Ladies and gentlemen, thank you for waiting. Thank you very much for attending today despite your busy schedules. We would now like to start the briefing of NTT financial results for the six months ended September 30th, 2019. I am Fujiki from the IR office, and I will be serving as today's facilitator. First, I would like to introduce today's attending members. President and CEO, member of the board, Mr. Sawada. This is Sawada. Very nice to meet you. Senior Executive VP, member of the board, Mr. Shimada. Senior Vice President, Head of Finance and Accounting Department, member of the board, Mr. Hiroi. Senior Vice President, Head of Corporate Strategy Planning, member of the board, Mr. Kitamura. Before we start, there's about three housekeeping announcements. First of all, regarding the distributed materials. Up till now, we have been distributing the presentation material and results briefing materials on your seat.
As announced beforehand, in order to promote paperless, from today onwards, they will be stopped to be distributed. You'll be able to confirm the content and the materials at our company's IR website. I seek your understanding. Today's presentation will be streamed live on our company's IR website, and also will be streamed on demand on later dates, also. Within the content of the presentation materials and the forecast numbers and the future outlooks, they'll be included in the explanations and Q&A. There are points to be noted for within the material, please read through them. Mr. Sawada, the President CEO, will be explaining the results outline and receive questions later on. Mr. Sawada, please.
Good afternoon, ladies and gentlemen. Thank you for joining us despite your busy schedule. We appreciate your kind attendance. We'd now like to start by presenting to you the financial results for the first half for fiscal year 2019 for NTT. Let's start with page four. In a nutshell, we experienced increase in operating revenue, but decline in operating income. As far as operating revenue is concerned, we recorded second quarter levels for three years in a row. As far as operating income is concerned, there was decline in operating income due to drop in mobile service revenue at DOCOMO, as well as costs related to reorganization of our global business. That being the case, we experienced rather, a drop in operating income on a year-on-year basis. Although we have not disclosed our internal guidance, both operating revenue and operating income actually exceed our internal business plan.
We are making very positive strides. In terms of net profit or profit, there's a decline year-on-year. There is valuation gain from consolidation of Ennet as a subsidiary firm in the first quarter. However, because of the impact of the decline in operating income, we saw a decline in net profit on a year-on-year basis. As far as overseas sales and income margin is concerned, this coincides with the timing of the reorganization and operating a correction. Overseas sales remain very strong. The impact of foreign exchange is about JPY 30 billion. We've been able to absorb the foreign currency impact and still realize an increase in operating revenue. However, as far as operating income is concerned, and focusing on income margin per se, it's a negative JPY 9 billion, for one thing. We are making investment for expanding our digital offering.
As we have consistently been pointing out, we want to shift to high-value, high-margin services, such as managed services, but there is a delay in such a shift. We require cost for rebranding. That being the case, operating income margin declined by 0.9 percentage points. Let me now focus on the consumer factors by segment. The top shows operating income, and the bottom, red, shows increase in operating revenue percentage. Correction, on the top. Long distance, international communication data, and other business. In particular, the other business, because of the consolidation of Ennet as a subsidiary firm, we saw increase in operating revenue. As a result, the drop in regional and mobile communication was offset by increase in those aforementioned segments. As for the bottom part, this relates to the operating income.
In the case of DOCOMO, there was already an announcement by DOCOMO, there's decline in operating income. As for regional communication segment, it seems as though there's a slight decline in operating income. However, on a full-year basis, we anticipate increase on a full-year basis. This is in line with our plan. As far as long distance and international communication segment is concerned, if we focus on this particular segment, yes, there is about JPY 10 billion related cost for integration purposes. That impact is there. Furthermore, as I mentioned earlier, we are spending money on branding. These are all one-off costs, as far as we're concerned. Going forward, we would like to further pursue structural reform in this segment. Next page. If you could focus on the next page. This is the financial results forecast for fiscal year 2019.
As far as DOCOMO is concerned, there's impact of a better-than-expected net increase in mobile in the first half. There's increase in handset sales. Although the absolute sales is lower than the previous year, however, the actual sales is stronger than our initial expectations. That being the case, we are going to revise the forecast for operating revenue by JPY 60 billion. On the other hand, as far as operating income is concerned, yes, there is increase in handset sales. However, the gross profit from handset sales is not that high. The increase in handset sales does not contribute too much to the increase in operating income. There is expenses related to disaster countermeasures, and also at the same time, we have to consider the possible measures that the government will take when they enter the market.
