We would now like to start the press conference by NTT. Thank you for joining us despite your busy and demanding schedule. We appreciate your kind attendance. My name is Sekine with NTT Public Relations Office. Thank you so much for joining us today. First, I would like to introduce the attendees from our side. The Chief Executive Officer and President, Mr. Akira Shimada. Senior Vice President, Head of Finance and Accounting, Mr. Kazuhiko Nakayama. Also Senior Vice President, Head of Corporate Strategy Planning, Mr. Takashi Taniyama. These are the three attendees from our side. The presentation materials which we will show today has been uploaded on the website at NTT Group as of 13:00 Japan time. After the press conference is over, we'll have press conference by NTT DOCOMO, NTT East, and also NTT West from the Osaka side.
There'll be presentations, financial results from all those companies after NTT holding company's presentation. We'd like to start. Mr. Shimada, the floor is yours.
Thank you for joining us today. We appreciate your kind attendance. My name is Shimada, the President and Chief Executive Officer of the company. I would like to introduce to you the agenda for the day. Main is made from three parts. We'll present the financial results for fiscal year ended March 2023, and financial forecast for fiscal year ending March 2024. This will be followed by a discussion on the new medium-term management strategy, we'll close out with introduction of shareholder returns, stock split, and organizational changes. Allow me to start with the consolidated results. Correction. Please turn to page four.
I would like to turn to the financial results for March, ending March 2023 and forecast for March 2024. As you can see, fiscal 2022 consolidated results saw operating revenue, operating income, and profit all increase year-on-year and all these items reached record high levels. Operating revenue grew JPY 979.7 billion year-on-year and also reached JPY 13,336.2 billion due to increase in global solution business revenue and increase from revenues for electricity business at NTT Anode Energy. Now, of the increase in revenue, impact from currency was roughly JPY 280 billion. Operating income increased JPY 60.4 billion year-on-year up to JPY 1.829 trillion, as increase in electricity price was more than offset by increase in operating revenue and cost reduction.
As for profit, this increased JPY 32 billion and reached JPY 1.213.1 trillion due to increase in operating income. As for overseas operating income margin, this improved 0.9 point up to 7.2% due to increase in profit based on increased revenue as well as cost reduction driven by structural transformation. We achieved meeting term financial target of 7% one year ahead of schedule. Please turn to page five. This shows contributing factors by segment, and we focus both on operating revenue and operating income. Let me start with integrated ICT business segment. There was negative impact from price reduction in consumer communication segment, but this was covered by increase in revenue in enterprise business as well as Smart Life business, as well as cost reduction. We recorded an increase in both operating revenue and operating income year-on-year.
Turning now to Regional Communication Business segment. The one-off cost increase factor in previous fiscal year is no longer present. On top of more than expected increase in electricity cost and the delay in cost reduction program at NTT West due to large scale malfunction which took place back in August of last year, both operating revenue and operating income declined year-on-year. As for Global Solution Business segment, operating revenue and operating income increased year-on-year due to increase in revenue from robust demand for digital services as well as value-added services at NTT Ltd. Both operating revenue and operating income increased year-on-year. As for the other sectors, including real estate and energy, due to increase in revenue from electricity business reflecting jump in the fuel price at NTT Ennet, operating revenue and operating income both increased year-on-year.
Let me now talk about the fiscal 2023 results forecast. Please turn to page seven. Operating revenues will decrease year-on-year, while operating income and profit will increase year-on-year. That will be the forecast for the fiscal year 2023. We'll aim for operating income and profit to reach record high levels, and we'll aim to reach EPS of JPY 330. Achieve medium-term financial target. As for operating revenue, this is expected to decrease year-on-year due to foreign exchange and decline in revenue from electricity business at Ennet. Our plan is to aim for income increase in major business segments after excluding these factors.
As for operating income, while the impact from rise in electricity cost is uncertain, we expect operating income will increase JPY 131 billion year-on-year based on increase in profit in group companies such as Docomo. As for profit, despite increase in interest payment, profit is expected to increase JPY 41.9 billion year-on-year based on increase in operating income. Please turn to page eight of your materials. This shows you the fiscal year 2023 forecast summary by segment. Starting with integrated ICT business segment. On top of growth in enterprise business and Smart Life business, downward pressure on revenue was more.
less eased due to the increased number of users signing up to medium to large data plan in the consumer communication business, as well as cost efficient. DOCOMO as a whole was able to see increase in both operating revenue and operating income year-on-year. As for regional communication business, we expect increase in both operating income as cost efficiency measures that was delayed will now be implemented at NTT West, as well as expanded growth business at NTT East and West, and cost efficiency. That is the plan for this segment. Turning now to global solution business segment. While there is negative impact from currency or foreign exchange, operating revenue and operating income is expected to grow year-on-year from robust demand for digital, as well as cost reduction through structural transformation and reform.
As for others, operating revenue is expected to decline year-on-year as results from drop in revenue from electricity business based on more appropriate sale volume at NTT Anode Energy. Although decline in revenue will push down operating income, we expect operating income will increase year-on-year due to increased profit in NTT Urban Solutions real estate business. Please turn to page 9. As for the current medium-term financial targets, this is on track. EPS will reach 348.6 at the end of fiscal year, fiscal year 2022 rather. It's expected to exceed our plan of JPY 340 . We will aim to reach EPS of JPY 370 , which is the current medium-term financial target. Now, I will explain the new medium-term management strategy, and we will shift to financial targets.
