Thank you very much for joining us today for NTT IR Day 2024, despite your busy schedules. My name is Nakamura from NTT. I will be moderating today's event. Thank you. Today, we have many people joining us, both in person and online. We will be holding a presentation on a topic of great interest to investors, followed by a Q&A session with you. And also, we will have a comprehensive Q&A session that we do not limit the topic. So I hope that you can stay with us till the end. The event is scheduled to finish around 6:00 PM, Japan time. In addition, we plan to distribute the event on demand at a later date. We seek your understanding in advance. Regarding the materials for today, it will be posted on our company's IR website.
At the end of each presentation material, there is a disclaimer, so please read through them. Without further ado, we would like to go into the first session. Just a moment, please. NTT DOCOMO, Inc. President and CEO Yoshiaki Maeda will present and explain consumer business growth strategy and receive your questions at the end. Mr. Maeda, please go ahead.
Good afternoon.
Good afternoon. My name is Maeda. I'm very grateful for this opportunity today. I would like to talk about consumer business group strategy at DOCOMO Group. I look forward to the session, inclusive of the Q&A session to follow. This shows you my background. I've... My background is reported. I joined Recruit, and then in 2000, I joined DOCOMO. As you can see, I have spent 24 years at DOCOMO, so I'm not a job hopper. I hope that I'll be able to stay until the very end. Now, in the 2000s, I was involved in the i-mode service delivery. I was responsible for planning and operation of i-mode-based services. Now, from about 2000 onwards, I was involved in Smart Life business services. I was involved in planning and designing of those services.
For the past ten years, I was also involved in d POINT, membership-based DOCOMO economic sphere. I was very much involved in the growth, in the growth of these economic spheres for DOCOMO during 2010. In June, I was appointed as the President and CEO of DOCOMO. Let me talk about vision, based on which I'll be operating the group. Now, the new DOCOMO group. I promise that new group will work together as one to demonstrate its value, and we will continue to grow. To achieve this as a group, what are our core values? I've compiled these thoughts into the form of new DOCOMO Group vision. We at DOCOMO Group have transformed the structure of the industry by evolving technology, co-creating value, creating value, culture, and new value that is not taken for granted.
So the group vision is foster new connections with technology and resources, bringing by effort, effortless happiness to the world through exciting value creation. So what are we doing? We believe that DOCOMO- we can transform the structure of the industry by evolving technology, collecting value, creating a culture and new value that is not taken for granted. We also believe that resourcefulness is to take on challenges with a sense of ownership and respect that has enabled us to create new value through our commitment to connections. Now, in compiling our group vision, we would like to focus on the thought of connection, which has been a core domain of DOCOMO Group since its establishment. In order to further solidify this, we would like to create new connections by mobilizing all the technology and human resourcefulness that the group possesses.
Please allow me to explain what the term connection means. Connection does not just refer to the transmission of information. Connecting at a high quality level, strengthening bond by sharing important things with family and friends, and creating and nurturing new value, combining different values. The concept encompasses all of these thoughts, which I've just alluded to. The DOCOMO Group is committed to creating various values and contributing to the realization of an effortless society by going beyond the mere connection of information transmission. We will continue to create the value of connection with consumers, corporate customers, community members, and group partners, and expand them into their respective domains. ... The field of providing such value is not just limited to Japan. We will continue to expand this concept around the world until it becomes a common practice.
Expanding the value, connecting together with stakeholders, and spread the value that not only in Japan, but eventually throughout the world. We will work as one based on this concept, and bring about efforts and happiness to the world through exciting value creation. Today, I will talk about consumer creation, consumer business growth strategy, which I believe is of much interest to investors. First, let me talk about the network, which is the core of all our activities. When I was appointed as the president in June, I mentioned that telecommunications service quality is an area that we will focus on in particular. There are two main points.
First is to quickly improve the quality of the customer experience and become a carrier the customers can feel is number one in telecommunication services quality. The second is to simultaneously improve the performance and cost efficiency of the network equipment, which we believe will be part of the process of achieving this goal. Let me first talk about our efforts to improve customer experience quality. We plan to expand Sub-6 areas, mainly in the urban areas, by 10% from April through August of 2024, and by 30% by the end of fiscal year 2024. That is the plan that we have.
In addition to the expansion of Sub-6 areas, we are improving the quality of the customer experience through a combination of area tuning and the average throughput of the Yamanote Line, which is one of the most important railway traffic lines, improved by 20% from April to August 2024. We have also improved the quality of the customer experience around many important stations, including Shibuya, Osaka, and Nagoya railway stations. As you can see from this area map, the Sub-6 area will continue to expand steadily, and we will continue to provide communication service quality that will satisfy our customers. Point two: As I mentioned earlier, we intend to aggressively expand Sub-6 compatible areas in order to promote high speed, high capacity services, and this will require a greater number of base station devices.
Our policy is to procure the latest equipment offering high performance efficiency from vendors in Japan and abroad. We have recently procured equipment from an overseas vendor to replace base station equipment, which is in the early stages of the 5G era. In addition to the capacity measures, which I mentioned earlier, we're also working on procurement to increase the efficiency of area construction, which will lead to a reduction in total cost, and in fiscal year 2025, we plan to fully introduce vRAN using virtualization technology, and we plan to achieve a strong 5G network through the best mix of superior products.
Next, I would like to talk about three points related to our strategy initiatives in the consumer business: consumer customer base, mobile communication, ARPU, and evolution of growth areas. First, I would like to talk about our overall strategy for achieving growth in our consumer business. We have two main customer bases, the 100 million members of d POINT Club membership base, and the 43 million telecommunication service customer base. We will expand our share of the highly profitable telecommunications customer base, stop the decline in ARPU, and increase the profitability of the member base by expanding our business in the entertainment and finance field, centered on d POINT. Entertainment and finance are areas where DOCOMO's existing strengths come into play. We will create fans who join DOCOMO through sports and live events, and increase opportunities to come into contact with financial services through d POINT, d Card, and d Payment.
Through these efforts, we will create a strong engagement with our customers and connect them to opportunities to use other services, including communication services. In addition, it is important to grow with our partners, such as our merchants, in order to grow in the finance field by having our partners, a number of customers and sales, increase. And we will enlarge this virtuous cycle through our marketing solutions business. With this strategy, we will strengthen our customer base and increase our revenue. I will talk about each of these in more detail later. And this is the specific revenue scale we are aiming for. With regards to consumer communications, due to decline in population and the impact of a service termination of FOMA in twenty twenty-five, to a certain extent, we expect the revenue to decline.
However, we will stop the decline as soon as possible, as well as expand revenue in the Smart Life business centered on entertainment, finance, and marketing solutions, with the aim of increasing revenue in total over JPY 350 billion in FY 2027. Now, I will explain the telecommunications business in terms of both the customer base and ARPU. First is the customer base. Considering a decline in the domestic population, we believe that it is time to thoroughly focus on acquiring a customer base that will form the foundation of future revenue and expanding our market share. In particular, even currently, we have a market penetration rate close to 40% among the young and middle-aged group.
However, we want to increase the number of loyal users among young and middle-aged group, who use a DOCOMO service actively, in addition to communications, and we want to increase this age group of DOCOMO retail subscribers to more than 30% by fiscal year 2027. This is the current situation regarding our efforts to strengthen our customer base. Due to the three-tiered pricing strategy through eximo, ahamo, and irumo rate plans, which we reviewed last year, and our strengthened marketing activities, retail users' handset net additions is improving. In the first quarter, we improved the net additions by 30,000 compared to the previous year, and 80% of these are young and middle-aged group, who we are targeting at.
In addition, the churn rate for retail user handsets, which was already low compared to other telecommunications operators, as you already understand, has improved compared to the previous year, achieving a level of 0.66% in the first quarter. Subscriber acquisition is progressing ahead of plan. As the positive effect of expenses and measures, such as reviewing handset prices and strengthening sales promotion activities, we have seen an increase of around 100,000 subscribers up to August, especially in terms of the stores, which we're reinforcing sales staffs. When comparing the situation from April, we have seen a 50% increase in port-ins in August, and we can see the clear effect of our measures on acquiring subscribers. We will further strengthen our sales measures in the second half of the year to expand this effect.
On the other hand, we recognize that there are challenges in port-out when it comes to preventing subscribers' outflow. One is dissatisfaction with the rate plans, particularly the fact that the churn rate for ahamo is higher than for other plans. And the second is the relatively declining proposal capabilities at the important customer contact points, such as mass retailer stores. This has already been announced the other day, that is in response to the porting out of ahamo users. We have reviewed the data capacity of ahamo. When we surveyed our customers about the reasons for the high churn rate for ahamo, we found out that subscribers who use 20 gigabytes or more in particular were dissatisfied with the fact that the data volume in their existing plans was insufficient for their increasing data usage over time.
We have therefore decided to increase the data volume to thirty gigabytes from October, with no change in price. Since the announcement, we have received many positive comments from customers, such as, "I can watch videos with peace of mind," or, "This is like a plan from God." By providing more capacity, the usage environment, we are receiving many voices of satisfaction. We are not aiming for simple price competition, however, by making timely improvements to address customer dissatisfaction, we will strengthen our ahamo customer base. With regards to specific strengthening and proposal capabilities at sales channels, we will work on this by strengthening sales promotion at mass retailers and commercial complexes, as well as comprehensively proposing service mixes that is highly effective to lower churn rate by utilizing non-face-to-face channels.
Specifically speaking, at mass retailers, we will expand our sales staff and the number of stores, where we implemented measures so that we can compete effectively with other companies on the same level or above them. At DOCOMO shops nationwide, we will make use of our customer contact points to strengthen our proposal for services such as finance. And in addition, we will work on strengthening events in commercial complexes that are popular with families. We'll utilize the history response from all channels, including contact centers and digital channels, such as apps, to make proposals in a timely way. Through these initiatives, we will work to prevent churn and further improve net additions in the second half of the year.
Next, about mobile communication ARPU. We aim to reverse the ARPU trend after hitting bottom this year. While strengthening our customer base, we will steadily increase ARPU at the same time. There were many concerns about the downsell impact on individual subscribers since the launch of irumo, but we are already seeing signs of recovery. In fact, our individual ARPU is shown here on this page, and our individual ARPU is about JPY 100 higher than that of all other carriers. And we will bring it to the level of JPY 4,200 by the end of fiscal year 2027. So already, our individual ARPU is higher than the average, as you can see. As I mentioned earlier, we would like to continue to grow ARPU at the same time. I believe that we should respond to the issue through DOCOMO services.
Now, as for the new subscribers, we're already making steady progress in acquiring new customers based on small and mid-size capacity, ahamo and irumo, which is contributing to the improvement of our competitiveness against other companies. We're also encouraging upselling to higher plans by offering convenient and economical services to customers after they sign on to our contract and allow them to use more data. In addition, for customers with old rate plans, we are encouraging migration to the eximo and higher ARPU by appealing new services such as Poikatsu Plan. More customers than initially expected have chosen to migrate to eximo as a result of all these efforts. I would like to explain this about later on. Here, we show you the trend of the ARPU at this moment. The ARPU usage is increasing, correction, our data usage is increasing every single year.
We have worked on music and various contents, and there are a lot of contents, a lot of subscribers who are using these contents. We believe that this trend will continue based on the numbers that we see here right now. As a result, customers are shifting to higher data capacities for tiered pricing plans such as irumo and eximo, which are based on data usage, and the unit price for the same pricing plan is rising year on year. In addition to these data usage trends, we will further improve ARPU by proposing our entertainment and financial services in our service mix. We see positive effect on ARPU with our Bakuage Selection and Poikatsu. We will leverage these services to accelerate our upselling to eximo.
Now, as with Bakuage Selection, which we launched in April of twenty twenty-three, this has been well received by our customers, and our subscribers have now topped 2.5 million. The graph shows seven gigabytes. This is the monthly data usage limit for Gigalite. By joining the Bakuage Selection, you can see that the amount of data used by customers will be increasing. The percentage of those customers who go on to make an upsell is actually seven times higher than for customers who do not have a Bakuage contract. By having more customers enjoy our video services in this way, we will certainly promote upselling because the customers will be enjoying our services as a result. The number of subscribers to Poikatsu is also steadily increasing. We have already topped 200,000.
We aim to have over one million by the end of fiscal year twenty twenty-four. As for eximo Poikatsu service, which we launched in August this year, this has also been well received. As you can see, 30% of subscribers to the pre-subscription plan have migrated from plans other than Gigaho and eximo. So this is also contributing to upselling. In addition, by subscribing to Poikatsu, the amount spent on d-card shopping has also increased by 20%, and this has led to the increase in the financial transactions which are handled. So by utilizing services and plans in this manner, we will strongly promote an increase in ARPU going forward. We are particularly focusing on the migration rate from the old plan to eximo, and we will improve this to over 60% by the fourth quarter of 2024 .
As you can see, eximo migration has been improving each quarter. So that being the case, when will the impact of downselling of irumo be eliminated as a result of these initiatives? In this regard, we plan to have the upselling effect of eximo outweighing the downselling impact of irumo in the fourth quarter. At the start of irumo offering, there was a lot of migration to the more advantageous plans, and there was a downselling effect in the migration from Gigalite and Kake- Pake. But in the first quarter results, the average unit price for those who migrated to the new plan from Gigalite has already turned positive.
We will continue to build on this positive trend, and we will achieve a reversal of ARPU with this fiscal year as the bottom, and we will firmly achieve a recovery to individual ARPU to JPY 4,200 in fiscal 2027.
So Lastly, I will explain about our growth areas that will become our pillar for revenue increase. Among the businesses I explained at the beginning regarding our strategy, I will first explain our entertainment business. By developing proprietary original IPs such as video contents format, planning live performance and events, and nurturing artists, we will grow the business through providing video streaming and licenses, conduct live performances and entertainment, as well as enhance services for fans. And through this, we are going to aim to achieve revenue of over JPY 310 billion in FY 2027. Strengthening our entertainment business will not only lead to increasing revenue in the entertainment business, however, will also strengthen our customer base and lead to utilizing our services.
By having our proprietary original IP utilized or provide real and digital services through our alliance with other entertainment partners and having many fans enjoy these, it will generate strong engagement between DOCOMO and our customers through entertainment, which will lead to expanding our economic sphere.