We need to be prepared for that. That being the case, as far as operating income is concerned and as far as the profit is concerned, we are not going to revise our full-year forecast at this juncture. Naturally, we're going to make efforts so that we'll be able to exceed our annual guidance. Let me now turn to topics. There are many items, so I will just highlight some of the major points, if I may. I would appreciate your understanding. First relates to support our customer's digital transformation, B2B2X projects. I mentioned that in three years, we will have 100 projects in full. This year, we've been able to achieve 54 such projects. Therefore, in terms of number of projects, we are making very strong strides. We've been expanding such projects.
For example, support the offering of new lending service for financial institutions and also supporting VoC, voice of customer data analysis for contact center industry. We've begun to offer such services. Next relates to the 5G services. I think this is familiar. From September 20th, we've begun the 5G pre-commercial services. As far as investment is concerned, we are talking about 10,000 stations deployed by the end of June 2021, which means there's more than 8,000 stations increase. Let's turn to the following page. Accelerating our own digital transformation. First relates to global. As you are aware, in June this year, we launched NTT Ltd. We intend to complete the whole process by December this year.
In relation to the company, in terms of the company names in each region, we want to make sure that we'll be able to change all the names so that they will include NTT. All the logos of the subsidiary firms will be changed to NTT logo, and the company names will also be changed to include NTT. This is the stage characterized as day 2, day 1, day 2, day 3. By day 3, we'll complete this whole process. Also, as I mentioned earlier, we want to change from product sales to managed sales. We want to accelerate transformation to such managed sales services. We want to realize implementation of unified ERP, a cloud version of unified ERP. We want to introduce a unified ERP based on cloud within two-year period.
Next, with regard to extended partnerships to strengthen our branding. Please take a look at the following page. In September, we entered into a technology partnership with Major League Baseball in September this year. This represents a technology partnership, so it's not just about straightforward sponsorship. We'll also be providing technology, which means that this is a bilateral relationship. We've already had that for IndyCar series and Tour de France and also J.League here in Japan. Also for Major League Baseball, we are going to be expanding such a partnership. We want to leverage NTT's technology and make sure that we'll be able to experience new type of experience for the fans. We want to support that. As a result, we believe that the brand awareness will be enhanced as a result of this initiative. Next, please.
In terms of the digital transformation of our own, the IT systems that were not integrated needed to be integrated. The first part is the operation or the service operation side. From accepting the subscription, providing the service to the billing of a service, we are making inter-cloud-based IT service, and we would like to automate the process, and we're scheduled to complete it by 2024. Excluding DOCOMO's consumer service. For DOCOMO, it's only going to be corporate customers, but excluding certain services, we are going to integrate all of the services, and we have started the initiative already. The second is the unified ERP. On the global side, we would like to complete that within the next two years, but for the domestic side, it is going to take longer.
In the global side, S/4HANA, a platform that will be implemented overseas, we are going to implement it in Japan, too, but we would like to spend the next four years to create this unified integrated ERP. As for RPA 117,000 robots already have been implemented for the business processes. Last year was 500, and it tripled to 1,500. More than 4,000 customers, we are providing the WinActor, which is the RPA service. We are providing it for the group too. Next is utilizing the people, technology, and assets. IOWN Global Forum has been established in partnership with Intel and Sony. We would like to bring in the photonics structure within the platforms, and we have started this forum. IOWN W, which is W, we have announced it today, the wireless side, together with JAXA.
We are working on the research and development of ultra-high speed, large capacity communications infrastructures between the ground and space, which is going to be a seamless link. In Chiba City, we are planning to have a field demonstration test of a DC power transmission. Chiba actually was impacted by the typhoon, and they want NTT Anode Energy to provide the disaster power source as soon as possible, so we are accelerating this initiative. Next page is regarding the smart infrastructure platform rebuilding. We have created NTT GeoSpace Corporation to come under the NTT InfraNet. We would like to reorganize it and complete it December of 2019. With the Real Madrid, as written here, the Real Madrid Foundation, which is the foundation for the football school, Japan. We are going to participate in this as an executive sponsor.
Within the community building that will be going on nationwide, we are going to participate with them so that we can utilize this as part of the community building. Next is regarding the community and economy. One is towards food manufacturing business or school or a local government that will be using that network. We would like to create a system or cloud-based system to develop the community. Also in Vatican, they have the archives created. In Japan, with NTT East, we would like to utilize this technology to preserve and succeed the local culture and art resources utilizing this digital art archives technology. Next is regarding disaster countermeasures. The impact of typhoon number 15 and 19 was large and quite serious. I'm sorry it's in small letters, but typhoon number 15, 35,000, and in typhoon 19, 45,000 subscribed networks went down.
