We now would like to start earnings announcement for the Q1 of the fiscal year 2021. Thank you very much for taking time out of your busy schedule to attend the conference call today. I am Fujiki from the IR office and will be serving as today's facilitator. Thank you for your cooperation. First, I'd like to introduce the attending members today.
Representing member of the Board, Senior Executive Vice President, Mr. Shimada Senior Vice President, Head of Finance and Accounting, Mr. Nakayama, Senior Vice President, Head of Corporate Strategy Planning, Mr. Taniyama. We have peaceful other representatives attending.
The audio of announcement is streamed live on this website. This is also will be distributed on demand at a later date and we ask your understanding. And after this well, the earnings results presentation, we will have the earnings results announcement of ntt.como. We would like to seek your attendance as well. Today's presentation materials are on our IR website and please refer to them.
On the first page of the presentation materials points to be considered as stated. So we would kindly ask you to read them through. After this, Mr. Shimada, Shina's Executive Vice President will explain the overview of the financial results, which will be followed by a Q and A session to take your questions. Mr.
Shimada, the floor is yours.
This is Shimada speaking. So I would like to explain The financial results for the Q1 of fiscal year 2021. I would like to take as many questions as possible. Therefore, for my explanation, I would like to make it brief. First of all, please look at page 4.
Both revenue and income exceeded expectations. That was the quarter's result. As for the operating revenues,
it was JPY 2,892,600,000,000, up
by JPY 126,100,000,000,000, JPY 1000000000, up by JPY 126,100,000,000 year on year. Operating income was JPY 486 JPY300,000,000 down by JPY11,300,000,000 year on year. Profit set a new record high of JPY 340,000,000,000 up by JPY 67,300,000,000 year on year due to the positive impact of bringing in the profit That would have been of minority shareholders by wholly owning DOCOMO. As for overseas, sales increase compared to the previous year due to the increase in the system integration of NTT DATA revenue by During the strong digitalization demand, overseas operating income margin has improved as a result of a higher revenue and NTT data as well as positive Effective structure reform initiatives, it was 4.1%, up by 1.9% year on year. Next stage, please.
I will explain the Mobile Communications business and the Long Distance International Communications segment. As for the mobile communications business, though revenues declined due to lower rates, overall had an increase in revenue compared to the previous year due to increase in hard handset sales as well as expansion of smart light business as such as finance payment. On the other hand, due to enhancing measures for further growth of Smart Life Business and expanding the 5 gs areas, operating income declined against the previous year. And by continuing the cost reductions for the full year, we are aiming for both increase in revenue and income. As for the long distance and international communications business, there was a special demand for conference revenue last year at NTT Communications, which did not occur this fiscal year and there was an increase in structural reform expenses at NTT Limited.
Therefore, both revenue and income decreased. And at the I did skip a lot, but please go to Page 14.
In order to improve the capital efficiency and also enhance our shareholder return at the Board of Directors meeting held today and up with a maximum of JPY 250,000,000,000 of JPY share buyback was resolved. And also EPS for the target of this So JPY 320 in FY 2022 and full year forecast of the free cash flow and debt repayment for the term has been well considered. And with this EPS target for the FY 2020 21 has been revised to JPY 302 from JPY 300. Our basic shareholder return policy remains the same to increase dividend in a steady manner and also to conduct the buyback in a flexible manner to improve capital efficiency. That's it from me.
Thank you.
Thank you very much. Now we would like to open the floor for questions. As for the questions as we have previously notified you, for those of you who have pre registered and connected to this Our conference system will be the ones to ask questions first. A half of the questions will be explained by the operator.
We would like to start the Q and A session. Those of you who have questions for please press Mr. Masuno from Nomura Securities, please.
This is Masuno speaking. I have two questions. The first question is regarding the overall EPS at JPY 320 being achieved ahead of our plan and JPY 250,000,000,000 of Share buyback. And also reviewing the midterm business plan, the EPS and share buyback, the information is coming in separately. This JPY 320 achievement being achieved 1 year beforehand, is this linked to the review of the midterm management strategy.
And if that's going to link to the share buyback of JPY 250,000,000,000, Can you once again explain in order of each one of them and their relationship? First of all, regarding the JPY 3 The achievement of EPS a year ahead of our plan. I would like to answer that first. Actually, We wanted to put an effort to achieve a year ahead of the plan. When we made the announcement of the last ended fiscal year financial results, this is something that we verbally have conveyed.
