Thank you very much for attending today despite your busy schedules. We would like to start the briefing session of NTT's FY 2024 financial results and a financial forecast for fiscal year 2025. I am Hanaki from the IR office and will be the facilitator for today. At first, I will introduce today's attending members: Shimada, Representative Member of the Board, President and CEO; Hiroi, Representative Member of the Board, Senior Executive VP, CFO; Nakamura, Senior VP, Head of Finance and Accounting; Hattori, Senior VP, Head of Corporate Strategy. Today's briefing session will be streamed live. We are planning to stream this on our website at a later date, so we seek your understanding beforehand. As for the materials used today, please refer to presentation material posted on our company IR website.
On the first page of the materials are items to be noted, so we kindly ask you to read through them as well. At first, President Tsuyoshi Shimada will explain the overview of our financial results, followed by receiving your questions. Without further ado, Mr. Shimada, please.
[Foreign language].
Thank you for your attendance. I'd like to provide you with explanations about the financial results for fiscal year 2024, as well as financial forecasts for fiscal year 2025. Please turn to page 4. This shows you the consolidated results highlights for fiscal year 2024. Operating revenue increased, operating profit and profit decreased. Operating revenues reached new record high levels. Operating revenue increased JPY 330.2 billion year-on-year and reached JPY 13 trillion 704.7 billion due to increase in revenue at NTT DATA Group, as well as Smart Life business at NTT DOCOMO. Now, of this increase, the impact of foreign exchange was approximately JPY 140 billion.
As for profit, despite increase in profit at NTT DATA Group and also at Smart Life business due to decline in mobile and fixed-line telecommunication service revenue and DOCOMO's initiatives to strengthen its customer base and network quality, as well as reaction to the impact of streamlining of non-core assets in the previous year, EBITDA was JPY 3 trillion 239.3 billion, down JPY 178.9 billion year-on-year. Operating profit was JPY 1 trillion 649.6 billion, down JPY 273.3 billion year-on-year. Profit went down JPY 279.5 billion year-on-year and was JPY 1 trillion due to drop in operating profit and also rebound from gains on stock sales in the previous year. Now, allow me to turn to contributing factors by segment, starting from Integrated ICT Business. This recorded growth, despite decline in mobile communication service revenue, mainly due to growth in finance and payment in the Smart Life business.
Now, despite increase in profit in Smart Life business, as well as measures to improve our profitability, profit decreased year-on-year due to measures to strengthen customer base and also efforts to improve network quality. The efforts to strengthen customer base have led to steady results in MNP or mobile non-portability, especially in the second half. Turning now to Regional Communications Business, operating revenue and profit both declined due to decline in network revenue and also reaction to the impact of streamlining of non-core assets implemented in the previous year. Fiber service net additions increased year-on-year due to stronger sales of 10 gigabit plans and also all unit plans for the condominium market. Let me now talk about Global Solutions Business segment. In this segment, revenue increased due to capturing demand for digitalization in Japan and also the impact of foreign exchange.
In line with that, we've been able to realize increase in operating profit year-on-year. There was increase in revenue year-on-year due to expansion of data center engineering at NTT Urban Solutions. However, profit declined due to impact of declining profits from the sales of assets in the previous year. Let me now turn to forecast for fiscal year 2025. We expect that there will be increase in both revenue and operating profit in fiscal year 2025. With regard to operating revenue, we are aiming for record high through increase in revenue at the Global Solutions Business segment and also Integrated ICT Business.
Now, as for EBITDA, operating profit and profit, we're aiming to expand profit over the medium term through measures to strengthen customer base and also improve competitiveness, such as network quality, as well as expanding profit in growth businesses, such as Smart Life and also enterprise business, and also transferring outcome of successful investments to REITs. We plan to achieve year-on-year growth. As a result, we are aiming to achieve year-on-year growth through those measures. We believe the fiscal year 2025 will be a year where various measures toward delivery of medium-term goals during fiscal year 2027 will be accelerated, and we will actively undertake various measures to achieve medium-term profit expansion. Let me talk about contributing factors by segment. Let's start with integrated ICT segment. We project increase in revenue but decline in profit, while there is increase in growth areas such as Smart Life and enterprise business.
Also, measures to strengthen customer base and also improve network quality will be continued, as well as measures to reduce future cost burden. We intend to improve medium-term profit by creating a strong customer base with the launch of the new business plan in June. In the Regional Communications Business segment, we project increase in both revenue and profit, while there is decrease in fixed-voice service revenue and decline due to measures to reduce future cost burden at NTT West. Profit from optical service revenue and also system integration is expected to grow. As a result, we will be able to realize both increase in both revenue and profit. Turning now to Global Solutions Business, revenue and profit is expected to grow due to increased revenue from DX demand, as well as sales of data center leveraging REITs.
In the others category, we expect increase in revenue but declining profit, while revenue is increasing due to expanded housing sales at NTT Urban Solutions. There is also reaction to sales of assets and energy carried out last fiscal year. That is why we expect increase in revenue but decline in profit. Next, I will explain our initiatives for achieving our medium-term goals. Since announcing our medium-term management strategy with a view of expanding future profits, we have continued to actively invest in growth areas such as data centers and Smart Life. In fiscal year 2025, which marks the halfway point towards achieving the financial targets set for fiscal year 2027, we will continue to make high-level growth investments to ensure the steady execution of approximately JPY 8 trillion in growth investments announced in our medium-term management strategy.
Towards fiscal year 2027, by surely realizing the results of our growth investments to date, we will accelerate profit growth. In addition, we will also aim for expanding domestic and overseas enterprise business by leveraging synergies within the group. Fundamental cost structure reforms through the use of AI and other initiatives will be further strengthened to achieve profit growth and achieve the EBITDA target for fiscal year 2027. Next, I will explain four topics. First, I will explain the review of corporate governance. To further strengthen our global business, we plan to appoint Mr. Patrizio Mapelli, who has management experience at a global ICT company and advisory expertise in business execution, as a new director, as announced in March, in order to further enhance discussions on management policies and strategies and to further strengthen the monitoring functions of the board of directors.
We plan to transition from a company with an audit and supervisory board to a company with an audit and supervisory committee. Through these measures, we will further enhance our governance structure. The credentials for Patrizio Mapelli, who is scheduled to take up his new position, are as shown. Next, I will explain shareholder returns. At today's board of directors meeting, we have resolved the increase in the annual dividend forecast for the fiscal year 2025 by JPY 0.1 from FY 2024 to JPY 5.3. As a result, dividends are expected to increase for the 15th consecutive year since 2011. Additionally, to enhance capital efficiency and strengthen shareholder returns, we will implement a share buyback program with a total purchase amount up to JPY 200 billion. We will now explain the state of our shareholders.
As shown in the left graph, the number of shareholders has increased to 2.68 million, approximately three times the number before the stock split, setting a new record high. In terms of the age distribution, the number of shareholders in their 20s to 50s has increased significantly, leading to greater diversity in the shareholder base. In addition, as shown in the right graph, the percentage of voting rights held by individuals has also increased. Progress under the medium-term management strategy since February is as shown. This concludes my explanation. Thank you.
Thank you very much. We now like to take questions from the floor. For those of you here on site, or also for those of you who are connected online and who have registered in advance, we'll take questions from those people.