For base stations, 1,900, 1,600 respectively for each typhoon has gone down, and we have been largely impacted by the typhoon. Regarding these countermeasures for disasters, as is shown in the next page, we would like to strengthen the equipment and facility. We would like to accelerate the recovery process. From the government perspective, all the base stations should operate 24 hours, 7 days a week. It's actually better to incorporate this medium zone base stations. One is 1 million. If we have 160,000, it's 1 million times 160,000 base stations, think about the large amount. We would like to actually utilize EVs. The 8,000, we were going to renew it every 7 years. Actually, the electric vehicles, cost-wise, it's going to be lower compared to the conventional gasoline-running vehicles. Actually, these electric vehicles can be used as a power source.
We would like to accelerate or front-load the implementation of it. Regarding the mobile power generation vehicles, currently we have 400, but we would like to manage it in a centralized manner and utilize it more. Regarding the cables, we would like to bring it underground as countermeasures for natural disasters, it is costly, we would like to prioritize the areas. Acceleration of the recovery support. Through the typhoons that we have just experienced, Miyakojima or Miyako Island, we found out based on the big data communication that the Miyako Island was going to be impacted by the typhoon. We have implemented recovery countermeasures beforehand with full preparation, we have done that.
We would like to utilize AI to generate damage forecasts. Also, we would like to further enhance recovery system and secure personnel, and we would like to strengthen support to the customers. In the public phone booth, we would like to have a Wi-Fi station or the storage of batteries. There, we will be able to cover the communications in these areas and just enhance the data countermeasures. Next is regarding return to shareholders, and the first part is regarding the share buyback. For the share buyback, we would like to strategically and flexibly conduct it. What I would like to explain today are the two measures written on the next page. This will be mainly for the individual shareholders. The first one is according to the original guideline.
The share price has gone up to JPY 5,500, in the investment unit, it will be JPY 550,000. We would like to split the stocks. Through this, we would like to expand the number of younger investors that will become our shareholders. The other thing is the distribution of d POINTs. Right before two years, many shareholders seem to be selling their shares, we would like to retain these shareholders. In two years, we would like to provide 1,500 points, second year onwards, 3,000 points. Of course, all the shareholders will be subjected to this. Up to two years is 1,500, two years or more will be 4,500 points. This will also lead to the expansion of the d POINT members by distributing this. The record date of the stock split will be 2019 December 31st.
Through these measures, we believe it is going to be quite effective countermeasures to secure shareholders. It's been long, but that will be all for my explanation. Thank you very much for your kind attention.
Thank you very much. We now like to take your questions. The microphone will be brought to you, so may we ask you to please state your name and affiliation. If you have any questions, please raise your hand. Thank you.
The first question, please.
Thank you very much. Masuno from Nomura Securities. I have two questions. The first question relates to the short-term performance. The second question relates to your outlook for the coming year. Earlier, you talked about structural reform in global businesses. You talked about strengthening your brand in the overseas business and JPY 10 billion for reorganization, also additional extra for rebranding. Going forward, you mentioned that this will continue until December, meaning that how much will this be? How much branding and structural reform-related costs will be expended for the full year? Based on that spending, what positive impact do you see on your operation? If you could talk about the outline of your structural reform, I would appreciate your elaboration. Thank you.
Thank you for the question. I mentioned JPY 10 billion for structural reform. In the second half, we anticipate JPY 8 billion further for structural reform. In the immediate sense, I mentioned that there's delay in the transition to managed services. Therefore, JPY 2 billion impact from lack of sales in security and other sectors. In the second half, it is likely that similar impact will be felt. For the full year, I would believe that there's still further JPY 10 billion impact in the second half. Then we'll be pursuing streamlining and rationalization. We're talking about JPY 60 billion over a three-year period. We're anticipating JPY 30 billion, sorry, correction, JPY 60 billion for a three-year period. We're talking the figures three years from now. I think it will be heavily skewed toward the second half, if you will, in terms of three-year plan.
The impact of the streamlining, I think, and structural reform will be that level. Also, as a result, JPY 60 billion impact from shifting to managed services. That will be profit and revenue impact, if you will, as a result of transitioning to higher margin managed services. This will take roughly five years, but the target for 2023 will be margin of 7%. That will be JPY 190 billion. That'll be JPY 190 billion, thereabout. JPY 130 billion, the gap from now, will have to be covered by the two aforementioned pillars. That is the plan we have.
