile phone virtually, free of charge. Moreover, we would like to, grow this much more, and the first three point, the Saikyo Plan launch and one-stop MNP, easy sign-up and activation, and the SPU growing. So the, there will be more benefit advantage for mobile users. We changed the program to that way, and the new roaming contract, and the 700 megahertz introduction, and then the, existing software upgrade will be made. Therefore, so the, congestion, the base station problem would be resolved. So we are on par with other major carriers or more, or, or maybe we would like to, build better network than them.
On top of that, the B2B business, which is growing today, and first of all, the Rakuten Group's partners, which is 900,000, and then also the oil companies and local governments, we have a strong partnership, so we would like to grow this business. Not just selling the product, but mobile network solution to be provided to our customers. Therefore, the various services, including security and the AI and translation. So using mobile, what can you do with mobile? And then we would like to provide the solution together with the mobile. In addition to that, the various ecosystem to be leveraged is something we would like to do.
So, net add growth, and then, the last month, it's close to 200,000, and we would like to continue this pace, and then churn rate, and it has been declined drastically. And as for the ARPU, so it used to be JPY 837. It's now JPY 2,046, and our ultimate goal is to, including the option addition or value up and base mobile phone services, base, the 3,000 uplift and 1,000 JPY. So in total, 4,000 JPY as a Rakuten Group, the revenue up will be done with this ARPU improvement as a part of this journey. Well, so RCS application, so I think we are the only one who is successful in this. So they're using...
So the Rakuten Link users, I think there are many of Rakuten Link users, and in this Rakuten Link application, we set up home button. With that, 21 million, this is in a cumulative number, and they are using the Rakuten Group services through this home button, and that can be reached to 100 million at the end. Therefore, the Rakuten Link application will become a super application at the end of the day. CapEx, this year's plan is JPY 200 billion. That is a target, but we much lower than that, and in 2024, we would like to make this half. So, please be seated. So, with the Rakuten Group power, with the wisdom and knowledge, and then high performance, but the less expensive network to be developed.
So the current network, 13 million subscribers can be supported with the current network structure. So if it goes beyond that, and that would be a good timing to think of new investment in the future, but for the time being, it is not necessary to make additional investment to strengthen the capacity. Last but not least, SoftBank and KDDI, I think they make some announcement about this NTT Law abolition, and also NTT in a various context, integration are being progressed. So I would like to make one comment about this stuff. So the basic is thinking that wireless would be advanced, and the backbone, all of them are using the the fiber optics. And then the 5G and 6G, when those era comes, and then the distance become much closer when that time comes.
Therefore, the fiber optics would become more important in such situation. So, this is used from the tax paid by the citizens and other public collaboration, and they have been developing this asset based on the people's tax and other efforts. Therefore, under the special regulation and law, this needs to be managed appropriately. And then what's being insisted by NTT as in terms of technology development, they said they cannot make announcement. However, NTT Law is the holdings and the NTT East and West, these are the subject for that law, and outside of that is not subject for the law, so the development doesn't have to be done there. As long as they are group companies of NTT, they can do the same development type things. Therefore...
So I think they can do some technological development, but I think they are using that as their excuse. Or maybe the vertical dominant. They have an asset for vertically dominant. In other words, let's say all the petrol station are monopolized, and then only the car manufactured by themselves are subject for their the petrol provision, or maybe they can raise the price of oil, and then that can be managed or supported by the telecommunication law. But the NTT Docomo, it's 100% subsidiary to NTT, so there is totally irrelevant to the consolidated revenue. So if I am the NTT CEO, I will raise the price.
So it's not the matter based on the verbal commitment, and NTT Group, it shouldn't be integrated, but they broke that promise, so their verbal commitment or declaration cannot be trusted at all. Therefore, as for the NTT law, I think you should leave it as is. That is Rakuten's comment, and then that is all from the business side update about the financial results. And now moving to the financial strategy. That will be covered by Hirose-san.
Thank you. We have noticed that there's been some technical issues, the live streaming showing some delays. Line 1 seems to be experiencing this, so for those who are on line 1, can you please switch to server 2 to continue watching this live broadcast? Thank you. Also, today's sessions are going to be archived. We'll be following up with an announcement of how to access them. Thank you. Next will be the financial strategy. Mr. Hirose will do the presentation.