We'll shift to new financial targets. The current targets, including EPS targets, will shift to financial targets to contain in this new strategy. Please turn to page 9. This shows you the progress under the current medium-term management strategy. We've shown you the progress since February 2023. Let me now turn to explanation about the new medium-term management strategy. The title is New Value Creation & Sustainability 2027, powered by IOWN. That will be the subtitle under this plan. The current this medium-term strategy will cover 5-year period from 2023 up until fiscal year 2027. This is a 5-year plan. The fundamental principles of this new plan is indicated on page 1. The pillar is this innovating a sustainable future for people and planet. This represents the fundamental principle of this new plan. Please turn to page 2.
For that purpose, we will increase our investment in growth areas. Over the next five years, we will invest about JPY 8 trillion, increase of 50% compared to the past. Including investment for existing areas, it will total JPY 12 trillion over the next five years. Please turn to page three. We will also further increase our cash generation ability for the future. Looking ahead to fiscal year 2027, we aim to grow EBITDA, which has been flat so far, to reach approximately JPY 4 trillion, 20% increase by increasing investment in growth areas and so on. Please turn to page four. Next, I'd like to talk about pillars of our initiatives to execute our strategy. We've set 3 main pillars. The first pillar is NTT as a creator of new value and accelerator of a global sustainable society.
The second and third pillars are designed to support the first pillar. The second pillar is upgrading the customer experience, CX. The third pillar is improving the employee experience, EX. I will explain 9 initiatives that make up these three pillars in a moment. Please turn to page five. I will now explain the first pillar, NTT as a creator of new value and accelerator of a global sustainable society. The very first core initiative is IOWN-driven creations of new values. From concept to commercialization, we will establish NTT Innovative Devices Corporation in June 2023 to rapidly commercialize photonic electronic conversion devices that achieve lower power consumption as a solution to the growing power consumption with the increased use of AI and so on. The company will start with initial investment of JPY 30 billion, with subsequent increases to be considered.
In order to accelerate R&D and the commercializing IOWN, including 60 in FY 2023, we will invest approximately JPY 100 billion in continued investments thereafter to accelerate commercialization of service and Digital Twin Computing will follow. Please turn to page 7. The second initiative is data-driven creation of new value, smart work. With a focus on retail customers, we will strengthen Docomo's Smart Life businesses to strengthen personal business, and we will actively invest at least JPY 1 trillion in the growth area over the next five years. For example, we will upgrade and refine variety of services in different domains, such as financial and healthcare medical services. By analyzing various data obtained by these services, we will try to offer optimal personalized services to our customers.
Page 8, please. Next, strengthen the use of DX data in society and industry. For our customers such as corporate clients, we will transform industries that support day-to-day life and society by globally deploying solution services and platform services by utilizing technologies such as AI, robots, IOWN, digital twin, security, and so on. Our plan in this area is to invest at least JPY 3 trillion over the next five years. Please go to the next page. Now, expansion and upgrade of data center, which is the key platform in data-driven society. While further expanding the world's 3rd largest data center infrastructure of NTT Group, we will upgrade them by introducing IOWN technology.
For that, with more than JPY 1.5 trillion or so investment over the next five years, the data center capacity, it will be doubled from the current total of 1,100 megawatt. Please go to the next page. The third initiative is achievement of a circular economy society. We will promote green solutions that can be achieved by combination of green energy and ICT with a planned investment of about JPY 1 trillion over the next five years. We will expand our renewable energy generation business and achieve a stable supply of optimized and efficient energy directly towards local production and local consumption using our energy storage battery and EMS. Please go to the next page. Next, we'd like to talk about creating circular economy-oriented business.
On top of renewable energy, we'll pursue recycling local waste in various industries and thereby recycle these resources and create a sustainable society going forward. By leveraging IOWN, 5G, IoT, AI, and robots, we will be contributing to improved efficiency, value addition in primary industries, as well as industry development and regional revitalization. Please turn to page 12. Let me now talk about achievement progression toward net zero. Looking ahead to 2040, under NTT Green Innovation toward 2040, we will expand this to Scope 3, aside from Scope 1 and Scope 2. Please turn to page 13. This relates to 4th initiative, which is further strengthening of business foundations. I would offer apologies for the inconvenience and cost to all of you due to malfunction that took place in NTT East and West. I would reiterate our apology.
Leveraging our reflection and lessons, in particular from past failures, we will make our networks and systems more resilient to withstand large-scale failures and cyberattacks in order to strengthen social infrastructure. We will be enhancing countermeasures against increasingly severe natural disasters. By 2025, we have already announced this, we'll make an investment of JPY 160 billion by fiscal year 2025. Please turn to page 14. Now, I would like to talk about the second pillar, which relates to upgrading the customer experience or CX in short. The first relates to fusion of research and development with the market-focused strategy. We'll combine and strengthen R&D capabilities with our market analysis and alliance capabilities. We'll be creating an R&D Market Strategy Division within the holding company.
On top of strengthening product-oriented R&D, we'll collaborate with various partners, and we'll carry out all the activities from R&D up until product delivery. We'll be promoting alliances with many different partners going forward. Please turn to page 16. Here, we talk about the sixth initiative, which relates to strengthening services that emphasize CX or customer experience. We will see various stakeholders as potential customers and partners, and we'll be placing emphasis on customer experience-first initiative. We will track customer journey. We'll also be providing agile and upgraded and improved services, and we want to offer new experiences and impressions that will exceed customer expectation so that NTT Group will continue to be chosen by our customers. Please turn to page 17. We will now be talking about the third pillar, which relates to improving the employee experience or EX.
