We will now start the briefing on NTT's financial results for fiscal year 2019 first quarter.
Thank you very much for attending today despite your busy schedules. I am Fujiki from the IR office. I will be serving as the facilitator today. First of all, I would like to introduce today's attendees. Mr. Shimada, Representative Director, Senior Executive Vice President.
Mr. Hiroi, Member of the Board, Senior Vice President, Head of Finance and Accounting Department. Mr. Kitamura, Member of the Board, Senior Vice President, Head of Corporate Strategy Planning Department.
We also have the attendance from holding companies, corporate planning department, finance and accounting department, NTT East, West, and NTT Communications. For today's briefing, we will be explaining in line with the presentation material posted in our company website.
First page of the presentation material has the points of attention, so please read through them when you have the time to. Today's briefing session is streamed live through our company website. We also will have this available through on-demand streaming later on.
We seek your understanding on this point. Regarding today's schedule, first of all, Senior Executive Vice President Shimada will explain the results, followed by questions from you. Mr. Shimada, please.
Thank you very much. Shimada is my name. I would like to share with you the financial results for the three months ended June 30, 2019. Let me start with the highlights. If you could please turn to page 4 of the presentation materials. With regard to operating revenue and operating income, you find these numbers there.
We are seeing an increase in operating revenue and a decline in operating income. Operating revenue reached record first quarter levels, JPY 62.7 billion, an increase year-on-year. It reached JPY 2.9 trillion.
As for operating income, primarily due to the decline in operating income arising from customer return at DOCOMO, it declined year-on-year. Declined JPY 32.0 billion and operating income reached JPY 505.2 billion. As for the plan for the first quarter, we are not disclosing the first quarter plan per se.
Both operating revenue and operating income actually exceeds and outperformed the plan. Turning to profit, there is gain evaluation from integration of NDS, our consolidated subsidiary. So therefore, year-on-year, it declined JPY 9.2 billion year-on-year. Profit was JPY 280.5 billion.
So year-on-year, decline at JPY 9.2 billion only. As for overseas sales and overseas operating income margin, we are continuing to expand our sales outside Japan, even whilst we are integrating our organization. Then increased JPY 0.1 billion and reach $4.8 billion.
As for overseas operating income margin, due to anticipated investments such as service development and promotion to enhance our brand, operating profit, operating income margin went down by 1.0 point and was 1.6%. Please turn to page 5. So with regard to there was an increase in revenue at long distance international communication business and secondary communication segment.
Other segments increased due to integration of Ennet NSS as consolidative subsidiary firm and expansion of urban solutions. As for mobile communications segment, SSNS by DOCOMO, the operating revenue is declined. As for regional communication segment, it declined.
It is regarding shareholders return. The acquiring amount from the government. For that, we have resolved the share buyback. Maximum amount of share buyback is JPY 300 billion, and the maximum amount of the shares to be bought back is 53 million.
The time period of share buyback will be from 2019 August 7 through 2019 September 30. Due to this share buyback this time, the EPS target has been revised. We have increased it by JPY 6 from JPY 456-JPY 462. It was very brief, but that is all for my explanation.
Thank you. We will let you take your questions now. With regard to the questions, as we have already announced beforehand, we will take questions from only those who have registered beforehand and who are connected to the phone conference system as we speak. The operator will explain to you how we will accept and take your questions.
I would now like to start the Q&A session. If you have a question, please push zero one. If you wish to cancel and withdraw your question, please push zero two. We will now start the Q&A session. If you have a question, please push zero one. If you wish to cancel and withdraw your question, please push zero two. From SMBC Nikko Securities, Mr. Kikuchi, your question, please.
Thank you very much, Kikuchi. My name is Kikuchi. I would like to ask my first question. Long distance international communication segment, you saw a decline in the operating income in this segment. You talked about the expenses related to the integration of your global operations.