Hello, all. Thank you. I'd like to speak a little about the financial strategy. First, this is our commitment. We have made an announcement on the early redemption of JPY 68 billion subordinated bonds at the first call date, December this year. There's a remainder of 8.6 billion.
We're going to be making a redemption at the first call, and our announcement is to do that this year in December. To explain Rakuten's situation right now is that EBITDA is, as Mr. Mikitani already explained, it continues to improve. Also, mentioned previously, the consolidated EBITDA has turned profitable, and as you can see, it has been growing steadily. In terms of the financial businesses... Rather, we're going to be aiming to turn profitable with a non-fintech during this quarter. Moving on to the capital business alliance with Mizuho Securities. Once again, the Rakuten Fintech structure is shown here. We're looking into maximizing the synergy of Fintech and also further enhancing the management base. The investment from Mizuho Securities in the amount of JPY 87 billion, for additional 29% of Rakuten Securities.
You can see how the system, the organization has been organized. As was explained, announced today, we have enhanced the existing partnerships we have had with Mizuho Securities. We remain positive on the potential listing of the company. Now I'd like to talk about the path to self-funding. First, we want to make drastic increase with the cash flow through mobile business, and we want to grow the internet services FCF and grow CF from FinTech. EBITDA has to be grown in a robust manner, and a thorough organization-wide effort is going to be made for overall cash flow improvement. As mentioned, there's gonna be FinTech performance is going to be pushed forward and will be followed up. This is how we're going to become self-funded.
Proactive management of bond maturity, which might be one of your concerns, as we see it, by using equity-related financings to reduce gross debt. That is our main focus, and also we're proactively managing the debt maturity under and we're, you know, we're looking at the best timing for maturity. We continue to work on the matter as shown here. So that was very brief, that concludes the presentation on our financial strategy. Thank you.
Thank you, Hirose. Good afternoon, everyone. In the last earnings call, we announced our AI strategy and roadmap. Today, I'm very excited to share with you we are off to a great start. We're integrating AI into everything we do in an initiative called AI-nization. Rakuten is in a unique position to realize this vision for three reasons: First, we have a unique data asset. We have domain knowledge across multiple industry, combined with the customer contacts over 25 years, and we have the world knowledge and the best technology through the collaboration with OpenAI. Second, Rakuten has the reach to millions of consumers online and offline through Rakuten Credit Card, Rakuten Pay, and Rakuten Points Network. And lastly, Rakuten is known for good at execution.
With the discipline and determination, we can build the flywheel to reach consumers and continue to build a better model to serve our customers with better and faster services. The core to our strategy is generative AI. Generative AI works like a human brain, and the human brain sometimes could use some external tools, like a whiteboard for brainstorming, a notepad for capturing the ideas, and generative AI, like, can use some external tools. We use a technique called Retrieval-Augmented Generation to connect the generative AI with external tools. One of the most important tool is Semantic Search. We have been in Semantic Search on top of deep learning foundation for over a year. The essence of deep learning foundation is to capture everything in a, in a concept, in a technology called embedding.
Embedding can be used to represent any item, a query, a product, in efficient mathematical form. We are starting with Rakuten Fashion, and here is an example. Last summer, I want to go to a fireworks festival in Edogawa, and before I went to the festival, I went to Rakuten Fashion for what clothes I should wear. And it's such a long query, and normally you won't get any result, but Rakuten Fashion gave me plenty of results. As we can deliver more relevant results to our user, user are searching more, and as they are happy with our, our result, they are coming back more often. As a result, they are purchasing more from Rakuten Fashion.
By the numbers, we have seen the searches per session increased by 3%, and sessions per user increased by 4%, and sales from search on Rakuten Fashion increased 5%. But that's just the beginning. Embedding is such a fundamental technology. It captures the essence characteristics of any item. It can represent an item, a person, a product, in so many dimensions efficiently. By analyzing what people purchase online, what store they visit offline, we can compute embedding in probably the world's most efficient way through Rakuten data. We are looking at leverage this embedding technology to help people to find anything on Rakuten services through search, ads, and recommendation. I want to end with what I begin. We are on a mission to augment human creativity with the power of AI.