Let me confirm. In three-year period, JPY 60 billion for three-year period. You're talking about cost reduction of JPY 60 billion, right? Okay. The remaining JPY 60 billion, that's a profit increase due to increase in revenues.
Yes, that's right.
Impact on profit. You're talking about impact on profit. Okay, thank you for that clarification. My second question. Original communication, you had the impairment loss in the previous second half last year. You were able to cover that. Structural reform is underway. For this fiscal year, as a result, I think you're in the process of those various initiatives, both the medium to long term and three years or five years from now. What about next fiscal year? What will be the situation, if you will, for next fiscal year? If you could talk about each segment and your outlook for the next fiscal year. DOCOMO will be recovering into the positive profit territory. What about other segments? What will 2020 be like for each segment?
In the context of three years, five years from now, what will be the positioning of the next fiscal year?
Thank you for the question. With regard to DOCOMO, as you mentioned, Mr. Masuno.
Next year will be the bottoming out year. We are anticipating recovery for DOCOMO starting from next fiscal year, so we want to make sure that we'll be generating profit in DOCOMO. As for NTT East and NTT West, the first optical fiber backend system, integrated system, will begin its operation towards the second half of this fiscal year. The impact of the unified network will be roughly JPY 10 billion, perhaps. That positive impact is going to be felt. Aside from that, with regard to digitalization, we're trying to change processes to enable digitalization. As a result of those activities, NTT East and NTT West will likely be able to have being in the positive territory in relation to their operating income. Now turning to global business, we want to separate into two, NTT Ltd. and NTT DATA. We want to separate into two.
As for NTT DATA, very strong performance right now. I'll be very frank. Order taking is very substantial. We anticipate further in the pipeline for the third quarter, very large contracts. For next fiscal year, NTT DATA will be very strong performance in terms of the global performance. That potential is very high. Now as for NTT Ltd., they have just begun their streamlining and rationalization efforts. In a two-year period, they will be carrying out its migration process. Although not as much as this fiscal year, but the expenses will be much lower next year. They will, of course, be expanding their operating income, but facing a lot of challenges. That's the type of year it will be. As far as operating revenue is concerned, as I mentioned earlier, it's not dropping. It is increasing.
That being the case, what they need to do is to further make sure that they translate the marketing activities into actual profits. As for other business, be it power business, or be it urban solutions, building and real estate are concerned, it is not yet a year we'll still be able to reap benefits from the various initial activities. We will not likely see substantial profit from the other business segment next fiscal year. Thank you for that.
Thank you very much. The next question, the second one from the front.
SMBC Nikko Securities. My name is Kikuchi. The global business is my question. For NTT Ltd., I have a question. The structural reforms, you're spending JPY 10 billion, you're in the process of doing so, is what I think. The first quarter and second quarter profit, when I look at it, is it costing more? If you exclude the structural reforms, it's not performing as planned? During the structural reform period, it seems that there's a downsizing or the business worsening. We don't have to think about those factors, meaning that it doesn't seem like it is doing very well. The global NTT Ltd. business environment or the operations current situation, can you share that with us?
First of all, United States at the center, the market itself is rapidly moving towards digitalization. The NTT DATA Group and for NTT Ltd., both will be impacted by this. NTT DATA Group, they have to provide the solution by industry. That's their mission. NTT Ltd., they will have to provide a managed services. That is the mission. The missions are separated. Both sides, the consulting to do the digital offering or hiring talent or preparing, in total, they're using about JPY 4 billion. That is a fact. It's about JPY 2 billion each. In addition to that, NTT DATA, the recent order receiving situation is good, but the Ltd. side, the security or the managed services, it is not telling us what we have originally planned, is they're continuing the product sales. With just that, we're not able to gain much of gross profit.
That impact is about JPY 2 billion. As a growth investment is JPY 2 billion, and the struggling part is JPY 2 billion. Those are the expenses other than the structural reform. The previous JPY 2 billion that I mentioned, I did say that it's going to continue on to the second half. As Mr. Kikuchi, you say, if you look at the end numbers, it may seem that there's structural reforms, but the numbers may be larger. I think that's where you want to ask about. In reality, well, the management of the business is done. I'm doing it together with Jason. We think that we'll be able to clear that.
Thank you very much. My second question is a simple question, maybe. The regional communications, I believe, on the west side, seems that expenses is increasing. Is that a one-time temporary increase within the regional communications? It seems that, well, the west especially is declining in profit. Can you explain about that?
Well, the first half, from that point, it looks like the expenses are accumulating.