However, As we have been speaking with our investors, If it's not placed in writing, The factual relationship is not clear is what was mentioned to us. That is why we have actually written it down. So in that sense, the midterm management plans are reviewing the relationship to that. It is not directly related to that. So in that sense, it's just that what we have verbally conveyed to you last time, we have put it in writing as a record.
And furthermore, there's a JPY 250,000,000,000 share buyback. This basically every year we conduct a share buyback in a flexible manner And this has been our basic capital policy. So based on this, we have made the decision to conduct the share buyback. So in a sense, this is not directly linked to the reviewing of the midterm management plan. That is all from my side.
I just want to confirm, When there is a review of the midterm management plan, is there going to be more of a detailed EPS target that will be assured? Yes, probably so. Okay, understood. My question is regarding the each segment's performance for the last 3 months. Speaking, there were business segments that were strongly performing and ones that were not doing so well.
They were all mixed up. The regional communications, The IP network and the packet and the cost control was done very well. But on the other hand, as you have explained, NTT Limited, the equipment and device sales has gone down due to structural reforms and the personnel expenses went up. Therefore, it seems as the structural reform is not progressing well. So can you explain the background of that?
And for the domestic business, Of course, there was a special demand last fiscal year. But within the COVID-nineteen situation, the digitalization demand is increasing. But within that environment, the revenue has gone down and that is unfortunate. So how are you looking at this actually increasing. And the mobile communications revenue has remained at JPY 10,000,000,000.
Is that intentional or can you control that? Can you please explain about that before this quarter? Thank you very much for your question. This is Shimada speaking. So in the order of how you have asked your question Masuno san, I would like to answer.
First of all, regarding NTT Limited, it is a result that is difficult to understand. When there was the forecast that was announced, We were not able to give you the detailed explanation of the structure and that is probably why it is not clear. However, For this fiscal year's plan, there is one major factor. Throughout the year, the structural reform expense of JPY28 1,000,000,000 is what we are expecting. The last fiscal year was JPY8 1,000,000,000.
So compared to the previous year, it has increased by JPY20 1,000,000,000. The content of this in a way is streamlining the headcount that's equivalent to 1 third. And also the service migration to cloud and etcetera that's 1 third and organizations are reforming and integration IT integration is 1 third. The reach of reorganization is Europe and APAC. Of course, Such efforts were made by country, but in addition to that by region.
For example, in Europe, The U. K. And the European continent was managed separately, but that is going to be integrated. And also Australia and Asia Region was separately managed, but we are going to manage that as the one APAC moving forward is what we have started doing this fiscal year. So relatively speaking, in the first half, all of these efforts are concentrated.
And by doing so, within this fiscal year, about JPY 18,000,000,000 increase of a profit Positive effects will be generated and from fiscal year 2022 onward about a JPY 23,000,000,000 of profit boost effect is what is expected from these efforts. So for the Q1, the structural reform expense is JPY8 1,000,000,000 Compared to the previous year, it's a JPY 6,500,000,000 increase. Mainly, as a breakdown of this is streamlining. And this is, as you have mentioned, Masuno san, is linked to the increase of the personnel expenses. And in addition to that, last fiscal year, the former Arkadin Conference related services, there was official demand last fiscal year due to COVID-nineteen and there's a reaction of that about KRW4 1,000,000,000.
So in a total for the Q1, KRW6.1 billion loss was a result. And this time or for this fiscal year, the structural reform expenses all of that is incorporated And in a full year basis, JPY 22,000,000,000 of operating income achievement is the plan. So up to the Q2, the structural reform expenses will be recorded, But Q3, Q4, we will recover from that situation is what we are planning now. And in In line with that, if you look at the supplementary material for the financial results, you'll be able to see this. But what is happening for the revenue side or Sales side.
Overall, the high value added service, last fiscal year was at 39%, But it has increased to 43%. The annual plan is 39%. If you look at the breakdown of the individual high value added service, data centers and managed services compared to the last fiscal year, They are increasing their revenue of 32%, about 32%. And as for network, About 4% decline has occurred. Currently, in a concentrated manner, As for the network, we are making proposals.