If you're here on site, please wait until the microphone is brought over to you, and then we'd like to ask you to raise your hands. For those of you who are connected online, please use the raise hand button function of the web conferencing system. If you wish to cancel your question, please push the raise hand button once again to cancel your question. When we designate you, we'll call out your name and affiliation. Please unmute your microphone where we ask you to do so, and then go on to your question. Please wait until the responses provide entities from NTT's side before you actually unmute your microphone again. We would first like to take questions from those of you who are here on site. Kikuchi from SMBC Nikko Securities.
Thank you so much for this opportunity. Stock price today is actually increasing unexpectedly.
You're paying a premium now. For example, SoftBank has announced its billing plan, increased the billing plan. The environment has been generally positive for you, but I think the announcement of your TOB of NTT DATA has increased the expectation toward multiple for your growth down the line. I sincerely hope that you do respond to the expectations of the marketplace. We hope that you will be able to achieve results that are in line with the very high expectations. Now, let me turn to my question now. I would like to ask two questions, if I may. My first question is about the following. Let me start with a very straightforward question. The net profit this time, net profit is increasing, but NTT DATA Group, our flow of profit will be reducing as a result of TOB.
Is the impact of TOB factored in in your outlook for net profit this fiscal year? I know it's a difficult question.
No, it's not included. It's not factored in.
Okay, thank you. If the TOB was successful, then, and if operating profit is in line with the plan, then this could be an upside?
Yes, yes, that is the case. Yes, it would be an upside.
Okay, thank you very much for that clarification. My second question. The increase in operating profit and EBITDA this fiscal year is due to profit or process from the sales of data centers. I would imagine the REIT is going to be the main part of your increase in operating profit or profit for this fiscal year. Is this temporary, or is it going to be sustainable, do you think?
I was hoping that I could have discussions with members of the NTT DATA when they announce the financial results. Will the contribution be sustainable, or will it be temporary? If we look toward fiscal year 2027, because of the rebound, are you going to announce decline in operating profit? Is that a possibility? Is there going to be a rebound eventually? Also, the process from sales of data centers, or are there other profit drivers that are able to sustain EBITDA, profit growth for the next fiscal year? Can you share with us your thoughts about the direction for the next fiscal year onwards?
Thank you for the question. Let me start with the macro situation for the next fiscal year. I certainly want to avoid a decline in operating profit.
Now, we talked about the JPY 150 billion of sales process can be expected because we turn data centers into REITs. The next fiscal year as well, we hope that we'll be able to translate some of our data center assets to REIT next fiscal year. The JPY 150 billion, I don't think that's the scale we can expect for the next fiscal year, although we will, of course, consider the matter. I think we have to find other matters and other factors so that we'll be able to continue and maintain the profit level we had fiscal year 2025 into fiscal year 2026 onwards as well. We have to maintain the increasing trend. I know that this period for TOB is being ongoing, so I know that you're going to be clear until the TOB period is over.
I have strong expectations about the process from sales of data centers. The reason is because the first five years, the data center project was those three loss making. You had to explain that you expect profit to be driven in 10 years' time. As a listed company, that's a very challenging situation for you. Actually, by selling data centers, by selling data centers into REITs, you're able to bring forward your profit contribution from a data center. It is important that you carry out such REIT translation every single year at a certain amount because I think there's going to be volatility in the profit. Actually, REITs could actually help to undermine your enterprise value. That was my concern.
At this juncture, I know you cannot be very clear, but can you share with us how you characterize the contribution from the process of sales of data centers into REITs? I think it is important that there be a sustainable explanation.
Thank you for the question. It's very difficult for me to talk about the scale of REITs for the next fiscal year or the year following that. We will be considering that from later on. We cannot be very clear about that. I think it is important that we continue with the REIT program at a certain level, of course. Now, for this fiscal year, it's important that we consider a scale which will be acceptable to the marketplace. That being the case, we are going to be releasing something that is equivalent to 5% -6% of the total assets.
I don't think this will be very difficult to sustain because how to strike a balance is something that we must give thought to. We have to consider the other businesses as well. In fiscal year 2025, DOCOMO was trying to bottom out. They want to reach an inflection point. NTT East and NTT West were also seeing a turnaround in fiscal year 2025. Therefore, we believe that there's going to be an uptick in the profit overall for the group during fiscal year 2025. That applies to NTT DATA as well. It's important that we consider the overall situation of the group and the pace of increasing profit from fiscal year 2026 onwards. We need to scrutinize the group as a whole, and we need to come up with a plan for the group as a whole.
In principle, we want to make sure that we avoid a guidance where operating profit will be exhibited to the ground. That is something we want to avoid, and we want to avoid any volatility.
If I may add, as was already explained by Mr. Shimada right now, with regard to proceeds from sales of data centers, we expect proceeds from sales, we also expect profits from rent as well. In principle, we expect a moderate growth trend for data centers. That is how we want to control the data center program going forward. Of course, we have to deliver a certain level of scope size in the marketplace. In the initial phase, it will be somewhat large as a volume, but we want to make sure we exercise control going forward.
Now, with regard to data centers that will be sold, there will be features from data centers once the data center at the other. Again, there are characteristically presented assets. Hopefully, we will be able to control the future of the data assets that are going to be sold.
Thank you very much. That's all.
[Foreign language]. I would like to take the next question of the gentleman in the very front row.
I am Masuno from Nomura Securities, my first question is related to how the group businesses should be. I asked this question before. The capital not being 100%, 100%, I understand that. One thing we have to think about is that within your group, you have various companies conducting various types of businesses under various organizations. This is my personal opinion.
Data centers, it should be returned to communications and the optical fiber network GPU servers. All handled there is cleaner. Even though it's overseas right now, I have this thought that it should go back to communications, meaning that the businesses, how are you going to group them within your group? Looking at generative AI, East, West, DOCOMO, communications, and there's Tsuzumi, all that, they're done separately in different companies. Create one entity that will handle generative AI or AI agents. Grouping by businesses is another way of thinking. I'd like to hear your thoughts on this way of thinking.
First of all, regarding data centers, basically, currently, you have a global data center under data, and new data centers will be constructed under this entity.
The important element here is that for about 60% plus are hyperscaler customers, and the Japanese data centers as well will be occupied by data centers quite a lot. The data center business is sales upfront, mainly in North America, meaning that the headquarters are not in Japan. The contact point is something that we need to keep in mind and be aware of. Therefore, just have the Japan domestic business stand alone. On a global basis, the customers are thinking of the locations of their data centers. We have to understand this situation as well. Regarding AI, basically, within the group, in an intergroup way, it seems that various things are conducted. However, at the marketing department levels for Tsuzumi, how it's going to be rolled out within the group companies, it is discussed in this marketing meeting opportunity.
This goes for Tsuzumi as well and ChatGPT type of a service. How are we going to respond? The contact point has to be one place. Who is going to deal the businesses with Microsoft? We have the rules clearly set. It seems like things are done separately here and there, but we are having control. As you have mentioned, Mr. Masuno, various businesses, especially when we wholly own NTT DATA, at that time, which operating company or holding company can lead the stakeholders of this certain business? We have to have thorough management on this. Once we clarify that, things will go better. If we consolidate organizations, we can revisit the structure of the organization anytime. We can do that at that time.
Regarding security, up to this point, security business that was conducted in each individual operating companies was consolidated, and then we returned it. We have trial and errors repeatedly for this area. We would like to do such a thing and come to what is going to be most efficient and does not cause problems for customers.