... With aim of acquiring a customer base based on entertainment and creating a new trend that will lead to porting into our network, we will make the most of entertainment as our major weapon, which no other mobile carrier has. Next is the finance business. DOCOMO has built a top-class customer base in Japan with d CARD and d Payment, and has steadily grown the business. The number of d CARD members has grown to around 18 million most recently. The finance and payments transaction handled has exceeded 13 trillion JPY last fiscal year, and growth rate has reached 20%. Through collaboration with Monex and ORIX Credit, which joined the DOCOMO Group last year, we aim to become a partner in our customers' financial lives that uses the strengths of smartphones as the most accessible information tool.
We will understand our customers' needs and customers' circumstances as data, and propose appropriate financial services according to their life stage, life events, and assets. In addition to providing one of the top payment services in Japan, we also offer a wide range of financial services, including investment, loans, insurance, and accounts, and we aim to generate revenue of JPY 630 billion in fiscal year 2027 by having customers entrust all of their financial service needs to DOCOMO. Lastly, is the marketing solution business. Increasing, the usage of dPoints and payments at our merchant stores, will increase point sales revenue. And as a result of this, the accumulation of customer behavior data will enable, more advanced marketing solutions for our partners in the manufacturing and retail sectors, and this will increase marketing DX revenue and advertising revenue.
By having many customers use this solution, the partners, our customers, and the sales will increase, and we'll acquire more point sales, and we will be able to increase demand by increasing more partners. We aim to achieve revenue of JPY 270 billion in FY 2027. In relation to this, I'd like to explain the initiatives of DOCOMO Intage, which we entered into a capital alliance last year. By having our d POINT members use points and payments, as mentioned before, the payment data will accumulate. Here, in order to further advance the solution, by linking ID and POS data with all of our retail partners, purchase product history can also be used as data, which will enable the proposal of a solution that will lead to analysis and taking actions.
The solutions for retail partners can be advanced. Moreover, based on this data, we can provide the customer data analysis and communications of consumers that were difficult to have direct contact as a solution to manufacturing companies as well. As you know, Intage Group is a company that has the most know-how of analyzing POS data in Japan for a long time. Moreover, they have a strong relationship with many manufacturing companies. Through the alliance with Intage, we can further increase our strengths and provide a strong solution from upstream to downstream in the marketing DX domain. Through marketing DX initiatives and expansion of payment and point distribution, we will largely expand the marketing solutions domain. Last is the summary.
As I have explained, so far, we will update our strategies with a sense of speed on a daily basis, and aim to increase consumer business revenue by at least JPY 350 billion by fiscal year 2027. Please look forward to the future of DOCOMO. Thank you for your kind attention.
Thank you, Mr. Maeda. We would now like to take questions from the audience. With regard to questions, we will take questions for those of you who are here on site and also who are connected to us live, who have registered in advance and which are connected to the web conference system at this moment. For those of you who are on site, may we ask you to please raise your hands. One of our staff will come by with a microphone. For those of you who wish to ask a question and who are connected online, please use the Raise Hand function of the web conference system. We will call out your name and affiliation. When we ask you to unmute your microphone, please do so, and then start to speak. Also, please do not unmute your microphone until NTT has.
NTT side participant has responded to your question. If you wish to cancel your question, please push the Raise Hand button once again, if you wish to cancel the question. We'd like to take as many questions as possible from a very large number of people, so could we ask you to limit yourself to one, two question at a time? We appreciate your kind understanding. Thank you so much. So let us now take your questions. We'll go to the person in the second row. Please go ahead, sir.
Masuno from Nomura Securities. You talked about midterm strategy. You shared with us midterm vision, and we appreciate that. But let me ask two questions, if I may. First, is with regard to consumer business, and the second relates to the general ICT-related question, a more broader nature, broad in nature. Earlier, you talked about the target for fiscal 2027. Communications services revenue may go down, but others, as for others-
I wish that you were said that you've been expecting an increase. Why are you not seeing, are you not, why are you not seeing increase in the consumer business? You talked about how migration has been expanding, but can you please tell us some potential elements that will could actually be a positive upside for your consumer business? Now, 30-50 billion JPY revenue increase is expected from entertainment. How do you see the profitability? What about the operating profit, 20%, or is it 30% operating margin? Can you talk about the margins for the entertainment business? So please give us your thoughts about the consumer business. Should I ask one by one, or should I ask all the questions? Thank you. Let me respond to each question.
Okay, yes, please respond to our consumer business-related question. Well, thank you. As you pointed out, from 2024 through fiscal 2027, yes. We do expect some decline, but consumer communication business, I think, will bottom out in fiscal 2026. We hope to make that year as the bottom for the consumer business. I talked about how our ARPU will be making reversal. As you pointed out earlier, there is the population decline element, which we must be mindful of. That will have some impact. And also, in fiscal 2025, FOMA services will be terminated. So we'll be having some forced cancellations insurance at that time. So I think that represents potential downside. But having said that, from that point onwards, we'll be able to make a reversal.
We'll be able to bottom out at that time. As I mentioned earlier, the overall ARPU needs to be improved. That is what we are focused on. So mobile communication service revenue, we want to make sure that we can expand, and we believe that there is potential to expand this revenue. And during the meantime, we want to see the upside based on the Smart Life business. As I mentioned earlier, we see the positive impact from the increase in revenues in various factors behind the Smart Life business. Operating margin is about 20% at this moment. So I believe with regard to the impact of increase in revenue, we believe we will also see consequent operating margin improvement as well. And of course, it may not be straightforward.
Of course, we want to be, we want to have a higher plan, naturally. Now, today, I just want... Today, we just want to focus on some organic growth, organic business, which we're involved in right now. That is what I want to show you. As we have consistently mentioned, we believe that going forward, we will consider various ways to expand our business, inclusive of potential acquisitions. So hopefully, there will be able, it was, an even greater upside for operating profit as we move toward fiscal 2027. Thank you for the response. That was very clear. Thank you. Let me ask my second question. I think when NTT DOCOMO joined or combined with NTT Communications, we were expecting 200 billion JPY synergy based on the combination over the four-year period. That was the original outlook.
But you talked about 100 billion JPY, 200 billion JPY increase in profit for both consumer and other business. When you consider that large picture, where does today's presentation of consumer business fit? Okay, today, we focused on individual consumer business in our presentation today. But as I responded to in your previous question, as for consumer business, we have various factors that we're considering, and we also consider potential acquisitions as well. So hopefully, they will be able to realize increase in operating revenue over a mid period in the JPY 100 billion level. So within that, we achieve 200 billion JPY, we're not sure, but we hope that we'll be able to increase profit in the 100 billion JPY range eventually. Thank you. That is all.
Stop. Thank you very much. Are there any other questions? Then, this row's the person in the gray suit.
Kikuchi from SMBC Nikko Securities. I have two questions. First is regarding ARPU, and the second is related to profit. The turnaround of ARPU, regarding this, for the other carriers, well, SoftBank ARPU is not saying that they will increase the ARPU because they're focusing on acquiring subscribers, but KDDI is saying that they want to increase the ARPU, and they want to do that through the improvement of the mix, and also with each rate plan they would seek upselling. However, in reality, it has not been realized for last several years, and in your company's case, because of this background, during this fiscal year, you're gonna turn around, and from the fourth quarter, it's gonna go positive.
From the investors that are also looking at KDDI, they will think, "Really? Is it true?" That is why I want to ask several questions. On page 25, yes, this one. First quarter, it's 53% is eximo, meaning that 47%, I don't know if that includes ahamo or not in the denominator, but the 47% is irumo. And probably the subscribers in Gigaho will move to eximo. But Gigalite subscribers from here switching over to eximo, is there really going to be that much of an increase up to over 60%? I believe 60% is the total pie, but currently the Gigalite subscribers moving to shifting over to eximo, that percentage, but how is it trending?
Also on the next page, on page 26 on the right-hand side, the Gigalite subscribers shift over to the new rate plan, and it's making a positive effect. That structure, based on what calculation have you come to this conclusion? The Gigalite subscribers, if they shift to irumo, I believe that the rate is going to mostly go down, but the ratio of shifting over to eximo is increasing by large. If that is the case, then the previous pages of 53% needs to be higher, is what I think. As a conclusion, on page 26, left-hand side, first quarter, you know, year-on-year, it's quite a negative, and second quarter onwards, year-on-year, it's positive. Quarter on quarter, excluding the seasonal elements, can we expect that the ARPU is gonna go up?
Sorry for my complicated question. Meaning that at the end, ARPU improving, it's difficult to believe that, is how I feel. So as long as you continue the current irumo. Therefore, in what way, in the fourth quarter, are you going to turn it around to the positive, is what I would like to ask. Well, I would like to answer from the easiest to understand part. From Gigalite, the majority of subscribers are going to irumo, is your question, but that is not the case. Half is shifting over to eximo. That is the current situation, and that is increasing. And as you have mentioned before, the overall shifting rate going to eximo, that you're concerned, is going to be this volume.
So in that sense, this part is going to largely boost up the ARPU, and it's contributing to that. And also, for the overall structure, currently, there's 47%, 53%, 60%, what we're talking about. This is for the former rate plan. We still have about 2,500, but from the old plan, shifting over to eximo, percentage is shown here. And we have quite a large amount of stock of those pe subscribers. And within that eximo, more than half will select eximo. And regarding irumo and ahamo, sorry, this one, by the way, the remaining part includes ahamo as well, not just irumo. Having said that, where we acquire new acquisitions will be seen more in irumo and ahamo.
As I was saying, compare to the large amount of stock, the flow coming in is smaller. So by having a larger stock, it is boosting up the overall numbers. By improving the situation quarter by quarter, the ARPU is going to increase, is how we look at it right now, and we are implementing various measures so that it will be in that way. Understood. I'm looking forward to the ARPU for the second and third quarter. Regarding my second question, this time, the overall DOCOMO's profit was not the theme. However, your company, when you were listed several years ago, "What are you going to do about your profit?" was the center of discussion, as I think.
And now you're delisted, but you are making more than half of NTT's profit. So your company's commitment is something that everybody would like to have expectations towards. And this time, the communications revenue is not growing or declining, and within that, you are going to increase the profit through Smart Life business. But you are saying the several hundred billion yen increase in profit, which is more than one hundred billion yen, is what you have mentioned. But in more detailed numbers, can you explain in specific terms by when, how much? And NTT right now is aiming to increase the EBITDA, but in your company's case, maybe it's not an EBITDA, but rather the bottom line profit or the operating profit.
So I'd like to see some sort of a signal from you, the CEO. Well, as I have been explaining, towards the increase of revenue, about 20% of a profit can be gained. In looking, even looking at the current operating margin, is what I have mentioned, and that is the minimum level, and it's a sure base. However, to begin with, from last or two years ago, the Smart Life business, in order to make that larger, and sorry to repeat, but we have been saying that we will conduct M&As, and we have built up a track record, though it is not done in a speedy manner overall. However, we are planning to continue this situation. So regarding the content, we cannot share anything in specific terms. However, we are continuing our current efforts.
So including that, we would like to create an increase in profit. That I would like. I wanted to convey that to you as my intention. The current situation, it's not that we are lightly looking at the profit level. However, increasing the competitive edge and in the medium and long-term perspective, growing is important, and generating a profit this fiscal year and not being able to generate profit next fiscal year in a continuous matter is something that you're not even looking forward to. That is why, as I have mentioned before, it's first, is how can we solidly build up the customer base is going to be important first. And from the each individual customer and subscribers, how can we bring in money or revenue?
That structure is important, and creating the structure for growth is something that we need to solidify as a foundation in the next year or so, is what I think, so we are prioritizing that right now because we are in a competition, and also overall, we are facing declining population, and our market share is continuing to decline, and just leaving it that way, we'll end up saying we can't see the future, so that is why we would like to thoroughly be able to compete, and in order to create the foundation for that, we are looking to do so in the year or to next year or two, and this year, we will put a priority on that, and of course, we are aiming to also achieve the business plans as well. Thank you very much.
May I just have a little bit of a deep dive? Basically, the communications revenue, basically, you are expecting that it's not gonna grow. So if that is the case, the profit is not going to grow. So seems that the Smart Life is going to generate the increase in revenue and profit. And for Smart Life, there's existing business and M&A, and the existing business is the finance business, has the potential to grow, is what I think. And through M&A, how much of a revenue and profit are you going to make? And with the existing consumer business, focusing on finance, how much of growth are you expecting? Well, regarding the margin of the existing business, largely increasing is difficult to think.
But rather, as I have mentioned, the 350 billion JPY, about 20% is the margin, so that means that it's simply 70 billion JPY of increase. And from there, bringing it up to 100 billion JPY, we need a 30 billion JPY level of profit acquired through M&A or other means, is how we are thinking about this. Thank you very much.
Next question, please. We'll go to the person in the front row. Please go ahead with your question.
Tokunaga from Daiwa Securities. I would like to ask two questions, if I may. My first question is regarding the so-called three brands. Now, you talked about March twenty-eight. I think you have shown us an outlook for the ARPU. So these three-tier plans, you believe that based on these three-tier plans, you'll be able to compete over the next five years. I have interpreted this as you're growing confident about being able to compete with the other players based on this three-tier plan. So what about the potential risk scenario for the ARPU? Maybe there could be intensified competitive landscape regarding reducing your prices. So can you talk about the outlook for competitiveness and your confidence about the three-tier plan?
How confident are you, and what about the potential risks? Thank you.
We believe that at this moment, we, we'll be able to compete based on the structure which we just introduced to you during the course of the presentation. But having said that, as what the recent situation is concerned, there is at the high level of churn for ahamo, so we need to revisit the substance and the contents of our pricing plan, which we have already carried out. So we need to stop the outflow. How can we improve the outflow from this sector? It could be that there, if there's continued outflow, then we might have to consider potential revisiting the time plan, the rate plan rather, in a timely fashion. That is one possibility which we need to bear in mind. But at this moment, what we view is that we want to further enrich and strengthen ahamo.
Naturally, we will continue to monitor the customer trends, and if there's need for us to make some adjustments, then we'll do that in a timely fashion. Now, naturally, we want to make sure that there is no downward trend in the ARPU when we address these issues. But then, data usage trend is actually increasing overall. In the case of last fiscal year, for example, our customers' data usage has increased by 20%. Actually, 21% increase in data usage among our customers in the last fiscal year already. But we see 20% increase in data usage by the August of this fiscal year as well. So I think in principle, data usage is going to be increasing, and we believe that the overall pricing will see an upside trend.
