We will now start the briefing of NTT's financial results for fiscal year twenty twenty third quarter. Please go ahead. Thank you very much for participating today despite your busy schedules. I am Fujigi from the IR office and will be the facilitator today. I would like to introduce today's attending members.
First from Mr. Shimada, Representative Member of the Board, Senior Executive Vice President Mr. Nakayama, Executive Officer, Senior Vice President, Head of Finance and Accounting Mr. Taniyama, Executive Officer, Senior Vice President, Head of Corporate Strategy Planning from NTT DOCOMO Mr. Fujiwara, Executive Vice President, Member of the Board of Directors, General Manager of Corporate Strategy and Planning Department Mr.
Kobayashi, Senior Vice President, General Manager of Accounts and Finance Department. Today's briefing session, Voice, is streamed live. This will also be streamed on our company's website on a later date, so we kindly seek your understanding. Today's presentation materials are posted on our company's IR website under Presentation Materials. On the first page of the presentation material, points to be considered are stated, so we kindly ask you to read through them.
After this, Mr. Shimada will explain the outline of the results and others followed by opening the floor for questions from all of you. Mr. Shimada, please.
Thank you very much. Shimada is my name. Thank you for joining us at this web based meeting despite your busy schedule. So allow me to explain the financial results for the nine months ended 12/31/2020. I'll be very brief in my presentation.
So Pages four, five and shareholder return Page 14. For this, I will be focusing on these three pages. So let's start with Page four. As for third quarter, we saw decline in operating revenue but increase in operating income. Net profit was achieved record high as of third quarter.
At this moment, both operating revenue and operating income is proceeding better than our annual plan. As for operating revenue, as a result of declining DOCOMO's handset sales as well as overseas system integration business revenue as well as due to change in accounting method for part of the revenue whereby net amount instead of total amount will be recorded. Operating revenue decreased by JPY124.7 billion year on year and reached JPY 738,000,008,000. As for operating income, while there is decline from impact of COVID-nineteen, as a result of increase in profit in DOCOMO Smart Lock business as well as improved profitability in our overseas business, Operating income increased JPY51.9 billion and reached JPY1502.3 billion. As for net profit, there was increase due to increased operating income.
Also there was contribution from absorption of minority interest income related to turning DOCOMO into wholly owned subsidiary firm. So profit increased JPY34.3 billion and reached JPY831.2 billion. As for overseas sales, there has been decline due to change in accounting method as well as impact from COVID-nineteen. But on the other hand, operating margin improved due to streamlining exercise at NTT Limited.
Right now, we're making very
strong progress. We need to continuously monitor the possible restriction on economic activities around the world due to COVID-nineteen. We will not be revising the annual plan at this juncture, but we'll make an effort to exceed the plan. Now as far as the impact of COVID-nineteen during the third quarter results are concerned, the impact on operating revenue is JPY160 billion and JPY30 billion on operating profit. Please turn to Page five.
Contributing factors per segment for the third quarter. As for Mobile Communications segment, decrease in operating revenue but increase in operating income. Decline in Mobile Communication Service revenue due to decline in handset sales and global programming revenue expanded impact of the new rate plan was offset by increased profit in Smart Life business. So revenue declined year on year, but operating income increased year on year. As for Regional Communications segment, while revenue increased due to strong fiber sales at both NTT East and West, there is disposal of property related to expanded capacity at NTT West.
So increase but decline in but decline in operating income. But for the second quarter, third quarter, they showed both increase in operating revenue and operating income, so very strong. As a long term long distance international communication segment, change in accounting for part of the revenue at NTT Limited did take place. And also there was impact of COVID-nineteen, so there was decline in operating revenue. On the other hand, improved profit there was improved profit from structural reform in overseas business, So revenue declined, but income increased as a result in this segment.
As for Data Communication segment, this was already announced by TD Data just yesterday. They recorded increase in both operating revenue and operating income year on year. Let's turn to Page 14.
This is regarding the shareholder returns. In the mid term management strategy, we have announced our basic way of thinking of continuous dividend increase. Therefore, this is reflecting the steady progress of this fiscal year performance against annual performance forecast, profit increase from wholly owning entity DOCOMO and improvement of cash flow. And given this as for dividend fiscal year 2020 year end dividend will be JPY0.55, a JPY5 increase from the dividend forecast at the beginning of fiscal year and the annual dividend of JPY105 per share and it is JPY10 increase compared to the previous year.