And thanks to that, it was in the Gartner's Magic Quadrant, within the leader group. So the right top position is where we are for this year. Therefore, in that sense, We were highly evaluated. Therefore, moving forward, we can have high expectations at the network business. For cloud, as I have mentioned briefly, it is in the midst of service migration.
Therefore, After we migrate as a multi cloud, we would like to grow this business. So for the conventional businesses. We are compressing it. It's about a 10% decline. And regarding the communications, the NTT Communications, Japan Domestic Business, fiscal year 2020, the Q1, when there was declaration of state of emergency, there was the conferences and a toll free number of special demand that has occurred.
So compared to that, this fiscal year, we have we don't have that. So there's a decline of that part. And last fiscal year in Q4, starting with the online classes as a trigger, the system integration demand has occurred. So for fiscal year 2021, that is not going to exist. So in terms of the revenue increase It is in a small degree.
However, as digitalization advances, the solution cloud data network being expanded. And due to that, we are going to put an effort so that we will be able to achieve increase both in revenue and income. And also regarding NTT DOCOMO, this time, we have not disclosed this, but the planned It's a result that has exceeded the planned figures. As for DOCOMO, the 5 gs Expansion is done in the planned and also using the expenses in advanced manner resulted in the results of 1st quarter financial results. We To begin with, had a plan that is going to be a decline in profit, but it has been performing above that plan.
And the investment is done in advanced manner more than the fiscal year. And as a result of that, the 5 gs related depreciation or retirement expenses and the network usage fee is increasing. So a strategic the expenses are used in a strategic way. The sales related matters or the finance area within the Smart Life business, they're using sales expenses. So that is being recorded.
And as a result of all this, the 5 gs Networks dedicated spectrum, the base station. DOCOMO, an accumulated matter, has constructed several 10,000, but the competitors are 1 third or one fourth of that. And so the light speed of these stations, DOCOMO is constructing them in an advanced manner. Thank you very much. If that is so, where it says the decline in profit with Communications Limited and DOCOMO, It was in line or there was an extra.
For NTT Limited, it seems like the number is bad. However, this The CEO changed to Mabito Dabin. But before we enter this fiscal year, Regarding the plan, we have had thorough discussions and discussed that we need further Streamlining and that has been reflected in this current plan. So we are progressing in line as planned. That is same for entity communications and limited too.
We would like to take the next question. Ando from Daiwa, please. Well, Ando speaking, can you hear me? Yes, we can hear you. I have two questions as well.
The first question I have, and well, I was really watching the press conference. And once again, I'd like to really ask The following question, NTT.comor, KPI, subscriber numbers and also the 5 gs and also in the revenue. And as for these four factors, well, from the entity holding perspective, well, how do you really evaluate the progress with spec duties or KPIs? Shimada speaking. First of all, With respect to NTT DOCOMO, with respect to Ahamo, As has been well mentioned by Mr.
Sawada at the press conference earlier, and RMB 1,800,000 The contracts have been really well signed. And so we are thinking that we are making steady progress. More in corporate terms, in terms of ARPU and others, Well, there was some perception that Ahamo will bring down ARPU, but well, actually in the 20 giga. Well, we have this for kind of the upselling. And particularly, with respect to Ahamo, Approximately half of these people are in the 30 to or below or younger.
So in that sense, We are really making the progress or the growth in line with our expectation or in a very well steady manner. And there are Some key points and the businesses in Smart Life domain and particularly finance and settlement or payment related and in the next 4 quarters. Well, JPY 2,000,000,000,000 at the overall sales has been achieved. And compared to the previous year, Approximately, it was 30% of growth or it has been multiplied by 1.3x. And so going forward, This finance and payment related service is expected to grow and we have already observed this kind of design of the potential growth.
So in that sense, While there are some areas where we were behind gigabyte competitors and in order to catch up with them, while cost has been incurred to a certain degree. But those are for the Well, the retail outlets who are really having these kind of the businesses and we are coming closer to the number of those of the competitors. And so we think that the steady growth has been achieved. As for the churn, We have a slightly worsening trend, but it has been maintained at a relatively low level. And so we are not so much concerned.
And that's what we can say about this. And Mr. Ando, do you have any specific theme that I should cover? And we do have the earnings results announcement from NTT DOCOMO. And so I think we'll just our brief equity overview could be just fine.