The second question is related to IFRS accounting. How are you going to reconcile profit? Currently, the JPY 155.4 billion is included. My understanding is that this year starts is JPY 1.61 billion. The profit is going to continue to increase with the sales of asset profit level increasing and decreasing. It's kind of a noise. I had a feeling that you should adjust it. The data center in the U.S., or the Wall Street, is evaluating the cash flow by excluding those elements.
I think if it's more inclusive, that it seems that it will be growing, so it's easier to understand. What do you think?
Thank you very much for your thoughts. I think the way of thinking is exactly the same. Our intention is to explain in that way. We are showing you what we are doing and have it understood by you and directly make it into a chart or diagram in Joy too is something under a review. We received your feedback, so we would like to consider it. Based on the way of thinking as you have, Masuno-san, we have provided the explanation because in that way, you're able to see a growing trajectory.
Because we have Mr. Shimada here, I want to ask you about ION, the co-packaged optics, regarding the CPO part.
You were doing it, and then NVIDIA came in. In the substrate you have 444, total of 16. NVIDIA has a set of threes, so it is 18. It is the same structure. The CPU of being putting more weight on CPUs, that is fine. NVIDIA is making chips for 11 companies, and they are ready to go into mass production. I think the competition is going into more of mass production. Up till now, I want you to keep the leading position all the way, NTT. How are you going to respond to this situation?
First of all, regarding NVIDIA, the product itself, what type of product it is, honestly speaking, we do not know. For us, we wanted to do CPO, but the customer side wanted to do programmable ones.
When it's a CPO, the power consumption goes down because it's inside to the inside, you can use optics. For us, it all depends on the customer. Therefore, programmable ones, they have started. NVIDIA started from the programmable ones, and they changed it to that. For us, it's actually beneficial, is how we think, because originally, we wanted to do that way. Probably at this current point, we believe that we're still ahead of them, honestly speaking. In fact, right now, we are at a point that the customers are evaluating our product. Therefore, all the way up to the end of next fiscal year, it's going to be the period where it is going to be evaluated by our customers. Hopefully, by the end of the year, we will be able to share some good stories with you or good news with you.
We think that at some point, competitors will rise. However, the market heading towards that way is not necessarily a bad thing. I'm sure it's not fully answering your question. However, it's not that because NVIDIA came out that we're going to be kicked out of the market. We are not worried about that, honestly speaking.
Thank you. That's all. [Foreign language].
Thank you. Next question, please.
Yes, please wait for the microphone.
Tsukasa from Morgan Stanley. Thank you so much for this opportunity. First, I wanted to ask about the meeting to manage the strategy. You talked about fortunately a number in line with meeting to management strategy. Now we see NTT data centers turning into REITs, and there could be potential volatility from the REIT program at NTT DATA. But then what will happen next fiscal year? It's not yet clear. You mentioned that it's premature to discuss.
You mentioned it's too premature to discuss this at this point in time. But then three point, but actually, there's going to be a major jump from JPY 3.3 trillion up to JPY 4 trillion. Yeah. But then the number, but then the years will be limited. Time will be limited for you to achieve this major jump. I know that you're not, I know you're not committed to fortunately an asset commitment. If you have indicated this number, I think you need to show some sort of pathway so that you'll be able to reach this target. This might overlap with the previous question. Now, you want to reach an operating profit increase, but then I think the message is not going to be very strong. I would imagine that it's not just a three point increase.
There's going to be a lot of various other factors such as guiding elements as well. In fiscal year 2027, you're not going to make a major investment. Can you share with us how you intend to achieve this number? Can you share with us your thoughts behind the management so that you'll be able to achieve this particular number? Can you elaborate on how you intend to achieve this number then?
Thank you for the question. First, in relation to NTT DATA, I did mention this yesterday as well. We need to discuss the potential synergy. Hopefully, around fall, we'll be able to give you some clarity, inclusive of possible numbers. In conjunction with that, right now, there are several inorganic elements that are ongoing. They're all being considered both for Japan as well as outside Japan as well.
Inclusive of that, we need to consider our overall plan. Once we have a clear idea as to the synergy that is available, actually, in the meeting management strategy, turning NTT DATA Group into a wholly owned subsidiary firm is not factored in in the current midterm plan. I think we need to review the role of NTT DATA Group going forward. At a certain timing, maybe we need to review the current meeting to management strategy. At that juncture, if the target unfortunately is not very clear, but in any event, hopefully, we'll be able to show you a pathway that will allow us to achieve this target. Because unless we can show you the pathway to achieve this, I'm sure it will not be a very viable target.
While we review the meeting to management strategy, hopefully, at that juncture, we'll be able to share with you some numbers. That timing, when will that timing be? Hopefully, we'll be able to consider the synergy available by fall. We're not sure about the timing table. If there are a lot of discussions that's ongoing, we might have to wait until next year. At a certain timing in the future, hopefully, we'll be able to share with you some ideas.
Thank you. NTT DATA is showing profit plans, which is quite high. It's almost inflated. On a consultant basis, they only account for 20% of the contribution. 80% of the profit comes from telecommunication. That's the break. No matter how you move some of the parts, that is the calculation. Actually, there are other non-telecom elements that are out there.
If NTT is to come up with a different image of its company going forward, you need to consider various ideas. For example, you might have to include growth opportunities inclusive of the ICT integrated industry and also underlying cash. I know that the situation can be disagreed, but I think if you can show us a more straightforward message, then the investors' perspectives will probably change. The multiples available in the marketplace will likely change. This is my personal view, but thank you.
Yes, there are the finance-related elements. Yes, we need to organize some of these elements. That is true. Right now, we are showing segmentation based on each operating company. I think we need to scrutinize this. We need to revisit this.
Thank you. One other point. Net EBITDA is going to increase more than threefold. That is my idea.
The interest rate is low or cash flow, the ability to generate cash flow. There are a lot of reasons. Still, in the global business, you need a certain ratio. There is a level where you need to really work on your health ratio. Do you need to deleverage? That is my question. Do you need to deleverage? Also, in the current leverage ratio, is it possible to get inorganic, large-scale bold acquisition under the current leverage ratio? My impression is that you have really stretched yourselves in this particular case. What about the impact on your balance sheet? What about the capital allocation management? How do you intend to manage this? I would appreciate your thoughts. Thank you.
Yes, thank you. Simply put, interest-bearing debt is about JPY 10 trillion. That is the most recent number.
If the TOB is successful, then this will be utilized, and EBITDA will be JPY 3.2 trillion. Yes, it is true that the multiple will be increasing if the scenario were played out. Of course, we have had discussions with various rating agencies. We discussed this yesterday during the press conference as well. As far as we are concerned, we are now implementing a strategy that is geared more toward growth going forward. Inclusive of the entity data, if the current leverage ratio could be maintained, then financing availability and also interest rate and interest cost can be managed. I think we will be able to accommodate this and still have access to good cash flow. Of course, if the cash flow is not increasing, then the interest-bearing debt will have to be repaid much more aggressively.
In actuality, if the cash flow generation is increasing, then leverage ratio per se does not need to be dropped all that excessively. We can still manage cash allocation that is geared toward growth. That is the current situation.
If you have attractive, very sizable opportunity in the future, are you going to consider something else?
We will think about the response when the situation arises, I guess. For example, if the financing opportunity were to be limited, then we want to avoid such a critical situation. We will avoid such a critical situation. We will make sure that we will be able to finance at a certain rate. Also, if there cannot be, if there is a shortfall, we will consider possible selling off of some of our assets. We will give various ideas. Thank you very much.
Thank you very much.