We are combining human expertise across multiple industry with the latest cutting-edge technology through tools such as semantic search and through retrieval-augmented generation. So we are combining. We are delivering this technology together with all the expert in multiple areas. We want to create value for our consumers and merchant and bring value to our society. This is just the beginning. We are very excited about the future. We are so happy to be on this journey with you. Thank you very much.
... Thank you. That concludes the financial results report. Thank you for joining us at Rakuten Group's 2023 third quarter financial results meeting. From here, we're going to be taking questions from the members of the media. These are the speakers attending from Rakuten Group's side. I'd like to explain the flow for Q&A. We have Japanese into English and vice versa, simultaneous interpretation made available. Please choose the language of your preference. And please do not choose to mute the original voice. During the interpretation, providing interpretation, you will be hearing the original voice at a lower level. For those who are joining us on the computer, you can use the other function on the app that will let you raise your hand to ask questions. We'll mention the name. Make sure when your name is called, please unmute yourself and start your question.
Please limit your questions to those related to financial results as well. And also, please ask only one question. If you have any questions, please raise your hand. Thank you. From Sankei Newspaper, Mr. Otsubo. Thank you. Thank you. I'm Otsubo from Sankei. Yesterday, at the other financial results announcement yesterday, Miyakawa has mentioned that the Platinum Band, there's gonna be backhaul line, and so they would like to extend their support on this. So it looks like there's a stronger bond, given the other announcement. Mikitani-san, can you please share your thoughts on this? So you have to choose between SoftBank or NTT? No? Well, that is that. It's not just SoftBank... How many companies? It's not just three. It was over 400. We have local cable companies, many local companies, too.
So other than not NTT Group, all the other companies are against the idea. So the network that was built using taxpayers' money, their aim is to do vertical integration. I thought they really... I'm surprised at how they came out at that. But I think from a communications situation, I think this is a very risky move, and that's why that for we're aligned with the direction that these three companies are working towards. And in a general sense, it's important to talk about having a competitive landscape rather than just one company monopolizing. So again, this is another common concept. Again, I've only heard of this through what has been reported in the media. So, what possibilities are there? I'd like to talk not just with SoftBank, but KDDI and NTT Docomo.
There should be cooperation as well as competition, but I don't think that there needs to be unnecessary competition. So in many ways, I look forward to having a good communication with the other players. Thank you.
The next question is from Yomiuri Newspaper. Ono-san, over to you. Ono from Yomiuri Newspaper is speaking. So, I think I may repeat some questions because my network is unstable, and the mobile subscribers increase. So as for the first report, as of October, it is about 198,000 net increase, so it's accelerated. How do you analyze the factor of this acceleration? Is there any major driver to push this up? And if any, I would like to know that. So is this a kind of a tentative factor? So, reaching 8 million-10 million, in the future, you need to sustain this momentum and accelerate... so the sustain momentum and accelerate, is it visible today?
Or in order to accelerate this, the growth, what will be the most important factor, and how do you view this? That's my question. So there are three factors for this acceleration. The first one is the churn rate reduction, and the network quality improvement is one of the reasons to lower this churn rate. So the number of churn, so it, in reality, 1.3%, but when it did, it was the highest, 1.8%, 8%, so it's improving now. So now we see, the we, we have a net increase, but many people are staying and using our services, so low churn rate. In October, our churn rate was 1.72%. So, comparing us to three other major players, we are on par with them. That is one of the factors.
And the second factor is the Saikyo plan and the contents bundling. We started these initiatives, and the number of subscribers has been increasing. That is the second factor. And another factor is... So the smartphone is a product available nationwide, but it's sometimes specific to certain region. For example, in your living area, that is very important if the coverage is okay with your region. So the region-based sales structure are established and... and is established, so the marketing level has improved. Those are another reason, so every day, so the hurdle is there, so I'm working on that.
Also the how to sell products. Well, this is, we are mainly selling it online, but now we started using the real shop as well, and then we have a various unique channel to sell. Well, usually, they have a agency and sell through there, but we are trying many new things. The third one is about B2B contract increase and B2B business, and if the output goes down, it doesn't make sense. Therefore, we are selling this to the B2B, so the people working in Rakuten Group and also the merchant of Rakuten and those who are engaged in the Rakuten. I think is about 1 million people are engaged in our business.