I suppose this is anticipatory investment. But going forward, I would imagine that this expense will actually expand in full-fledged manner. Is that your expectation? You mentioned that you will be pursuing integration of overseas business for the next two years. I think that was your comment in the previous session.
So during this two year period, will the centers overseeing investment be required? Can you talk about how much integration expenses you are expecting? Also, in the first quarter, Dimension Data has seen a decline in the operating income but increase in the operating revenue. Is this due to the impact of the integration expenses? If you include integration expenses, what will be the level of operating income at Dimension Data for the first quarter? That is my first question. Thank you very much.
Thank you very much, Yamada here. Thank you for your question, sir. Let me talk about long distance communications segment and the integration expenses for this particular segment. For this fiscal year, the integration expense will be a little above JPY 10 billion. That is our plan.
This time around, Dimension Data, we have seen decline in the operating income year-on-year. But that decline primarily is related to integration expenses. So the drop year-on-year is primarily due to the integration expenses. Going forward, for the next three years, we will be pursuing an integration process. The main part, for example, for this fiscal year, we will be carrying out the unification under NTT brand.
These are businesses who require to unify the brand. Also, on top of that, with regard to IT system, we will also be carrying out various integrations. So that will require some expenses. As for the next fiscal year, we will have to study the situation going forward, but we hope that we will be able to reduce the integration expenses for the next fiscal compared to this fiscal year.
Also, with regards to Dimension Data, I think I have already responded to your question. So the negative, so the current part, this is primarily due to integration expenses. Yes, that would be the correct characterization.
Thank you very much for your response. In the first quarter last fiscal year, operating income was 34. Now it is negative 35 this year, which means that there has been a decline close to 16. So therefore, maybe integration expenses is quite large. May I take it that the expenses are concentrated in the first quarter or do you anticipate that JPY 10 billion integration expenses will be required for the full year?
Well, I think expenses will be incurred going forward, but for the time being, yes, the decline in operating income for Dimension Data is primarily due to the integration expenses. When we set up the initial plan for long distance international communication segment, the operating income plan for this segment already factored in the required data integration expenses.
Now that for the projection of Dimension Data's important income, we were not able to factor this in because we cannot identify how the expenses will incur. So for the first quarter results, yes, integration expenses were reflected in Dimension Data for the first time. So it may seem as though there is a gap, but that is the situation.
Also, this time around, as far as the integration expenses are concerned, this primarily encouraged in Dimension Data. So I think that is how you should see the situation. So in the case of NTT Communications, integration expenses are not really reflected.
Okay, thank you. Let me go onto my second question. Earlier, you mentioned that the actual performance for the first quarter exceeded your internal plans. What is the driver? In what parts are you outperforming your initial boost plans?
Do you believe that this could actually have a positive impact on your annual plans? Also, as you go into the second quarter and the third quarter, maybe the impact of the new rate plans at DOCOMO may expand.
So when you take a look at the current operation at DOCOMO with regard to the new rate plans, what is your assessment? How do you see NTT DOCOMO's response and handling of the new rate plans for the first quarter? That is my second question.
I thank you very much for that question. Against the plan, we mentioned that we are seeing upside in the first quarter as far as the actual track record is concerned. Well, first of all, at NTT East and West, the operating income is actually higher than our initial expectations.
But as you are familiar, towards the second half of the year, there could be the potential for expenses during the second quarter. Also, with regard to DOCOMO, there is an upside, but as you are aware, as far as the new rate plan is concerned, 17 million customers will be transitioning to this new plan. So that positive impact may be absorbed as more customers migrate to the new rate plans.
If I may, generally speaking, from your perspective at NTT Holding Company, do you see that NTT DOCOMO's performance and operations is in a very strong situation?
Yes. At this moment, yes, I think they are in a very good situation. As was announced by NTT DOCOMO in their financial presentations, compared to their initial expectation, the migration and take-up of the new rate plans was not as high. That is true. But when we consider the potential scenario down the road, I believe that, yes, NTT DOCOMO's performance is very positive at this moment.