Please turn to page 18 now. The 7th initiative relates to open and innovative corporate culture. With the customer-first principle as the basis, we will be emphasizing open collaboration trial and error type of culture. We'll also continue to reinforce our activities in relation to diversity and inclusion. Please turn to page 19. 8th initiative relates to support career growth. We'll support employee career growth and increase investment in human capital to drive business growth. For example, based on the personal system, based on experience rather, which was introduced in April of this year, we will support employees acquiring external skill qualifications, as well as expand many of various training programs, as well as strengthening career support functions that will be performed by career development advisors.
We'll also support total career development that supports relevant various life events past that based on child-.
Lastly, the ninth initiative is strengthening and upgrading of support programs for employees and their families all around the world. Benefits that support a portion of educational expenses up to college graduation of children of deceased employees will be expanded. In Japan, from 1988, using the scholarship fund, educational expenses support to children in the event of employees' death have been provided. For approximately 150,000 or so employees working for NTT Group's overseas entities, we will consider introducing the support system equivalent to that of Japan, aiming for implementation from the beginning of the next fiscal year. Please turn to page 21. From now on, I will describe our midterm financial targets. Please turn to page 22. In midterm, financial targets are as shown. As I've already explained, EBITDA 20% increase. Target was set in the growth area.
In the growth area, which is a driver for the target, EBITDA increase of 40% against FY2022. In addition to growth, where we should focus on in the growth area, separately, overseas operating income margin of 10% in FY2025 is set as target. In the existing area, continuous profit generation is expected and 10% EBITDA increase over FY2022 is targeted. In order to improve capital efficiency, 9% target is set for ROIC. In addition, sustainability-related targets based on Sustainability Charter, New Environment and Energy Vision that we put forward, 3 targets, namely new female manager promotion rate, greenhouse gas emissions, and employee engagement rates are set. Please turn to page 23. For strengthening our ability to generate cash for growth is as shown. Please turn to page 24. By increasing investment to achieve further growth, demand for funds will rise.
We will, however, pay attention to capital efficiency so that we will be able to maintain or reduce our interest-bearing debt to EBITDA ratio to two times or so. I'd like to talk about the fundamental policy on shareholder returns. We will keep our basic policy of implementing steady increases in dividends and flexibly conduct share buybacks to improve capital efficiency. This concludes the presentation of the new midterm management strategy. Lastly, I'd like to talk about shareholder returns, stock split, and organizational changes that's being planned. I would like to explain about the shareholder returns and stock split. The board of directors resolved at today's meeting that aggregate annual dividends for FY2023 are expected to be JPY 125 per share, an increase of JPY 5 from the last fiscal year.
As a result, dividends are expected to increase for the 13th consecutive year. The board today resolved to split the stock, and each share will be split into 25 shares effective as of July the 1st. By significantly reducing the minimum investment unit, we wish to facilitate an environment where people find it easier to invest in our shares and expand NTT's core investor base across a wide range of generations who wish to support sustainable growth of NTT Group. We are going to carry on with the organizational change in the holding company. As explained earlier in our new midterm management strategy, R&D Market Strategy Division is going to be newly launched. Under that, Marketing, Planning, and Alliance departments will be well-established.
In line with that, the R&D Planning Department will be transferred, and also the new Business Development Division is going to be abolished. Separately, in order to strengthen our global marketing and promotions, Public Relations Office will become independent of the Corporate Strategy Planning Department and set up as Public Relations Department under the direct control of the President. In order to strengthen our global legal risk support, a legal office will be established within the General Affairs Department. To accelerate initiatives for sustainable charter, a Sustainability Office will be established in the Corporate Strategy Planning Department. This concludes my presentation. Thank you.
We would now like to take questions from the members of the press at this juncture. We'll take questions from those of you here on site. If you have any questions, please indicate your wish by raising your hand. A microphone will be brought to you, so please state your name, affiliation, and then go on to your question. May we ask you to limit one question at a time, and should the time allow, we will give you the chance to take the floor again. Let us now take questions from the floor. Please, Yes, you in the front row. Let's start with the person in the front row.
Thank you. Miyajima from Nikkei, Nihon Keizai Shimbun. Let me ask a question. You talked about a 25 split by shares. Can you explain why you're doing this? Yes, the reason behind this?
For one thing, we wanted to focus on the young people. We would like to invite investment from the young people, so that is the reason for the split into 25 shares. Next year, the new NISA mechanism or system will be launched. The mechanism of the system will actually be shifting from savings to investment. Against that backdrop, as far as we are concerned, this is our thinking. For example, in the recent, the members, children going to primary schools are actually buying shares as part of the classroom lessons, and they're buying shares from the U.S., so companies like Google or Amazon. The investment unit is roughly JPY 30,000. You'll be able to acquire that at the price of JPY 30,000 per unit.
In the case of Amazon, which is a telecom company, these shares can be bought at JPY 5,000. Unfortunately, NTT's, our stock price is very firm, very strong, so it exceeds JPY 4,000, which means that the investment unit will be JPY 400,000, which is not accessible for young people. We want to have a split the stock into 25 shares, which means this will be JPY 164? Yeah. If you buy 100 units, it will be JPY 162,000, which I believe will be on par with companies like Amazon and Google. You'll be able to invest in this very low investment unit as a result of this split into 25 shares. Young people are now investing in so-called mini shares.
In the case of mini shares or stocks, you do not have the authority, you cannot execute the authority as a full-fledged shareholder. We wanted to reduce the investment unit so that the wide range of age groups will be able to invest in our company. That is why we split the shares into 25.