And the second question, and you have explained the results by segment. And well, the regional communication, I don't think you have made much of the reference to the original communication looking at the numbers. And fixed end voice for the communication revenue is not really declining too much. And so it was difficult to understand 100% fully. But as for the regional communication, Is there anything that you would like to really mention about the business performance of this segment?
Regional Communications. Net adds of the Hikari business And the churn has been reduced. So steadily, we are really adding the number of contracts. And particularly, in the last fiscal year, because of this remote work environment, And we had a significantly higher level of demand. And so IP package revenue were both for the NTT East and West, And we have seen a substantial work growth, which has resulted in a big sort of drive and the driver too will increase revenue and income.
And in the Western Japan World West, The contact business, the subsidiary company, has seen a significant growth in revenue. And because of the COVID-nineteen related to the response by the call centers And there was the increase in the demand for such and also the e books, so mare. I think what this is These were 2 businesses, half already made a contribution to our income growth. And the fixed and voice communications related, And we have seen a smaller sort of decline compared to the last year. And well, this is Taniyama from the corporate strategy planning, and I think there is a difference between World of World of East and West.
And the reason why we have the smaller number of All the fixed voice revenue decline in East, and we have some positive because of these other games. And so because of that, we have some slight difference between NTT East and NTT West. Thank you for that. Thank you, Mr. Ando.
I'd like to take the next question. SMBC Nikko Securities. Mr. Kikuchi, please go ahead with your questions. This is Kikuchi speaking.
Regarding the financial results, all of the questions I wanted to ask was already asked by the previous people. But regarding the management, And the last result announcement held in May onwards, Shimada san, what have you been doing is what I would like to know. Mr. Kikuchi, thank you very much. It's not that I was Daydreaming every day.
It's just that, well, there are things that I can share with you and there are things that I cannot share with you And there are things that we're doing that we cannot share with you also. In fact, Due to the fair study meeting on ideal way of ensuring fair competition, there are some delays in what we can share with you. And regarding the discussion of the content itself, it is progressing. At the current situation, when we'll be able to make the announcement will all depend On when the report will come out from MIC? So I cannot say anything clearly yet.
But we are working under management that we will not fall behind schedule. So in that sense, From next fiscal year onwards, we would like to make it a way that we will be seeing a sure effect. And the questions that we've been receiving from you previously regarding the synergy effect and others, We would like to make it a way that we'll be able to give you a specific explanation and I kindly ask you to Understand that. The second question is the securitization of the assets. I believe that you are going to actively progress on that.
I looked at the briefing session material, but there was not Much of mentioning. So was there not many of activities in the last 3 months? In each telephone
offices,
And the towers on top of the base stations or telephone offices, you were going to carve them out, I believe. Can you explain that? What we have started is that the off balancing the data center assets. 1, we have already made an announcement in India and Mumbai. The Tokyo Century has a 75%.
Well, we will collaborate with them for the data center there. And moving forward within this fiscal year, We would like to make things more clear. So data centers are for balancing. It will be a more of a medium term initiative. And I believe that we'll be able to come to a time that we can give you explanations.
And related to data centers, This fiscal year, it's about JPY 130,000,000,000, JPY 140,000,000,000 of investment with our own capital, which is in line with the previous years. But for the external capital, We would like to bring in about 1 third of the required capital from external sources or third party capital from External sources, which is about JPY 200,000,000,000. So in total, that amount will be invested in data centers. There is a demand for data centers. So for the new data centers, we'll bring in the 3rd party capital.
Management and operation of the data centers will be done by NTT, but we will grow it in that way. And regarding the existing data centers, We will be managing the data centers. But where it is necessary or how should I say this? The data centers that can be off balanced, we will off balance them. In that sense, the structure of the network needs to be considered.
And so, we will determine which will be kept with us and which will be off balanced. And as for our real estate and property assets, this is related to Urban Solutions Group. And this year, as for selling the real estate, it's about JPY 400,000,000,000 of our real estate is a plan to be sold. That is because the housing Our property is it rotates, but for offices, depending on the area Or how are we going to consolidate our locations depending on that? How do you like to replace the assets?
Or If there are real estate that's better to sell, we will and we would like to optimize the real estate assets. And also that's about it. Thank you very much. That is all. Mr.