That is because the disasters from last year and the response and countermeasures to those disasters are included. Till now, we changed the depreciation method. The ones that were in the floating profit that we had, there were various depreciations or amortizations, or there was a special amortization and loss that we have recorded, and there's some removal or disposal of assets. This time, the cable depreciation, we have the reverse return from last year. That is done last year. Overall, this year, it is going to turn into positive. Thank you. I have the third question. In order to have a more advanced group management, S/4 SAP for HANA, you're going to integrate those systems. Can you share with us what the meaning of doing so?
Meaning that right now in the existing business, that part, you're using SAP and there are some conversion migration, but there are some new areas too. You've changed the database to HANA, and everybody goes to S/4HANA, will be integrated into S/4HANA. I believe that there's going to be quite of a cost. Yes. As you have mentioned, currently, the global side subsidiary companies, they're on SAP. They're all standalone SAP systems. There is a connecting system. For the consolidated connected type of work, there's no problem. The codes that they're using is not consistent. We are making it into one consistent one this time. By implementing S/4HANA, the Concur or Ariba or SuccessFactors, which were the external system, all of that is going to be commonized.
Based on that, the database is going to be integrated into one, and through that, we're going to seek higher efficiency. The existing license, when those are replaced, whether it's going to be higher or lower, it's going to be maintained the same, that's depending on the negotiation. Basically, we think it's going to be the same. It is going to impact efficiency, and also it will become more visible. The Japan side, too, you're going to integrate all that too, right? Yes. To what extent are you going to do that integration? The financial accounting, the managed accounting, all of that is going to be consolidated to the holding company and you can look over it. Are you going to go that far?
If you're not going to that far, but is it you're doing it to make the group structural reform easier in the future? If you do have an integrated system, you'll be able to freely do things. As a holding company, all the domestic subsidiary companies and overseas companies and the general accounting and the managed accounting, all of that, you're going to integrate that into one, and you want to manage that under the holding company. Is that what you're thinking of? In the consolidated basis, it's all integrated. We would like to make it the codes that are used for the system. The employee IDs were all integrated, too, into one. We're starting it, but there's a system, accounting system, called Active. That's communications, NTT DATA, DOCOMO are not included. For the subsidiaries, they have a different system.
We want to replace all those systems because we have to renew the system at some point. At that time, we would like to replace them with the cloud-based IT system. I think that's a better way of looking at this. With this, we'll be able to see all the KPI performances at real-time basis. AI will be realized. Thank you very much.
Thank you very much. We'd like to go on to the following question. The gentleman in the front row, please.
Citigroup.
Thank you. Tsuruo from Citigroup. Thank you for this opportunity. I'd like to follow up on Mr. Kikuchi's question. The medium term, how much investment will this require if you want to introduce SAP for both the domestic and overseas operations? I know that you have counterparts you have to discuss. Maybe you won't be able to respond to all. Over the medium term, how much investment do you think this will require in relation to introducing SAP? Or will this have a major impact?
Thank you for the question. NTT, when I was the president of NTT Security, S/4HANA was introduced in one year and a half. That took about JPY 3 billion. We're talking about 1,500 people. The basic functions were the same, but the IDs, because of the licensing question. Let's say we are anticipating 10-fold increase, JPY 600 billion for 20-fold. I think we're talking about tens of billions of JPY for global operations. Tens of billions of JPY for the global side of the operation. That's not all. I think we need to finalize the details. That's the overseas operation. As for domestic operation, it's more complicated. To be quite candid, we don't have clear set of numbers for CapEx for domestic side.
As far as the outline is concerned, annually, we spend about JPY 200 billion for IT for the NTT Group as a whole. If you exclude overseas business, it would be above JPY 200 billion. ERP, CRM, and other processes included. Well, 130 ERP lets us in. We're talking about JPY 100 billion max.
This includes a P&L. As far as the initial investment is concerned, we have already had maximum numbers. The actual number should be lower than the ceiling. Thank you. My second question relates to the medium-term outlook. At the Tsukuba Forum the other day, you talked about the common usage of towers. I understand that there are discussions underway. You're investing in JTOWER. Can you give us an update as to the common usage and sharing of towers? What are your thoughts at NTT? I would appreciate your response. Thank you. Well, we have consistently been involved in various initiatives, for example, within tunnels or within buildings, introducing common antennas for those areas. This was already being carried out without any forceful move on our part. Now, the second part.