Thank you very much. Appreciate. My second question, this relates to the review of the financial targets and the final financial indicators. You talked about employee engagement. This relates to of course, the usage of the human resources. Can you talk about the current status? What is the reason why you introduced this pillar as part of initiatives? Please go ahead.
Yes, with regard to employee engagement.
Well, last year, in the case of last year, our, in domestic companies, engagement was roughly 57% for domestic operating companies. This is considered to be low compared to the global index because in the global average is around 60%, this is somewhat lower than the global average. In the case of overseas business, actually, the level of engagement of our group is quite high. Of course, this relates to the structure of the employment, there are a lot of differences, of course. I guess when it comes to employees, and this is something which I've constantly mentioned since I was appointed as the company, as president of the company, customers are the source of creating customer demand.
It's important that we improve the satisfaction and engagement of the employees, as well as the sense of excitement. This is very important. By improving those indicators, we believe that we have a system whereby employees are excited to deliver new services and new products. I wanted to foster such a climate. That is why this time around, we decided to focus on employee engagement ratio as part of a financial target. You simply referred to improvement. You did not give a numerical target. We're improving year-on-year, that's the meaning behind the improvement. This year it was 57%. We want to exceed 57% today or this year rather. Thank you very much.
Yes. For the person next to that row person from row on U.K. The electricity bill, the cost is rising. What is the direct impact from them? Also, how have you factored in that impact for FY2023?
Annually, on a full year basis, JPY 60 billion. Compared to the previous year, it's up by 40% or so. In that sense, with Docomo, the rising, well, well, power cost has been absorbed, then they have increased their profit. Well, the NTT WEST, because of the failures that have caused and cost reduction is being delayed, that the cost increase for the electricity power was not absorbed.
Looking at the, well, the current market instead of the trends, well, the rate of the increase this time, it could be maintained. It's not that we will see, well, higher rate of the increase compared to the previous year. That has, that is the sort of rate of increase that we have factored into our plan. If it is going to go beyond that level of increase, then, well, the circumstances will become more challenging. Hopefully that weather trend will be maintained as it has been.
The next question, please.
Yes. The person in the second row from the front, please. Please go ahead with your question.
Takano from Toyo Keizai journal. Let me ask 2 questions. First, with the NTT Innovative Devices Corporation, let me ask about this new company, NTT Innovative Devices Corporation. Will NTT Holding Company be the sole provider of equity? Do you have any sales targets for this new company? In conjunction, this account will be creating photonics-electronics convergence devices. What's the significance of NTT having such as a department in-house ?
Thank you for your question. You asked whether or not we're the sole provider of capital. Yes. This is a company that will be wholly owned by NTT Holding Company. We are the sole provider of capital. As for revenue or sales, I think Nikkei provided an article that said that the target is JPY 200 billion. I know that that's an article put out by Nikkei.
That's about the, that's about the level of revenue that we have in mind. Now this is a company focused only on devices. It presumes sales of device. For example, when photonics-electronics convergence devices are used to create white box server, if this could evolve into other fields as well. If you focus on devices, that's about the level of sales that one can imagine in the initial phase. That will be the initial target. As we go forward, hopefully we'll be able to cascade our technology into other areas as well. Now you ask why NTT would have this type of a company in-house? Well, NTT Research Laboratories was one of the first to carry out research into photonics-electronics convergence devices. We were the first to create this. That's the starting point.
That being the case, we wanted to further evolve and develop this technology. That is the aspiration on our part. Thank you. If I may continue. Now, when we engage in mass production, are we going to do everything on our own in-house, or are we going to follow a different path? Are we going to have our own fab facilities? We have not yet made such decision at this juncture. This is a matter to be discussed down the road.
Thank you for that. My second question is related to the previous question. Within NTT Group, hardware manufacturing function will be NTT Electronics. That's the company with the hardware electronics capacity, right? Now, this time around, electronics. You did not decide to engage them for manufacturing purposes.
You have decided to create a new company instead of relying on an existing company that has manufacturing capacity. Going forward, what type of a role will be played in NTT IO Initiative with regard to NTT Electronics?
They'll be integrated with NTT Innovative Devices Corporation going forward, so they'll be converged and integrated down the line. The main product is going to be photonics, electronics, converged devices. We decide to focus on this technology and product. This really is our intention and resolve. We wanted to demonstrate our resolve and our commitment to this technology. First of all, it is a new vehicle, if you will, a new company for this purpose. At the same time, with regard to DSP and other existing products, we have that. The electronics system is involved in that.
That function should be combined with the new company for the sake of efficiency. That's why we'll be integrating these two companies.
I see. Thank you. What about the timeline for the integration of the two of these two units? Let me confirm once again. You mentioned JPY 200 billion earlier. Are you talking JPY 200 billion after the integration?
Yes. Yes, that's the case. As far as the integration is concerned, we'd like to do this before the end of the year. Thank you.
We would like to take the next question.
Well, hopefully in August.
We would like to take the next question and, the person on the left-hand side.
Horikoshi from Nikkei BP. In slide 23, I believe, and R&D and for marketing department, I'd just like to really ask more about this in R&D Market Strategy Division. I think for the new business for development division is going to be abolished. I think this one particular division has been trying to pursue and explore new business opportunities. This is going to be integrated into this new R&D, the market strategy division. One of the reasons is that NTT DATA, Inc. is the sort of global arm. From various parts of the world, there are so many requests coming to us.