Kikuchi, thank you very much.
We now like to take the next question. And Tanaka san from Goldman Sachs, please. Well, thank you for the opportunity. Watanaka from Goldman Sachs. I hope you can hear me.
Yes, we can hear you. Thank you. With respect to NGG Limited, I have 2 questions. The very first question, once again, I'd like to seek your view Earlier, in terms of the restructuring cost and also the effect of the reorganization has been well mentioned. And well, you are really expecting to have stronger sort of effect in the next fiscal year.
And the restructuring cost, KRW 28,000,000,000, well, in this fiscal year and after spending this much, Well, in the next fiscal year and beyond, do you think this is going to be well reduced? Or do you have to keep that level of the investment? Of course, this is something about the future, but how should we look at the restructuring related cost? This is Shimada speaking. To As for the restructuring and the structural reform, we have been doing this in the last 2 years.
And in that sense, With respect to this scale of the structural reform, we would like To end this by the end of this fiscal year, hopefully, however, with Related to IT, and as I have said, well, reorganization, if that is being done, and we may have to review, and that could be required. And so in that sense, rather than the structural reform by the strategic investment And also some spending might be more necessary to a certain degree. And also as for the value business deployment, and that's something we need to really consider and look into. And the skills of the personnel is really well kind of attached to the business itself. And so the human resources might be replaced depending on the business we are to embark upon.
But we do not really expect to see the same level of disbanding in the next fiscal year. That's our sort of the observation? Thank you for that. And the second question, high value added services is showing a strong growth. And of course, there is a growth from the rebound of the world COVID-nineteen and it is not going to continue as it is.
But well, The outlook for the Q2 and beyond and by product, you have really well shown the break the sort of the results by product but not by region. And if you could just give us some kind of image of how this has been growing? Shimada speaking. Related to datacenter, there are not much of the regional variances or differences. However, By region, where we see the impact is this sort of The areas where the higher impact or the stronger impact from the COVID-nineteen is affected because, well, Naturally, there is a negative factor for the sales activities and others, and so that has been the sort of the impact.
However, going forward, What we need to reinforce a little more is the U. S. In case of Europe, The UK and Germany, where we have bigger markets, and we need to really upgrade our efforts to reinforce the business here. And so of course, due to the COVID-nineteen or pandemic impact And also in terms of the market scale, on our part, we do not have a higher market share there. And so we would like to really focus on these regions to really accelerate the growth going forward.
Thank you. Tanaka san, thank you very much.
I'd like to take the next question. BLA Securities and Mr. Kinoshita,
Please go ahead.
This is Kinoshita speaking. Can you hear me? Yes, we can hear you. I have two questions also. The first question
is a bit detailed. However,
the non operating area, The financial income and equity method applied income is improving than the previous year. Is this a one time effect? Or what is the background of this is what I would like to know? That is the first question. This is Nakayama from the accounting finance and accounting.
With the financial income is a JPY 6,500,000,000 increase year on year. We received the dividend Last fiscal year, we have acquired the shares of Toyota last year and we have received dividend from them, those shares. So that's about yen 4,000,000,000 increase. And also equity method, The Tokyo Century lease, we have incorporated their profit. So basically, naturally, Organically, these increases are occurring, yes.
That's the correct understanding. And my second question is you have announced to conduct a share buyback and in an annual basis, you will do that. But looking at the past Track record, I believe that announcement timing was earlier than the past years. It's up to next March 31. However, Do you have any thoughts that you would like to conclude it as soon as possible?
This is Shimada speaking. No, we don't have such intention at all. It's not that we want to do it quickly or as such. No, we don't have that intention. We're just naturally going to conduct the share buyback.
So within the fiscal year, you will be conducting the buyback. Yes, you're correct. Okay. Thank you very much.
Thank you, Kinoshita san. So we would like to move on to the next question. Takahashi san from UBS Securities. Please. Takasa, we don't seem to I have two questions.
The first question is with respect to the review of the EPS and the point of clarification. And while the event to make our entity DOCOMO, a wholly well owned subsidiary company, and then automatically, you will have further boosting of EPS by And based upon that, the basic starting point is For JPY 320 plus JPY 50 and JPY 317 might be the starting point. And there has been no change in terms of direction to be pursued in the midterm by DOCOMO. And well, can we just Take this view or if there is any different way to look at it, what are the factors which are you assuming And that you will not be really well in line with that. And basically, the target of FY As for the review, at this point in time, what we are thinking is FY2023, well, number is to be reviewed.