We'll now start the Q and A session. As we've announced beforehand with regard to Q and A, we'll be receiving questions only those who have already registered and connected to the telephone conference system. For those for questions, please the operator will explain how we will be taking questions from now on. Thank you very much. We'll be starting the Q and A session.
If you have any questions, please push 0 followed by 1. If you wish to cancel your question, please push 0 followed by 2. From Nomura Securities. Your question, please. You.
Masuda from Nomura Securities. I hope you can hear me. Yes. We hear you, sir. Thank you.
I would like to ask two questions. One, the second relates to telecommunications with regard to Harmony. I understand M and P is now in the positive territory for M and P. How much impact did AHAMO have? I understand the reservation of AHAMO already reached 1,000,000.
That's what you said at the press conference. Can you give a breakdown between the new customers as well as current customers? What's the breakdown between non DOCOMO customers and current DOCOMO customers? How do you see the trend going forward? So that's my first question with regard to AHAMO.
Thank you very much. Fujiwara from NTT DOCOMO. Let me respond to your first question about AHAMO. Yes, at the press conference today, we mentioned that we have already exceeded top 1,000,000 subscriber base or correction 1,000,000 reception. This is only for entry.
So what extent this will translate into active subscription, we're not yet sure. This is simply the level of entry. But what we had intended is to capture customers in their 20s and 30s. And that customer segment was the target of the new lineup called AHAMO. And we're now making preparations for this end.
So the application from people in their 20s and 30s, they are actually relates to a substantial portion of the application. So I think Aomo is very attractive in that regard. At the same time, March 26, that is the day for the launch of the service. This was also announced today. Toward the end of the year, inclusive of the promotion going forward, we hope that we'll be able to expand the recognition of this new service and expand the tick up.
Thank you. What about the impact of AHAMO on the M and P in December and January? I think right now advertising is on YouTube. Would the advertising be also focused on web based going forward? As far as the advertisement is concerned, well, yes, we have launched some primarily net focused advertisement, but we are hoping that we can expand that.
And we'll have to make preparations to expand these throughout of our marketing. Yes, we'd like to get off to a good start. As far as the M and P is concerned, yes, we mentioned that we are in the positive territory when it comes to mobile network portability or M and P. So we're in the positive territory after the third quarter. We would like to continue this positive trend.
So that is what we would like to aim for. Thank you very much. May I I'd like to follow-up as far as the quarter is concerned. Well, we went to positive territory in December. When I think for the third quarter, we're still in the negative territory for MNB, but positive territory for MNB in December.
Thank you very much for that clarification. My second question is in relation to Entity Communications. MIC Advisory Group, based on the data which was submitted there, I understand that towards summer, you're considering possible turning of Internet communications into a whole new subsidiary firm for DOCOMO. One of the points is the backbone efficiency greater efficiency backbone network. To what extent is the overlap between the backbone network?
And to what extent can you realize efficiency? What about sales and marketing? I think you have corporate teams in both communications and DOCOMO. How much is the overlap between the corporate sales team between the two companies? And also what impact can you see if you have a group oriented structure going forward?
I would appreciate your thoughts. Thank you. Shimada here. Let me respond to your question. As you mentioned, Mr.
Masuno, toward the summer of this year, we are considering turning NTT Communications into a subsidiary firm of NTT DOCOMO. Now against the backdrop, with regard to corporate sales team, we want to reinforce that and also we want to consider greater efficiency in our facilities and thereby translating that into cost reduction. These are the two major targets for this exercise. As far as the facilities are concerned, in principle, as you're aware, NTD Communications has core network that connects between different prefectures. As for DOCOMO, naturally, they own all of the network.
So therefore core network interperfectural core network entity DOCOMO has as well. So can we immediately very simply realize efficiency? This is going to be a time consuming exercise. But with regard to investment for future networks, I believe that we will be utilizing the efficiencies of the two companies. And since we're in the era of FMC fixed mobile convergence, we will be trying to integrate the core network down the road.
With regard to corporate sales, in principle, NGT Communications has focused primarily on fixed line solution on delivery fixed line solutions. As for DOCOMO, in principle, they focused on sales and marketing for handsets as well as delivery of solutions in relation to those handsets. So that being the case, as we get embark on five gs era and we just request new standalone services. So selecting related services will be required. So in that regard, the customer base that Internet Communication has can receive such services and they can receive solution services which is based on fixed mobile conversions.