From the global customers overseas, we would like to really, well, establish a sort of the contact point. That's the one reason. The marketing, well, division is going to be, well, established. On the next page, to really come closer to the customers and to really have the, well, joint customer journey and to provide the services. In that extent, well, we may have to establish a certain KPI to monitor the progress. That is the reason why, well, this, the newly established market planning analysis department is going to take that kind of role. That kind of function will need to be established, and that's what I said, well, last year. With this, well, statistics business development division, well, they were really pursuing that.
Well, as this sort of new marketing arm, we would like to establish this, well, New Market Planning and Analysis Department. So the roles being played by the New Business Development Division and together with the partners outside of the group.
Continuously, they are to receive as a contact point, also they are to, well, upgrade their functions and to really, well, enhance their functions. That is the sort of purpose of this organizational change this time. The next question, please, from Newspaper. I came late. I apologize if you've already covered this, but I was not present. Around the world, artificial intelligence is now the buzzword, and it's a hot topic. As far as NTT Group is concerned, you were involved in the development language in-house. There is also ChatGPT and overseas companies outside Japan. There are AI usage outside Japan, also maintain balance between regulation and usage of AI. On these topics, what are your thoughts as NTT Group?
Thank you. Thank you for the question. I think your question includes many different points.
Let me first start by addressing what NTT will be doing in this area, and also, you asked whether we've involved large scale language. Well, as far as NTT is concerned, when it comes to AI, we've already launched concrete services to our customers. It's under the brand of Kotoha. It specializes in certain areas such as finance and insurance. These are programs that are dedicated to particular verticals and industries. It's very light, and it offers high performance. Seems like tooting our own horn, but I think our product is appreciated. It's not just about linguistic language processing. We do voice and image processing as well as part of our service lineup. In the process of brushing up what we have at NTT Laboratories, we have the large scale linguistic models, LLM.
Has been actually addressed by the NTT Laboratories for a very long time. The thing is, though, the large scale linguistic model that is the topic of today entails very large power consumption. How can I put it? Well, let me see. In the case of GPT-3, the parameters will have 170 billion parameters, actually. HPA will be used in that process. As you can see, it really is large scale technology, so therefore, power consumption will be quite enormous. That is the issue. As far as we're concerned, when it comes to LLM, we want to have a smaller linguistic model or language model and also improve our customization function and capabilities. Furthermore, as I mentioned earlier, image and voice, multimodal type of services should be launched.
We want to be able to entertain multimodals, and we want to introduce that into the marketplace down the road. If possible, of course, it is dependent on how much NTT Laboratories will be able to achieve this, but hopefully by the end of the year, we'll be able to have something that relates to more small-sized, more accessible, easy-to-use and lightweight, more efficient model. That is our wish. This will be probably geared toward the enterprise market. What about our response to ChatGPT? What are we doing when it comes to OpenAI? Are we using OpenAI such as ChatGPT? I think that was another part of your question. Based on customers' requirements and requests, outside Japan, we already use Azure OpenAI services.
We are not doing that domestically, but we do offer some of that type of services based on customer requests outside Japan. With regard to ChatGPT, on a trial basis, we are testing the waters as to what this technology is all about. When it comes to OpenAI or open technology, we cannot incorporate customer data. We will use something that is closed, that is not open. That has been the internal recognition and consensus on the part of NTT Group internally. In the case of OpenAI, like ChatGPT incorporating data from NTT, that is not something we are going to do. We're not allowing that. Have I responded to your question?
Yes, thank you very much. Yes. Thank you. Now, with regard to ChatGPT, I think SoftBank the other day mentioned about the usage of GPT-4.
SoftBank was more conducive to using ChatGPT type of technology. What are your thoughts on this matter?
In the case of Azure type of model we're seeing, which is closed model, incorporating that as part of customer solution is a possibility, I think. It's more than possible. Application of that is likely correction. This is likely to be considered by the marketing team going forward. Right now, within the group, I'm sure that various considerations are underway on this topic as we speak.
Thank you very much. Then, the person in the very back row on the left-hand side.
From Kyodo. In this, well, mid-term management strategy, you have been, well, talking about the IOWN. I think, well, the forum was conducted, held in Osaka. Intel and other, well, executives of the companies have attended. I am sure you had a very good discussion there. Once again, for the establishing a new company to work on the photonic and electronics conversion devices, basically the target. Well, what is the progress you have been, well, making? Also, some for the services for the couple clients have been launched. If you could just tell us the progress you've been making. This time around to newly establish for the company for the devices, IOWN 2.0 aiming at 2025.
Well, we are to really, well, come up with the devices to connect all this. In launching them, and of course, well, we have to have this, well, entity to really, well, launch and commercialize them. I think, well, the steady progress has been made for sure. By 2025, and photonic electronic conversion devices will be ready to be launched, and we would like to make sure that we'll be ready for that. Also IOWN, well, 3.0 and around, well, 2029. That is, well, the certificate, well, within the board, the selection, the connection within the board, will be facilitated by these four devices. We would like to make sure that we will be progressing in line with the plan.
I cannot say immediately, the portable, photonic, well, the semiconductor, we would like to really, well, move forward step by step.
Thank you. We'd like to go back to the person in the second row. Your second round of questions, please.
Thank you.
from Nikkan Kogyo Shimbun. Thank you so much. I want to ask about the impact of rising prices and CPI. Of course, personnel cost is increasing, electricity costs and charges are increasing. There's overall upward pressure on prices. The other day, DOCOMO talked about the version of various price commissions. Can I talk about the impact and also countermeasures against this impact?