So we should leverage this kind of relationship with Rakuten to have the meaningful B2B contract so that we can recognize revenue. So that is the third factor. So the most recent performance, maybe there are some fluctuation, but it's not slowing down, but accelerating. I think we are gaining that momentum today. Thank you.
Hai.
Thank you. A freelance, Mr. Ishino?
Thank you. I am Ishino. First question: with the revision of SPU, you're going to be—this is, this is going to be a big advantage for people who have Rakuten Mobile. So how effective is this going to be and for you to gain more users for Rakuten itself? And the second part of my question is, with the platinum band, you have mentioned earlier in your presentation that you'll be using existing antennas, and you're simply attaching these units that would enable that connectivity at 7 million BPS. So is it entirely going to be done that way? I'm asking this question because the major three carriers, when it comes to the 7 million, 8 million, 9 million, they're using much bigger antennas, units. So but yours, your antenna are relatively small. So just a simple question, is that going to suffice?
So these are the two questions from me. What other companies are doing is something I cannot really comment, so I'll refrain from saying anything about it. So the radio head, the antenna, the powers, the power of these that we have is really at the top level within the industry.
Hello, yeah. So, the existing antenna, what we are doing is we'll be doing using two RRH on the same antenna. Of course, there, for 700 megahertz, there will be a new radio head and a new antenna, but, the location, the pole, the DU, the CU will be same. So from CapEx perspective, it's very minimal and very easy to deploy. And, plus, also, we are, from acquisition perspective, it will be much easier because we plan to use same pole and same height of antenna.
The quality of our radio head?
Yeah. So,
Is that good, or is it? He said it's a little rather small, but it's powerful enough.
Yeah. By physics, 700 MHz antennas are larger, slightly, but what we are—for 1.7, what we are using is has good enough antenna gain, 17 dBi. Plus, also it supports 4x4, which is also kind of unique for Japan because all of our sites are 4x4. So what it means, it has much better sensitivity.
... All right, I would like to paraphrase that. He's saying it's compact, but it's very powerful. So that is what we have. So it's not larger the better, I think. Thank you. And about my question on SPU? I guess, we just have to do this and see what happens. But we're giving five times the points every day to everybody. I think this is quite attractive. So unlike other programs, what, what other programs do is that, there's no monthly fee, but for the mobile users, they get JPY 980 per month. So considering that, compared to the other programs, this program is quite attractive. So in the future, we, we can reach to 15 million people, 20 million people using Rakuten Mobile.
If that can be achieved, then Rakuten Ichiba, the distribution scale, is going to go up by that much as well, 30%, 50%. So we think that there's going to be a big synergy potential. Also, another advantage of this is this Rakuten Saikyo plan is quite cheap, right? So compared to what other providers are doing, they have Giga ho plans. That's monthly price is 7,000 JPY, 8,000 JPY. But if they switch to Rakuten Saikyo, it's maybe 3,000 JPY per month, and you get lots of points. So it's... You gain a lot from just simply switching. Thank you.
Okay, then next, from NewsPicks, Hatani-san, over to you. Hatani from NewsPicks is speaking.
So, the like Ishino-san's questions, and I have a question about SPU initiative, and 80% will gain some advantage or no change. I think that was what you presented, but after you make announcement from November first, and the, there are some people saying that this is the, the largest that you churn taking place. And how do you view about this kind of a reaction?
Takeda is speaking.
Well, some people say there is negative voices immediately after the announcement was made. But as I have been monitoring that after one week, I think we haven't heard that kind of a voice anymore, and from the user point of view, they are very smart. And they keep purchasing items from our service. And as for the other merchants and then partners, and we made a pre-explanation about this SPU program, and we haven't heard that kind of a negative reaction almost. And then increasing the mobile subscribers, and then we would like to increase the more distribution or the GMS throughout this effort. So that is the current situation, so what we hear from the field. So I think the people are taking this in a positive way.