So it's not so much overlap. I think the structure is that both companies will be cooperating in order to deliver new services. I think that is going to be the situation going forward. Thank So that means that you're not going to create one unified sales team. That is not what you're considering.
Is my understanding correct? Well, let me put it this way. Next year well, this year they will turn into subsidiary and one year toward spring and summer of next year with regard to the organization of corporate sales, we would like to consider integration of those teams at that juncture. Thank you very much. That is all.
Thank you very much. We would like to take the next question. Question. Haeidou Tokyo Research Center, Mr. Ishino, please go ahead.
Can you hear me? Yes, we can hear you. Thank you very much. I have just one question. The data communications business improving the efficiency of it.
I have seen the past data of that business. It seems that the headcount is quite large, but the sales is not in line with that. Compared to the other average, it is lower. So in Amazon throughout the year, they are investing $40,000,000,000 That is the environment and I think you need to improve the efficiency of this business area. And as Mr.
Masno pointed out, as a structural issue fundamentally, how are you planning to change this business? This is Shimada speaking. Thank you very much for your question. The data business currently consists as a group overall, as a group we have 330,000 employees and out of that data has about 130,000. So in the overall group, the data has a large number of employees compared to others within the group.
But as we have been conveying, and the data is a large number of headcount is mainly in India. In The U. S, there is a BPO service team are located in India and there it consists about 40,000 of headcount. And other than that in Europe in order to handle the BPO business there is an organization located. Basically, the number of headcount is large.
However, the personal expense, a unit price is low in terms of it being a cost. Moving forward, the digitalization business, The India's Support Team is responding to the digitalization business and they do have a organization that can respond to such a digitalization business. And towards a more efficient business. How are we going to utilize this offshore deployment more? We would like to enhance and strengthen the utilization of that.
It's not just simply increasing the number of headcount is how I would like you to understand it. So the surrounding environment, the needs towards cloud or shifting over to cloud or compared to the growth in The United States, I did understand efficiency and headcount. However, in the mobile or wireless business, the growth, Till now you are dependent on the mobile business and it seems that in terms of growth rate, this business was not focused on that much. I do understand the headcount efficiency part, in terms of growth rate when we compare to The USA business, it's a behind is what I feel. What do you think?
This is Shimada speaking. When you say behind, it's that feeling is different from ours. And currently, the data business also, as I have been saying, from the conventional outsourcing type of business, they are shifting over to the digital offering business. They are shifting their business model. Therefore, in that sense, steadily in terms of human resources in The United States, they are shifting to a more digital human resources and that is why we have been making investment or spending cost to acquire such a challenge.
And looking at the content of the orders we receive from the customers, the order also is shifting over to the digital side of business. Therefore, I believe that we will be able to furthermore respond to the expectations of our customers and yours. Thank you.
Thank you. Next question from Daiwa Securities, Mr. Ando. You have the floor, Mr. Ando.
Thank you. Hello, I hope you can hear me. Ando here. Yes, we hear you, sir. Please go ahead with your question.
Thank you for this opportunity. My first question is this might be a very naive question. If you could once again please talk about the impact of price reduction at DOCOMO. What are your thoughts behind this price reduction? And also for the past three months, the competition has come up with a new rate plan.
And against the backdrop, have you adjusted your thoughts and your position? If you could share that with us. Thank you very much for your question. Yes, we announced sorry, Fujiwara from DOCOMO. We announced HAMMO back in December.
As you know, as a result, MNB performance improved as a result. So in that regard, although the service launch is not yet done, it's not started, we're in a very good situation as a result of this announcement. And as a result, we've been able to stop the porting out outflow of current DOCOMO customers. So I think we're beginning to see improvement as far as subscription is concerned. With regard to price products, price plans, rate plans of other the competition, they are now visible.
It seems that they are actually more or less the same according to people in the media. As far as we're concerned, the rate plans, the rates may seem same across the board, but when it comes to network quality and the area coverage and also after sales support, hope that customers will take a look at this situation in a comprehensive manner. So we need to communicate more about the appeal of our services. It is important that we continue to communicate our benefits to our customers, and that is the priority in the telecommunication area for us. I see.