But as you have pointed out in your question, if there's a possibility of pricing competition, then the scenario could be of... undermined. But at this moment, as far as we're concerned, we are not able to make such forecast at this moment. So that is how we see the current situation.
If I could ask, so among the KPI that you shared with us, what is the one KPI you want to really safeguard? So it's not subscriptions. So in the case of mobile communication service revenue, is that one of the most important KPI for you to protect and safeguard? Is that the case?
Well, let me put it this way. Of course, of course, if we can expand revenue as a result of increases of subscription, that would be lovely. But, but we're also after ARPU, so we're after our revenue, naturally. But as you have pointed out.
... customer acquisition is going to be a very significant point for us. That is a very important point for us. Now, we talked about the potential downturn, but then as far as the overall revenue is concerned, we're going to naturally see an increase, continue with the upward trend. But fiscal 2025, we have to make sure that the market share could also be reversed. So we're making efforts so that we'll be able to make a reversal of the market share in fiscal 2025. So we want to expand our market share, and also increase our against the structure that we alluded to earlier, and I think this will show a general overall upside. Okay, second question. I'll ask about your port-in. Page 15, you talked about in August, you saw a 50% port-in increase.
Naturally, maybe this is a very unique factor, but what did you do which led to the port-in increase in August? Maybe improve the skills of the staff? How were you able to increase port-in in the month of August by such a large number? I know that this was a challenge for you in the past. Yes, as you pointed out, we were able to have very skillful sales staffs where we carried out reinforcement. So yes, so as to sources where sales staffs were reinforced, this did have an outcome, especially among the electronics shops. Of course, we'll be making efforts to reinforce the sales staffs in existing DOCOMO shops as well. But our core target, the young people. For those young people, they go to electronics shops, they go to retailers to buy phones, to buy goods.
So it's important that we improve the performance among the staff who are working at the electronic shops and retailers. So it's important that we also increase and assign skillful sales staffs in these very important shops. Now, of course, it is important that we maintain competitive pricing plans for the handsets as well. And we've already taken those policies to begin with. So based on those activities, as I mentioned earlier, it is important that we take these various measures to improve our performance. And I think as a result of this, we were able to improve 50%... We were able to increase port ins by 50% in the month of August. We want to actually expand that to other shops, so that we'll be able to improve the overall performance. Okay. Is it ex...
When customers do this, are they switching to eximo? Yes, I think you're talking about new customers port-ins, right? So ahamo, irumo are the very largest competitor, are the largest contributors in these subscriber acquisitions. Thank you.
We would like to take the next question. The left-hand row.
My name is Tsusaka from Morgan Stanley. I have a question from the business management perspective. I may sound a bit severe, and I've been following your company for a long time. And the last management that succeeded was CEO Mr. Tachikawa. But since then, as a business management, they... It's a situation that they have not succeeded in managing the company. And in a way, compared to those days, market share is declining and degraded this company, NTT DOCOMO. And Mr. Maeda, you have been with the company for over 20 years, so you have seen all of the CEOs up to now. So up to now, what was done wrong and come about to this situation?
As the President and CEO, what kind of change would you like to bring about NTT DOCOMO and create this image of twenty twenty-seven? Because you have the negative legacy from the past, and how did it become this way? I've seen many medium-term management strategies, but you have never achieved it once. That is the type of company you are. So, and from that perspective, how should we interpret these numbers? And with what kind of change in management will enable you to achieve these numbers, is what I would like to know. Well, during the times of Mr.
Tachikawa, I just joined this company, and I was focusing on i-mode, and the company was focusing on i-mode to increase that business. And at that time, myself and including my colleagues, each one of us, having the entrepreneurial mindset, and was quite proactive of creating the business. And that was the motivation. It's not limited to the i-mode relevant people, that's for the sales side and also the network side, as well as the R&D side. So in a sense, the people who are working, including the management like us, whether they're only... Are they always being, taking the proactive, aggressive manner? But we became large at the top share, the scale became large, and during that, we have to come up with a certain level of profit, so stop taking risks.
That is what happened, is what I think. I, myself, as I have explained at the start, I'm very serious. I always talk about the technology ability and the human capability, and creating this surely is my stance. Creating the human capability is what we need to do, and leading that or supporting that as a management and is what we need to do, or else it may be difficult to go back to the growth trajectory, and I believe that is my job and responsibility to do so. I would like to achieve the plan that everybody can have expectation towards. Thank you. My second question is related to the management or a question regarding the overall DOCOMO's structure. It's quite cynical.
Within NTT Group, you are conducting consumer business, and within NTT Group, NTT DOCOMO has been achieving the increase of a scale in quite a unique way within the group. I believe this is understood by all of the management NTT Group. NTT DOCOMO has the most silo structure, and is the least opened organization. I have been had exchanges with various DOCOMO people, and that's the part that I strongly feel. Probably, that is due to the past president CEOs who were managing the business not wanting to make any mistakes. Because of that, the whole organization become quite rigid, is my understanding.
And so I wonder if there are any measures to make this rigid organization into a more flexible one, or it has been accumulated for so long that is it going to be changed, difficult to radically change? So if there are areas to change that you can... Well, or maybe my opinion is not correct, so whether that type of a change is necessary or not, including that, can you answer? Thank you for your question. I believe that there are many areas that are in silos, so I would like to improve on that situation. And you. I did mention about the human capabilities before, but we need to improve, so we have to do. It's very important that everybody is looking at the same direction.
This is something that I have been mentioning since I have assumed this position, is to start from the customer. Meaning that the customer voices that we receive, not just the division who is responding to that, but rather the whole company needs to recognize that and improve that, and work together to do so, is what is important. We can be customers as well, so we need to place ourselves in the customer's shoes and improve the situation as your own matter. There are various points that's been pointed out regarding our plan, but we are putting our efforts. In the past, the network division, as the network division, how can they correctly achieve things, is what they were doing.
And then Smart Life business, the people who are working on the developing or cultivating merchants, they are focusing on that. And as a result of these efforts, the merchants, at the merchants' store, they try to use a payment, then the communications quality was bad, so cannot use them. So who is going to respond to such a situation? That becomes an air pocket without no responses, and that is the worst situation. And that is something that we need to take care of right now, is what I think. So which store is not good in what way? Including the network side, we are surveying the overall situation, and we already have a task force to improve the situation in a comprehensive manner. And how much can we have such situations is the key.
There is always the customer voice, and we need to look at that in a overall perspective, and the organization as overall needs to understand what is said, and we are making that improvement to do so. We need to have the overall unified direction of how we're going to respond to these customer voices. Through that, what you have pointed out, that it's a silo organization and it's quite rigid, we will by these efforts, we would like to overcome this situation. Thank you. Next question, please. Please go ahead with your question.
My name is Hori from Mizuho Securities. Thank you so much. I would like to ask two questions as well. The first question is a very general question. You talk about Smart Life, which is a growth element in your growth strategy. Although it slightly resists, I think we're curious, briefly, the similar services when it comes to your Smart Life business. They're trying to add financial services and peripheral services on top of their core customer base. You took the convenience store. I think only one company is having alliance, but I think the overall direction is probably the same among the three major players when it comes to this type of business.
So that being the case, if you even if you want to enrich your portfolio, will this translate into a market where you will have one single market one single victor if they simply enrich their menu? Or as you pointed out, Mr. Maeda, because of the population decline, you cannot be overly positive about the outlook of this business. So that being the case, are you going to go on to clinch and lock in your loyal customers? As well, it's a given, so in other words, take a defensive strategy. I was wondering which strategy you're following. Are you seeking victory based on such a type of strategy? So are you going to are you seeking victory, or are you simply want to defend your current customer base?
Can you talk about your, the direction you see, and also how, say, how you see the potential growth going forward? Well, actually, I think it's not just one. I think it's not just one single strategy. In actuality, what is happening on the ground? Let me share that with you. As I mentioned earlier, when it comes to the payment services, for example, with regard to the dCARD, yes, we launched this at a quite early phase, and it is well received because it's very convenient. So we have a very strong customer base for our dCARD program. Then what about barcode payment? As you're aware, PayPay is taking a very large share at this moment. When it comes to fintech and payment, we see the market situation, which has become visible, but it's not, it's not static.
So that being the case, how can we address the market? How can we become more aggressive in such a marketplace? And by doing and through the more aggressive strategy, we will be able to optimize our efforts. And various players are, of course, making various efforts to brush up their capacity. At the risk of repeating myself, credit card is going to be the core of our finance business. So how can we expand our business based on this core business? So that is why we are pursuing Poikatsu program, for example. So through that, we hope through those efforts, we hope we'll be able to attract more customers. Also, I touched upon the entertainment business as well. In the upstream entertainment sector, we are very, very much involved. Why upstream?
Because we're still on the way. This is a work in progress, but hopefully, we'll be able to get fans who will support DOCOMO, so we'll be able to have such connections. As inclusive of the DOCOMO shops, we are now addressing these markets. Yes, this is one area where we can acquire customers. So yes, there is the population decline. We want to make sure that we safeguard our market share, and on top... And also add on larger market shares through various efforts that I just alluded to.
Thank you. My second question is this: I apologize, it's a detail. You talked about the portion earlier. We took a look at the installment pricing plan in detail. UQ and Y!mobile, they have added a 10-minute voice option, so that's the differentiation. So DOCOMO is also differentiating based on the pricing element. And little by little, DOCOMO subscription momentum is increasing. They're gaining momentum now. So can you really compete purely on the pricing element right now? Is that your thought, or do you believe that you need to add something else? Maybe. I think the benefit. First, I believe the benefit of your performance is due to the review of your handset price.
Are you going to revisit those pricing plans for your handsets going forward, or are you going to flexibly adjust your pricing plans from time to time? Is that enough for you to compete? I guess that's my question. Thank you.
With regard to the review of handset, that has led to the performance improvement. That is true, yes, so I think we did more than the competition, and that being the case, I think we're going to continue with this policy going forward. The base will remain, and I think you can expect greater customer acquisitions by reviewing pricing plans, but as far as the specifics of the pricing plans are concerned, there are elements that we're not competitive against our competition. Naturally, we have to hear the voice of our customers, and we have to be mindful of the timing, but it's important that we continue to maintain our competitiveness and make sure that we carry out review of pricing as required from time to time.
Hopefully, there'll be other opportunities for to expand our pricing plans at a separate date. Thank you.
At this point, we would like to receive your questions from those of you participating online. Okasan Securities, Okumura-san, Mr. Okumura, please go ahead by unmuting. Thank you very much. I am Okumura from Okasan Securities. Can you hear me all right? Sorry to ask from online. I have two questions. The first is related to something that has been mentioned, the growth area, which is DOCOMO's finance business. The other carriers having securities, credit, and bank, they have unified the brand, and they are rolling out the business, having a intermediate holding company. But in your case, your finance business kind of cross divisions, but moving forward, do you have any thoughts of actually unifying the brands in the future?
Before in the Q&A, you were saying that it's important to have an aggressive management style. However, regarding this finance business, what kind of expectations should we have in terms of aggressive management of the business? That is what I would like to ask about. Thank you.
Last fiscal year, the securities company or the loan company just entered our group. Therefore, it's not the situation right now that we can immediately unify the brands. However, in order to generate a synergy from them by utilizing our customer base, they want to increase their business. So we... The way of thinking is to make it into a brand that our customer base, our customers, is easy to understand. The other customers, excuse me, not.
... looking from the existing customers, but rather from the perspective of the new acquired, customers. So regarding what we're going to do about the brand is something we would like to thoroughly review moving forward, and how the governance should be, regarding this point, of course, the specialty or the characteristics of the finance business when we consider this, the organization structure that can enhance the specialty or the talent structure that will be able to handle that is something that we need to create, and through that process, depending on the situation, we may have to review the splitting or separating the companies, but of course, nothing has been decided.
Therefore, this point as well, we would like to consider it and hoping that there will be an opportunity to share something later onwards with all of you. Thank you. And the second question is regarding the mobile telecommunications revenue. Sorry, that I'm repeating my question. In this part, next fiscal year, you've mentioned that this mobile communication service revenue is going to decline, and you raised the FOMA service termination as one of the reasons. And if that is assumption, you're saying that the-- you're going to turn around the ARPU. So the positive effect and the negative effect, and what strength or what scale are they going to balance out? And then from next fiscal year, you're going to turn positive.
So, what is going to lead that? What are the elements to do so? If you can give us a clue of how that's going to work out, I will appreciate it. Okay, well, from the perspective of ARPU, as I've mentioned, next fiscal year will turn around. Well, this fiscal year is going to bottom out, so it is going to turn around next fiscal year. And also, if we look at FY 2025, from the perspective of the population decline, next year, in terms of declining, we looked at about 100,000, so it's going to decline by that size.
Regarding ARPU, what slightly exists is that, eximo Poikatsu, if that becomes large within it, as you know, there is the revenue included that we return as points to the users. So that part is going to slightly go negative. I think, if I hope this suffices your question. The FOMA's termination, in a way, forced termination, can you comment on that? Regarding the termination of FOMA, from our side, FY 2025, that will happen mid-FY 2025, so it's going to have the impact, more impact in FY 2026. That is the impression we are having. Okay, understood. Thank you. Sorry, I took a deep dive. Thank you very much.
Thank you, Mr. Okumura. Next question will be this last question. We are about to conclude the session, so this will be the final question of the session. If you have questions, please raise your hand. Please go ahead.
...
Kono from Bayview Asset Management. Having heard your comments so far, I think you focused primarily on the growth strategy, especially for top line. You've shown the numerical target. You've given us a rough image of the financial targets that you're following. What about post twenty thirty-seven? What are going to be your targets and goals after twenty thirty-seven? It could be conceptual, but I would appreciate some insight. And also with regard to revenue, not just top line, which relates to revenue, but what about how you see the strategy to grow your profits? And also, in order to solidify your profit growth, what type of human resources do you intend to prepare? Also, furthermore, what are some of the elements that are required for you to reach those targets at the end of the day?