We'd like to take the next question, the person in the very front row.
My name is Tokunaga from Daiwa Securities. I have two questions. The first question, maybe the same as Mr. Tsukasa, related to page nine, the cumulative profit growth. How do we read this? Sorry, maybe my understanding is that FY 2025, if you include data, then an accumulative figure will be JPY 7 trillion. You have already achieved the target. As you explained, in the medium-term plan, the data is not included. In two to three years, I believe you are aiming to achieve JPY 8 trillion. How should we digest this chart at this point?
NTT DATA themselves, when we were creating this medium-term management strategy, the TOB of NTT DATA was not included. It is not included at all, is how you could understand it.
That means that in the two years, you want to conduct actively investment in growth. However, the financial position is different from when you made this plan. It will be different and adjust.
Of course, you want to aim for 8 trillion still. As Hiroi said, the interest-bearing debt and EBITDA, we need to be aware of that as well. Depending on the deal, we need to organize the assets. We'll organize the assets so that we can bring about cash from there. This area, we would like to devise that so that it will enable us to do so.
The second is regarding a new price plan of DOCOMO. From before, from you, Mr. Shimada, you're going to be focusing on the market share. If the share is taken away, you will lose your customer base.
Up to now, you were focusing on the market share. Looking at the new pricing plan, it seems like you have started to focus on the quality of the customers as well. This type of a plan you are launching ahead of the other carriers, for me personally, was a surprise. Within this situation, before, the 35% market share, did the meaning of how you said that change? Also, the reason why you were able to launch this plan ahead of others is because you had to use the return to the users.
Actually, the customer base, of course, I'm still focused on that. Because, honestly speaking, DOCOMO, compared to our competitors, they have not spent that much on marketing expenses or marketing costs. Finally, now, they're spending about the same amount as the competitors.
As a result of that, up to now, they've been losing the market share, and they have been losing their customer base. Having said that, there are various rooms to devise some initiatives. It's not that blindly spending the marketing cost is good. DOCOMO needs to control it. I want you to ask DOCOMO directly that question as well. Regarding the price plan, I think that they came up with quite an interesting plan, different from the traditional plans. What are they going to bundle with? They looked at that, and it's important to generate added value. DOCOMO's Max plan, I think they have been creating that plan from an interesting perspective. I mentioned this at the press conference before towards the media. The plan launched by KDDI is totally different.
Therefore, having various types of a pricing plan into the market is going to be something for the customers to look forward to. Maybe the wording is not correct, but with various types of characteristics plans in the market, different types of competition may occur. I think DOCOMO was able to have a good start. Of course, it has to come with a solid result.
Thank you.
[Foreign language]. Thank you. We now like to take questions from those of you who are connected online. For those of you who are connected online and if you wish to ask questions, please use the raise hand button in the web conferencing system. We will take the first question from Okasan Securities, Okumura-san. Okumura-san from Okasan Securities, please unmute your microphone and then go on to your question.
Thank you. Okumura from Okasan Securities, can you hear me?
Yes, we hear you. Please go ahead with your question.
Thank you. My first question might overlap with the previous question. Let me confirm. NTT DATA, you're turning that into a society firm. You talked about synergy with that. You talked about synergy and its relevance to the midterm plan. You mentioned that it might come up with some quantitative synergy numbers in the upcoming fall. As for concrete growth strategy, do you think that this will contribute to the achievement and delivery of goals in the midterm plan? You talked about possible revision of the midterm plan. I think this might require some revisiting of the data contribution. Is that an option? Can you share with us your thoughts about this matter? That's my first question. Thank you.
Yes, thank you. With regard to the synergy, I did comment on this yesterday a little bit.
I think we need to create a project and then come out with concrete synergy in that course. At this moment, I'm afraid I cannot make a clear comment about the possible synergy. Naturally, though, we do have a certain level goal. It's important that we work for a certain goal and target. With regard to possible revision of media management strategy, how will this play out? In the midterm plan, we did not consider factoring the possibility of turning NTT DATA into a wholly owned subsidiary. Now that NTT DATA will be translated into a wholly owned subsidiary, yes, I think that will require some certain review of the media management strategy. How will this play out? That needs to be considered. We're not yet sure as to what form this will take unless we go through with certain considerations.
That is where we are at this moment.
Thank you. If I could persist a little bit. The top-line synergy, yes, I understand that this is uncertain. I know you cannot talk about synergy for the top-line, but what about cost synergy? I think you can. Can you talk about how much cost reduction you expect in certain areas? Is it possible for us to give? Is it possible for you to give us some clue at this juncture?
Very difficult to do so at this juncture.
Okay, thank you very much. That is fine. Let me go on to my second question. It is about fiber. In the case of mobile, I think all the operators are now trending toward increasing pricing, inclusive of yourself. Last year, in the case of Hikari, I think you increased your prices for Hikari last year.
Do you think you still have the room to further increase your Hikari pricing now, or is this something different?
Okay, Shimada here. Let me respond to your question. Yes, with regard to Hikari, with regard to price increase for Hikari or fiber, it is very difficult to make a comment on this matter at this juncture. For the time being, we need to consider the following. We have to consider the migration and termination, or migration rather, of the fixed and telephonic service. This is very important. Naturally, if we are going to see migration of fixed and telephonic service, then we need to provide a certain level of incentive. Also, we need to be prepared for a certain disincentive because unless we have that, it is difficult to encourage people to migrate to a different substitutional or other options.
That being the case, what type of plan do we have for migration? How can we move various players, various people, customers to substitute?
We need to make the plan open at a certain time, deadline. Hopefully, this can be compiled and made public sometime during this fiscal year. That is my hope. At that juncture, hopefully, we'll be able to talk a little bit about the treatment of fixed and telephonic service. That's how we want to, and that's how we want to start this discussion. I know it's not very clear. My response is not very clear.
Okay, what about are you talking about universal service?
Yes, that's the case. Yes. Yes. Okay. Right now, the law has already passed at the committee in the House of Representatives. If that were to be passed, then it will then be passed on to the lower house, or upper house, rather, the House of Councillors. Once the law is passed, then hopefully we'll be able to talk a little bit about our thinking to the community at large.
Thank you. One other confirmation. What about the cost? Is the cost reflected in the plan for entity service for this fiscal year?
No, it's not factored in the cost for entity service for this fiscal year.
Okay, thank you very much. That's fine. Thank you. That's all for my question.
Thank you.
[Foreign language]. Thank you very much. Are there any other questions? If you'd like to ask remotely, please press the raise-your-hand button. Are there any more questions from the venue here? No more questions? With this, we would like to conclude the briefing session. NTT DOCOMO's briefing session will follow, so we kindly ask you to wait where you are. Thank you very much for today.
From now, we would like to start NTT DOCOMO's FY 2024 financial results briefing, as well as FY 2025 guidance briefing session. My name is Makai no from the IR office. I will be serving as the facilitator today. Today's briefing will be streamed live. We are also planning to stream this on our website at a later date, so we seek your understanding beforehand. As for the material used today, please refer to presentation materials posted on our company's IR website. First, I will introduce today's attending members. From NTT DOCOMO, Maeda, President and CEO, Representative Member of the Board of Directors. From NTT Communications, Kojima, President and CEO, Representative Member of the Board of Directors. From NTT DOCOMO, Saito, Senior Executive VP, Representative Member of the Board.