Let me follow-up. I think the price reduction was quite extensive, which means that you have you mentioned that you want to do cost reduction. In what areas would you like to implement cost reduction efforts? You mentioned about the network in relation to data communications. Can you please revisit your thoughts on these items, please?
Thank you. As far as cost efficiency is concerned, yes, we're naturally working on this for this fiscal year as well. Primarily marketing related cost reduction and also network related cost reduction is something that we're working on. As far as marketing is concerned, this inclusive distribution commission, we're trying to review various unit prices. And also this is something that we've been working on since last year, but web based online based procedure, we want to shift to those processes.
And we hope that we'll be able to achieve results as a result of those efforts. On the other hand, when it comes to the network, with regard to maintenance, we want to improve efficiency as well as the per unit price and also in terms of indirect cost. We want to consolidate various efforts in operations. And as a result, we hope to achieve the cost reduction targets which we have set for this fiscal year. And we'll continue on those efforts and support our conservation efforts and also accommodate price reductions.
Thank you. My second question is this. But NTT East and West against the expectations has actually been about the general profit, different for NTT Communications as well. I hesitate to say, but my question is this. When it comes to enterprise business, inclusive of the COVID-nineteen impact, How is this turning around?
Can you elaborate on how it is that the corporate related activities are beginning to turn for the better? You. Shimada here. Let me respond to your question. When it comes to corporate business, we cannot say that there has been no impact from COVID-nineteen.
Actually, we cannot say that. As you mentioned, Mr. Ondo, in terms of the domestic market, the impact has been relatively minor. But then impact on corporate activities outside the country has been quite extensive. To be quite honest, we have seen that remote based customer response has been very strong.
We've able to offer this in a very strong manner. So Internet communications is the case in point. But at a fairly early stage, we have found that 80% of the people are now working from home. And when it comes to customer response, this is done on a work from home basis. So this is, of course, for existing customers.
When it comes to marketing sales and marketing to explore new customers, that might be somewhat challenging. But I think in principle, we're talking about recurring business. That is something that we're focused on. So the impact of COVID-nineteen has not been too much on the recurring customer base because project related businesses can be done on a remote basis and we've done very well in this area. So compared to initial expectation, we have found that impact of COVID-nineteen on corporate related business has been quite relative.
So impact on the income has also been relatively minor as a result. I see. I understand about the negative impact. Has there been what about positive impact that you did not expect? Were there any unexpected positive impact?
I see the response of that question, inclusive of the corporate business. But we have found that various companies had to prepare environment for remote based work, working from home. So finance, securities business, in these areas, we have found that there has been tremendous shift to business model based on working from home. So as a result, we've been able to benefit from that and we've been able to receive many orders for such businesses. This applies to both NTT East West as well as for communications as well as for DOCOMO.
So businesses to offer support for remote based businesses, if that is there is a demand for that. So in that regard, we have had very positive impact from COVID-nineteen. Fujimoto of DOCOMO here, you talked about remote business. Let me try to some concrete business. Maybe this is limited to this fiscal year, but Giga School initiative project.
That is something we've been doing. So tablets contract for tablets with schools have expanded, not just for Dokomo, I would think. For Entity East and West as well, inclusive telecommunication environment, have found that local government and local education boards really want to expand their business. So I think that has been a special factor for this fiscal year, I would imagine. Thank you.
Thank you very much. We would like to take the next question. Next, Mizuho Securities. Mr. Hodi, please go ahead with your question.
This is Hori from Mizuho Securities. I have two questions also. First is regarding NTT Limited. I would like a bit more of elaboration. In the nine months accumulated figure, there was the impact of foreign exchange and net and the highly high value added business or the service business, how is it changing?
And also right now because of the lockdown, is there any impact in reality and you don't have to be concerned about that impact? This is Shimada speaking. First of all regarding NTT Limited surrounding environment, first of all, the impact of COVID-nineteen accumulated figure to the third quarter, it's about JPY 60,000,000,000 negative impact on the sales revenue. And also, the accounting standard change has JPY70 billion. So up to the third quarter, there's about JPY 130,000,000,000 impact.
And regarding NGT Limited, last year's it's been established since last year's second quarter. So from the first quarter to the third quarter comparison is difficult. And if we just look at the second and third quarter, the COVID negative impact is about JPY44 billion. And for the accounting treatment, net amount is about JPY 50,000,000,000. So in total there's about JPY 94,000,000,000 impact.