Can you give us some specific thoughts as to how you intend to achieve these goals? I know that this is a very rough question, a very broad question, but I appreciate your response. Thank you. Thank you so much for your question. So you talked about the image of the growth after twenty thirty-seven. As I mentioned, twenty thirty-seven, we're still in the working progress as far as the growth is concerned. I think all the pieces will come together in six or seven years. Likewise, when it comes to financial business, it should enjoy a similar level of growth after twenty twenty to twenty-seven as well. So I think that's the basic concept.
But when it comes to finance business, which we have been addressing so far, and also entertainment, entertainment marketing and solutions business, what about business outside these businesses? It's important that we focus on those other sectors as well. For example, healthcare and medical services. We are promoting that at this moment. It's important that we focus on this area as well, and also energy sector business as well. In any event, it is important that we support the lifestyle of each individual customers. That is very important for us, and that is the domain which we want to expand as much as possible. So it's important that we try to expand that particular side of the business. And also, overseas business, we've just begun in earnest.
I think we need to focus on this as a potential growth area as well. So inclusive of creating new growth domains, it's important that we work with various partners. We need to work with even more, with a large number of partners. So inclusive of potential acquisitions, we should technically have a team structure which is technically equipped to address these new developments as well. So that's one topic which we are pursuing as a mobile carrier. So it's important that we also enrich our human capital. Thank you.
Does that suffice your question? Thank you very much. It is now time to conclude this session, so we would like to conclude now. Thank you very much, President and CEO, Mr. Maeda. Thank you very much. Regarding the next session, from 3:55 P.M. Japan time, after ten minutes, we would like to resume at that time, at 3:55 P.M. Japan time. We will be setting up the stage until then, so we kindly ask you to wait till that time. Thank you. ... We have completed the preparations, so we would like to start the next session here. The topic will be Regional Communications: A Growth Strategy. And we would like to provide the explanation in a panel discussion format followed by questions from the floor. The presenters, please come on stage.
I'd like to introduce the presenters today. NTT East President and CEO Naoki Shibutani. I am Shibutani. Hello. NTT West President and CEO Ryota Kitamura. I am Kitamura. Hello. As a moderator, we have NTT, a Representative Member of the Board, Senior Executive Vice President Takashi Hiroi. Hello. With these three presenters, we would like to proceed this session. Regarding today's agenda is shown here, and here, I would like to hand the microphone to the moderator, Mr. Hiroi.
Thank you very much. I'm joined today by Mr. Shibutani and Mr. Kitamura, who will be talking about the future of the business strategy for the regional communication segment. So allow me to share with you two slides, which I have prepared for this program, and I wish to speak on your behalf in a straightforward fashion. This talks about reduction of net fiber optic growth. You see that this is on a downward trend. Over 2022 to 2023, there was a very rapid reduction in the net adds and net increase. But on the other hand, market share is also coming down as well. But the others' share is not increasing either. So what has happened to the marketplace? Is NTT East the worst fiber optic net increase? Why is it reacting in this way? What is the backdrop? Next slide, please.
This shows you the cost reduction trends at NTT East and West over the past years. Of course, to begin with, from about 2018 and 2019, they carried a very large-scale cost reduction. But year by year, cost reduction number seems to be dwindling. If we exclude special factors such as inflation, I suppose that is one area, but the real cost reduction is becoming smaller. Why, why is this the case? These are the frequently pointed out questions. These are the two features of the performance at NTT East and West. When we take a look at the factors that make up the stock price, it's the growth area, data. These are very important factors that make up the stock price.
But in fact, for the past ten years, NTT East and West has carried out various efforts to increase their profit over the ten-year period, and that has really supported the stock price for NTT. This is a very basic element. They were very stable, and there was a security element. Many people feel secure. The contribution at the East and West in the regional communication could support the long-term growth of stock price. But it seems that there's now a great amount of skepticism in the marketplace. So maybe you can tell us some of the challenges that we see. Hopefully, we'll be able to do a deep dive into this issue. Then without further ado, I'd like to ask Mr. Shibutani to talk about how you see the situation.
How do you see the market situation for the Regional Communications Business at this moment? And also going forward, how do you intend to deploy your strategy for this market? I appreciate your input. So Mr. Shibutani, please, the floor is yours.
Thank you very much, Mr. Hiroi. From the holding company's perspective or the analyst's perspective, you have pointed out in a very strict way, and so towards that, I would like to share with you our thoughts regarding the management of the business. Before we go into the discussion of a cost reduction as a business opportunity, what is happening to the telecommunications market, and how are we looking at our business opportunities given this background, and from Mr. Kitamura, they will be talking about the cost reductions and the improvement measures. First of all, please look at this diagram. The telecommunications market overall, and as you, the analyst, looking at it, there is a large significant opportunity. We're at a turning point.
Up to now, the on-premise telecommunications limited to the customer site, the AI, generated AI, and the hybrid with cloud is going to be connected through networks. And the major driver is these three that I have pointed out. This is a movement including the Digital Agency, schools, universities, and companies multiple site institutions. Connecting these multiple sites market, that is one driver, and the other is the hyperscalers AI and generative AI. They are constructing the data centers in Japan from Kyushu Fukuoka to Hokkaido areas. And between those sites, the companies or enterprises are connecting. That area is largely growing right now. And as Mr. Maeda mentioned before, the retail users the network usage is significantly increasing.
So 10 gigabit high-speed internet communications is what they want to shift over to, or in the rented apartments, and then there with Wi-Fi, Netflix, they enjoy that, or they want to have a remote working styles. So having this as an environment, as a base, how can we respond to the network demand is the large opportunity. And because of this situation, as I have mentioned right now, the services for business, internet integration, the demand is including. There's one time we had a special demand in 2020, but currently, Digital Agency and from multiple site customers, we are receiving orders that is exceeding the previous year.
These are the areas that we would like to increase, and that is the major trend of the market itself. Okay, then over here. Looking at this slide, the NTT East and NTT West, the revenue structure, those who know about this very well, the fixed lines are dropping. So of course, the enterprise ratio is going to increase. However, structurally, a larger change is happening, is what was commented right now. In that sense, the East and West, a specific profit, how is this going to contribute to that? Can you elaborate more? Thank you very much. Given that, the regional communications company, what kind of portfolio they have, and what areas are they thinking as a growth area, is I would like to explain using this diagram.
The horizontal is the profit rate, and the vertical is showing how much the market is going to grow. The right bottom is, as you mentioned, Mr. Hiroi, beginning, that the growth has stopped. This is our cash cow, which is the fiber optics services and network. How much is that? Currently, East and West together is 1.4 trillion JPY. And this part, the market share was slightly declining. So how is it going to turn around is something that Mr. Kitamura will explain later. And on the right-hand side is what I have mentioned is where we can expect a future growth, which is the network area, and this is the area that I would like to continue to explain.
And on the other side, what you have interest is the bottom part, the legacy services. There's a discussion regarding the NTT Law terminating the services, ISDN, PSTN service. We will be migrating PSTN in twenty twenty-eight, and we'll also terminate the phone directories, et cetera. And so regarding the PSTN, the telephone or current customers or ISDN customers, they will shift to Hikari or Hikari Next, which is the optical-based services. And how much can they shift over to that is going to become the key. And also, lastly, today, we'd like to talk about the future new businesses.
However, scale-wise, JPY 750 billion, JPY 430 billion, JPY 300 billion, and half of that is going to be the fiber optic services. Next page, please. So as I have mentioned, the growth area, the right upper side, business areas, the multiple site customers, they're shifting over to cloud, and also, they will connect with the generative AI and AI sites as well. And the major driver will be the local governments and also the governments, GSS, Digital Agency, and the next generation GIGA Schools. We have the SINET, which is the academic network. The nationwide junior high schools and elementary schools will connect with each other. Next school year, we have the online clinic and also the hyperscalers data center.
From now, in Fukuoka, Osaka, Tokyo, Sapporo, all of those sites will be connecting, and there will be various needs that are occurring. So as you can see here, the profit base, it's about JPY 30 billion, and that is almost approximately going to double by 2027, is what we would like to aim for. And this profit, how much of... How is that going to be generated, is the next page. And that is related to: How can we minimize the investment in the network, while we can update it to the IOWN, which has a good affinity with the next generation, sorry, with the AI, good affinity with AI? There's next in A one here.
The existing is, we have the high-speed service that is provided, the optical roadmap and, and, Hikari Connect with OSC. We have this network nationwide, and we have implemented that from 2008, and that network needs to be replaced soon. So the... Meaning the existing network within the existing investment scope, we have to shift that to the next generation platform with no investment increasing, and IOWN platform in 2027 is going to be available nationwide, and that is going to, in a sequential model, connect with the multiple sites. And, fully, utilizing this setup without new investment, with the multiple sites or the data center and AI, there's a demand to connect these.
Therefore, in an efficient way, we believe that we'll be able to increase the operating margin of this part. Okay, thank you very much. The enterprise and network demand, the digitalization, and due to AI progress, there's a large demand, and this is where we can have high expectations. Next, within the overall portfolio, the consumer side, Hikari side. So Mr. Kitamura, can you explain a little bit?
Thank you. Let me take over at this point. As was explained by Mr. Hiroi earlier, there is sluggish fiber optic net increase, that is true. For the factors, one is that there was the COVID-19. There's a lot of remote work and online classes that were really very popular during COVID-19, but that has now run its course. On top of that, when we compare ourselves with competition, we're slower than our competitors in responding to the need for faster fiber services and also changes in the apartment building market. So that being the case, going forward, it is important that we expand the area for Hikari Cross area coverage as soon as possible, and we need to reinforce our sales and sales activities. Also, we need to focus on the condo market.
We want to strengthen the provision of the comprehensive bundled services to the condo market, to strengthen our initiatives in areas with high customer needs. So that is how we want to recover our market share. Also, in addition, we revisit and carry out a great review in August 2024. So we are aiming to generate 40 billion JPY in profits in fiscal year 2027, in addition to all these efforts. As far as the current situation is concerned, the net increase as of August 31st this year, we recovered to 117% of the previous year. So we've made the recovery, as you can see. Next, let me talk about Hikari Cross a little bit. As was covered by Shibutani-san earlier, video, remote work, this traffic really increased.
We need to respond to the growing need for faster speeds as a result of this increase in traffic. We need to strengthen our sales of Hikari Cross, and expect to improve our bill in cooperation with collaborating carriers. In addition to Tokyo, Kansai, and Tokai areas, we will be launching Hikari Cross service in Kanto, Kyushu area, Chugoku, Shikoku area, as well as Kyushu area in fall this year, and in many other prefectures as well. We want to use a variety of measures, so that we'll be able to aim for household coverage rate of over 50% or 60%, correction. Now, naturally, we're promoting expansion of Hikari Cross service while keeping costs low by encouraging customers to switch from 1G service.
We want to spend promotion expenses in accordance with the competitive situation. So as such, we'll be able to expand Hikari Cross, but while keeping our costs low. Next, let me talk about efforts when it comes to the condominium market over the last couple of years. The introduction of FTT, the introduction of FTTH services through apartment building-wide services, has become the mainstream in the recent years. We have, we had a service menu available for the customers, but there were issues with price competitiveness and sales methods when we compare with our competition. There were challenges, I believe. Now, since fiscal 2022, we released a menu that was price competitive. We shifted to marketing that was focused on sales through developers as well as management companies. So as a result, installment has been rising dramatically.
In addition to the condominium market, we're also expanding our efforts into the hotel market, where demand is emerging in concrete terms. We want to increase the number of units sold by 1.7 times in fiscal 2027 compared to fiscal 2023. Now, what about sales efficiency? Although the revenue per unit will be lower with the apartment building-wide service, the revenue will actually increase, since all units will be subscribed to the service. Furthermore, there is no need for individual sales to tenants because we're talking about apartment-wide service, and the service is not affected by tenants moving out of the building either. So we believe that without additional marketing costs, we'll be able to maintain our medium-term revenue.
So that is why we want to further promote our activities in this market area as well. If I could ask a question here, sir. If I could throw this at you. You're talking about high speed and also increasing sales toward the condo, condominium market. But if you face the market, it's good that if you had the contact with the market, you could have done this much earlier. Why were you behind against the competition? When it comes to the condominium market, I think we were focused only on collaborative efforts, unfortunately. So when it comes to marketing to, marketing vis-à-vis developers, we were somewhat behind. As a result, we were not able to keep up with the competition. So that's one thing, we were not able to keep up with the competition as a result.
So this applies to the ten giga services as well. But I think we were so focused on near-term cost. Our attention was really fixated on short-term cost. So that being the case, we were focused on trying to generate short-term profits. Our emphasis was really on that. So we wanted to improve, so going after a very large market and realizing efficiency, that mentality was very weak. We were not very mindful about that. Of course, we... But there's no growth unless we are able to acquire customers. So I think we need to change our mentality as far as this particular area is concerned. Okay, thank you. I got that. So you talk about the revenue side. You want to reinforce revenue side of activities.
But when it comes to profit, I think we have to be very concerned about cost efficiency improvement. So what do you see specific cost reduction efforts? Kitamura-san, can you talk about how you intend to reduce costs going forward? Okay, thank you. This was also touched upon by Mr. Hiroi earlier. You mentioned that our cost reduction efforts are now doing the thing. I don't want to give you excuses, but we had increase in, of course. We had the increase in electricity costs. There was also inflationary factors. But if we exclude that, in 2025, I believe that we'll be able to realize, we'll be able to realize a certain amount of cost efficiency. However, it is true that the amount of cost reduction is coming down. That is true.
I think that is. I think it's important that we should not just focus on commercial type of cost reduction, because that will be facing limits. We need to change the way in which we actually do our work. We need to fundamentally review our work method, and we really need to pursue more fundamental cost reduction efforts and DX and AI communication transformation. That is going to be the most beneficial element. Currently, there are more than two million applications for fiber optic lines at NTT East and NTT West each year. Correct, six million, six million. And these entail very personnel heavy operations. We need to make full use of DX and AI so that we can redesign our operations.
The front desk, which responds to customers by phone, we have found that 80% of their work or inquiries is a very straightforward inquiries, and the remaining 20% are pure applications. We will conduct web and AI-based automated response for inquiries because these are straightforward. We want to make sure that there is no personal involvement in this area. But as for applications, we want to strengthen our contact with our customers because this represents very strong, very meaningful contact with customers. We want to strengthen our contact with our customers at the application sector and increase orders through our strengthened inside sales. Now, please take a look at the right-hand side of this chart. We have the backyard, where back office processing and installation coordination is carried out. There is a team in the backyard.