At that point in time, from your side, and well, people are really were saying that So we should have this plus JPY 50. But on our part, basically speaking and this is one of the forms of the M and A. And so inclusive of the M and As, well, we were saying that the target is JPY 320. So it's not that we could just add JPY 50 on top of the JPY 320. So that's what we would like to really well say.
But of course, based upon the feedback from your side, We would like to really well reflect your views. And then as this appropriate timing, we would like to really announce that review numbers. So may I ask a second question? And as for the PSTN migration, and January 2024 is Timing and so it is slightly well just into the future. But what you are really assuming the potential financial sort of the impact, What should be the potential financial impact from this migration?
Shimada While speaking, PSTN migration, financial impact is not really expected to be large. And so basically, within this for the depreciation, we will be able to manage and accommodate. And so it's not that We are to add on anything new on top of this. So we don't expect, What major financial impact from this? That's our understanding.
And the voice Well, telephony or voice communication along well, distance communication, the unit price is expected to go down. And also, there could be some impact on Your revenue, what do you think of this? It is exactly true that And so we have we'll see much of the reduced on a volume based trial rates And then it is basically based upon the basic rates. And so, of course, it is going to be declining. But in our view, it's not going to be a significant impact in any way.
Thank you. Thank you. Thank you, Takahashi san. We now like to take the next question.
From Credit Suisse Securities, Mr. Eguchi, please go ahead with your question. This is Eguchi speaking. I have a question regarding NTT Limited also. This time, You are conducting structural reform and probably from next fiscal year onwards, the structural reform expenses will be recorded.
Looking at the midterm operating income margin target, what is the progress? Maybe you are Thinking of some additional expenses for the structural reform, but I'm just wondering at what point is it going to get close to what You are expecting. If you can explain it including the time line, sense of time line, it will be very helpful. Thank you very much for your question. Basically, The current structural reforms that we are conducting and including such efforts, The operating income margin target of 7%, the road to achieving that, we are on track.
At this current timing, conducting the structural reform, Well, in the last two years, we have changed the organization. And in a way, We were integrating the companies with subsidiary companies attached to them. So the brand and the organization itself at each country, as a unit, The integration process is close to completion. However, in order to deploy the high added value business Rather than the just integrated organization, we wanted to make it into a better organization. And in order to achieve that, We have decided that the structural reforms should be conducted this fiscal year.
It is difficult for me to say that the process is accelerating. However, at least regarding this fiscal year's Planned target, our understanding is that it has become 21 that they'll be able to achieve those targets. And based on that, in fiscal year 2023, we'll be achieving 7% will be the target. Therefore, for the It is one of an important key position in order to achieve the midterm plan for the global business. And the second point also is regarding the overseas business including NTT Limited.
Well, last year, due to the COVID pandemic, the whole world has changed. And how the companies are investing towards IT has changed too. And I think your company has done a structural reform in a good Timing. And I think you're in a phase now that you can actually go with the momentum. And then you did another sector reform and then you changed the management again.
So it seems that the governance from the holding company in Japan Is that fully being conducted? I thought had some concerns regarding that. Thank you very much for your concerns. And this spring, the NTT Limited's CEO has changed. And In order to lead this integration, We thought that having Jason taking over, it is easier to integrate.
However, in order to go on to the next phase of growth, Integration from the phase that we put importance on the human relationship, We need to change the talent to people who can overcome
is just to deploy the
new business. So we have been selecting the talent in a strategic manner to do so. And thanks to those efforts, NTT DATA for digitalization And it's the base of the global business and also we can say that there's strong demand for the digital services. Therefore, the managed services demand is becoming stronger. Therefore, as you have mentioned, As a timing for structural reform, we were able to do that in a good timing and meaning that changing the human resources and others.
And this fiscal year, we would like to come out with a certain outcome. And if you can bring up the margin to 6%, we will be able to see the next phase of the prospects. Okay. Thank you very much. Mr.
Eguchi, thank you very much.
We now would like to take the next question. And KITSAKA san from PMJ, Morgan Stanley, please. Well, its sake speaking. I hope you can hear me. Yes, please go ahead.