That with increasing revenue it's about JPY 81,800,000,000.0 decline in revenue. So billion is the situation. So in terms of the progress rate, it's about the 70%. They're up to 70%. The remaining 30%, it may be quite difficult, however, like them to put their full efforts so that they can further progress.
On the profit side, thanks to everybody's efforts, we did a rationalization last fiscal year and various measures have been implemented. They were starting to see the fruits from those measures there. So from first quarter to the third quarter profit, it's JPY6.9 billion plus. So the plan, it has exceeded the plan JPY5 billion. And regarding the third quarter, as for us, we are expecting that this trend to continue.
However, having said that, regarding the structural reforms, we are going to do it within the next two years. Therefore, the further system enhancement is what we are working on right now also. Therefore, we would like to fully cover the cost and we would like to see the third quarter's profit level in the measures that we will implement moving forward. That is all. My second question is regarding the situation of DOCOMO.
Well, five g subscribers, the acquiring acquisition is going well and the churn rate is low. And for the middle capacity users, you have Ahamo. But what are you going to do about Gigalight moving forward? In December, you renewed the Gigaho. And for Gigaho, you said that you are going to review it.
But after that, from Rakuten, under one gig, it was a free of charge plan came out and the low rate smartphones have lowered their price between one to three giga. So and that is to actually protect or retain their subscribers. So maybe you don't have to take any action towards that. But it seems that the denominator is large. So even a slight decline in price, it has an impact.
So can you tell me about your way of thinking regarding low usage or pay as you use? Regarding Gigalight, what are we going to do about it? To respond to the competitors and looking at the competitor situation and thinking about our customers. So we do have to thoroughly review it until we take it as an issue that needs to be tackled. And when we announced AHAMO the other day, there were three layers.
It's what we have showed you. There's premia and Ahamo and economy. And regarding those plans, we have not been able to share the details with you yet. And regarding Giga Lite, the premium plans, it belongs to the premium plan category right now. But the low usage users to make it comfortable for them to use it, we have the economy layer that we will be able to announce soon, probably in March next month.
We will be able to announce the content of it, and we are preparing it to do so. Mister Hori, sorry. This is Shimada speaking. I forgot to mention this. Regarding the foreign exchange impact to limited, it's 18,000,000,000 negative impact.
Sorry about that. Okay. Thank you very much.
Thank you. Have we responded to your question? Yes. Thank you very much. Then we'll go on to the next question, please.
Next question will from mister Kinoshita. Hello? Can you hear me? Yes. We hear you, sir.
Thank you. I would like to ask two questions, if I may. First is with regard to the impact of Ahamo. Earlier, you mentioned that in December you were able to achieve positive territory when it came to MNB. Now this positive trend, did this continue through January?
Is my understanding correct? That's my first question. Thank you. Docomo here. Yes.
Our response is yes. Yes, that is the case. And we want to continue this positive trend. Thank you very much. My second question is this.
Your thoughts behind the impact on your performance. In the case of NTT, you have absorbed NTT DOCOMO as a subsidiary firm, so the situation may differ between the two companies. But when it comes to your competition like SoftBank as well as KDDI, they have launched their new rate plans, but they've been able to record increase in operating income or they say that they want to aim for positive operating income. That is what they want to aim for in the next fiscal year as well. On the other hand, NTT DOCOMO as well as the combination with the NTT Communications, who we consider the partnership between the two companies, I think you'll be in a position to aim for increasing operating profitability.
Is that the case? Or is this not the case? What are your thoughts? And as you talked about the so called economy plan, what is going to be the scale, the magnitude of this new rate plan? If you're able to stop the negative trend in the M and P through Ahomo Ahomo, I think that should be sufficient.
But can you please share with us your thoughts about what you want to achieve as a performance next fiscal year as well as what your thoughts are with regard to customer acquisition? Thank you. Thank you very much. Docomo here. Let me talk about the second half of the question with regard to the so called economy plan.
With regard to Ahomu, with premier services also are looking for large sizes, medium sized bucket customers. So we want to offer accessible services for low volume customers going forward. Particular, we want to spur migration of feature phone customers. So we want to offer something that will be attractive to this segment as well. So through this, we hope to stop deporting out of our customers, which is quite substantial at this moment.