4G and existing telecom specs, such as 4G, where JTOWER already had common usage. Placing antennas outside the common usage parts for 4G. That's what we want to accelerate. We have three operators, and with Rakuten coming into the marketplace, it will be four parties involved. Hopefully, we will be able to accommodate all four of those parties. This requires engineering, and also we need to come up with prototypes. That's what we are discussing right now. The discussions have already begun. The final part relates to 5G per se. We have to do this on an antenna-by-antenna basis. It's not just limited to 5G, but we need more cognitive type of antennas. We need to consider the possibility of more cognitive antennas. It's not so much NTT per se. The initiative is with JTOWER.
Well, if there's an idea, let's say in the case of 5G, how many towers do you think this will require? Or how much towers can be commonly used for 5G? Any ideas? Well, in the case of signaling, you can't place four antennas at the same time. Even if JTOWER were to cover all that, we're talking about 200,000 towers. No, 800,000 towers. Sorry, I forgot the actual number. I think it was 200,000 towers. Yes, 200,000 towers. That would be the basis, I understand. If you can achieve such antennas, it means that it will be on utility poles. 20 million for power and 12 million for NTT. How much of the towers that we have can be accommodated? Maybe it's 10%, 3 million. 30,000, correction. That's the scale we're talking about, the point of reference, but it's not yet visible, sorry.
You don't have to respond to this, but I would appreciate this number. Primarily, we're talking about CapEx for fixed line business, right? CapEx will be in the fixed line business. In the case, how will base station-related CapEx be allocated? Well, for base stations, it will be JTOWER. The network to connect that will be in the case of fixed line business. That's going to be quite large.
Thank you very much. Any other questions from the floor? Third row from the front, please go ahead.
SBI Securities. My name is Moriyuki. On slide number nine, you have the current state of the mid-term management plan. You did explain part of it, but there's 54, the B2B2 projects, and capitalizing on that, what is the percentage of that? Also, the two points, the second and third point you see on this page, when are they going to contribute to the profit? Sorry, it's a very vague question.
Well, I cannot tell what percentage is being monetized. At the POC, proof of concept stage, I don't know what percentage that is yet. I'm told that there's no numbers to be disclosed. Several ten billions in the end level, I think. Profit level? No, no, no. Revenue levels. Sales rev level. Profit, still, they're in the struggling level still. There's 54 projects. It's not 54 companies, but partners. The managing cows, that's one project. We would like to expand that to 10, several hundreds. Even though the project is the same, as the time passes, many of them, the number increases. By repeating those, the margin is probably going to increase. Therefore, the numbers that I can share with you right now, I don't have it on hand. In terms of revenue, that is steadily going up, is how you can understand that.
For example, the first line, the first two, in the second and third point, the lending platform has already started. The money is already coming in. That is Shinsei Bank. That is our partner.
Well, it will depend on the bank's business plan, I cannot share with you solid numbers. However, it is going to increase more. The third one, at the call center, NTT West has already implemented this service to their customers. This also, through sales activities, this model is going to be implemented and increased. For both two, they're not at an experimental stage, they're already implemented. The same one, the DOCOMO's bus, AI Bus. Those buses in areas in Japan has already been implemented. Even though it's one project, but it has been deployed in various locations and increasing. Understood. My second question is regarding disaster countermeasures. You said you're going to increase your efforts in that area. You will wait for the revenue coming in, but this is like an insurance for contingency.
What is going to be the ending expenses that you will be looking at? You're going to expand gradually, right? This all depends on how you think about this. For us, how are we going to respond during disaster moments is what we have been thinking, because we cannot cover everything. The breakdown maintenance, meaning that even though it breaks down and we repair it, in terms of economies, when you compare it, which is better? Depending on that, we decided the formulation. The past experiences up to now, for example, to bringing in the cables underground, it's about JPY 100 million per kilometer. That's not going to pay off. It breaks down once a year in a certain zone. It's JPY 10 million, JPY 20 million. If it breaks down or cuts off every year, it's going to be JPY 100 million, 10 years.
In the past, it wasn't as so. We have to compare the economies based on the probability, because meaning that the probability is going up. That is what we are targeting at, is that the scope that we can manage within the current cost, and that cost itself, we would like to reduce that through digitalization. The question you asked, meaning that the additional investments for disaster countermeasures, how much is that investment going to be a burden on us? We don't look at it from that angle. We are looking at it from the angle to not increase the cost, but be able to manage within the current situation, and how we're going to compare the economies and make the decision is how we are looking at this. I just want to confirm once again.