Here, we believe that DX can realize zero-touch processing for relatively simple applications, such as those involving single-family homes and condominiums. These are very straightforward applications, so accounting for 90%. So I believe we'll be able to address these inquiries through very simple zero-touch processing. Also, for applications that require complex human coordination, such as applications for multiple locations and sites, then we want to make sure that we offer very meticulous services, and that should monetize. And that type of services should be monetized as value-added services. So through these reforms, we are aiming to improve profit. Correct, we want to improve profits by reducing current 14,000 front and back office workers to about half of the current workforce, down to 8,000. We want to realize 80 billion JPY of profit by fiscal year 2027. Next.
Here, this shows you the facilities-related operations. With regard to repair work reception, we will realize web and AI-based automated response, just like the operation at the front desk. We also want to realize automated inspection as well, reducing personal human intervention. Also, in design building facilities and operational work, we want to reduce work through AI and DX. And in the design for building facilities and operational work, we want to standardize the process involved. We can believe that, and we can realize error-free work and conduct more efficient operation as a result. Also, in the operation of in-house station equipment, we will aim for zero-touch operations that automate a series of processes, from fault isolation and impact assessment all the way to the recovery phase.
Through these transformations and reforms, we will reduce the current 20,000 employees in the facility operations by 25%, down to 15,000, and we can improve profits by 11 billion JPY in fiscal year 2027. This represents an 11 billion JPY improvement in our profit in fiscal year 2027. The series of operations represents an opportunity for NTT East and West to interact with customers. This is really customer experience. It is a matter, of course, that services such as mobile, electricity, gas, and water can be completed with zero-touch operations. That has become a customer. We have to improve both service quality from the customer's perspective and also service operation efficiency through these many initiatives. We want to make sure that we achieve both. Thank you for that.
If you could go back to the previous chart. Again, let us take a look at the situation from the investor's perspective. Let me ask you this: You talked about cost reduction. We've been carrying out cost reduction, and the amount of cost reduction and the impact on profit was not directly intertwined. So, can we take it the numbers you indicate customer re, cost reduction numbers transfer, will transfer directly into improved profits? Well, let's take a look at the simulation. In fiscal twenty twenty-seven, if we do the same operation, how much cost would have incurred? So it's improvement against the business as usual scenario. So the amount you see here, these represent, for example, suspension of contract workers, and so cost reduction as a result of reallocation.
These are the effects that have been captured in these numbers. Okay, thank you. I see. So for example, reduction of personnel inclusive of contract workers and also shifting personal resources. When you shift the resources, then that doesn't lead to cost reduction, right? Because it costs somewhere else. So as was mentioned by Mr. Shibutani, are you going to reassign those people to new businesses, make sure that you're able to absorb the cost, and also improve the profit? That is the scenario that you're thinking? Yes, exactly. Yes, that is indeed the case. Okay, thank you. I just wanted to confirm that. Thank you so much. Okay, next. Well, let's go back to the portfolio. We have unprofitable business. Some businesses are now aging, so can you talk about exiting from unprofitable businesses?
Okay, thank you. Yes, this shows you the exit from unprofitable business. Telephone directory services, we announced in July that these will be suspended. We are now reducing customer service and operating costs based on the mentioned plan. Also, the other relates to the electronic invoicing. We announced the review of the invoicing conditions in July of this year. With full-scale rollout of electronic invoicing from fiscal year 2026, we believe that we can optimize operational costs, such as invoice printing and mailing. So we'll be able to pursue those cost reductions in a robust manner. Also, in addition, we want to reexamine telegrams and other legacy offerings in the light of social trends and the business environment.
Through these changes and reforms, we are aiming to improve profits of the legacy business by JPY 13.5 billion in fiscal year 2027. These are our goals. Next. PSTN is another example, so please go on.
This is a migration to alternative PSTN service. Currently, the INS-Net and analog telephone service revenue base is around JPY 350 billion from basic charges, and the 2035 where the copper line facilities will reach their limit, we hope to improve the profits by drastically reducing the cost of copper line facilities by switching over fixed-line telephones that use fiber optics and wireless technology, so for the time being, the customers moving or the opportunities to repair, we would like to use those opportunities to encourage customers to switch.
And for ISDN as well, we announced the termination of it in March 2024, and last week provided information on the revision of services and the shifting to alternative services. Therefore, moving forward, we will consider reflecting the rising costs of electricity and labor expenses and fees in line with the suspension of new subscription for landline phones, and we'll maintain the revenue base of JPY 350 billion to the maximum extent. Understood. Up to now, the enterprise network revenue trend and also the consumer side of fiber optics sales strengthening that and reviewing the cost structure was mentioned, and also for the slightly legacy services and business withdrawing from them or various measures are planned right now, and that has been shared up to now.
Now, from looking at the overall portfolio, the upper left, in what areas as a new business you're going to take on the challenge? Mr. Kitamura, Mr. Shibutani, I would like you to comment on. From my side, as NTT West, we have the company called Solmare. Allow me to explain a little bit of this company. This entity, Solmare, currently has annual sales of approximately 80 billion JPY, and this is to be expanded to 100 billion JPY by fiscal year 2027. Currently, they have the service, Comic SIM, and the monthly users are over 40 million and handles 1.4 million books in stock. This is the largest ebook. It's grown into the largest ebook store in Japan.
They have original comic production to license and development, so they have comprehensive initiatives that was implemented. So we would like to expand this business to JPY 95 billion. And in addition, we have a Manga Plaza in North America. And this in 2027, as the overall global business, we like to aim for JPY 5 billion and to expand the overall business in total to JPY 101 billion. Okay, then for NTT East, we have NTT e-Asia. For the last 30 years, the telecommunications infrastructure development business and consulting was done for the last 30 years in this through this company. And this is one of the success cases. In Vietnam, we have Becamex, which is the local financial conglomerate, and the...
We are developing an FTT infrastructure project, and with BDPP, we improve the relationship with them, and by partnering with the local carriers and provide the service to the end users through the NTT. We are receiving inquiries that they would like to work together with us to further expand this network telecommunications infrastructure. And in Java, there is about 48 million of lines demand, so they want us to help them. So of course, we would like to continue to expand such businesses to expand the business. So the entities, the investment businesses, it's good that you will actively be involved in it.
It's not all success cases, and withdrawing the business and when to terminate the business, the timing may not be the best. So can you actually comment on these points as well? In that sense, with myself and Mr. Kitamura, we both would like to share our opinion, and with NTT, with East and West. There's no businesses that we made in investment that exceeded JPY 100 billion. Moving forward, we are saying we'd like to expand in the global businesses, but we would like to surely create the local partners and have them grow surely, and then we invest in them and go into the revenue share type of business. It will be a business in a way that we can afford.
As you have pointed out, Mr. Hiroi, IRR and ROIC targets set them as the KPI, and because these infrastructure projects are long-term, therefore, we would like to continue to keep checking and monitoring the profitability. And with the cooperation of the holdings company, we would like to have a thorough governance so that we would like to always keep in mind that we need to conduct these businesses that we can afford. And that's the same for NTT West as well. The service business we need to thoroughly monitor such businesses. 60 services which is conducted under 30 divisions, and the profit and loss management is monitored surely.
And we look at the individual businesses, and the KPI is set in a way, and at every certain set period, we look whether they have achieved that target or behind. The current profit and loss situation and the future growth possibility, those are the two perspectives that we decide on the business. So the services that do not reach that, we have about ten of them. And so for each one of them, we are having discussions to determine withdrawal. And up till now, four services have been discussed already, and we have withdrawn from four services. And also, up to now, from an overall perspective, we have been looking at the regional telecommunications strategy of NTT East and NTT West.
Moving forward, we would like to look at the overall number and also including the future direction from Mr. Shibutani. Can you wrap up now? Thank you very much. I think the slide is this that are viewed by the online participants. They said that the enterprise and network business will largely grow, and for the network part, we are going to increase the share. And we are arranging the reevaluation of personal and business portfolio, which is the front office and the back office. And the delivery side, we are going to increase the efficiency using AI. We have the 25 billion JPY, 45 billion JPY, 40 billion JPY. Through these, we will be able to create this type of profit from these initiatives.
And at the bottom, which is in the gray color, the dual type of facilities and network. By migrating them, we'll be able to reduce cost. And we have old telecommunications facilities. So this year, by spending certain expenses, we would like to dispose of them. And the global discussions and the new businesses that I will be touching upon moving forward, we believe that there is room for growth. And what's not included here today, we would like to further increase. So in that sense, this time, the non-core asset streamlining, selling the land and et cetera, in twenty twenty-seven, JPY 437.7 billion, we have achieved, therefore, continuous fiscal years of record high profit.
This year, we are causing concerns to you. Towards 2027, once again, we believe that we can recover this. What will be the target? In 2023, the non-core asset, without selling the non-core assets, about JPY 360 billion. The non-core asset is not the business capable of making money. In 2027, this JPY 360 billion, we would like to take it. We believe we can take it up to the level that would cease this JPY 360 billion, and that is the target within the initiatives that we have. Lastly, moving forward, what is the direction that NTT East and NTT West will head towards? I would like to use this diagram.
As I have mentioned, today, the population will go down, but the telecommunications in three years will be twofold, and in ten years, tenfold, and in twenty years, it will be by one hundred, two hundred times. And we have to make such facilities, or the AI sites will not be established. So with the conflict between U.S. and China, Japan was becoming the hub, and Hong Kong cannot be reliable, and Singapore doesn't have the electrical power. So in Japan, in a very high speed, high burst hyperscalers are entering. So with the underground facilities with are using fibers, they want us to connect their data centers, and we're having that special demand, and I cannot say which hyperscaler that we, but we are receiving orders.
So in the periphery of these sites, we have the multiple site customers, we have the Digital Agency, we have schools, and the users that have multiple sites. We would like to surely utilize our assets and expand the business there. And at the same time, the digital driving society is how we would like to create for the future for Japan. And what that means in this slide is shown. If you see these areas, you will see that we are implementing these initiatives in reality. So, creating the value of the regional economy, and we have smart stores that does not require human staffs, or we have the renewable and circulating energy.
By utilizing that, we would like to create a circulating society. In NTT East, about from five years ago, we started it. These type of businesses have reached about 10 billion JPY. The top part of the plan, we set a challenging theme, and as Mr. Hiroi mentioned, that we will be making investments that we can afford. Also by setting KPI, we would like to further grow these businesses so that the digitalization of the future Japan can be taken upon by us as a challenge. Lastly, I would like you to look at the commercial that we have created of these initiatives between NTT East and West.
Thank you. That concludes the panel discussion portion. Mr. Shibutani, Mr. Kitamura, Mr. Hiroi, thank you so much. We would now like to take questions from the audience. We follow the same protocol for Q&A as we followed in the previous session. So for those of you here on site, please raise your hand. For those of you who are connected online, please use the Raise Hand button function. And just as the case earlier, we ask that you ask two questions, up to two, up to two questions at a time. So who has a question? Let us start the Q&A session. We would like to start with you. Please go ahead with your question. My name is Kikuchi, SMBC Nikko Securities. Thank you so much for this very detailed presentation. We appreciate this straightforward presentation based on numbers.
This was an excellent, very outstanding presentation filled with details and numbers, so thank you so much. My first question is this: with regard to if the NTT law is abolished, what impact do you foresee? That's my first question. We have the new prime minister, we have the new president of LDP. I suppose that this will be can be addressed at the very final Q&A session. But if NTT law were to be abolished or were to be reviewed, what. And we, and we're not sure what the outcome will be, but you talked about further being NTT improvement, you talked about further being impact on human resources. So what impact do you see if NTT law were abolished? How much improvement can we see on top of these numbers that you have shared with us?
If you could share with us with an image, I would really appreciate that. Okay, thank you. Let's show the portfolio. There are several perspectives we can deploy in this discussion. First is possible business opportunities. The other is cost reduction. In the case of portfolio, we have the universal service obligation, as you will recall. We have the obligation to offer telephone services whenever we are asked. So we have the telegram. These are legacy business. But if we could use Wi-Fi, or correctly, we could use fiber, if we could see the relaxation of these requirements, that would be positive. So by each area, we'll be able to choose the most optimal way to offer connections.
We can complete and we can suspend copper wire-based telephony services, and we're already doing that. And we could add further cost reduction benefits, and we can accelerate this transfer if NTT Law were to be reviewed or abolished. One other element, even now, it's not a major bottleneck for us even right now, but in the field of IOWN, we'll be using fiber to connect with hyperscaler's sites. We can use low. We can have one link connection. They'll want low latency connections. Now, we're focused. We have to have auction for inter-prefectural connection as well as intra-prefectural connection. That's a handicap. But if we could. If this regulation could be relaxed, then we don't have to go through electrical processes. We can actually connect, offer direct connections.
But of course, it's important that the access be provided to other companies, other players as well. So shared network area could actually accelerate, and it could actually provide sharing network. That potential could emerge. So that being the case, today's numbers that we showed earlier, there's going to be further upside, that is true. I think there is a possibility that if NTT Law were to be discussed and changed, then this could add to this could represent upside to these numbers. Thank you. Let me add as well. For NTT West, when it comes to universal services, we want to use fiber and broadband if possible. There are areas where we're not yet able to provide that.
So if you offer such connections inclusive of with other network operators as well, we can do so without making additional investment. If that should be the case, and that's the direction that discussion is heading, but if this could be realized, then this will be actually this could be a positive for us. Now, what about the universal service obligation, outside universal obligation? What about the restrictions on scope of business? If that restriction, if that condition could be lifted, then services which could not be offered by NTT East or West can actually be provided. We can actually contribute toward revitalization of local economies. So using NTT directly, if we could work and deliver these services based on NTT brand directly, then this can actually translate into increased order for us.
Furthermore, from the cost side, if the law were to be abolished, and if NTT East and West could actually freely collaborate freely, without any restrictions, then that means we'll be able to reduce common costs because we'll be able to unify our operations. But having said that, if NTT Law were to be abolished, what will be the exercise usually? It really depends on how the situation will be handled. But of course, that will be a lot of benefit. But to what extent will the upside... How much upside can we expect? That's very difficult to say, but yes, it's we can expect significant amount. Okay, one point of interest for you.