If we can do this, then customers will be then Dokong customers can be retained. And I think we'll be able to offer such an environment to retain customers. So trying to control the outflow of customers and at the same time trying to capture customers who are subscribed to our competition. If we can spur inflow as well, then I believe our customer base will be very strong, and we will expand our customer base to non telecommunication business segment as well. So that's our thought when it comes to consumer related business.
You. Shimada here. Let me add. In principle, at entity.como, like KTDI and SoftBank, they're focused on Smart Life business. I outside of telecommunication business segment, they want to strengthen Smart Life business segment.
As for entity communication as for entity communications, DOCOMO were to form the same group with entity communications, naturally, we can explore new possibilities. But this is going to be a time consuming exercise. So we need a bit more time for that. In any event, for the next fiscal year, plans are as far as the plans for the next fiscal year are concerned, as far as we're concerned, yes, we would like to further do better when it comes to M and P performance. And also, we want to expand Smart Life business as well.
And when May comes around, we will be able to make further announcements about our performance. Thank you very much for your understanding. Thank you, Vemi. If I could add one question. The economy plan, will this be available at DOCOMO shops?
How are going to promote this? As we have not yet so I'm afraid we're still considering. We're not we're not able to share anything at this juncture. I see. Thank you very much.
Thank you very much. We would like to take the next question. Next question, Goldman Sachs Securities. Mister Tanaka, please go ahead. This is Tanaka from Goldman Sachs Securities.
Can you hear my voice? Yes, sir. We can hear you. Thank you very much. I have two questions.
The first question is regarding Dokomo making NTT Communications a subsidiary company and you are going to do it soon. In order to make it a subsidiary company, are there any barriers? And after you make it a subsidiary, the synergies such as cross selling or you're going to seek for a cost reduction synergy. If it is going to take time, what are the things that you can think as a barrier or something that will take time? Can you share that with us?
This is Shimada speaking. Often DOCOMO and NT communications culture is a different is said or the mass media says that opinion too. However, at least for the employees in both companies, we are conducting employee surveys and it seems that there are more positive responses than negative responses from the employees. Already from this summer onwards strategies, the two companies have been discussing it. Therefore, at an early timing, they are preparing so that new measures can be implemented from an early stage.
So as a holding company, we would like to fully support their efforts so that new services and strengthening the corporate business will arise from it. If that is so, there's no outstanding barrier. And regarding culture issues, there are no issues there either? That is what we think up till now or the new era that we will be entering from now within combining conventionally different things and creating new things. Of course, within NTT group, there are resources that are existing but combining them in a new way, we will be generating new value added value.
So in that sense, NTT DOCOMO's NTT's communications are new challenge to take upon is to provide a new service and new product to the society. Thank you very much. My second question is that NTT Limited demand situation, I would like to ask a bit more in detail. Before you talked about the impact of COVID-nineteen and accounting system changes and I think overall the sales is improving. However, the impact of COVID-nineteen on a quarterly basis has hit the bottom In organic base, it is showing a recovery.
Is there a certain color differences between the products or the area or regions? This is Hashimada speaking. First of all, where are we seeing the regional impact? Conventionally, the conventional products such as routers integrating that and providing consultations and selling it. The conventional dimension data business model business area means being impacted in Europe and some parts in Asia region.
On the other hand, The United States side, they're not seeing that much of an impact there. The NTT Data Services in North America and NTT Limited North America team are realizing a one collaboration under one NTT. So NTT Limited is a managed service or data center business, NTT Data Service is actually strengthening their sales of those. Currently at a several 10,000,000,000 yen sales are reached and they are establishing a good track record. As NTT DATA announced in North America, they are currently in the midst of structural reforms.
And though there is a COVID-nineteen impact, but the data resources they have a strong resource therefore the data as a product is combined with that and to sell that together is what they are taking the challenge upon and working on right now that is all. If that is so, the high added value business that you're focusing on that is going quite well in the North American region, well mainly in The United States but also in Europe regarding managed service business, it is steadily progressing is our understanding. And as for data center, for the construction of the data center due to the impact of COVID-nineteen, there are some that are slightly behind, but there are still a strong demand that is existing. Therefore, we would like to further strengthen the construction of the data centers and at the same time, in fact, we would like to work on off balancing those data centers from next fiscal year. Thank you very much for a detailed explanation.
Thank you very much. We will be taking next question. Next question from S and P C Nikko Securities, Mr. Kikuchi, the floor is yours. Thank you.