I would appreciate your thoughts. Well, thank you. Let me start by talking about our overseas business. Electricity charges, our data center businesses are being borne by the customers. A rise in electricity prices are being borne by customers. In the case of personnel cost, system integration, business and contracts, we ask customers to bear the cost for increase in personnel.
In Japan, domestically, telecom businesses are the main business for our company at this moment. That being the case, since this is part of an infrastructure, it's very difficult, so it's difficult to say just because the electricity charges are increasing, we can raise prices for our customers, our services. It's a matter of getting the understanding of the customers. I think we have to do, we have to work hard to absorb the increase in these prices through cost reduction efforts. As I mentioned earlier, during the early question, we hope that the current level of electricity prices will maintain for throughout the year. Should the prices take an uptick once again, we need to revisit this question at that juncture. Right now, yes, there are some impact from increase in overseas business trickling down to Japan.
For enterprise customers, we try to get the understanding through dialogue with the customers, and hopefully we'll be able to factor in those increase in prices, to our contracts with those customers. When it comes to services dedicated to the mass market, what are we going to do about that? I think we should focus on to what extent we'll be able to improve our cost efficiency on our part. If possible, we hope that we'll be able to offer our services at accessible level and offer quality services at an accessible price level. That has been our consistent intentions, and we'd like to do it the best we can.
Thank you. Sorry, one other question, if I may. This regard to the new mid-term management plan.
You talk about JPY 8 trillion for investment over a five-year period in the growth area. How will you finance that? As to who is the most profitable. In the case of operating income, half was offered and generated by DOCOMO within the group. What about this structure going forward? Will this change over the five-year period? If you could share your thoughts. Thank you.
Well, thank you. As far as the current situation is concerned, within the group, this is true that DOCOMO is the largest contributor to the operating income. Yes, cash from DOCOMO is quite significant. As was clear from the current financial presentation, our global business is also enjoying very strong growth at this moment.
That being the case, NTT DATA Group growth, we hope, we will expect a great deal from the growth in NTT DATA's business. Also investment into new areas can then generate strong returns and thereby generate cash. We want to make sure that we carry out investments so that we can create such a virtuous cycle whereby new investment into new areas will generate returns. This 40% figure, EBITDA, we want to increase EBITDA by 40% in these new businesses, as I mentioned earlier. We want to generate return by investing into these new fields. We want to accumulate those outcomes going forward.
Thank you. In the interest of time, at this point in time, we would like to take questions who are joining online.
Well, those of the participants who are joining online, if you would like to ask question, please click the Raise Hand. Also.
When you are to really start asking questions, please unmute yourself by using the bottom, at the bottom. This is the Hyuga-san's question, we would like to take a question from Hyuga-san. Just a moment, please.
Hyuga from Bloomberg, I hope you can hear me. Yes, we can hear you. Thank you for the explanation today. Earlier, while there was stock split, it was explained, and I find it very interesting. If you could elaborate more, there may be some duplication of what you have said. To really look for the broader or the wider base of the investors and the retail investor composition as of now in terms of by gender and also by age and by the affiliation.
Well, to the extent possible, if you could share what is the sort of demographic or profile of the retail investors? I'm sure, well, you do have a large number of the institutional investors and how you would like to, well, see the changes and, well, the investor base. You have referred to elementary school children, and you will be looking for these, well, the younger, well, people before the coming of age. Well, is that the assumption that you hav
e? If you could elaborate more. Currently, entities to retail are the investors and approximately 900,000 people. To tell you the truth, well, they are quite older. According to a survey, majority of them are aged 70 years or older, and also 80% of them are 60 years old or older.
That's this is the result of our founding to the securities companies. Well, mini split investor is increasing its number, and I think, well, we find more younger people doing that. In that sense, we have more the senior investors, but not just limited to them. We would like to really, well, have more younger investors. In order to really, well, gain more of the younger investors, we need to, well, reduce the, well, the unit price, the split into 25 shares has been decided. Well, they will be able to really, well, buy the U.S. stocks at a lower price point. We thought that it would be necessary for us to really facilitate an environment where these, well, potential investors will find it easier to really, well.
Majority of them are, well, retail customers in their 70s or older, and that is the composition of the retail investors. 80% is 60 years old or older. Majority of them are 70 years or older, 80% of our investors are aged 60 years old or older. This is the result of the founding and to the brokers. This is based upon the, well, sampling, well, sample survey. You are targeting the younger people, not just limited to the younger people. Of course, well, we would like to really, well, have more senior investors and also the younger investors as well as Hyuga-san.
Well, according to the rules and regulation, I am not allowed to, well, buy your shares, unfortunately. Well, thank you.
Next from NewsPicks, Hatani-san, you have a question? NewsPicks, Hatani-san, please. Please go ahead.
Thank you. Hatani from NewsPicks.
Thank you. We hear your voice. Please go ahead.
Thank you. I would like to ask two questions, if I may. First relates to the new medium-term management strategy. You talked about the change within, or structural change. Mr. Shimada, you've been president. I think NTT DATA and NTT DOCOMO had major structural transformation. With the medium-term management strategy, do you have any plans for large-scale reorganization process? Are you abandoning or not the possibility of a major change in your structure within the next few years? Second, relates to the new company with regard to IOWN. You mentioned that this is going to be wholly owned subsidiary firm, is it possible that competitors like AJF could actually offer a good investment going forward? What about the possibility of third parties offering investment into that company?