Kobayashi, Senior Executive VP, Representative Member of the Board of Directors. Sato, Senior Executive VP, Representative Member of the Board of Directors. A total of five will be attending today. Next is the schedule for today. First, Maeda, the President and CEO, will explain the overview of the financial results and receive your questions following this. We are scheduled to end this session at 5:35 P.M. Japan time. Without further ado, the financial results will be explained to you. Mr. Maeda, please.
Thank you. Maeda is my name. Thank you for this opportunity. I'll provide to you the financial results for fiscal year 2024 and guidance for fiscal year 2025. Let me show you the results highlights for fiscal year 2024. Upper revenue was JPY 613.1 billion, up JPY 33.1 billion. Upper profit was JPY 120.5 billion, down JPY 123.1 billion due to increased cost for customer base and community quality.
With regard to Smart Life, correction, we posted an increase in JPY 20 billion in revenue growth areas such as finance, payment, and Smart Life acquisition, solution business for enterprise business. We were able to cover customer communication, negative impact of enterprise business migration, and recorded an increase of JPY 33.1 billion. Now, continuing factors, by segment. We recorded an increase in profit growth areas such as Smart Life, but due to decline in customer communication revenue and strategic cost of campaign without the players, as well as factors unique to fiscal 2024 such as PSTN, upper profit decreased more than JPY 100 billion. Through fiscal 2024, we will concentrate costs of marketing and also improve network resilience, and we want to hold the declining handset net adds, and we want to also improve network quality. We have significantly changed gears for future growth under the management structure.
As a result, we want to improve with MNT becoming positive in the second half, as a trend upward, and improve service quality, representatives, and major railways. Now, let me talk about the guidance for fiscal 2025. Operating revenue will be JPY 636.1 billion. Correction. Operating revenue will be JPY 636.1 billion. Operating revenue is JPY 636.1 billion. We expect an increase of JPY 30 billion in growth areas. As for enterprise, we want to attain operating revenue to JPY 30 billion, which is the target for fiscal 2025. Now, customer communication profit will decline, but on top of continued efforts to increase, strengthen customer base, and improve upper level of decline, especially shrink due to our strategy under the new. Also, we are expecting increase in overall, although there will be operating revenue will increase. We see robust growth in Smart Life and enterprise to future growth areas.
Also, the decline in mobile communication service will be improving, so we believe that increasing growth in growth areas will help to offset decline in customer communication. Now, in order to make, correction, in order to solidify the growth-based growth foundation for the future, we will continue to make marketing efforts, and we'll make efforts to improve the momentum with the network quality. Also, we'll aim to slim down assets in fiscal 2025, and we'll aim for more lean management structure. Although upper profit is expected to decline in 2025, we'll make sure that we can realize growth for 2026. I'm going to talk about efforts to realize midterm recovery in profit. As I mentioned, 2025 will be the year of transformation. We'll make efforts to improve marketing strategy and also transformation network.
In the case of marketing strategy transformation, through the new billing path, which we announced, we want to make sure that we will be able to realize rebound mobile communication service revenue from 2025 to 2026. Also, we'll also realize efficiency in terms of customer acquisition and marketing efforts. Also, network transformation. We have to make sure that we continue to make investments so that we'll be able to reinforce quality because this will be the basis of our service down the line. Also, on the other hand, we want to fundamentally overlook, review the construction process. We'll reduce the per unit investment for base stations in 2026, and also in 2026, we want to realize efficiency. We'll aim to improve network quality through the JPY 1 billion. Also, we want to make sure that we realize organic growth in Smart Life and enterprise business.
With 2025 as the binding, in 2026, we want to realize increase in profit, and in 2026, we want to make sure that we are back on back growth track, which is on par with fiscal 2023. Let's talk about the initiatives for each business for 2025, starting from consumer business. Let's talk about the overall strategy for consumer business. Now, yes, on top of communication, we have provided various services in line with the needs of the customers. In order to further facilitate growth for consumers, it is important that we add values of various partners, and we combine that with value of DOCOMO. It's important that we provide values that can be selected by our customers. One such case in point is the new billing plan, which we announced, called DOCOMO Max and DOCOMO Poikatsu Max.
Also, we will offer sports and live events that converge physical as well as digital, and also promote marketing and provide services. We want to create new value with various business partners so that we'll be able to expand customer base and also Smart Life and telecommunication service revenue. Let me now talk about the aim behind DOCOMO Max. From June 6th, June 5th, we will be offering DOCOMO Max, and the selection will be shifting from data, capacity, and price to value. We'll be offering long-term discounts. We'll also be offering benefits for international routing. Also, through collaboration with DAZN and Amazon, we'll be responding to various needs of customers, including sports, EC, and streaming, sports viewing, EC. For customers who use streaming services, we can offer various requirements. DOCOMO Max will further evolve. They will cover not just sports.
They will also include films, dramas, idol, and animation, and offer new values. I'm sure that this is a very attractive plan that can really drive requirements of various customers. With regard to customer base reinforcement, we have been MNP turned positive in the second half of fiscal 2024, and handset net adds are also improving as well. We want to accelerate this plus positive trend for MNP during fiscal 2025, to make sure they also improve recognition of DOCOMO Max and acquire new customers and make sure that we reinforce customer base in an efficient manner. As for ARPU, although we are JPY 20 behind the forecast, the plan, the migration of XMO is more than 60% for the fourth quarter. Also, per unit, per unit, ARPU after the migration to new plan is positive.
Again, we want to make sure that this 2024 will be the bottom line out of this upper trend can be accelerated. Let me talk about Smart Life and finance. 2024 [Foreign language] FY 2024 finance revenue increased 22% year on year to JPY 448.3 billion, especially D-Card Platinum, which was launched in November 2024, has been well received by many customers, and it has exceeded 600,000 members as of May 5th, making a significant contribution to revenue growth. In the investment and loan business, Nomura Securities' D-Card investment amount has grown by approximately five times, and the loan balance of the loan business has also increased by 23% by leveraging the strength of Nomura Securities and DOCOMO Finance. As our customers and MoneyLife partner, we will produce finance services that tailor to life stages and aim to achieve finance business revenue of JPY 516 billion in fiscal year 2025.
Next, I would like to talk about our marketing solutions business. In addition to growth in existing businesses such as marketing digital transformation, revenue has grown to JPY 172.4 billion with the collaboration with InTouch Holdings. To expand our support for marketing digital transformation, we will increase our constant IDPOS linkage with partners up to 70 companies. With the MyNiche Receipt service that we launched in February 2025, we will utilize extensive purchasing data and InTouch's analytical capabilities to support the overall value change. Through these efforts, we aim to achieve revenue of JPY 185 billion in the marketing solutions area. Next, I would like to talk about our entertainment business. Revenues for FY 2024 increased up to JPY 233.8 billion by the growth of LEMINO, NTT DOCOMO Studio Live, and other businesses.
In the future, we will develop original contents and strengthen our efforts to host events and live performances such as those for the J-League and popular sports, as well as strengthen the nurturing of our own artists to develop original IPs. Although there will be a decline in revenue from fixed-line video services, we aim to grow revenue from the entertainment business to JPY 236 billion in FY 2025 by expanding services for fans such as video distribution, licensing, and live performance and events. By utilizing the original IP and allowing many fans to enjoy live performances and events that combine the real and digital worlds, we will generate strong engagement between NTT DOCOMO and our customers through entertainment, which will lead to the expansion of our economic ecosystem. Next, I would like to talk about enterprise business.