Kikuchi here. My first question is this very straightforward question. Let me start with that. You mentioned that you're not going to revise the annual guidance,
but I
think Dokomo's minority interest will be shrinking. So pretax profit should be in line with your guidance, which means that net profit should be several tens of billions and higher, right? Is this type of straightforward calculation begun to be visible starting for the fourth quarter, would you say? You. Shimada here.
As you pointed out, yes, you are correct in your assessment. I see. My second question is this. It's not so much a question, but more a request perhaps. During the takeover during overtakeover, we were not able to have concrete and numerical discussions about DOCOMO while the takeover was being carried out.
But when it comes to next fiscal year plan, we're at some juncture. If you could please share with us numerical positive numerical impact as a result of absorbing DOCOMO. For example, 100,000,000,000 synergy with for example, I know that that is not the actual number. But if you could at some juncture, please indicate the impact of incorporating NTT DOCOMO as a wholly owned subsidiary firm. We appreciate it.
Is that possible? Thank you. Shimada here. Right now, we're working on improving synergy with DOCOMO. We have a project, and we are elaborating on this matter.
So that being the case, when the financial results for this fiscal year are announced, hopefully, we will be in a position to make some sort of a statement about this. So if you could please be patient for a little while longer, we would appreciate it. Thank you. But we'll be able to see some numbers. There's a possibility that you'll be able to share with us some concrete numbers.
Well, we hope that we'll be able to indicate numbers as much as possible. Thank you for that. We appreciate it. That is that is all. Thank you.
Thank you very much. We would like to take the next question. Next question Mitsubishi UFJ Morgan Stanley Securities. Mr. Tanaka, please go ahead with your question.
This is Tanaka speaking. Can you hear me? Yes, we can hear you. I have two questions, so I would like to ask each one of them. The first question is regarding DocoMo's Smart Life business.
The operating income of the Smart Life business and the three months comparison, it's increased by 6,000,000,000. In what way is it increasing? And I'm sure there are no special causes or elements of it, but can you tell me why of this growth? This is Kobayashi from Dokomo. As you said, it's 6,300,000,000.0 growth.
Mainly, it's the financial and payment area, the card payment, etcetera. Ear on ear, at the midterm, I did explain there's no accounting impact for the 3Q. Okay. This quarter profit, I'm very sorry to ask this, but it is increasing. However, when we compare it to the past performance, it seems that it I don't want to be rude, but it seems that it's not fully at a sufficient level.
You are conducting various promotional campaigns and others, but will there be more momentum or will this profit level expand more if there's such a thing you can share, can you explain? Compared to the second quarter, third quarter, it slightly increased and the second quarter, it did not grow at all and we got scolded. But regarding that point, looking at the recent technical cause at first quarter there's a COVID-nineteen and we couldn't launch any campaigns and we could not ask people to visit the real physical shops. That is why second quarter, third quarter looks like it is accelerating. So in that way, maybe if we wanted to grow it more, we could have grown it more.
But on the other side, the pay operators are having there's a competition. We would like to be the first place or else we will not be able to survive. So we would like to look at the other competitors and we believe that we are more efficient than our competitors, but we are making efforts right now and investing right now and this is going to increase in the future and around the peripheral business areas around payment utilizing data is going to further increase. Therefore in the recent situation, we're not a strategy wise, we're not planning to rapidly increase the finance area businesses. Does that make sense?
Yes. And the second point is regarding NTT Limited, the high added value service, what is the ratio within the overall sales? You made it a net figure, so it's different from the past numbers that I have received. But if there is some impact, can you comment on that, please? This is Shimada speaking.
Before the third quarter, last last year's ratio is just 32%. And this year's first quarter is maintaining a 36% level, excuse me, 37%. And originally, the plan was targeting at 36%. Therefore, in that way, from the first quarter till now, it is progressing in a steadily manner. In a way, business model it's a business model that has a recurring income.
Therefore, it has not been impacted by COVID that much. The business that is impacted by COVID is the conventional dimension data business model business, meaning that starting from consultation to the network integration type of business and equipment sales type of business have more of a larger impact by COVID. Okay. Understood. So in that sense, so the net amount posting, then the composition ratio may go down, but the equipment sales is going down.
But moving forward, it is going to increase. Yes. Understood. Thank you very much.
Thank you very much. Next question, please. Next question from Citigroup Securities, Mr. Tsuruho. The floor is yours, sir.