Well, when you make a change, whenever you make a change, there are some pros and cons immediately after the change. Therefore, the negative comment from there is a negative mindset people, and we have to capture them. And then with other services, for example, using AI, and then, we're going to improve the quality of the services so that we will be able to satisfy those people as well. Thank you.
We have limited time, so we would like to take two more questions from the members of the media. Mr. Ishikawa, our freelancer.
Thank you. I'm Ishikawa. So about the NTT law. All these government local government buildings that are using NTT antenna, if those can be leveraged, I think the overall internet connection is going to be better in Japan. Do you have any thoughts on that?
True. Basically, is AT&T base station, regional stations... Excuse me, we're borrowing their communication service of what NTT has. Now we have to move on to edge computing. So using of edge and how you use it is going to be essential. So AI, contents, maybe we can implement these into those. Right now, the latency is at 40 milliseconds, 30 milliseconds, but we want to be able to reduce that to just a few milliseconds. By the way, what Rakuten Symphony is doing, which is German 1&1, is at 3 milliseconds, which previously was considered unthinkable or unachievable, but it has been achieved there. And therefore, in that regard, we can deregulate more, and so we can use these existing functions to our advantage.
If we can do that, then the Japanese wireless connection is going to be the fastest, one of the fastest and the most useful systems in the whole world. So computer, console games, even without these hardwares, you will be able to do a lot more with mobile devices. So, for edges, I think there's going to be a great benefit, and it's going to be a huge occurrence if those could be made available. Thank you.
Okay, from NHK, Nishigata-san, over to you. Nishigata from NHK is speaking, and I have a question to Mikitani-san. So the mobile subscribers are increasing, and also the value is increasing, but the bond redemptions will start from the next year, and the core of your ecosystem would be placed onto the mobile businesses, and now you started some structural change. And I would like to hear about your commitment or determination in this change. So as Hirose-san explained earlier, so in a various format, thanks to the support or the commitment from the other banks and this bond redemption, there is no problem at all. That's how I view.
In addition to that, in various format, Rakuten Group ecosystem to be leveraged, and so far we have been just watching closely on the P&L, but with wisdom and knowledge, we would like to improve our cash flow, and that's what we have started. So that is a big portion. So 900,000 business partners, co-corporation, we have a partner, and most of the people live in Japan has a Rakuten ID, so we should leverage this mechanism. We'll establish and for this, even in this refinance, and then mobile investment, it has been reducing drastically. So as mentioned before, so the cooperation with other companies, and then what we need to borrow is something we need to borrow, and then we would like to reduce the amount of CapEx.
On the other hand, well, looking at the globe, it was not covered in today's presentation. So, the players in the global market paying attention in this Rakuten Symphony, I think it was covered in editorial in Nikkei Newspaper and the Symphony service in December, and that will be starting in Germany in December. So the industrial structure so far, the phone operator is a oligopoly, and then other operator are oligopoly as well. So these are two-by-two oligopoly, and we have made a big challenge, try to open the door to that environment. So the world mega carrier paying attention on our Symphony. So if we make this, and then looking at the industry here in Japan, and that will become a big positive factor.
And also, even in a Japan brand, I think this would serve as a positive factor, so we need to make Rakuten Mobile business successful, and also our technology to be sold in the global market. And also, the, the world mobile or the network will be running on Rakuten platform, is something we would like to achieve in the future. Thank you very much. Thank you. This concludes the media Q&A. This concludes the media Q&A session for the financial results meeting. Thank you to everyone for joining.
Thank you for joining us for Rakuten Group's FY 2023 Q3 financial results announcement. From here, we would like to hold a Q&A session to take questions from members of analysts and investors. These are the speakers. I'd like to explain the system. We are providing Japanese and English simultaneous interpretation. Please choose the language of your preference from the screen. Please do not choose to mute the original voice. When there's interpretation, you will be hearing the original voice, but at a lower volume, so you can hear the interpretation. For those who are joining us on your computer, if you have any questions, please choose to use the Raise Hand function. When your name is called, please make sure that you're unmuted, and then start asking your question.