Thank you. Let me talk about the possibility of large-scale structural organizational change. Is that going to be done within the 5-year period or the new plan? Well, at this juncture, I do not feel the need to make to engage in large-scale major transformation with the structure. Having said that, the changes in our society is very dynamic, so if it becomes necessary, I'll consider it. As I mentioned in the past, having transformation of the structure really requires a lot of energy internally if we are to change our organization. Major large-scale group transformation was carried out under my predecessor, Mr. Sawada. I think our structure is now stable, and we should focus on new growth based on this current mechanism, current structure.
At this moment, I do not have any intentions of carrying out large-scale business structural changes at this moment. Again, it's subject to change in the external environment. Your second question about the new company for IOWN. In the initial phase, we are not contemplating receiving cash from other companies. If it becomes the case that having joint initiative with other investor, then that might be one possibility. We can create a new venture under the new company in the context of IOWN. There are a lot of different forms this cooperation could take. I think for the time being, maintaining a wholly owned subsidiary firm structure is probably better for us because we'll be able to accommodate any changes taking place in the marketplace.
For the time being, I think we will pursue with 100% equity participation in this new company.
Thank you.
Thank you. I'd like to take the question with Tsuda-san. Yes, please. Please go ahead. Tsuda-san, are you ready to go? We would like to contact with Tsuda-san and from the public relations of NTT. While we are waiting, well, we would like to take the questions from others, for others in the venue or whether it's online and the person in the very back row, please.
Nagata from NHK, thank you very much. Well, you asked for the investment plan in your new midterm management strategy over the next 5 years and well you are really going to invest about, what, JPY 8 trillion.
IOWN-related investment, what is the size of your investment for that?
In this world, new midterm management strategy plan and then R&D and JPY 100 billion over 5 years, it would be JPY 500 billion. Photonic and electronic conversion devices, new companies to be established. If they are to really start the full-scale mass production, at that point in time, if they are to shift to that timing, there could be a necessity for further investment and R&D in JPY 500 billion plus alpha, the incremental increase might be quite large. I think for that is the sense of the size of the investment we are foreseeing. I...
When would that be, well, needed for this kind of the full-scale investment and then to the IOWN 3.0 and within the board and the devices that, well, would be utilized. At that point in time, the, well, the facility or production lines need to be established on a full scale. By then, we would expect that there is going to be quite a large investment needed. Probably in the following, well, the midterm management strategy plan after this. Of course, well, if we are to really front load that kind of investment and then for the IOWN devices or some of the equipment utilizing these for IOWN-based, well, devices. As needed, we would like to really accommodate and facilitate the necessary investment.
Another question, if I may, related to AI, and the discussion is being held within the government. Looking at the, where Japan is, well, in terms of the laws and regulation, what is your view on that? Also within your group, I think, well, there are so many, well, talents, well, dispersed or distributed in different type of the entities within your group. Do you think that it is necessary for you to consolidate these people in AI services per se?
In February, I think, well, I received the questions for related to that. Already in various services, these have been, well, incorporated. Yesterday, well, NTT perhaps also it is necessary, and also there were communications with the corporate clients, they are offering services to their clients.
In each operating company, they are working in different fields. The AI engineers are definitely necessary, that's true. This kind of large-scale language model, and that, the research is conducted by our laboratories. We do have these researchers working on it. Bringing them together will not necessarily enhance our capacity or the capability. The researchers of AI and the LLM, which has enjoying that much attention, and that kind of algorithm and based AI, we should not be left behind or actually we are intending to come up with something different. Hopefully by the end of this year, we hope to commercialize some product which is different from others.
We have to go back to Tsuda-san. I think you're now connected. Tsuda-san, thank you for your patience. Please start with your question. Thank you for taking part online.
Thank you very much for this opportunity. Tsuda here. Innovative Device Company, if I may. The most important technology in the case of IOWN is the photonics semiconductor laser and propelling the modulator. All these will be very important in the context of semiconductor. If that is the case, when it comes to NTT Innovative Device, are they, is that the company that will be manufacturing all those technologies or will entail foreign companies or Japanese companies are going to cooperate with semiconductor companies in other Japan? What are your thoughts? Do you intend to do everything and build everything on your own in-house? Now, of course, recently, there is no need to have physical labora- or physical manufacturing facilities and factories. Are you going to select some sort of foundry?
What type of image do you have? What do you envision?
Thank you for the question. Right now, the innovative device company will be established, and they will be manufacturing components of the semiconductors parts that are containing the semiconductors. That's where they will start. Then they will use photonics for the connection. It's separate from the so-called photonics or optical semiconductor. In order to achieve optical semiconductor, you need to elevate these various devices. At the end of the day, you reach the level of optical semiconductors. You need to make everything much smaller in scale. That being the case, it's important that we take concrete steps toward the optical semiconductor or photonic semiconductors. I think for the time being, this is going to be a long and winding road.
I think we need to consider what this company will manufacture down the road. Having said all that, in the case of semiconductor production, you need the pre-fabrication procedure and after processes, and the various companies are involved in this process. Depending on compound, the activities will change. In fiscal 2030 or so, I think we need to consider what type of semiconductor industry will be there. We need to identify the map of the semiconductor in 2030. We cannot have any concrete image at this juncture, so we just have to run and think at the same time. Thank you for that. Thank you.
Thank you. The time has come, and we would like to close Q&A session. With this said, we would like to conclude the press conference and move on to the conference by NTT DOCOMO. If we could kindly request to remain seated and wait for a while. Thank you.