Right now, well, we started the SDL, and in 2027, we'll be completing the suspending ISDN, and also we'll be. We've seen price increase for Hikari Next. So it's important that we carry out rebalancing. Please take a look at the cost change as a result, which we are doing as a result of rebalancing, and also for we suspend the services. How are we going to respond to our customers if we're going to suspend services? To what extent are we going to offer alternatives? We need to work on procedures to convince the customers. We have to. We also work with Consumer Affairs Agency services, Consumer Affairs Agency people as well. For if we're going to suspend telephone services, if too many users were to remain, are we going to send two mails to postal?
If that does not work, if that doesn't work, can we suspend the services? If that's the case, the migration cost will be quite minimal. However, if we have to go, if we visit our customers on site, and if we do what we are saying, "Oh," you know, so send people to the customers before we are able to suspend services, that could actually entail a very large amount of migration cost. So what type of ending are we envisioning for the suspension of these services? That will have a very significant impact. Okay, thank you for that information. We appreciate it. You talked about NTT East and NTT West and possible combination.
The NTT holding company, naturally, you talked about the possibility of unifying and integrating NTT East and West. You mentioned that there could be significant benefits if NTT East and West were combined. What about the potential scale? So I suppose it depends on to what extent you're able to combine the services. Are we talking about JPY 100 billion, JPY 200 billion impact if the two companies were to be unified? What about infrastructure, and what about personnel side? What about procurement? There are a lot of potential benefits, but in actuality, how much upside do you expect? It's very difficult to pinpoint specific numbers. We really haven't done a very accurate calculation either. But as I mentioned earlier, the head office function could be unified, and also a lot...
We could expect a certain amount of reduction in the common costs. So if area-free type of operations could be pursued, then call center operations can be concentrated and consolidated in particular location. That's another benefit. Also, with regard to facilities, we'll be able to consolidate facilities, and so that should lead to cost reduction as well for... So if we add the potential upside, there could be a lot of upside in terms of cost reduction. What are the numbers we are talking about? It's very difficult to calculate at this point. Okay, thank you very much. My second question is this: What about the potential for price increase going forward? Mr.
Shibutani, you mentioned at the outset, you mentioned that you didn't want, you don't want to give excuse, but actually, it's true that cost is increasing, and cost is increasing. Can you pass on to the customers? I think it's, you should be able to pass on those increasing costs to the customers, but I've a feeling that you're not going to pass on costs until NTT law discussion is completed, but you're already beginning to step up your price increase, so you're already embarking on some price increase. So are you able to pass on all the cost increase upon customers? Do you believe that if you're able to pass on all the cost increase to the customers, how much impact will this have? Well, let me put it this way: If we increase, if we increase the price by JPY 100-...
It's simply a multiplication with the number of customers. Okay, so you're talking about logistics costs. Yes, power cost is increasing, and vendor related cost is also increasing. So all costs are increasing for you, right? Yes, that is the case. But I think you should be able to pass on those costs to the customers. A lot of players are already passing on their costs to their services. If NTT can pass on all the increasing costs to the customers, how much impact will this have? It's a straightforward calculation. It really is. Okay. In the case of interconnection based on dry copper and the copper-based connection, this is increasing.
The demand is becoming smaller, but our burden, our cost burden is expanding, although the demand is doing the. So I suppose we have seen maybe 20%-30% cost increase in offering connections based on copper cable. Now, can we pass on? Can we really increase the cost? I think we need to do a bit of a mind, need to do some mental exercise. But if we see cost increase, if we are able to see increase by JPY 100, it's simply a mere calculation. So practically, in reality, how much increase can we realize? We have to do some sort of simulation, but we're not there yet. We have not yet worked out how much cost increase we should adjust.
We have not been able to do that work at this moment. But at the same time, though, we're already doing things that are possible. For example, in the case of directory telephone directory, we made a bold decision to suspend that. And telephone directory assistance, we have announced the suspension, although some people want. So our junior colleagues wanted to continue. But we're also, with regard to billing system, from fiscal 2026, the billing system will be changing, and paper-based invoice will be digitalized. If we can fully do this, then the blue part, the dark blue part, will be increasing, and also the printing company, printing factories can be cut from the cost. So although from co- we have some factories for printing in Kumamoto, we can actually consolidate that to certain locations.
So we have the discount programs, but last year, NTT East announced the two-year discount plan would be suspended, and we've already eliminated that. So I think in reality, in certain cases, we have already gone on to price increase, and with regard to old services in the range of 100 mega to 200 mega, we have asked that the ISDN pricing plans be increased. So we want to start our challenge in areas where we're likely to run into difficult opposition from the consumers. So I think in parallel, so I think we can start to improve cost efficiency in parallel. Thank you.
I'd like to take the next question. In the middle row, please.
Masuno from Nomura Securities. I have two questions. The first question is what you verbally explained at the end. Operating profit, 360 billion JPY. Until now, your material, IR material was only a bar chart. So today, I was able to see the actual numbers, so it's good. From 290 billion difference, there's a 70 billion JPY difference, and what was written here is 110 billion JPY increase in profit. So if it's a negative 40 billion JPY, and but there are various upside elements. So currently, when we look at the downside, what's happening right now, on page 19, I believe last year's from the last year's first quarter, the Hikari Denwa is declining, and I feel the sense of crisis the most there.
Since last year, I did have a discussion that you need to implement measures, and there are various measures that are occurring. Looking at this, the Hikari services, fiber optic services, is going to be an add-on, as you see on slide 19, page 19. Looking at this plan, Hikari Denwa is a negative of 600,000. There's JPY 250 billion plus alpha. That alpha part, how much is that going to be? I think that is going to determine the landing number. This plus alpha part, this fiscal year, the IP phone in reality is gonna decline.
Considering that, in what scale are you looking at this alpha part and come about with the calculation of JPY 360 billion?
Okay, from my side first. In the last two years, twenty twenty-two or twenty twenty-three, we put our efforts to achieve the numbers, and we caused you concern. But post-COVID two years, it was a very tough situation for the regional communications business because power cost went up alone 50 billion JPY, and the call centers was really active, and we had Hikari Cross and Hikari Next. And the COVID pandemic inquiries has rapidly declined, and even just that part, in a 10 billion JPY of a size, the profit just disappeared. And in West, we had the Noto Peninsula natural disaster, close to 100 billion JPY, 10 billion JPY to respond to that. So it's a very tight situation for us for the last two years.
As you have pointed out, the Hikari Denwa's traffic, actually, the voice traffic and with the optical fiber decline, together alone, has declined by JPY 35 billion in the last two years, and that was unexpected. What is the structure look like? With the collaboration of-
... vendors, operators, the Hikari will shift over. Big log type of ISP, having them selling it, then it is better. So we have not done that much direct sales, but they are selling the Hikari Denwa on their own. So if Hikari Collaboration increases, then Hikari Denwa, the income will be there, ARPU. But on the other hand, half of the JPY 335 billion, which is the decline in traffic. During the COVID pandemic, there were a lot of telephone conferences that were held, but post-COVID, that suddenly disappeared. So the last two years was really difficult, but that decline in traffic has stopped. So traffic decline and electricity costs going up, and the call center, the special demand suddenly disappearing, that all has disappeared in the last two years.
The negative elements have been sorted out, and we have come back to the normal status. How much can we improve from here? This plus alpha part, in a way, as explained before, the optical fiber service towards that, the BSA people, if it's the Hikari Denwa next, if they shift over there, at maximum it will be JPY 6,500 ARPU. How can we have our customers shift to the next services and have a service transfer and migrate to a higher fee service is the key. With NTT East and West, company-wide basis, we are working on this. We are starting to feel the positive effect of these measures now.
If that is the case, as I have asked previously, there's a JPY 40 billion negative element there, but and with that, you have JPY 360 billion. By looking just at this, it's minus JPY 100 billion. So plus JPY 60 billion is what you're expecting. Is that the correct understanding? And not just here, but the remaining part will be revising or reviewing the prices. So we are looking at whether we can implement other measures. And for the copper line, we have the leased line. We have still remaining of these leased lines, and the moving having them shift to the I1, which is the fiber service. We are working on that transition as well. And with this, we have parts we can further boost up moving forward.
Thank you. My second question is the timeline regarding what you have just shared. So this is by FY 2027. So the annual plan, the unprofitable business, you have an annual plan, but for the other areas, you're saying three years from now. So moving forward in the next three years, of course, as you go to the latter years, there's gonna be more weight on the latter years. So thirty several billion JPY size is going to happen two years from now, and at the very end, it's going to be 360 billion JPY. Is that how it's going to work?
With regional telecommunications, I think you manage your business in two-year spans, but if it's more further in the future, what are you going to do? How are you looking at this? As I've explained this time, in the cost reduction perspective, the signature item is DX and AI utilization and change of operation. In 2026, we are thinking that that is going to start to come into effect. And so the actual cost reduction, we will start to see the positive impact of that, these initiatives. So the large part will start to show in FY 2027. But till that point, of course, we are going to look for the improvement of efficiency in the operations.
And what we can do ahead of plan, we will do that. And in 2027, we're going to aim for a V-shaped recovery. So, we will see the larger positive numbers in from 2027. So I just wanna check, it's not written here. From FY 2028 onwards, you will see these positive benefits in full scale, and that is going to continue from that year? Regarding FY 2028 onwards, the positive impact will continue. So we would like to continue our thorough efforts. Okay. Thank you very much.
Thank you. Next question, please. Susaka from Morgan Stanley. With regard to fixed line broadband market, is there really demand for this service? I'm afraid I'm a bit skeptical about whether or not there's demand for broadband fiber. Young people don't want broadband, fixed line broadband services, and the demographics are trending toward that. So I have a feeling that there's no demand to begin with. That's my concern. Of course, there may be some certain amount of demand up until now, and maybe very small community use that. But it could be that going forward, not all people are going to be viewing video contents. So you have to wonder if there's really demand out there for this type of service. Is there really demand?
That's my first question: Do you really see a concrete demand? Now, you have a plan this time, and this is on page 22. You talk about FTTH upside 40 million, that's the plan you have. And I think there's a risk in your plan for FTTH, I believe. So can you talk about that? So how do you see your fixed and broadband services? Is there? You are still treating this as a main part of your product line, and I apologize for this ask. I apologize for this question, but is there any demand for this service to begin with? And as the population declines even if the demographics are changing, do you still see demand for that? Okay, thank you for your question. Let's show you this particular page. I think there are two major drivers. One...
Yes, this is the share, yes. By 2037, the number of households will continue to increase, so the households will continue to be the driver behind this demand, so at least this will continue into the future. One other point, as you see on this page, and as mentioned by Mr. Kitamura earlier, we're aggressively marketing Hikari. We're focused on supporting our partners, so we're not very aggressively marketing against our partners, and that has led to a significant drop in the market share. The 10-giga fiber Hikari Cross has a lot of demand. Many customers really want higher 10G plans, but we're not addressing that. But we began to address that, and now market share is improving. It's improved by 120% year-on-year improvement vis-à-vis the previous year.
Also, customers who are satisfied with mobile, they said that 5G was fine, but then they found that they want to view Netflix, they want to see Amazon Prime. So their taste is changing. So even if they are in these apartment buildings, they want high speed WiFi. So we're trying to respond to those needs. So that is why we're offering apartment-wide services. So we will work with developers. So as we work with developers, we can actually cover 1,000 new buildings, and also WiFi, they can see WiFi inside. And this can be covered in the monthly rental of JPY 300. So they pay that as a pay...
They pay that as a monthly rent, and they can actually have access to Netflix and other services. That demand is out there. Even in apartments, even in leased buildings, there are such demands out there. That is why we are addressing it, to address that. We're offering services for apartment-wide building. As a result, we've been able to make a recovery in the market share because we're offering services to apartment-wide setting. Again, we want to increase this by 1.7-fold, and we believe that there's potential to increase this even further. We can go even further. I think nationwide, we can maybe cover 30 million even. We want to go after that demand.
So people who are satisfied with mobile, they're willing to offer to pay additional three hundred yen per month to have access to those services. Okay, so you're saying the revenue is down? No, I think we can. From the owners, we're able to receive more than one thousand yen. What are we doing right now in the case of leased apartment buildings? If we have one new individual, that is, we do a splitter construction and offer access for it. But there's many which involve entails coverage for the apartment buildings under one thousand yen. But as we cover all the whole apartment building, the approval improve. So we don't have to work with each individual owner.
We can work with players like Daiwa House and Daito Trust Construction. If we work with such developers, all the apartment buildings can shift together, can shift all at once. So we have totally changed our way in terms of approaching the condo market. Okay, thank you. I want to ask you about the revenue for the end-of-life services. How do you see the revenue for end-of-life services? NTT East has to maintain certain services, and this relates to your costs, price increase possibility. I think you have eighty million subscribers, right? You have an enormous amount of subscribers. Yeah. And these customers are probably part of the bundle of the contract. And consumer to consumers, very few people are using zero telephone numbers that start with fixed.
But certain roles are still surviving, even though the role is over. Certain services are still being continued, even though the role, their role is over. Now, there are certain services that are ending based on natural attrition. That's fine. So in terms of when you review overpricing, it simply does not happen. Because you're not able to maintain quality, and I think your cost reduction efforts would not be sufficient to cover these problems. So if you're able to review pricing, and I think on Friday, there was talk about decrease in flats. But I think there's a very high hurdle you have to overcome if you want to review your basic charges, right? Also, when it comes to wholesale fiber collaboration projects.
So to what extent are you able to reduce your costs based on your own intention, and what extent are you able to not change prices unless you have sufficient negotiations with the government? You take 100 JPY. That's a very straightforward calculation, but I'm sure it's not that straightforward, right? So can you talk about how you see the ability to increase prices? Okay, I take your point. For example, in the case of subscriber telephony services, it's true that there's a lot of impact in the community if we change anything about the service. And right now, we're in the midst of the universal service obligation. So this is an area where we are able to freely change the price.
I mean, in terms of the mechanism, we can change prices, but can we really do that? I think we need to talk and consult with various people before we can actually embark on price increase for such services. As far as the level of the potential increase is concerned, we have to really be careful. Because under the universal service obligation, we are suffering from some tens of billions of JPY of deficit. We want to be able to cover that deficit through price increase, but that's unrealistic. So I think we need to talk with experts, and also we need to talk with competent agencies. We need to consult before we can embark on price changes. So that is true in the case of subscriber telephone services.