In FY 2024, as a result of capturing digital transformation demand, solutions for large enterprises grew significantly. However, growth and solutions for small, medium-sized enterprises underperformed expectations due to intensifying competition in the mobile space. This year, we will leverage the strengths of the DOCOMO Group in ICT and infrastructure and the latest entity group, Technology ION, to deliver on the ICT platform that provides one sub-DX integration. We will also leverage our customer base, which ranges from large to small, medium-sized enterprises, to introduce competitive new services. Furthermore, market growth continues. We are looking with partners to strengthen our sales and development structures in order to strengthen our four key areas of focus in IoT, AI, digital BPO, and digital transformation for local with our customers. Through these efforts, I would like to accelerate the solution growth and aim for JPY 2 trillion.
Let me introduce some examples of initiatives and key areas for enterprise customers. In the IoT domain, we started accepting applications for the Local 5G Service Type D on March 25th. By sharing the network with DOCOMO, we have been able to build local 5G areas with redundancy and high serviceability at a low cost, and this will contribute to expanding the use of IoT. In the digital BPO field, based on the strategic business alliance with TransCosmos announced last year, we began full-scale offering of digital BPO solutions on April 28th, which addressed the social issue of the declining workforce. Next, we will introduce some examples of digital transformation initiatives at regional NSME DX. Hospital DX, one of the industry-specific solutions, combines mobile devices and voice services with packages and AI to improve the efficiency of hospital operations and the customer experience of hospital users.
Also, on-demand network as a service, DOCOMO Business Rink is well received among small and medium-sized businesses. Starting this September, it will incorporate a system for detecting and blocking threats on the network, involving a more highly secured service. Next is the network. In FY 2024, we focused on improving the quality of our communication services as our top priority. The number of 5G base stations increased by 20% year-on-year in nationwide urban centers and along key railway routes. We have also strengthened our event countermeasures. We have taken approximately twice as many countermeasures as last year to provide an environment where customers can enjoy the event in comfort. As a result, average throughput provided improved by 20% year-on-year in major urban centers and 30% along key railway routes. In the area around the Yamanote Line, which is one of the main routes of traffic, there has been 80% improvement.
I myself regularly ride the Yamanote Line to measure quality, and at each station, I have confirmed higher throughput communications than before. Therefore, I feel the quality of experience of the customers is steadily improving. Complaints from customers nationwide have also decreased by 40%, and customers are beginning to recognize the improvement in the quality of our communication services. In FY 2025, we will accelerate our efforts to improve the quality of telecommunications services. We will further expand the rollout of subsets nationwide and enhance 5G areas using 4G frequency bands in pursuit of greater breadth and depth of our network. Furthermore, we will promote the introduction and replacement of the latest base stations and MMU, as well as start smartphones compatible with smartphones. Through these efforts, we will provide a comfortable communications environment regardless of location or time and build a network that will continue to be chosen by customers.
As I mentioned at the beginning, we will also improve efficiency through network structural reforms. We will continue to invest in improving communications quality from this fiscal year onwards without slowing down. However, we will also fundamentally review our network constructions and transform our organization and structure, our business process, and our procurement process to achieve cost efficiency. As a result, we will be able to reduce investment in 5G base stations by 20% in FY 2026 by reducing material costs, and in FY 2027, reduce CapEx to sales by 16.5% and reduce network-related investments by approximately JPY 30 billion, thereby achieving both improved communications quality and cost reductions. Finally, about the corporate identity. As President and CEO Mr. Shimada explained earlier, we will be revamping DOCOMO Group's corporate logo. The new logo combines the dynamic group's entity's corporate logo to the previous logo.
The color will be unified with DOCOMO Red, which has been widely recognized by customers today. NTT Group and DOCOMO Group will lead the NTT Group by combining assets and the latest technologies to provide value to all customers and society. In addition, we will be changing the names of NTT Communications to NTT DOCOMO Solutions, NTT Communications, NTT DOCOMO Business, NTT Comware to NTT DOCOMO Solutions, as well as develop the new corporate logo, including NTT DOCOMO Global. By bringing together the strength of DOCOMO Group, we hope to create new value and continue to contribute to the realization of an affluent society. This concludes my explanation of fiscal and financial results and FY 2025 guidance. Thank you very much.
[Foreign language]. Okay. We would now like to take questions. For those of you who are here, please raise your hand.
We'll put the microphone to be brought over to you. For those of you who are connected online, please use the right-hand button of the web conferencing system. We'll take questions from those of you here present on site. Let's start. Yes, let's start the first question. Please go ahead, sir.
Thank you. My name is Kikuchi from SMBC Nikko Securities. Thank you for this opportunity. I wanted to ask primarily about your plans for this fiscal year. Maybe if we could ask several questions. Let's turn to page eight. If you could please turn to page eight. It's about consumer communication. The number 18 billion. That's what I wish to ask.
Now, in fiscal year 2024, I think the negative was JPY 91 billion. The breakdown was roughly increased in marketing cost, especially during third quarter and fourth quarter. I would imagine that that increase was about JPY 70 billion. Of course, cost to reinforce network quality, that several tens of billions of yen were also incurred.
Now, this fiscal year, can you give us the breakdown of this JPY 18 billion number? Also, with regard to acquisition cost, are you going to spend the same level of marketing as you did during third and fourth quarter? It means that during the first two quarters, you'll have to spend tens of billions of yen for marketing expense. This number, JPY 18 billion, is this simply the gap? I know that there are a lot of factors that went into this calculation, but there are two questions that I wish to ask about this number.
During the first half of this year, did you spend the same amount of marketing cost compared to the third and fourth quarter of the previous year? Or if that's not the case, what additional investment do you intend to make? That's my first question. Thank you.
Yes, thank you for the question. First of all, let's start with the third quarter and the fourth quarter and the comparison with the first two quarters. The provisional number is very number. To be quite candid, in last year, we actually lost to competition in the first half. We spent a lot of cost in the second half in order to capture, take back customers. We need to control that. I think how we spend the money in the first quarter, in the first half of this year, is going to be very important.
We want to make sure that we maintain the momentum from the third and fourth quarter into the first two quarters of this fiscal year. Now, are we going to spend the limbs? Are we going to spend that amount on a full-year basis? That's not feasible. How much investment should we make for each given channel? We need to be, we have learned with takeaways. It's important that we reflect that know-how, and it's important that we create efficient spending. Also, the other relates to the new building plan that was just announced. I know that there's a lot of different feedback about the new plan. In principle, we wanted to change the way in which we market our plans. It is true that as far as telecom services is concerned, yes, we have to work even harder.
As for other competition, as for the competition, if they're also working hard in their telecom services, then it's very difficult to differentiate. How do we differentiate? Many players are spending a lot of money in their sales channel. As a result, the mobile players have not been successful in coming out with very clear differentiation. As a result, it's important that we differentiate the service delivery. That is most important. Also, if the services can be differentiated, then it's important that they can be delivered to customers who have those needs. It's important that we target those customers. It's important that we provide services that will hit the requirements of those specific customers that will translate into potential for further growth. That is the positive scenario which we have in mind. Now, with regard to DOCOMO Max.
Yes, we have added various values for DOCOMO Max. We talked about the variety of customers. [Foreign language]. With regard to sports, yes. With regard to sports, it's very extensive. There are a lot of broad customer base that are interested in sports. We have a very strong customer base already. Of course, there are potential for customers in the competition as well. It is important that we address those requirements. Hopefully, we'll be able to capture the customers. This is a different methodology that we follow from the past. If we're successful in pursuing this methodology, then I think overall we'll be able to be more efficient in marketing. [Foreign language] Yes, it is challenging, but it's important that we realize this. Hopefully, we'll be able to exercise good control. That's what we want to achieve. Thank you. [Foreign language]. Thank you.