Thank you very much for your response. That is all.
Thank you very much. We would like to take the next question. The next question is from Daiwa Securities. Mr. Ando, please go ahead.
This is Ando. I have two questions. The first question is: This was not explained, but in the back part of the presentation material, for example, page 9, promoting digital transformation for the domestic businesses, you have several points that are written there. How should we actually interpret this content?
Because at the very end, it is going to have an effect on cost reduction, is what I assume. However, the path to the final numbers that we will actually see, if you can explain that path, I would like to hear about that. That was my first question.
This is Shimada speaking. To promote the digital transformation of the domestic businesses, for example, the telephone inquiries about problems and regarding glitches and others are written here. However, the items leading to an immediate cost reduction, I think out of what you see on this slide, that will be difficult to achieve.
These are things that will take certain amount of time. However, how it is structured is that by implementing these systems based on those implementations, the personnel expenses will gradually go down, are the steps that we are planning to take. Therefore, at that timing, we will start to see the cost going down. This is a scenario that we are thinking of. That is all.
Okay, thank you very much. My second question is regarding page 13. It is promoting the smart infra business. Here, even though I read thoroughly through this, I cannot see how this can be turned into generating profits. I would appreciate if you can explain this.
Regarding the Infra business, this is the pipe conduits or the civil engineering related infrastructures. NTT InfraNet is the company that is in charge of that. First of all, the NTT Communications civil engineering related facilities work, we are going to transfer that over to NTT InfraNet in October, is the current plan. NTT East and West civil engineering related facilities, we have no plans to shift it over to NTT InfraNet.
But the other equipment and facilities that were under the management and maintenance of other group companies were separately done, but we are going to centralize that to this company as a group. East and West will manage it in a centralized manner. The separately managed and maintenanced pipe conduits and others will be managed and maintained in a central manner.
Also, we are going to pursue if other equipment and facilities can be handled in the same way. The digitalization of these equipments and facilities meaning that where these pipe conduits exist or where the tunnels exist, by digitalizing all this information, we can link that to new business opportunities.
Currently, on the ground surface, we have the telephone poles and others, and automatically trying to find out which telephone pole is tilting and et cetera, or what are the telephone poles or electricity poles that are necessary or not.
We are actually driving on the roads and collecting the data like Google Earth. But we would like to expand that data collection to other equipment and facilities, and to the underground facilities too. By making this into a database that we can provide, we would like to link this to create new business opportunities. This is the idea behind this.
Thank you very much.
Thank you very much. Next question, please. Next question is from Mitsubishi UFJ Morgan Stanley Securities, Mr. Tanaka. Mr. Tanaka, the floor is yours.
Thank you very much. Tanaka here. Hope can you hear my voice. Tanaka here. Yes, we can hear you, sir. Thank you. I have three questions. I will ask one by one if I may. Let me start with the first question. In the beginning, you talked about the profit. You talked about the gain from valuation of Ennet. How much was that? Can you share that with us please?
Yes. Thank you. Hiroi Head of Finance and Accounting. As far as this particular issue is concerned, it's roughly JPY 12 billion. Roughly JPY 12 billion. That is the number.
Thank you very much. The valuation gain, is that reflected in operating income? Is that the case?
Well, as far as we're concerned, no. It's financial loss and gain. That is where we reflect that, not operating income. This is not a subsidiary firm, but this time around, Voyager is a subsidiary firm, so they have to have the evaluation of their stocks. That is now reflected in the financial profit or loss. That is the understanding you should have.
Thank you very much for that. My second question, the share buyback. I think you're talking about the excess ownership, the excess beyond 33.3%. But when you consider the maximum, I think there's still room. That is my sense. Are you going to do a buyback aside from the Japanese government?
May I take that? Hiroi here, from Finance and Accounting. Yes, that is the case. In other words, on top of the government-owned shares recently, what we have found is that as we go ahead with the government-owned shares buyback, then there's also application from the general public shareholders as well.