Now, we would like to open the floor to the analysts and investors with questions. Thank you. Mr. Nagao from Daiwa Securities. Thank you. I'm Nagao. I have two questions. I think this is the first time you've clarified the timing to talk about 8 million-10 million target. So you have-- This is the first time you've included that number in your deck. So from 10-12, probably because of KDDI relations?... I think that makes sense. And, January to March is going to be a, a very strong business period, so I think that there's going to be some business performance improvement. But working towards that 8 million target, it might be too early, but I was wondering how you plan on running the other promotions? How, how you intend to promote that measure? Should I break at that? I have another question.
Go ahead and ask your second question. Thank you. Related to my first question, I have a question about SPU. So you are giving much benefits to the Rakuten Mobile. Now you have over 40 million users of the system. You will have local marketing initiatives, but you will also... Say, if you can bring in 10% of, if you can gain on 10%, that's going to help grow your, your ecosystem that much, that much. So I was wondering if this is your future direction for how you want to grow the Rakuten ecosystem? Yes. Basically speaking, we want to enhance the other sales channels that we already have. It's not just about increasing the number of storefronts, but it's more about welcoming more people to sell Rakuten Mobile and reaching out to more users, too.
So marketing is all about people, promotion, place, price, so these are the four Ps that you learn in business school. So it's about enhancing the place for us. Rakuten Ichiba and other Rakuten family components are being used so we can enhance the Rakuten Mobile outside of these major city centers. So we're doing more in the western region within Japan. We're also looking into growing these number at local community levels as well, whereas previously we used to focus more on the metropolitan areas, such as Tokyo. So we're now entering the phase of focusing more on micro strategy or smaller scale communities. Network quality is getting better and better as we go, and I think you're using our mobile phone as well. But basically, you have good coverage no matter where you go compared to the...
And then we have a KDDI roaming enhancement, and I think this is going to be launched in April. But we'll have the Platinum Band available, and software, generally speaking, will be improved. And this will mean less packet loss. It's going to be a very stable communication we can provide to our end users. We have SPU, that's going to be a big promotional initiative. So this is the direction. We also have some other ideas, which I'm not sharing right now, but say that those are going to be rolled out at a later time. But this is our strategy to enhance our sales channel and to grow our customer base and also be creative in our promotions. We're making micro improvements every day to reach that goal. About your question on SPU.
So don't you think this is really good? It's a very attractive offer. At the very beginning, after our initial announcement, there were some SPU situations where you were not reaping the benefit. And there were people who were reselling what they have already purchased. Or this was actually putting us into red. So there were many people who had that view on this initiative. But this is an initiative that would, that would be effective in reaching the mass, and we want to increase, improve the cost benefit. So again, these people, if they join Rakuten Mobile, their usage, the cost is going to be low, and they will be reaping the benefit from the points. So I think it's going to be a gradual change, but it'll be an improvement. Thank you.
Okay, then move on to the next one from J.P. Morgan Securities, Fujimoto-san. Please confirm you unmute yourself and start your question. Thank you very much. From J.P. Morgan and Credit Research, Fujimoto is speaking. I have two questions. The first question is about next year, the bond redemption and about the financing situation and the with major banks, what kind of discussion have you conducted so far? If you can tell any, please share that with us. And then your finance activities this year, looking at the cash flow of your finance and the non-finance and the, the recent, the borrowing and repayment, it's about JPY 200 billion above, and CP repayment is JPY 140 billion. So in total, JPY 360 billion repayment is done. That's how I read your financial situation.
So if you repay this amount of the borrowing to the banks, and maybe your relationship to them may have changed. That's my assumption, and the next year, when you redeem your bond, is there any possibility that you will be having additional borrowing from the bank? That is my concern, and that is the first question. And the second one is commitment. You mentioned that there is a commitment from the bank in your presentation. So the commitment. Are you talking about the commitment line? And the commitment line today, how much is it? And then, what will be the contract duration? It's something I would like to know. Those are the two questions. So Hirose from Finance will be speaking about the relationship with major banks.
We have a good relationship, and they are quite supportive to our businesses. As for next year's bond redemption, as mentioned before, the non-finance debt to be financed, and we have a various project, and we will be progressing that. On the other hand, the refinancing, necessary refinancing will be planned, including a bank loan, the diversified financing approach will be considered. Bank loan repayment, maybe some of them are misled. The bridge loan that we used to borrow, and then from the last December, Q2, we have already repaid. Maybe this part is kind of noisy. As for the ordinary, the borrowing from the bank, in terms of long term loan, we are repaying them based on the contract terms.