If that is the case, this fiscal year, you want to maintain momentum. You maintain the same level pace of investment from the third quarter and the fourth quarter of the previous year. Eventually, you'll be coming back. That's the approach you factored in. That's the approach. Yes, we will be exercising a certain level of control. Are we going to spend less than we did in the previous year? That's not necessarily the case. The negative could be larger than JPY 18 billion. Is that the case? [Foreign language]. Already to accommodate more losses than JPY 18 billion
Okay, Kobayashi here. Let me respond. On a full-year basis, are we going to reduce marketing costs? That is not what we planned. Last year, correction, we were changing approach from the previous year. For example, our competition with retailers, that is also already fixed. We also have very.
Are we going to compete the same way we did last year?
That is not necessarily the case. We will have a certain level of efficiency improvement. However, we cannot reduce the marketing costs because of the competitive environment. What will be effective? It's collaboration with players like DAZN. For example, we want to be able to procure the content at a cheap level. We have the largest market share in this particular market. We also have large venues. We also have partnership with J-League. That is very beneficial. That's very effective for us. We need to leverage those strengths. We're not going to just casually spend the same level of marketing costs that we did in the third quarter, fourth quarter last year on a full-year basis.
Of course, we have factored in certain efforts to control the marketing efforts. We also need to focus on enhancement of communications quality. We did this last year, but we need to do further more this fiscal year if we really want to rebuild the quality. With regard to network costs, I think this will have an impact of more than JPY 18 billion. With regard to marketing expense, JPY 18 billion negative. It's not just marketing expense per se.
Okay, thank you. That's very clear. Mr. Shimada earlier talked about a challenging target of maintaining both customer acquisition, but also maintaining cost. I think you lost the competition in the previous year when the competition came out with new iPhone. What happens if a similar situation were to emerge this year? Are you going to compete once again? Are you going to spend that much cost?
Actually, of course, the overall cost plan is there, but we have already factored in possible increasing competition naturally. Of course, we need to exercise control on a monthly basis, but what is important is that we do not create a situation where we are losing to the competition overall.
Thank you. If I could ask a follow-up question then. Page nine, you talk about fiscal year 2025. You talk about the efficiency of acquisition cost. If fiscal year 2026, you might realize profit improvement, although you are going to realize marketing strategy reform. Next year, you will be able to cut back on the marketing cost. Is that what you factored in for fiscal year 2026?
Yes, that is the case. Yes, we believe that our work will progress further. Furthermore, we have a point return program.
We're also involved in a finance program. We're able to combine those services, and we now have very broad coverage as a result. If this could be leveraged, then the churn rate would be coming down further. That will help us to realize more efficient marketing. I think we'll be able to reduce the cost as a result.
Thank you. With regard to billing band, if I could ask an additional question, I think in the case of Idemo, I've always felt that you should be, I've always felt that you should be reviewing Idemo, but with the new billing plan, you have revised the billing plan. This will help you to catch up with other competition. I think as a result, you have a very positive trend as a result of this new billing plan. I'm grateful for this new billing plan.
Having said that, with regard to DOCOMO Max, the competition is likely to catch up as well. They'll be coming out. Maybe eventually, you might have to revisit DOCOMO Max. If that's the case, I hope you review this in a speedy manner. The animation and your unique services, we hope that you will do something when you launch these new services.
My second question. Let me turn to my second question. Earlier, if you could go back to page eight again. Page eight. I was wondering what you meant about using enterprise assets. What do you mean when you say leveraging enterprise assets? Enterprise asset utilization, what do you mean? Will enterprise asset utilization on page eight help you to realize cost reduction in the fiscal year? That's my second question.
Okay, thank you. Kobayashi here. In fiscal year 2024, we actually streamlined non-core assets. This generated sales. There is a rebound from that. Also, in fiscal year 2025, if you compare EBITDA and the numbers, you find that we have created non-cash elements. That is factored in these numbers. The bulk is reaction from this. The bulk of the loss is due to the rebound from the enterprise asset utilization that we did in the previous year. Thank you very much.
Thank you very much. That's very clear.
Thank you. The very front row in the center, please go ahead.
Masuno from Nomura Securities. I would like to ask a question by segment. This fiscal year's enterprise operating profit, JPY 23.8 billion down. I was surprised. This is the asset selling again. That JPY 4.8 billion is going to disappear.
The actual capability is an increasing profit of about JPY 11 billion. Enterprise is a double-digit growth aim in the industry, and that seems to be the general level. In your company, the enterprise business operating profit increased by 10%. That phase, where can we see that? At what timing? This year is a JPY 20 billion increase. However, moving forward, at what time? How are you looking at it? Maybe at a longer horizon, if you can explain about the growth.
Kobayashi will explain.
Thank you for your question. Regarding this fiscal year's growth, PSTN impact that we've been repeating for, it's about JPY 18 billion negative against the previous year in profit. We have the increase and decrease of selling the asset. Actually, the growth is about 5%. Excuse me, fiscal year 2024 is 5% for growth.
For FY 2025, we are setting it growth at a higher level compared to last year. After academic year, we've been implementing various initiatives. For the large enterprises, just looking at the fourth quarter, we've been increasing by about 10%. For small and medium size, for the small-scale mobile customers, they have not completely returned to us, and they haven't grown yet. In total, it's about only 6% growth. By implementing sure measures in the next fiscal year, we would like to get close to that number or close to that number soon. The medium-term plan numbers will be announced. More than the industry or above the industry level is the target setting that we would like to have. You were saying next fiscal year. You're talking about March ending 2027?
Okay, understood. Thank you very much. The consumer communications? Mobile communications ARPU revenue, it was JPY 5.1 billion decline. ARPU went up by JPY 30, and the users and subscribers increase, and the price will increase. I was wondering why it is a decline in revenue. The point or marketing cost is impacting this decline. I would like you to explain the ARPU and the subscribers and the trend of the sales. I would like you to elaborate on a setup.
Kobayashi will be explaining that out of the JPY 37 billion last fiscal year and the first half, we have lost quite a number of subscribers. That part is going to fully impact this year. Also, the overall industry movement, and this does not impact our income, but the excess charge is going to slightly decline is what we expect. Together with that, there is about JPY 30 billion plus.
With this running fiscal year, due to the decline in population, the utilization is going to slightly go down is what expects. That is going to be remaining several billion JPY. FY 2026, meaning March ending 2027, it will become flat. From there, we will be able to steadily increase it. Excess charge is what you said, 30 billion? No, excess charge and others. The previous year's loss, that impact, and add that to the excess charge as well is about a negative that amount. This 37 billion, that consists of more than 60%. The point granting is about 6 billion negative impact, and MNP now turned positive. There is still a continuing declining trend of population. There is going to be a decline on the utilization of the service as well.
Also, consumers' communications business operating profit is JPY 68 billion decline. It is more of a decline than the service revenue. I think through marketing activities, it will increase the subscribers. The marketing cost seems to increase by JPY 20 billion or JPY 30 billion. I think it was asked by Mr. Kikuchi as well regarding the marketing cost. It is not that we are going to rapidly decline it. However, we are not thinking of increasing it by large at all. It is more of the network. Consumer communications is absorbing most of the network cost. That is a several 10 billion yen of negative number included in there. Regarding this, Maeda explained that we will be changing how we constructed with the constructing of vendors. To begin with it, what kind of vendors are we going to be using? We are reviewing all that.