So in consideration of that is how we came up with the aggregate amount we wanted to offer. We set out the aggregate amount so that we could buy back all the government-owned shares that were available for this time.
I see. Thank you very much. My third question. This is in the supplementary data. Page 6 of the supplementary data with regard to NTT Communications Group. Page 6. Let me talk about NTT Communications Group on page 6 of the supplementary data. Starting from the top line, Application & Content column, that is JPY 30.6 billion.
Although I think annual plan is for downside, for decline, however, the first quarter was very strong. For the factors behind deposit growth in Applications & Content, is there a downside risk in the second half for the applications and content column? Thank you very much.
Yes, Shimada here. I would like to respond to your question. Yes. The thing is, in this column, Plala was integrated with DOCOMO as a subsidy firm. So that is why there is a decline. Thus, the plan was for a decline in the offering revenue. So it will have an impact right from the second quarter.
Thank you very much. I get it now. Also, on a related note, the amount is not that large, but JPY 1.5 billion worth of impairment losses have been recorded. What is the reason behind that? What is the breakdown of the impairment loss?
Hiroi here from Finance and Accounting. Let me respond to your question. Yes, the Impairment Loss column at NTT Communications. So there is underground cable. They have such assets. So part of the underground cables have been subject to impairment loss accounting.
Thank you very much. That is very clear now. Thank you.
Thank you very much. I would like to take the next question. Next, JP Morgan Securities. Mr. Tanabe, please go ahead.
This is Tanabe. Hello. I have one question. It is related to Mr. Tanaka's question regarding NTT Communications Application & Content. It had a 10% growth. I believe that the put out transfers after April. So, the product part is increasing, and you brought in DOCOMO site accelerator, and others are also increasing. Whatever remaining is going to grow after the second quarter. Is that the plan?
Let me just confirm on this point. Also for solutions, it has grown for 10%. So overall, the amount may be small, but is this sustainable or is this going to continue in terms of our content? I would like to know that. That was my first question.
May I? Basically, for Applications & Content, basically the Plala parts increase in revenue, all of that is reflected. Also solution compared with keeping right now digitalization is going on under the surrounding environment, and we are able to grasp that opportunity. It is hard to give you hard numbers, but we believe that positive impact is working throughout the full year.
Okay. Understood. Regarding Plala, just for 2 months it is included, but it grew largely. Have you implemented new initiatives for Plala?
NTT Communications. My name is Tagawa. Regarding Plala, the DOCOMO's FTTH sales fees that comes into Plala is increasing for the last 3 or 4 months.
Let me check. Even though it will be transferred over to DOCOMO, the pace or the speed of the growth is going to remain the same, is that correct?
Yes. On a year-on-year basis, it will proceed in the same level is how we look at it.
Thank you very much. My second question, this is the part that was not explained, and it is regarding page 10 in the presentation material. This is regarding the NTT Urban Solutions. Urban development and facilities were merged for this, and the explanation is about JPY 400 billion annual sales is what you are expecting.
You have used the example here is Hakata Station East 1-chome site and Sendai Chuo building development. Specifically speaking, how are they going to generate the revenue? I would like you to explain the business side regarding that path. NTT East and West property is going to be redeveloped and come up with a new revenue, or it became one NTT Urban Solution, so there were changes because of that.
You said you are going to make it up to JPY 600 billion scale by 2025. In that sense, what is the contribution from here? Do you have to do 100 or 200 properties to reach that JPY 600 billion target? Can you explain on that or elaborate on this?
This is Shimada speaking. This will all be a case-by-case basis. The Sendai Chuo building, this originally is owned by NTT, and that is going to be redeveloped and university related facilities database will be linked to this redevelopment and created into a business. Therefore, this is the so called CRE.
Regarding the Hakata one, this is a newly acquired lands redevelopment project. Moving forward, Urban Solutions are aiming for JPY 600 billion. In regards to CRE projects, our projects are coming along one by one. As I had explained before, 57 projects will be the platform, and out of that, 10 projects will start early ahead of the rest.