This fiscal year, the expense is going to go out in advance, and that's going to flatten out throughout the years. We have a vast number of equipment and facilities, and to make them all resilient and robust, looking at the Chiba Prefecture and looking at the typhoon number 19, they're still at the level that they will be damaged. We cannot make it all strong, all of them. It's going to go out as a maintenance and repair expense. This year, we have already spent JPY 8 billion, and next year it may be JPY 8 billion again. That amount, in a sense, is the additional spending. In the next several years, we would like to make the core equipment and facilities robust and resilient so that we will not have this additional expense.
We have so much of equipment and facilities, so I cannot give you all specifics because we also have batteries too. It will all depending on the wise decisions based on which will be the core. Thank you very much.
Thank you very much. Next question, please. The gentleman in the second row from the front. JP Morgan.
Tanabe from JP Morgan. Thank you. I just have one question, sir. It's about the medium-term outlook-related question. Earlier, Mr. Tsuruo asked on this question as well. As you head toward 5G, with regard to, you mentioned the CapEx for fixed facilities will not increase that much to accommodate 5G. Aside from DOCOMO, be it NTT East, West, or NTT Communications, in relation to fiber, how much CapEx will be required for 5G? Also, with increase in 5G traffic, do you think there'll be increase in revenue for fixed line portion? Also, with regard to local 5G, I think NTT East, West, and NTT Communications, how will NTT Group companies be involved in local 5G so they'll be able to realize increase in profit? That's my question.
Thank you very much.
Thank you. Yes, I'd like to go back to the question raised by Mr. Tsuruo earlier. It's not so much 5G-specific, but in relation to common antennas. CapEx for common 5G antennas. I think that was the question. If you're talking about 5G-specific investment, starting from next fiscal year, NTT East and West will be offering backbone as a service to accommodate 5G. That investment, yes, will be required. With regard to fiber per se, considering the utilization rate for fiber, this can be covered from the macro perspective, but then on micro level, there are some shortfalls, so we'll have to address that.
We're talking about 800,000 base stations 5G among the four parties. 800,000 subscription fiber.
Yes, we already have fiber to accommodate that.
That being the case, on the fiber side, we don't expect a need for substantial need for investment into fiber to support 5G. As I mentioned earlier, in order to deliver backbone service, we need to invest in a certain level of nodes. That is the situation. If there's further congestion going forward, if, for example, people begin to download video at a very rapid pace, if that is going to be required on the mobile phone side, then it's not just fiber cores, but the transmission efficiency will have to be improved. That will involve and entail additional investment down the road. That is a possibility. For the current circumstance, we do not believe there's a need for substantial increase in investment.
Actually, we're trying to cut back on the investment per annum, and we believe that we'll be able to accommodate this even in a decline in CapEx. Local 5G, we have a lot of expectation for local 5G. NTT East and West, if they are connected, integrated, then it would be like the second DOCOMO, that's not allowed. If it's a closed circumstance, that's all right. I know that the competition is making a lot of noise, we're able to be involved in certain elements. For example, in Yamanashi Prefecture, we created a joint venture. It's an agriculture-related house. LPWA or 4G was used, we want to introduce 5G and connect with the network.
If that's the case, then the image data and more detailed data can be accessed on a real-time basis, which means that the system for the farms, we'll be able to deliver and sell such farm-related systems much easily. How much scale are we talking about? We have to formulate the business plan, but we have a lot of expectation for local 5G. Thank you.
Thank you very much. The person in the third row from the front. Ando from Daiwa Securities.
This is a question for confirmation. Just before, you said that overseas business or global business, you said 7% and JPY 190 billion. What is the calculation formula for that? I just wanted to confirm under what calculation you have reached those numbers.
JPY 2 billion revenue, profit margin 3%. That is fiscal year 2018's current situation. JPY 2.5 billion revenue target, 7% margin. Fiscal year 2023, that's the target. When you compare those two years, fiscal year 2018 is JPY 60 billion, approximately. 2023, I can't calculate right away, but it's about JPY 190 billion, I think. That difference is about JPY 130 billion. That is what I have said. On the profit base, in five years, JPY 130 billion, when we are to generate that, half is going to be cost. The other half is going to be increase in revenue and profit. That's how we would like to compile this number. That's what I mean.
Okay. Thank you very much, because I was unable to calculate. That was very helpful. Thank you. Sorry about that. Related to that, the increase in revenue, this is after you shift over to managed service, is what you have explained. You're going to increase your revenue through mainly managed service. Is that the correct understanding?