I have one question. So far, where we were, the NTT DOCOMO was a separate well listed company And then investors had a very high level of interest in NTT DOCOMO. And now you are integrated and also what the And the DOCOMO is generating in terms of profit is accounting for about over a half and mobile world competitiveness and also the recovery of the limited and in the management elements. The contribution ratio of each individual business seems to be getting smaller. So what I'd like to ask you is, Vis a vis well, on the having the communication vis a vis shareholders and investors And more on a broader sense of the management of the entity group, what would you like to really emphasize?
And on what point You would like to be evaluated. And so I am supposing that you're really going to be more creative In conducting communication, whether you are satisfied with the way you are having the communication and of course, the stock price is for to be determined by the market. But Vis a vis the NTT shares and what are the sort of the factors to drive the investors to really invest in the shares of the NTT. And so what would be the sort of the major So the focus point of view of our other communication going forward. As I have said earlier, ntd.com or NTT Communications and NTT Comware 2B were integrated and 2B will work for the enterprise businesses And also to enhance the efficiency of the network utilization, I think that could be, well, the extension of the existing line of the thinking.
And I think, well, Kusaka san and others might agree that, that would be the strategy. And so in that sense, well, how to really come up with the scope of the new businesses and that's going to be an important factor. On IR Day, I was really well I am planning to really well talk about this. Carbon neutrality has withdrawn much attention. And on our part, well, last fiscal year, while environment vision of NTT Group was announced and 30% of the energy consumption will be supplied by the renewable energy in 2,030.
However, looking at the trend in the society, this wouldn't be sufficient enough. And so environmental factors It's something we should look into. And also on our part, we are engaged in energy businesses and also renewable energy and something like micro grade, what kind of stance should we really take vis a vis these words? And this is something We are really asked to really come up with some answers. And so our environmental vision And to what extent can we consume or use the renewable energy?
And at what point in time Can we really achieve the carbon neutrality? And so centering around that axis, Well, how we'll be able to really deploy our energy business. And all in all, I hope that we will be able to really well talk more about what we are going to do on our IR day. And so in Healthcare Business Domains And well, different group companies are engaged. And so with the data driven access, How should we really organize ourselves and what about the drug discovery and how we will be able to really develop the businesses.
And we would like to really sort out and organize our thinking so that we will be able to really have the better communication with investors. It could be a little difficult for us to really provide such information overnight, but I hope that you will wait for us to We represent that kind of information at a later date. Thank you. Kusaka san, thank you very much.
Citigroup Securities, Mr. Tsuriuo. Please go ahead. Thank you very much for this opportunity. This is Atoro speaking.
I have two questions. Many of the questions I wanted to ask have been already asked. So this may be a very minor question, Let me confirm. It is the progress of the cost reduction efforts and the content. It's in the supplementary material.
And I think the Q1 is always a slow start. But this time, you're planning for a JPY 25,000,000,000 level of cost reduction. You did do that. And where is this going to come out from? And moving forward, how is the cost Going to be improved.
I would like to know of your outlook on cost reduction. This is Shimada speaking. Well, this first quarter's cost reduction, It's the same as the past cost reduction initiatives, meaning that About 40% with facilities and equipment and for the sales related 40%, Personnel expense is about 20%. The larger part that is generating that is DOCOMO from DOCOMO. Okay.
Understood. So for the remaining three quarters, I should look at it as what has been done up to now same as what has been done up to now. Okay. The next question is towers curve out. There was A question already asked regarding this from somebody else in the West Japan, moving NTT West.
Moving forward as an NTT Holding Company, How would you like to curve out the towers? I think the Capital allocation, the holding company can control it. So I just want to know your thoughts. So with this curve out that happens, we will know about by towers strategy, but I would like to know about your thoughts on this. This is Shimada speaking At NTT West Tower, we have started the carve out.
But also as NTT East, we would like to consider it. How are we going to treat the DOCOMO part is something that we need to review in specific terms moving forward. However, one major factor is that regarding J Tower, We are a large investor
for them. So
Currently, the 5 gs base stations within the new spectrum, We have already installed several 1,000. But moving forward, how are we going to newly Construct the base stations, we need to review that first. That is all. So the pricing when you do the Carving out per tower, if you have any further thoughts, can you share that with us? That is difficult to comment.