With regard to potential price increase, we've not made a decision. We are carrying out consideration and study, but it's one that we need to talk with various parties before we actually embark on this. Now, what about the wholesale pricing? When it comes to wholesale, this is something that could essentially decide between ourselves and the partners who are providing these collaboration services. Now, in the past, there was some slight increase in interconnection charges for fiber. We would like even higher charges, but then on the other hand, we are actually competing with various players through our partners in the Hikari Collaboration project. So should we really increase our interconnection with our partners? Because that could actually undermine the competitiveness, and our market share could be coming down.
That's a very difficult situation to adjust to. Again, we need to consult with our collaboration partners when it comes to a wholesale collaboration model. Just because we're suffering, we cannot turn to our partners and ask them to accept a price increase. With regard to Hikari Collaboration, Hikari Collaboration project, I think the negotiations are not to increase your prices, but for coming down your interconnection charges, right? Yes, that's the case, yes. We've actually lowered prices by... on three separate occasions. It's because of price competitiveness. Who made the decision to lower interconnection charges for wholesale fiber? Well, by lowering fiber, we felt that the sales on the part of collaboration partners would increase. So that's why we made the decision to agree to the price reduction.
Thank you. Thank you. Understand.
We would like to take the next question. The person in the front row, please.
Tokunaga from Daiwa Securities. I have two questions. The first is regarding the apartment-wide initiative. The large-scale operators, small-scale operators, I think are involved in this area. So within that given situation, I would like to review this with this apartment-wide, building-wide services. How is the price, and are you using other operators and having a collaboration, or you change the direction, and your company on your own are conducting sales activities and being involved as a player? I would like to ask about this apartment condominium market initiatives. In that sense, well, JPY 300 is maybe an exaggeration, but how much common expenses are taken? It depends on the owner, so it will be a slightly higher price down menu. There are two points here.
The first is that the apartments that have 30 units or lower, and there are large apartment condominiums that are over 100 units, so depending on the size, we review the price, and there are ones that have a flat rate, so we have various plans prepared, and to get in discussion with the customer, we have them selected, and this part, in a way, with the headquarters of this company, we're saying: "Why don't you apply this to all of your apartment and condominium buildings?", so it is going to be a negotiation sales, so our people are going to do the sales activities, and we're increasing the number of the companies that we can approach and have a collaboration with.
So we are actually being active in this area. Any cannibalization? No. It's not that they sell it through their shops or anything, so there's no such thing. But the other optical fiber service provider areas we will do it as a whole. We do the whole thing. Okay, thank you very much. The next question is relating to page 22 regarding the profit. You have an increase in profit trend, and there's about three years of that. So I want to know the increase and decrease. For example, FY 2022 has an increase in profit towards that, and FY 2026, there's a lot of capital investment, so we need to be careful, or due to the increase of Hikari Cross.
I think that there may be an increase of a CapEx, so there may be a depreciation cost this much. So I'm sure various situations occurs, but I would like to know ups and downs. There will be differences regarding that between east and west. But as I mentioned before, for the optical fiber, if the users stop, then the profit will increase. And also, regarding the improving the efficiency of the whole operation, we will see that through the DX efforts. So as we get closer to the latter part, towards 2027, we will see the effects showing larger. And towards this, there are measures or expenses that need to be...
Go up for twenty-five, twenty-four, twenty-five, so it'll be like this, but I don't want to have that much of ups and downs. However, if something happens like the COVID pandemic, we won't know. But up to now, in the market, if the electricity cost is not going to change that much, then regarding the initiatives that we will be implementing, it will be a bit second half or latter part heavy, right? That is the same for NTT West as well. The latter part is going to be a more weight in a way. From FY 2025 onwards, it is going to be a turnaround plan, so it's not going to go downwards. I hope you will understand that it will go up like this.
Regarding the system expenses, this part, it is a challenging, I think, for us. To take on this challenge on our own, we would like to develop the system and to also use off-the-shelf type of products so that we can lower the development cost. For Hikari Cross, you mentioned that it will require a lot of investment. However, one giga and ten giga commonly shared equipment is what we are trying to increase to implement. Therefore, we would like to utilize a renewed equipment as well. So including Hikari Cross, the existing CapEx or investment towards existing facilities, we would like to make it to turn into profit as soon as possible, as quickly as possible.
So sorry, the CapEx is going to be lower than the current level. It's going to be cut down and for the existing. So it'll be within the existing business. Yes, we will keep it, and the network, we will upgrade it to the next generation IOWN. We believe we will be able to do that with this level. As explained before, the existing network is at the timing of the renewal or update, so we are thinking that we'll be able to do all this with the next stage of the update. Okay, I am now relieved. Very sorry, but it is close to the ending time, so the next question will be the last question.
If you have any questions, please raise your hand or push the Raise Hand button. Thank you. If not, then we'd like to conclude the session at this time. Thank you for your interest, and thank you for your participation. Thank you very much. Thank you, Mr. Kitamura. Thank you, Mr. Shibutani. Thank you, Mr. Hiroi, for your participation. Ladies and gentlemen, we want to set the stage for the next session. Please bear with us for a few minutes. We'll take a five-minute break and then go on to this session. So we'd like to start at 5:16 P.M., 5:16. Thank you. Thank you very much. As I decided to continue with this session, this will be the very final session of the day, the general Q&A session. We would like to ask Mr.
Akira Shimada, President and CEO of NTT, to respond to any questions you might have. Mr. Shimada, the floor is yours. The protocol for the Q&A is the same with the previous sessions. For those of you who are on site, please raise your hand if you wish to ask a question. When you are connected to online, please use the Q&A hand raise function. Please limit yourself to two questions at a time. Let's take questions. Please raise your hand if you have any questions for Mr. Shimada. Let's go on to you, please. Masuno from Nomura Securities. This may be a repetition of the previous question, but I really would like to ask your comments on the direction and the structure of the group. Within the group, NTT East and West are self-contained.
They are addressing data center, but when it comes to integrated ICT, how you integrate enterprise and consumers, this is very important. I know that you are competing with competitors who actually have integrated, so operating. There's an upside of JPY 20 billion in operating profit. How do you intend to realize that through enterprise and consumer business? So what, so what about the true, true synergy between DOCOMO and the NTT Communications? Today, Mr. Maeda took the floor. How do you see Mr. Maeda's view? What are your thoughts about the current structure? Is the current structure really working? That's my first question. And also, the other point, I would, I would like to ask about NTT, NTT law.
I find it most unfortunate that when it comes to mobile, I really feel that mobile should be all, should be substitute for the universal service obligation going forward. But mobile, broadband-based on, I think, mobile and shared broadband, that should be utilized. This is a major nationwide initiative. If we don't do this, what are we even aiming for 6G? It doesn't make sense. So can you take over as mobile broadband alternative? How do you see the trend toward that? These are my two broad questions. Thank you so much. Okay, thank you. Let me respond to your question about integrated ICT. You'd asked about DOCOMO groups. Let me respond to your question on this point. Now, Mr. Maeda, does it seem to. It seems, it was everything? Yes. I think I have to respond.
He's overseeing every part of the group, naturally. Now, as for myself, I'm responsible for NTT Group. I am supervising NTT Group, but I'm not alone. I'm supported by my staff. That's why, and Mr. Maeda is also being supported by a very strong team as well. And Mr. Kojima of NTT Communications, they have a good, strong management as well. But Mr. Maeda is exercising the overall grip for these two companies. Now, this year, DOCOMO will be facing a very significant and very important year. As was mentioned by Mr. Maeda earlier, the market share of 35% must be safeguarded and must be protected at all costs, no matter what. So we are slowly dipping below market share, but we cannot accept a market share that's lower than the current level.
So this, this is a number which we cannot allow DOCOMO to accept. So it's important that we make a reversal. This is an absolute need to do this. So I don't want this particular scenario to happen, but if this year they have to spend money to protect customer base, then that should be done. I think that's the full intention that DOCOMO should have as they face the business this year. Naturally, if you spend money to protect your customer base, then naturally you have to offset that cost through other businesses. That is the job of the management. So that is my expectation to the management team. Furthermore, there is a previous question. You mentioned that we have not been successful since Dr. Tachikawa's time. It's true that the market share has been constantly declining.
There's a history of downward declining, downward trend in market share. This was mentioned by Maeda-san as well. I think maybe we prioritize profit too much. So maintaining profit, even at the risk of reduction of market share, that would be fine. That type of mentality was prevalent up until now, and that is the backdrop for the downward trend, continuous downward trend in market share. We cannot go any lower than the current level. As the leading company, we must expand new frontiers. That intention is very important if we are to be a leading company going forward. This year, we will focus on maintaining our customer base, and on top of that, we will be evolving new businesses so that they can flourish in the future. One area is the financial service.
We need to expand financial services as part of this, as part of this effort. Also, it's important that we also work on entertainment business, and also work with the venue business, venue businesses as well. We should focus on delivering content to our customers. We should add, and we should also add value-added services on top of our offerings. That will be very important this fiscal year, and I'm sure that this will indeed be addressed by Mr. Maeda. I'm confident about that. Also, this is something that DOCOMO group must deliver. As for enterprise business, this is also very important. Although numbers are not clear, but as far as revenues are concerned, DOCOMO group enterprise business is leading, is doing very well.
Of course, KDDI is also a strong player as well, so it is important that we offer a very diverse menu, and also focus on SME market as well, and again, offer solutions as the leading company in the SME market as well. Also, I think in the future, SME market will be the scene of the battleground. It will be a very intensive battlefield for us. In the case of large companies, we have done very well. We have addressed the large company market, but it's important that we also be victorious in the SME market as well. That is going to be a very critical factor, so that is an area where we need to reinforce our efforts, as the DOCOMO reinforce their efforts. Now, the second point, you asked about the NTT law.
We are now in the midst of the discussion as we speak. I have consistently said, since last year in particular, I mentioned, I have also insisted that we should be able to use mobile. We should just, we shouldn't just focus on fixed-line part. When people work... When people go outside, we should be able to offer services. So I think we should consider universal services, which focus not just indoors, but also outdoor as well, so the people could be connected at all times. But within the advisory panel, some people are focused on primarily in-house, indoor environment. I suppose this would be viable as one assumption for the discussion, but I think at the end of the day, I think we should really offer broadband-based, broadband and also mobile-based service, mobile-based universal service down the road.
We do have no intention of changing our argument, and we have no intention of changing our position either. I think ultimately, our this will be the position taken. Along the way, though, for example, in next fiscal year, when the amendment is to be implemented, to what extent can these changes be realized? For example, we have been calculating the deficit we are suffering because of the universal service obligation and how much burden we will have to ask for the public. We have come up with such simulation and calculations. If we want to do this cheaply, then the fixed-line service offered by mobile players will have to be utilized.
If we can offer the mobile, fixed-line services being offered by mobile operators, then we can actually offer service coverage at the lowest cost. So that has come to light. Again, we're still in the midst of discussion, but this is the end position that we would like to really put forward and also propose. And beyond that point, as we saw in the recent floods, we should focus not just on fixed line, because there are evacuation centers are outside environment, and we need to be able to offer universal service obligations, even in those cases, and have to recover the main routes against the face of natural disasters. This is another point that needs to be discussed fully, I believe. Thank you very much. That is all. Thank you very much.
I'd like to take the next question. So in the middle row, please go ahead.
SMBC Nikko Securities, I am Kikuchi. Thank you very much for today. I have two questions. Next fiscal year and next fiscal year, NTT's consolidated profit. This year, you're planning a decline in the profit, and we are slightly disappointed. But today's DOCOMO's presentation and listening to NTT East and West's presentation, DOCOMO's ARPU and East and West's decline in revenue trend, everybody's considering it as a risk. But next fiscal year, I won't say that everything will recover, but it's not going to be at a degree of this fiscal year, that's what we expect. So if that is so, next next fiscal year onwards, a consolidated net profit increase is something that we can have expectations, and it will return to the previous level. Can we think in that way?
That's my first question. Mr. Kikuchi, thank you very much. As you have pointed out, well, today in the telecommunications business, in terms of telecommunications business, we had three key companies within the NTT Group make the presentation, but when we look at the profit-based perspective, these three companies are going to have to perform solidly or else we will not be able to go towards the growth path, and that's why we selected these three companies, and next year, whether they'll be able to make a turnaround for these three companies, I have confidence, and in addition to that, NTT DATA i s gaining a large position, and NTT DATA, I believe that they will thoroughly grow this year and next year as well for even further growth.
As the overall NTT Group, I will be able to go towards the growth trajectory, is what I think. Next fiscal year, there was a bit of a negative impact, such as the energy market, which has a high volatility. The measures to suppress such volatility has already been implemented right now. So the several tens of billion JPY, there were times that we made a loss of tens of billion JPY in terms of the electricity expenses, but we have come out of that, and those type of elements will decline moving forward. So in that sense as well, I believe that we can make a turnaround. Thank you. My second question: the new incoming Prime Minister, Mr.
Ishiba, the relationship or involvement between him and your company or the with him and the telecommunications industries, I'm not well-versed in that, but what kind of communications did you have in the past? Mr. Ishiba, towards telecommunications or NTT or towards NTT law, what kind of thoughts does he have? It's unclear. Therefore, from your perspective, Mr. Shimada, what kind of expectations do you have? Or, yes, I guess expectations. If you have any expectations, I would like you to share that with us. Because in the past, if there were any relationship between Mr. Ishiba and your company, I would like to know as well. First of all, the newly elected LDP President, Mr. Ishiba, will probably become the Prime Minister of Japan.
So I would like him to have the understanding towards technology and others, and within the global business arena, make sure that Japan can actually grow. And for that, we will be putting our efforts to realize that. Therefore, we'd like him to come up with policies that will support such efforts. That is the expectation, first of all, that we have. I personally have had a dialogue with Mr. Ishiba. However, I believe that he has expectations for telecommunications industry. However, it's not that he has been making announcements of new policies in the past regarding this industry.