The other bond financing and equity financing, combining them, the short term is the retained. The bank Commitment Line, JPY 150 billion, is the Commitment Line, and there is no change. So we have not used this, so this is vacant. The detail, the portion cannot be disclosed because of the contract. Thank you. Commitment Line, the contract duration, if possible, could you tell at Commitment Line? It is annually renewed, and that will be renewed in this coming summer. Basically, as for financing, what I can say for one is Rakuten Mobile investment amount, with the power of technology, we are going to control the investment amount for Rakuten Mobile.
With that, EBITDA of Rakuten Mobile would become. We want to make it to break even as early as possible, and then we can generate profit after that. Another point is... So other than that, the cash flow improvement, other than that, is something we need to do as a business operation. So maybe, so, this is a kind of a creative idea. So in that part, several hundred billion JPY of cash flow improvement can be done. So if we achieve that, then that will be used as a source for repayment, and other equity will be accepted in a subsidiary level, including that. So I think we have various options for financing measures. However, the most important point is to improve the cash flow at mobile business. That's all.
So we have other mechanism, established or developed in the Rakuten Card business, so if we have any opportunity, I would like to explain that. Thank you very much. Next, from Citigroup Securities, Tsuruo-san, can you please make sure you're unmuted?
Thank you. This is Tsuruo. I have two questions. The... There were some technical issues with the communication, so I have missed some of the presentation, so maybe, I'm, I'll be asking questions that has been answered. About the mobile, the, the net increase, you have said that, the recent results were very strong. So, can you maintain this growth momentum in the next couple mins, couple months, in November and December, and what do you expect for the January? Please let me know your, my thoughts. And also, I was wondering how many, of this total number, how many went, are the contracts for the, the corporations?
Individual or corporate, we don't really disclose that information, so my apologies. However, there's no point in doing cheap corporate deal. So 111,000 people, these are basically the BCP SIM, so we have to exclude that. So please look at the figure in that way. But, so with corporate membership growing, they can experience the network we have, and also we want to see a trickle effect of individuals also joining the network. Our service is low cost, to start with.
... So that's why, with our corporate, we want to keep pushing for the growth of our corporate users. Recently, the growth has been very steady, so we expect for November and December, we expect the pace, the growth pace to be the same. And also for the next three months, in the early year, of course, we want to keep growing these figures, too. But that will just depend largely on the competitive environment, too. But rather than seeing this as a one-off or temporary momentum, believe it or not, there's this has been very well planned, so we're reaching our estimated planned figures. That's amazing to hear. My second question is about capital investment. Again, I might have missed some of the information because of the poor connectivity.
The corporate investment has been decreased, as you can see here. What is the background of this, and also, what is expected for next year and the following year? Are you saying that big corp investments are not going to be necessary for facilities? We're still in the process of building the final budget, but I think it's going to be greatly reduced. That is our expectation. I can't say by how much or how many percentage, but there is going to be a great reduction that will come largely from KDDI collaboration and also with the Platinum Band rollout at JPY 54.4 billion. Unlike our competitors, I don't know, maybe I should say this, but you simply attach this.
It is an attachment to an existing facilities, and we can cover both bandwidths without having an impact on the capacity. This is our approach. So if we're doing 10,000 stations... But again, we already have the base equipment. It's simply attaching these units, and this is the beauty of using mobile technologies, I think. But in some cases, say, maybe we'll use 5G, there are more that could be brought on by using these technologies. So yes, the capital investment is going to go down greatly, but we're still in the process of making that plan. Our target is to... I can't say reduce by 50%, but we would like to get close to that number. Thank you. Very clear.
Due to time constraint, from investors or analysts, and the next, the next question is the last question. So, the from HSBC, Neale-san, please unmute yourself and start asking your question.