There's about four key points. The first is the digital solution of NTT DATA. On the NTT Ltd. side is the managed service. In addition to the managed service, they have data centers, which are performing very strongly. Moving forward, there'll be a continuous increase of data. We have GAFAs as our customers. In each area, we believe that the data amount is going to increase in various areas. The next will be security, including equipment and devices. There are a lot of factors that can experience growth. Digital solution, managed service, data centers, and security. With these four, those will be the drivers for the increase.
The order that you mentioned, is that the order of your priority or expectations, or you just did it at random? You just said it at random order.
It's not in the magnitude, but it is the order of expectations. The highest expectation will be digital solution. Next, maybe data center. The third is managed service, and the fourth will be security. Well, that may interchange.
The magnitude?
In the profit, it's at 20% for data solutions. The data center, about the same. Security right now is not doing that well. We have to improve that point.
If that is so, the positive effect of the structural reform, if that is generated, so those points are going to be easier to increase through hiring of new talent and others.
You think that that's going to bring in more addition and you have expectations towards that through efforts? Of course, we need to put in our efforts, including recruiting people. For the security side, we have acquired Secure-24 last year, and they're performing quite strongly, and their capabilities is quite high. How are we going to expand that in the same managed service, the NTT Global Network? This is the former Virtela. They have a 20% margin and they are scalable. They're SDN, and they still have room to expand. In the conventional thinking, we have people hired on the front side. In the special company, having special sales and special SEs, I think it's more important, so we're going to hire those type of people.
On the other hand, on the front side, like NTT Com's local subsidiaries and the DDs, each region's people, the people who are selling the products and the people who want to do security, and those people, we will have them shift over to that side. On the other hand, if their productivity does not go up, the efficiency in those areas need to be improved. Is that what we are thinking of?
Okay, understood very well. Thank you.
Thank you very much. Next question, please. Yes, please.
Thank you. Q Research, Sojima is my name. Thank you for this opportunity. I just have one question. It's about B2B2X. You provided us with an update. It seems much stronger than initially expected. Just one thing I would appreciate. You talked about Las Vegas, or you have already introduced the cases in Las Vegas, for example. Right now, here in Japan, what about the models for B2B2X model? Do you think they can be transplanted to outside Japan? Do you have models for B2B2X model here in Japan that can be applied directly outside Japan? I would appreciate your insight. Thank you. Well, thank you. As far as the current situation is concerned, we don't have any firm orders per se. The trial is underway. On this page is the contact center, offering VOC data analysis support.
ForeSight Voice Mining, this is the basis of this model. NTT TechnoCross is selling a R&D technology. This is a contact center solution, we're trying to apply that outside Japan. We're in the trial phase. NTT Ltd. will be the one marketing and selling this particular technology. As far as the product is concerned, we believe that it will be more than viable in European markets as well as in the North American market. That's one possibility, but this is something down the road. Well, up until now, this wasn't the case for your company. Now this type of model is becoming viable. What is the backdrop? What has led to a situation where it is possible for you to market this type of technology? What change took place in your company?
What is the change that took place in your company, and what has enabled you to take this technology outside Japan? Is this simply the case that this particular model is a very outstanding one, so NTT Ltd. is trying to expand that? Do you have a system in place whereby you'll be able to extract viable models from Japan and then transplant that outside Japan? Well, I can't say anything with great confidence, but we're trying to create such a system, and the driver will be NTT Ltd., NTT DATA's overseas companies. They want to sell whatever products that are viable outside Japan. When they do benchmarking in the marketplace, call center solutions that we just talked about, and also multi-lingual translation services and engines, this is already being delivered by COTOHA. We get the sense that these are properly viable outside Japan.
Actually, our global side, the non-Japanese marketing reps, take a look, are very focused on such technology. This is a very natural outcome. There is a request on the part of the sales team. We don't have a systematic delivery. That is because the vendor-related functions are still weak. Be it Japanese products or non-Japanese products, it's important that we need to deliver those products to customers throughout the world. When the customers place orders, they do the invoice and the delivery, and they do the fine-tuning. This type of systematic pipeline is not yet fully established, which means that the same applies when we want to introduce non-Japanese product from outside Japan into Japan. I think we've just begun this process to create this system. I think structurally, I think it's very positive that we now have the will to address this.
There is an intention emerging. Thank you very much for the response.
Thank you very much. Any other questions from the floor? No more questions from the floor. With this, we would like to conclude the briefing session for today. Thank you very much for attending despite your busy schedule. Thank you very much. I had a cold today, so it may be difficult to hear my voice. I am very sorry about that. Thank you.