Regarding the other areas than property, the former urban developments business will be continually done, which means acquiring new property or overseas, mainly North America, Asia, Australia, conduct urban development type of projects there too. So there will be 3 main pillars, as I have explained. Through that, it will generate the JPY 200 billion worth of new businesses.
Thank you very much. I would like to confirm. Once it became NTT Urban Solutions, how is it different, meaning from urban development and facilities separately? Projects that were not being able to do separately can now be done?
That is a difficult question to answer. For example, what NTT Facilities have, which are NTT's buildings, there is 7,300. In 2 areas nationwide, they are controlling the power, the AC, and others. That is going to apply to urban developmental projects.
What NTT Urban Development used to do, meaning the building developer's role, is it being expanded to the community level, and the facility's capabilities will be merged with that so that they will be able to conduct more variety of redevelopment projects.
Thank you very much. That is all.
Thank you very much. We would like to go onto the next question, please. Next from UBS Securities, Mr. Takashi, your question, please.
Thank you very much. I have two questions. First, about your overseas business and overseas sales and also operating margin thereof. It's 1.6% for this quarter, so that was a 1.0 point decline year-on-year. You mentioned that the decline is accounted for primarily by the required anticipatory investment.
That is what I presume. If you exclude the investment, when you took a look at the 1.6% margin compared against your annual plan, how do you see the progress to the annual plan? How do you assess the current situation as far as the overseas operating margin is concerned? Thank you. That's my first question.
Thank you. Shimada here. Let me respond to your question. As you have understood, decline of 1.0 points year-on-year, this is primarily in relation to the following. The overseas sales are $4.8 billion, so 1% would be roughly JPY 500 million, so JPY 500 million. This was transitory investment and also the cost and expenses required to pursue integration process.
On top of that, for NTT DATA or at NTT DATA, they're developing new business, and some expenses will be required to develop new offerings, if you will, from NTT DATA. From second quarter onwards, they will of course come into play.
That is the current situation. That being the case, as far as the level of operating income and the profit is concerned, this is on par with the previous year. NTT DATA's order taking in the North American market is still very positive and strong.
We believe that there's going to be a positive contribution to operating income going forward. Therefore, 3.5%, the annual target as far as annual guidance is concerned, we believe that profit will really begin to recover starting from the third quarter. That is our understanding.
Thank you very much. My second question is with regard to the impact of the consolidation of Ennet, especially in terms for how much impact was there in terms of the other business segment revenue and operating income from the consolidation, if you will, of Ennet as the consolidative subsidiary?
Shimada here. Let me respond. As far as the revenue is concerned, the contribution from Ennet is JPY 61.5 billion. As far as the operating income is concerned, just as energy business and the profit and the operating margin is not all that high. It is a slight contribution as far as operating income. Positive contribution, but slight. That is how you should interpret the situation.
Thank you very much. That is clear.
Thank you very much. We would like to take the next question. Next, Citigroup Securities. Mr. Turo, please go ahead with your question.
Thank you very much for giving me the question opportunity. As of July 1, NTT Ltd. officially has started. Well, within the last three or four months or this quarter, it is a major event that has occurred, and it is such a good opportunity. Can you please share with me what kind of a business are you thinking looking forward? You can share your thoughts.
This is Shimada speaking. NTT Ltd., right? Sorry. I am very sorry about that mistake. Thanks to everybody's efforts, July 1st at London, we were able to hold the grand opening party. The U.K. government, even though they are in the midst of Brexit, us having the headquarters in London and have a global business deployment from there. We have a message from the former Prime Minister, Theresa May.
Also, we had Margot James, who is the Minister for Digital and the Creative Industries, attend. We had a grand reception. Moving forward, what we are planning to do is that across related matters, everything is now going to be integrated.