Within the next two years, in the last two years, we completed the catching up. In FY 2027, we would like to normalize this situation. The removal process is going to occur, and that is going to impact the consumer communications revenue. What do you mean? The removal? March ending 2026, and from next fiscal year, it will not? Next fiscal year, it will continue to exist, but it is not going to increase. Page nine guidance at the network, it is going to be flat. In FY 2027, it is going to impact the improvement of profitability. March 2028, it is going to have a positive impact.
Understood. Lastly, in the macro perspective, I would like to ask you a question, Mr. Maeda. The integrated ICT segment, overall, JPY 966.6 billion of operating profit. SoftBank has JPY 1 trillion. KDDI exceeded JPY 1 trillion as well. In terms of operating profit, you're under JPY 1 trillion. JPY 1.2 trillion, JPY 1.1 trillion level, which the competitors have. To go up to that level, how long is that going to take for you? What is your view on this?
I would like to explain using, it is as I have explained using this page. Meaning that, as you, Mr. Masuno, mentioned, fiscal year 2027 is the year we'd like to bring it up to the level that you have mentioned. Previously, Mr. Shimada explained fiscal year 2025 is the bottom. From fiscal year 2026, we would like to turn around. Fiscal year 2023 is the record high level. We would like to bring fiscal year 2027 to a level that would exceed that. The story is that mobile service communications revenue is going to stop declining, and all the other additional services of revenue is going to be added to that.
Therefore, we believe that the overall increase will occur from that.
Thank you very much.
[Foreign language]. Next question, please. Please wait for the microphone.
Tokunaga from Daiwa Securities. I wanted to ask a question, actually two questions as a follow-up to what you mentioned during the press conference. The first point, you mentioned that KDDI was also changing their plan pricing for existing customer base. We asked whether you had no intention. You mentioned that you had no intention of increased pricing for the existing plan. You wanted to streamline and revisit your current plans. That is how I interpreted your response. If you are able to streamline your current billing plans, then will that have an impact on your revenue and profit? Will this have a positive impact? Also, how many billing plans are there in your service lineup? Were you able to review the situation?
I appreciate your elaboration. Thank you. That's my first question.
Thank you for that. Yes. I made a comment during the press conference. I mentioned that increasing the, well, streamlining the various plans and also increasing pricing for existing plans. There are two separate things, I believe. I think we need to monitor the customer situation if we are to consider increasing pricing for the current plan. With regard to organization of the streamlining of the old plan, we have customers that are still with very long-term, long-standing plans. This applies to the existing in place. Also, we have to consider various elements such as the system cost as well if we are to change the plans. Of course, we also need to consider the changes in the shop floor as well if we are to have contact with those customers.
Those customers that are with the old plans, we have to consider what plans we are going to migrate them to. How can we do that in the future? We have to give this matter some thought. I cannot give you comments at this juncture. You mentioned streamlining. This will have an impact in terms of cost efficiency. Is that the case? Yes, that is the case.
Thank you for that. My second question. I understand that you were not able to meet some guidance targets this year, and you spent a lot, made some bold investments. You mentioned your approach to the distributors. This fiscal year, I think you have the intention that you are going to go through with the plan, and you are going to work with consumer companies.
You mentioned that you did very well as a result of changing the way in which you work with consumer companies. If you're going to seek further acquisition, there could be that there's a potential upside in terms of the cost. Are you going to spend more for this fiscal year? I think the investors are concerned that you might, again, end up not meeting the target. In terms of cost efficiency, considering the guidance, you were not able to meet some parts of the guidance. How confident are you that you will be able to meet the guidance for this fiscal year? Thank you.
With regard to marketing cost, I think we're confident that we'll be able to control the marketing cost. We have to consider that there are other parties involved.
How do we respond if there are other parties that are relevant? I think we need to be mindful of the situation. We need to realize the overall general cost efficiency program. It is important that we consider ways in which we can finance those marketing initiatives. I think we need to give this matter some great thought. Yes, that's true. Your second question? Yes. In the case of AU, they changed their building plan. I think you have an environment where you're also able to benefit from that and increase the price. AU increased their pricing. Can you do the same as a result? Generally speaking, since cost is increasing overall, how can we gain cost from the customers and check balance?
I think, yes, we have the history that we have a positive environment where we could potentially consider increasing pricing. However, it's very difficult to change drastically. Can we do this with a good communication? That's not the case. I think we're still competing with the competition over customers. We need to consider what's the most beneficial for our strategy. That being the case, I think we need to consider how we manage the situation from this point onwards.
Thank you.
Thank you. [Foreign language]. Would like to take the next question. Please go ahead.
Just one question from my side. You two carriers came out with new plans, and this may be a media-like comment. However, it seems like things that it's not necessarily mixed up in the plan from the user perspective.
I think that I only have this much choice. I think it may become that way. I'm wondering if there's a way for, I think you should provide what the users want. Of course, you just started. I think it's like, okay, this is how we're going to start with. It seems it doesn't sit very well. It seems like au also, there's a lot of things that it's not necessary. I don't know in your case that there must be impact for the mean impact for network. It seems like new plans, there is no freedom, or maybe from the people who've been joining previous plans, it's unfavorable for them. It's the feeling that I'm having. Add something that is unnecessary and have them pay the price. I think that is the ideal.
However, because your DOCOMO, you have this value, it's unclear right now. What's the end picture you have?
Not if you want to add added value to communications. As you have mentioned, Mr. Tsukasa, line up that where the customers can decide whether it is necessary or not is what we'd like to do at the end. We're starting this and trying to seek how we can approach the customers. I think this cannot be copied by other competitors. Having this much of a sports contest at that high price is competitors, but we are providing it at a reasonable price, including the communication side of our service as well. We believe because of this, the customers will come to our side. For sports, as written in our slides before, there's about 90 million of spectators of sports.
I believe that not all 90 million will join our plan. However, in fact, DAZN, J-League, baseball, B-League will be included in the plan this time. If we include everything, the fans, the dedicated fans is about 40 million. Looking at the people who play these types of sports will exceed 10 million. I have a son, and my son does sports, and they actually get the parents involved as well. We are working on this together with J-League. There are regional football clubs. They improve the stadium's communications environment or provide support as a sponsor. By doing such a thing, we are having more linkage with various regional communities. It is more like we are on their side, and these fans and these people who play sports will join DOCOMO and enjoy the sports content.
This will lead to increasing our customers, and we will be able to have our customers feel that value. Regarding this part, we believe there is quite a bit of room for possibility. Having said that, we do understand there will be customers who are saying, "That's not what I want." In what other genre, what kind of thing we can create is something that we would like to further review. Within this competition environment, we wanted to launch something as quickly as possible as a first step first. [Foreing language].
Thank you. Next question. We'd like to take a question from someone who is connected online. Please use the raise hand button function of the web conference system for those of you who are connected online, and we just ask a question. Please do so now. Thank you.
It seems that there is no one who wants to ask a question who is connected online. Any other question from those of you who are here on site? If not, it seems that there are no other questions, so we'd like to conclude the session at this juncture. Thank you for joining us for the presentation of financial results for fiscal 2024 and projection for 2025. Thank you so much for joining us today. That is the end of the session. Thank you very much.