Yes. Thank you. Sudoho from Citigroup. All the questions have been exhausted, actually. So let me ask some con specific questions and also about the next fiscal year.
My first question is this. I was looking at KPF for NJD DOCOMO, and the greatest discourse is when it comes to net adds in particular. How do you see the discrepancy in the plan and actual performance for net adds? You. That's my first question.
Thank you. Kobayashi from DOCOMO. Let me respond to your question. Well, net increase on a total basis, that is the guidance. So please take maybe you're looking at that number.
In the beginning of the year, at the time of summer in July, TCL net increase was expected to decline at that juncture. But now overall, it seems that we are going to have net adds on par with fiscal year twenty nineteen, it seems. For example, the data plans was actually not as weak as we initially expected. As mister Fujairah mentioned, in the case of corporate data plans, such as tablets, We are seeing very strong performance there. So inclusive of that, I think on annual basis, we should be on par with the previous year.
My second question is this. Next fiscal year, I would imagine that when it comes to mobile communication, it will be difficult to ask questions about mobile communication. So for regional communication and the international long distance communication, how should we expect the performance for these business segments for next fiscal year? If you could please give us some insights or hints for the next year. Thank you, Taniyama, responsible corporate strategy planning.
We are now working out the plans for next fiscal year. In principle, based on the outcome of this fiscal year, we naturally want to exceed the performance of this fiscal year. That will be the basis for our plans, which are just being formulated right now. That is all. Thank you.
Thank you for that. Thank you. That is all.
Thank you very much. We would like to take the next question. Next question UBS Securities. Mr. Takahashi, please go ahead with your question.
This is Takahashi from UBS Securities. Can you hear me? Yes, we can hear you. I have two questions. First question was already asked briefly.
The synergy between NTT DOCOMO and NTT Communications, I believe that the interview for the media, you said that in several 100,000,000,000 yen size, you'll be able to reduce the cost. I believe that's what was said. But in the solid terms, money amount wise, what is what type of cost efficiency improvement can you make in terms of scale? And in what time length are you going to do that? If you can comment on that, please go ahead.
This is Shimada speaking. Probably, I what I commented became an article is what I think. Several 100,000,000,000 yen scale that is accumulative. What kind of impact will occur is what I meant. It's not that a single year effect because, of course, if it became that way, we will be very happy.
However, currently regarding the synergy between the two companies, we are doing the estimation calculation right now. So I would like you to wait a bit longer. So in that sense, as I have mentioned regarding the core network, depreciation timing of the equipment will have an impact. So at that timing, I think we will be working on it. And when we accumulate those figures, we will be able to achieve that certain scale size of cost efficiency.
So in terms of the time length, what is your image of achieving JPY 700,000,000,000? Normally, for the equipment and facilities, there are ones that have a long depreciation period. But usually, the usual products such as routers equipment is between five to seven years of depreciation period. Therefore, that's one example and when it becomes the fiber cables, it will have a longer depreciation period. So we need to precisely look into it more.
Okay. Thank you very much. My second question is regarding the dividend policy. You have increased your dividend and you have verbally explained that. For example, if you look at the payout ratio, plan payout ratio, it has gone up to 45%.
And compared to the past, it seems that you're focusing more on the dividend. That is my impression. Do you have any standard was there any change in the way you think regarding the criteria or the standard regarding dividend? This is Nakayama from the Finance and Accounting. I would like to answer that question.
Well, this time, we have announced the dividend. We have announced is about payout ratio of 45%. But from next fiscal year onwards, the impact of DOCOMO becoming wholly owned, the profit, we had the profit that went out to the minority shareholders, but that is going to be retained. Therefore, $860,000,000,000 net profit, if you add JPY 200,000,000,000, then the denominator and net profit area is going to exceed a 1,000,000,000,000 yen level. Therefore, with the current level of dividend, this 45% number will be a late 30%.
It's what we assume. So looking at the payout ratio is not the only determining factor of the dividend amount. We are looking we are want to steadily increase the dividend money amount. And depending on the performance, we will have additional increase of dividends in line with the increase of performance. That is the basic way of thinking.
Thank you very much. Understood.
Thank you very much. Are there any other questions? If you have a question, please press 0 followed by 1. If not, then we would like to conclude the presentation of the financial results for nine months ended 12/31/2020. Thank you for your attendance.
Thank you very much.