Therefore, personnel expenses and related properties and other expenses, we will be conducting cost reductions. On the other hand, on the business side or sales side, conventionally, Dimension Data, in a way, was doing the reseller products.
Over there, the margin has become slimmer and slimmer year after year. However, regarding engagement with the customers that they are quite well-versed, therefore, to that engagement, what NTT Communications has, which is the high margin product of managed service and data centers product, data center service, those will be merged to them as one company and provide the product services.
Therefore, the managed service and also data center-related services, those have 10, several, or close to 20% margin. Therefore, those products will be brought into the overall sales network to boost up the margin. In order to do that, of course, we need the appropriate skills and capabilities for sales side. Of course, we will probably need to conduct the replacement or improvement of the skill sets that exist.
By doing that, and at the same time, improving efficiency and further enhance the engagement with the customers. Through all that, we would like to push up the overall profitability of the company.
Okay, thank you very much. Related to that is my second question. The managed service or you were transferring this company into a company that has the IT services as a core, and there are several acquisitions that you have listed here already.
The entities are limited when they are going to expand their businesses. How much is the M&A strategy going to hold importance? Through that, what kind of money are you going to require? What financial position is that going to be occurring moving forward?
The managed service type of companies that we have acquired up to now is in line with the current trend, which means is that in order to respond to multi-cloud, these are companies that have skills, that are well-versed in that area. Also, the businesses are starting to transfer over to cloud, and in order to secure the necessary system engineers, we are conducting these M&As.
Therefore, in fact, if we are able to deploy these know-hows that we have acquired, that will be great. The large scale M&A, we do not think that it is necessary to move on to the managed service type of business. However, having said that, within the businesses that we conduct moving forward, if there is something that we need at that point, we can think of leveraging M&A at that time.
However, within our strategy that we have conducted up to now, we already have all the things that we needed or lined up till now. It is the skills acquisition that will be the query if you are going to conduct M&A.
Thank you very much.
Thank you very much. Next question, please. Next from Nomura Securities, Mr. Masuno. Please, Mr. Masuno.
Thank you very much. Masuno from Nomura Securities. My first question is with regard to the financial numbers, and the second relates to medium-term investments. So those are the questions I wish to ask.
Starting from the financial results, just for cost reduction, beginning of the year, your annual target was JPY 470 billion, JPY 220 billion. I think this year, I think it is up by JPY 250 billion because this is the gap between the 2 years. In the first quarter, you reduced JPY 60 billion, and DOCOMO has already announced a JPY 20 billion cost reduction. Aside from DOCOMO, I would imagine that you have already reduced JPY 40 billion in costs only during the first quarter.
Can you give us a breakdown of the cost reduction achievement during the first quarter, and also for the full year? I would imagine that you intend to reduce costs of JPY 120 billion ex-DOCOMO. Can I take out the progress rate of the cost reduction for non-DOCOMO subsidiary firms? Thank you.
Shimada here. Let me respond to your question. As you pointed out, this was clear in the first quarter, JPY 60 billion cost reduction, out of which DOCOMO has announced JPY 20 billion. The remaining JPY 40 billion, this is primarily NTT East and West contribution in terms of cost reduction.
This is where the cost reduction came from for the first quarter. As far as the breakdown of the cost reduction contribution for the first quarter is concerned, let's say facility related costs and also marketing sales and marketing related costs.
These were primarily the cost reduction drivers. Personnel cost reduction was not all that large for the first quarter, but of course it is still on downward trend. As far as the first quarter is concerned, though, primarily facility related cost and marketing related cost were the main drivers of cost reduction for the first quarter. That is my response.
Thank you very much. What about the progress against the annual plan? As far as the progress to annual plan is concerned, we are making very strong progress. Thank you.
Actually, the pace is accelerating. That is a recognition.
I see. Okay. Thank you very much for that. With regard to CapEx. In others business, CapEx seems to be increasing. Is this in relation to real estate business and also maybe related to the new companies that joined the group recently perhaps? So can you talk about the CapEx in the other business segment? Can you share with us the current status, please? Thank you.