Thank you. Good afternoon. I have two questions, please. The first is on the mobile monthly cost. I understand you're aiming at a average of JPY 24 billion next year. My, my question is: how do you fund the increase in customer acquisition costs? So I think next year that should increase. So is that to be funded by the decline in roaming costs, or are there any other costs you can take out of the, the mobile operation? The, the second question relates to Symphony. Could you give us an update on where you see the most near-term opportunity for contract wins in Symphony? Thank you.
Well, we have no plan to do a massive marketing, but we would like to re-define how we sell the mobile contracts. Like, we are the only company, like 60%-70% of our contract is coming from web, which is like, I think very small for other companies. So channel, you know, innovation is a key, and we would like to pursue various different options in order to do it. Mobile businesses, going there, is not easy product to sell. So, of course, we're gonna enhance our web capability, but we would like to be very innovative. And without increasing our customer acquisition cost, it's going down, as a matter of fact. It's going down per sub significantly. And, also, our corporate phone business is a very profitable business.
So we would like to grow our mobile business significantly. Second question, Neal, what was the second question? Oh, Symphony. So, I think, Symphony has basically three components. One is radio, the second is cloud, and third is operating software, operating support software. As for the radio, on top of Rakuten, we are going to launch 1&1 Drillisch service in December, which is gonna be a significant milestone, not only Rakuten Mobile in Japan, but Rakuten Symphony—the very big MVNO is gonna start using our radio service and migrate all of their MVNO user to MNO. So it's a very, very big business, and then it's gonna be a very good proof of our technology... and the cloud is, we have two clouds in the strategy.
One is cloud for telecom, and the second is, you know, independent cloud. Independent cloud now, all, Google Cloud Platform, GCP, Edge Cloud is rocking, you know, Robin. io cloud. So, it is accelerating, and we are seeing enterprise cloud users growing significantly on top of our telecom. And operating support software, the fact that we have OSS and the radio company under the same umbrella is very, very important. 'Cause, whatever people say, what is very important for, you know, all telecom companies is how to bring down total cost of operation, TCO. So just, you know, changing the legacy hardware to software is not enough.
Of course, you can substantially reduce CapEx, but more important thing is how you can automate all these operations, you know, commissioning, and scaling, and, you know, basically, rebooting and everything. We are automating everything, and that's the combination. AT&T is significantly using our OSS software, so as Nokia and other companies, and this is a big, you know, sales opportunity for us. But I think, one of the, you know, big, tipping point about Symphony is coming in one month, which is the launch of, you know, 1&1, MNO service in Germany.
Thank you.
Thank you. That concludes the Q&A session for analysts and investors. I'd like to ask President Mr. Mikitani to provide closing remarks.
Mm-hmm. The major concern-
Sorry, I'm having some... I've been having coughing fit. I'm hanging on. So with the balance sheet, the Rakuten Securities included, one plus one is going to be made three. That is what we're doing with the securities matter and also with the working capital improvement. How we do that is maybe say 30 trillion JPY is moving around within our ecosystem from left to right, right to left. So there are many ways of moving the working capital in a positive direction. Also in regards to the marketing costs, in order to grow our businesses, in some cases, we were really forcing ourselves to give away more points. So the amendment or changing the SPU system is simply just rationalizing it, which makes more financial sense.
And also, AI is going to be key from now on. It was mentioned in the presentation that the semantic search helps the other sales of 5% increase. So this 5% increase, if you want to actually have that kind of financial results, it usually increase a lot of cost. So ecosystem enhancement is going to be key in achieving that success in sales without having to spend so much more investment. And same with the Rakuten Ichiba. AI is going to be used more aggressively, and that's going to be a profitable scenario for us as Rakuten Group, but also for our partners, too. They will be able to leverage the AI technologies. So with the OpenAI collaboration, AI is going to be leveraged within our system.
From financial to distribution, we cover this vast business areas, and AI is going to give us a potential upside of 20%. There are two targets for AI. Using AI, we streamline the marketing, marketing. The target is 20%. And also another thing is, to use AI, we're going to improve the, the work efficiency by 20%. These are our pillars, and we have been devising some. We have launched some projects to work on this, which means a total of 40% streamlining. So as you can imagine, this is going to help us with our profitability as well. Thank you. Thank you. I hope I will be coughing less next time.
Thank you. That concludes the FY 2023 Q3 financial results announcement for Rakuten Group.