Okay, understood. Thank you very much. Mr. Cuduo, thank you very much. Now we would like to take the next question.
And Morioki san Efrem were SPN Securities. SBI Morioki. Yes, we can hear you. I have two questions. And Ahamo has been well performing strongly in DOCOMO.
And from the group perspective, well, the Any change in terms of the request from this holding company to the NTT DOCOMO? And it seems to be somewhat lacking behind In terms of the Smart Life domain, and that was a sort of comment made, in what areas do you see that while the NTT DOCOMO needs to really catch up. And also, well, I think there is going to be the sort of profit or benefits of integration from NTT Communication. And so where are you going to really reinforce the foundation and any changes? If you could just enlighten me on that.
And Shimada speaking. First of all, With regards to Ahamo, the effect from Ahamo is really significant, I think. And well, constantly, M and P has been well negative. And actually, Well, Ahamo has really well stopped that trend. And within DOCOMO, The mindset of the employees of NTT DOCOMO, and I would suppose there has been a significant change.
So Well, they were just thinking that it is really natural that we are seeing this sort of decline in market share, but rather, well, they are to really increase in market share. I think while the Ahamo has been really the big factor to enhance the motivation of the employees. And I think was still most significant impact. And so within NTT DOCOMO, Their really well mindset and willingness to win against the competition That has become stronger, which is very important. And so we are really well expecting this to really well come more Well, from the holdings perspective, also for the Smart Life business domains, there are some areas where we have the higher profitability and there are some areas which are not so profitable.
Having said that, In terms of one unit of the customer, to what would be the sort of the scope of our offering? And from that perspective, whether we should be focusing on center areas or should we have more broader scope, And I think, well, that's something what NTT DOCOMO is really trying to decide on a group wide basis. If we can really support them in identifying that, that would be very well Helpful and effective. And so in the very first place, finance And payment area would be the priority area. So we would like to really work together with them for that.
So do you think that there's going to be more of the cost to be incurred for catch up? Rather than catch up And about the settlement or payment areas, We are almost becoming the size on par with those of the competitors, but in enlarging the scope, And a kind of upfront investment might be required in some cases and I think well this is where they are. Thank you. The second question. In the Q1 of the previous year, well, because of the COVID-nineteen and the revenue of JPY 70,000,000,000 And also the impact the income was for JPY 10,000,000,000.
That is the sort of impact. And do you see any changes in terms of the impact? Well, is this becoming larger or smaller? And Taniyama from the corporate strategy planning, I'd like to answer to your question. And well, in terms of revenue, JPY 20,000,000,000 impact on revenue and JPY 10,000,000,000, well, domestic and JPY 10,000,000,000 overseas.
And as for the domestic, Well, the international roaming of DOCOMO and Urban Solutions and Hotel Conferencing related revenue, Well, that has resulted in JPY 10,000,000,000 impact. And overseas, India and Indonesia, because of there were significant impacts from the COVID-nineteen and we Some decline in SI revenue and as reported for profit and well, JPY 7,000,000,000 impact. And for that, overseas, Basically speaking, where we had minor impact and well, the domestic roaming and also real estate, our impact has resulted in this RMB 7,000,000,000. It's not the reversal. And so JPY 90,000,000,000 were in revenue and also JPY JPY17,000,000,000 will income on a yearly basis.
Well, This fiscal year, the impact of that is JPY 10,000,000,000 of revenue and JPY 7,000,000,000 in income. And JPY 70,000,000,000 last year, then we have just for JPY 20,000,000,000. And as an operating income, well, we have just a JPY 7,000,000,000 impact this year, but against JPY 10,000,000,000 next year. So Visib, the previous year, you are having sort of the positive. And so you have JPY 50,000,000,000 reversal The revenue and so yes, we're positive of JPY 50,000,000,000 and also in terms of dividend income positive JPY 3,000,000,000 impact.
And thank you very much, Morioki san. Any other questions? Those of you who have questions There seems to be no further questions. So we would like to conclude the briefing session for the financial results For the 3 months ended June 30, 2021, and we would like to reorganize the evo briefing session For NTT DOCOMO, those of you who will be able to attend, well, please keep your connections. Thank you very much for your attendance.
Thank you.