Thank you. Shimada here. Let me respond. As far as CapEx is concerned, in the others segment, primarily that would be in relation to NTT Urban Solutions Group. Well, traditionally, it would be NTT Urban Development. So equivalent to the traditional investment made by NTT Urban Development in the past. It is simply the extension of the existing trend.
Okay. Thank you very much. Last question with regards to lease, NTT lease. I think JPY 36 billion cancel depreciation. Also leased assets, JPY 170 billion.
I am checking.
So what about the impact of free cash flow? This is essentially the amount of amortization. So can you talk about the NTT lease?
Thank you. Hiroi for accounting and finance. Let me start with the profit and loss related lease impact of the lease. It is roughly JPY 36 billion expenses. Depreciation is where the impact of the lease is most felt. So we are in the first quarter, so this will have an impact over the rest of the quarters until the fourth quarter.
As far as the cash flow is concerned. As far as IFRS is concerned, it organizes the depreciation amortization, but at the end of the day, the final cash, it does not impact the cash. So there is not so much impact in terms of the free cash flow. Therefore, we do not expect a significant impact on free cash flow. Also, what about debt liabilities? As far as the liabilities are concerned, well, naturally, the lease liabilities, the increase thereof, is there. So that would be roughly JPY 757 billion, and that is now reflected in the liability section.
Thank you very much for that. My final question with regard to medium-term outlook, I think you talked about real estate earlier. You mentioned anticipatory projects of roughly 10 projects. You talk about 10 projects running. So can you share with us the potential size of the 10 anticipatory projects that you will be handling in real estate?
Also, you talked about more greater efficiency in investment. But aside from real estate business, be it data centers, there are sectors whereby investments is likely to increase. Can you share with us potential areas whereby medium-term investment may expand? If you could share that with us.
Thank you. Shimada here. Okay. Areas whereby investments may expand over the medium term, what are these sectors? One would be something that you already cited, data center business. That is one case in point. As far as data center business is concerned, well, at a fairly early phase, there is need to carry forth with the investment because there is competition out there.
Therefore, we have to be mindful of the potential competition as we come up with investment strategy for the data center business. At the same time though, as we carry forward through with the investment, it is important that we gauge the global competitive landscape and also the situation of the customers. But there are cases whereby we have to make haste in certain cases. If that is the case, then we will consider potential partnerships to address projects that require early investment.
We will probably expand the sale or the size of the investment, but at the same time, we will consider the possibility of having collaboration with partners as far as the investment is concerned. Also, on top of that, NTT Urban Solutions and the CRE related investment. As far as this particular portion is concerned, actually although it has been announced, there are large scale projects that already cover daily mass media.
In Shibuya, for example. We are giving consideration to the possibility of those projects, but these projects could be enormous in scale. There are not those possibilities, but there are also fairly small scale projects possible as well.
For example, condominiums and so forth. There are small scale projects as well. It is a mixed bag, if you will, of large scale projects and smaller scale projects. When we consider the investment down the road, the investment burden could be quite enormous.
The assets, again, with the data center business, for example, we might consider possible partnerships in those type of investments as well so that we could reduce the impact from the investment.
Also, in certain cases, once a certain level of development has been carried out, then we might translate that to REIT or we might consider possible sell off of those developments. We want to have a combination of various possibilities so that we could increase the efficiency overseas asset portfolio and improve our return.
Thank you. Very good follow up. You are talking about the 10 projects that you want to start ahead of the rest. Will large scale projects be part of the 10 projects?
Yes. It is part of the top of the first 10 projects.
Thank you.
Thank you very much. We would like to take the next question. Are there any more questions? For those of you who have a question, please press zero and one. For those of you who have any questions, please press zero and one. With this, we would like to conclude the briefing session of the fiscal year 2019 first quarter. Thank you very much for your participation.