Therefore, I'd like to have understanding from his side regarding this overall industry, and at the end, to come up with the telecommunications and IT industry. Growth is going to be important for the overall Japanese people's growth, economic growth. Therefore, our telecommunications industry as well as the IT industry, I would like to provide the support or have a various discussions and dialogues with him. We will appreciate it if we have such opportunity. Thank you very much.
Next question, please. Yes, please.
Tokunaga from Daiwa Securities. I would like to ask two questions. My first question, the same question that I asked Mr. Maeda of DOCOMO earlier. Improving ARPU and also improving the market share beyond 35%. As you address this, if you're going to go after market share, depending on the competitive landscape, you might have to change your pricing plans. So Mr. Shimada, how do you see DOCOMO's aggressive strategy? Do you believe that they have Do you think they're sufficiently prepared or other areas where they need to accelerate in order to compete in the marketplace? So how do you see DOCOMO from the viewpoint of NTT Holding Company?
Thank you. Right now, Mr. Maeda, President Maeda, is now leading the efforts, and I appreciate his efforts, so reinforcing sales at electronic shops, that's very important. I believe that must be done. Furthermore, this came up earlier as well, increasing the capacity for ahamo. I think this is going to help improve customer satisfaction.
... and so the traffic itself is increasing as a result. I think they made a very good decision, and this was a very good policy. As far as the pricing plan is concerned, we need to see the response of the customers. It's important that we be flexible in changing the plan. Is the current structure and are the current lineups sufficient to respond to customers' requirements? I'm sure DOCOMO is discussing this internally, so I hope that at appropriate timing, they'll be able to conduct review of the pricing plan and the billing plan. I think the general trend is that people want greater data capacity. With regard to ahamo, we've been very fortunate. This is very suitable product when people are taking up remote connection services.
So the take-up has been very strong. But then, there's also a need for face-to-face communication. The people who want to touch, physically touch the equipment, customers who still want to have physical touch before they actually buy the product. So in the case of replacement, for example, people still want to go to shops. So some shops are beginning to address replacement in physical form as well. So there are a lot of different types of customers out there. So it's important that we respond to each customer type, and it's important that we try to respond in a way which can offer enhanced customer experience. We'll work toward that, and for that, we want to continuously change the structure if need be.
Now, even during this fiscal year, there are likely to be some changes as well, I believe. Okay, thank you for that. Let me go on to my second question. This relates to your midterm plan. Based on what you mentioned earlier, with regard to operating plan, I have a feeling that this is going to be recovering. But you didn't too much. You mentioned that CapEx was not increasing. But then, as far as the progress of the current plan is concerned, Mr. President, what are the areas that are doing well? What are the areas that are not progressing well?
In order to cover the areas that are behind in the progress, how do you intend to also support that? Can you give us an idea as to how that will work out? Okay, thank you as far... Thank you. As far as the CapEx is concerned, it's not a major. We're not, there's nothing major, but right now, DOCOMO is trying to improve their quality, and they're investing in order to improve the service quality. I think today, on page two or page three of the presentation material, there was talk about how they're using global vendors' equipment as well. So DOCOMO has begun to make very good investments. So again, we're not expecting extremely significant large CapEx, per se, but they will...
We will invest in base stations that have high, that have strong performance, that have high performance. So it's important that we steadily carry out that type of investment. That is one thing. Now, this will be something that will be meaningful more down the road, but this was covered by Mr. Shibutani earlier. With regard to the core basic network for network, we want to introduce IOWN-based IP node. Right now, we're working on IOWN 2.0. We'll be launching IOWN 2.0 product next fiscal year. But it's important that we introduce equipment that will lead to power consumption reduction, because that will so latency was lowered for IOWN 1.0, but then the power consumption was not changed. So for the core network part, it's important that IOWN 2.0 be introduced.
We need to incorporate IOWN 2.0 version type of equipments. As was mentioned by Mr. Shibutani, the replacement cycle for equipments will be coming. So as we'll follow the routine replacement cycle, replacement type of investment will not be increasing. But again, we'll be switching to something new when the replacement cycle comes. So through that, we'll be able to improve the service quality, and also we'll be able to reduce costs because the power consumption will be lowered through these equipments. So for telecommunication-related services, we believe that that type of investment will be continuing. And naturally, it's. We're not talking just about CapEx. We need to make investments to expand new business. We need to invest.
We might have to acquire companies so that we can expand into new business areas. So there, there's no specific area that I can talk about, but there are some sort of candidate areas. So regardless, domestic and overseas, we will consider potential opportunities out there, and respond with acquisitions should such opportunities arise. Thank you.
We would like to take the next question, then on the left side row, please. Susaka from Morgan Stanley. Hello. Thank you.
... I have a question regarding the overall presentation made today. I heard the overall presentation today, and the majority was a positive direction, but I'm the analyst on the finance side, so when think about how much drop there will occur in the profit, DOCOMO 1%, and will contribute to the profit and NTT East and West together will be a 2% profit growth. And with Enterprise, how much they can make money, that's the unclear part. So with the best case scenario, it will be the early single digit. If you can secure that amount of a profit, that should be fine. However, looking at the current business model, probably that level will be the limit is the impression I have.
The underlying profit, if that is the situation for this, then the additional investment will. For the stock market, they want a return for the investment. So towards the 1%, 2% growth company, will you make the investment or not? That investment decision is going to be required. If there's no risk there, yes, they can say we will invest in a defensive manner. But until now, if there's a volatility and if there's risk, there may be investors who will get scared and not make an investment. But towards the stock market, to give them a peace of mind, well, on other hand, there, the underlying profit, and on the other hand, there's a shareholder return, and with the both sides, it's going to be a total return.
Probably, it's better to show it in that way, given the size of your company. Now, looking at the past BPS numbers, the EPS, it's been threefolds now, and I think that track record is an impressive one. So thinking from this perspective as well, what do you think? The overall presentations, the pitch or the tone when you speak to the investors, I think you can make a pitch of what the total return is going to be. So operating a profit or EBITDA, you shouldn't focus too much on those two elements. So within yourself, is there some these organized within yourself? Thank you very much for that.
Last year, when we announced the medium-term management strategy, well, Tsukasa-san, yourself, and from others, we were told that the, a little bit more of a EPS, should be described as well or mentioned as well. And actually, myself, last year, the feeling I had when we created the medium-term management strategy, I said, each operating company grows. I didn't want them to become too dependent on the buyback from the holding company, meaning that I want them to grow on their own and generate return on their own. And each company has already become to a certain size, a large certain size. Therefore, gaining return organically, well, they cannot immediately increase in that way, is correct, as you pointed out.
Conducting M&As, well, aside from NTT East and West, but DOCOMO or NTT Data, they can utilize M&A to add on to the organic growth, is the request that I have made to them. In a way, it's a perspective investor or maybe an internal perspective. However, towards the expectations from the investors, ask myself what I think is that to actually act upon it, meaning increase the dividend or in a stable manner conduct a share buyback. By showing that is what I am working on right now. Regarding EPS, actually, for us, we do have a target in mind. However, it's we haven't committed it as a number, so probably you are implying to make a commitment to that.
However, the way we are rolling out the business, I cannot clearly say, but I want you to have a certain level expectations and just watch what we do for a little while longer and also look at our track record. We do have the feeling that we want to make one more leap or one more large jump, and from that perspective, we would like to make certain investments. And I have to continue to say this, or else within the group, they may have feelings come out that, "Oh, maybe we don't have to make new investments anymore." So I want the group companies to take on a new challenge, do something new, and create the opportunity for their new businesses.
That type of a willingness is important, is what I think. Once I become sure about what can be done, I feel that we can change the direction a bit, but please let me work on this a bit more. Thank you.
I'm afraid we have come to close the session, so this will be the final question for the session. Let us take your question. This will be the final question for this session. Hori from Mizuho Securities. Thank you for this opportunity. I would ask a little bit about NTT Data's data center business. How you at NTT Holding Company view data center business at NTT Data? I think NTT East and West and DOCOMO, they're trying to make a recovery all and minimize any downside. So right now, as far as data is concerned, as was mentioned by Mr. Shimada earlier, data is still enjoying very robust growth. But then, having said this, data center business at NTT Data, actually, investment still outweighs the revenue or profit, so no, there is no free cash flow.
You're spending JPY 1.5 trillion over a five-year period, and you invest three hundred and ninety billion yen per annum. Actually, your investment into the, your investment into data center could actually exceed two trillion, and you'll be perhaps maybe delaying the timing at which you'll be able to make profit from, be able to generate free cash flow from the, from the data center. Your market cap is the same as Nomura Research Institute. That being the case, if there's demand, are you going to allow them to invest regardless of the financial situation?
Is that your position with regard to NTT Data's data center business, or at minimum, are you going to say that there's business that would be profitable if you take a look there, if you take a look at Equinix? So if you spend, you'll be able to eventually generate free cash flow. So are you going to say... Are you going to demonstrate to the investor community that you'll be able to generate profit? And because of the free cash flow, because of the foreign exchange, your CapEx is gonna be contained at 1.5 trillion JPY. So I guess my point is, are you going to continue to be aggressive when it comes to data center?
Are you going to continue to invest in data centers regardless of the profit right now, or are you going to exercise financial discipline in terms of investing in data center? So as far as the holding company is concerned, to what extent are you going to allow NTT Data to invest in data center? So over the next five years, I think the data center business is going to be a very important part of your growth strategy at the group. So how do you to what extent can NTT, the holding company allow NTT Data to invest in data center business? Thank you for the question. To begin with, data center business was carried out by NTT Data, as was by the holding company up until now.
Actually, at one time, it is true that the growth of the data center business could actually start to fall. There was a time when we felt that the data center business could actually begin to decline. This was before the data center business was transferred to Data. But actually, this prediction did not come out true. There are the three top players, including NTT DATA. There is a difference in timing in the investment. So we were somewhat delayed, for some time behind in the investment cycle compared to the two top players. That is true. So the companies that were ahead of us, they have completed investment ahead of us, and some of them have transferred their data center assets into REITs.
As far as we're concerned, eventually, as we have consistently mentioned, around next year, we want to create our, our own REIT as well. So at that juncture, we, we'll be able to recycle the necessary funds and still be able to be involved in this marketplace. So yes, we were behind the major players. So in order to, in order to catch up, we're trying to make very robust investment. That is true. That's where we are at right now, and I believe that is the recognition, that is the recognition on the part of NTT DATA as, as well. Again, this, this entails a very difficult decision. Interest rates are rising right now. That is true. So yes, the situation is somewhat difficult. That is true. I have to, I have to be very candid and admit that we are in a very difficult environment.
But actually, if we can overcome the next couple of years, we can ride the next couple of years. I think we'll be able to go back to normal situation again. Now, are we going to do this forever? That is not the case, naturally. But I think for the next couple of years, I think we need to persevere. We need to be persevere and patient, and address this. That is my understanding of this particular business segment. Now, of course, it's difficult to envision that we'll continue the current pace of investment forever. That is not what we're saying. But right now, AI is emerging. And also, 60% of our customers are actually the so-called hyperscalers. But I think going forward, maybe it's not just fiber, maybe it's just hyperscalers.
I think people who are in big feel that public clouds are beginning to be too expensive. That could be a new market for us. So maybe the so-called industry cloud market could emerge, because some people might feel that public cloud is now too expensive. So I think inclusive of the content and the substance of the data centers, we need to really revisit our data center strategy. I think this year, we need to do that. So we're not just going to merely make CapEx into data center per se. It's important that we also consider the potential cloud as the new business area. So I think we are coming to the area where we need to see these other areas as potential candidates.
How do we respond to the industry's needs to lower the delivery of these services? That's another thing that we need to consider. So I think data center business is going to become even more hybrid going forward. And also, the capacity and the strength of NTT DATA can be very significant. They can contribute to this new market. Right now, they're not just involved in creating single system integration projects. They have the ability to create software as well. They have high quality. They're able to address high-level specifications. These are the requirements on the part of the customers as well. So how can you offer high-quality global software that is globally compatible? For example, the types that are offered by players such as SAP.
There are issues we need to be able to address them. We need to offer solutions that can also combine cloud and offer hybrid-based solutions to the customers. That is now what is required from the customers these days. I know that I've, I'm talking beside the point, but I think NTT Data can really make a contribution to this side of the business, as well. I know that someone veered off the major topic of your question. So it's not just focusing on mere data center business per se. It's important that as we try to expand new business opportunities, we are in a very good position.
So that being the case, I hope that we can grit our teeth and write the greatest decision of ambition so that we can be successful in the next stage. Thank you very much. If you could ask a second question. This relates to my first question. I think what you mentioned is that you want to focus on covering everything from the application layer all the way down to the infrastructure layer, and you have this full stack. That's your strength.
But this might be contrary to the shareholder return question earlier. Now the NTT law discussion is being carried out, and also eventually, the copper, in 2030, you'll be able to implement IOWN in full scale because the copper telephones will be now being terminated. So I think that now you're making preparations to emerge as a full-scale IT, ICT player. So I think that's why you're so involved in data center business, and this makes sense because this is a powerful business for your telecom center, telecom business. Now, if you want to launch IOWN in full scale, I think this will entail significant CapEx. So maybe you don't need to focus on shareholder return like other telecom carriers because you're already involved in other businesses. So maybe, maybe you need...
Maybe you could reset the scene and try to refocus all your efforts on growth. Maybe that time could come. What are your thoughts? Do you think such time will come? With regard to APN, with regard to all photonic network, this doesn't entail so much investment. Why? Because fiber itself is already completed. We've already carried out the investment required for fiber. If we need even larger capacity, then we need to introduce multi-core type of technology. But I think for the time being, we just need to tweak the transmission equipment, and we should be able to accommodate the changing technology. So it's not something. So we are not talking about domestic CapEx that will entail a significant investment. That is not something we're intending. That's not.
It's not a major system change. It's just about changing transmission equipment. For example, when we take a look at investment up until 2030, I don't think we need to make that significant investment in this area because we should be able to achieve what we want even without that large investment. We're not envisioning such heavy investment in the domestic scene. I think that's actually how you should understand our position. Okay, thank you very much for that.
With this, we would like to conclude the comprehensive overall Q&A session. Mr. Shimada, thank you very much. Thank you. With this, we have concluded all of the scheduled program for today. Thank you very much for staying with us for the long hours. With this, we would like to conclude NTT IR Day 2024. We seek your continuous support and understanding of NTT. Thank you.