Thank you very much for your introduction. Thank you for joining us despite your busy schedule. We appreciate your interest. My name is Ii, the President and Chief Executive Officer of NTT DOCOMO. I would like to explain to you fiscal 2022 financial results, as well as the guidance for fiscal 2023, and talk about some of our e-key actions as well. Let me now talk about the results of the fiscal 2022 highlights. Operating revenue increased JPY 108.8 billion up to JPY 6.59 trillion. Operating profit increased JPY 21.3 billion up to JPY 1,093.9 billion, which means that we're recording increase in both revenue and profit for the first time in four years since fiscal 2028.
Against the forecast, operating revenue exceeded the plan by JPY 7.5 billion, and operating profit exceeded the plan by JPY 9.9 billion. Let me now talk about the results by segment. Enterprise business and Smart Life, which are the growth drivers, achieved good increase in operating revenue and operating profit, and also recorded record growth. As for Consumer Communications business, we expect decline in both operating revenue and operating profit. Both have exceeded our annual guidance. The details will be explained from the following pages. Please take a look at them. Let me talk about the key factors behind changes in operating profit for fiscal 2022.
As we indicated in our guidance last year, the drop in consumer communication revenue was more than offset by increase in both enterprise and Smart Life business, which allowed Docomo Group to enjoy growth as a whole. As for enterprise business, there was increase in integrated solution business centering on large companies. This drove the increase in operating revenue. There was the impact of price, electricity prices rather. We tried to control the operational cost. We were able to record increase of 31 billion JPY year-on-year with regard to operating revenue, operating income profit in this area.
As for Smart Life business, we were able to co-conduct growth in finance, payment and marketing solutions, and we were also able to make this compatible with the increase in investment for growth so that we were able to achieve increase in operating revenue, operating product correction of JPY 7.5 billion in Smart Life business. As for consumer comms, as for consumer communication business, yes, there is impact from customer return program, but as the customers began to expand toward meeting a large scale plans, we were able to diminish the decline in mobile communication service revenue. Of course, there was the impact from electricity price charges, but we introduced cost efficiency in various networks as well as channels, as well as in our marketing strategy. We were able to contain the drop down to JPY 17.2 billion year-on-year.
Let me now talk about the forecast for fiscal 2023 and the key actions. The general association is as you see, operating revenue is expected to increase JPY 51 billion up to JPY 6,110 billion. Operating profit will increase JPY 70.1 billion and will reach JPY 1,164 billion. We'll see increase in both operating revenue, as was the case with fiscal 2022. Let me now talk about the forecast for the second one. As you see, growth business of enterprise business will aim for increase in both operating revenue and operating income. As for consumer communication, as I mentioned earlier, customers are now expanding to medium to large scale plans.
Therefore, the drop in this revenue will be going even further, we will to reverse trend toward increase year-on-year. Let me now talk about the progress in relation to midterm plan at Docomo Group. Let me talk about the growth drivers, which are enterprise business and SmartLife. Those reference DCC. Integration of Docomo Communications and Comware. After the integration of these two companies, we've been able to steadily increase profit annually. Compared to fiscal 2023, in fiscal 2023, we will realize increase in operating in profit by JPY 170 billion. Also, the percentage of profit is now close to 50%, which means transformation of business structure is on track. As for consumer communication business, there's still a lot of issues.
Due to the impact of customer return program, there was a downward trend in operating profit for the last couple of years. In fiscal year 23, due to expansion of medium to large scale plans, as a result of strengthening low volume user segments through the economy plan and also through consolidation of marketing centers and infrastructure. Through these cost efficiency programs, I think we're now at a juncture where we're ready to reverse the trend. Further growth in enterprise and SmartLife business, and also by reversal in consumer communication business. We want to demonstrate the synergy effect from integration of Docomo Communications and Comware. We would like to aim for growth and profit by roughly over JPY 100 billion year-on-year compared to fiscal 2022.
Let me now talk about the initiatives for various businesses. Let me talk about the enterprise business. As for operating revenue, this is now in line. This is clear, the integrated business will also grow, and this will be the key. We want to expand our business to minuscule scale businesses, operating profit on top of the increase in operating revenue. We will see of the internal operation through usage of DX and also operation through DCC integration. We will aim for increase of JPY 29.4 billion year-on-year in operating area. Let me now talk about the rest initiatives toward various companies. Let me talk about incentives for large businesses. In July, we will be integrating part of management resources from NTT Comware with NTT Communications.
By consulting Comware's abilities to develop specialized application for the industry, as well as NTT DATA's know-how, we will be further enhancing the quality of our integrated solution, and we hope to give greater consideration to the customer's business challenges in our support. To the left-hand side, you see the usage of member base, member foundation. We will promote co-creation of and also leverage our members' database. We will build a data management platform to, but not limited to that, we will also build a great new co-creation business by data multi-management. Let me now talk about the offices and reducing SMEs. Let me introduce new services that combine both mobile and fixed line services.
As you see on the left-hand side, you'll be able to use office numbers using mobile handsets, which means that you will no longer be bound by physical location. Also by using mobile, the fixed line construction will no longer be necessary, which means that we'll be able to deliver solutions which will allow customers to open up offices and train, and also move offices very quickly. We'll support initiatives to improve business efficiency for our customers. Also, on the right-hand side, in July this year, we will create a new portal application for customers using Business d account.
To certain SME customers through digital, we hope to create an environment where customers can consult very readily, and we will coordinate with docomo Shop and call centers, and we'll also pursue customer support in relation to DX promotion through omnichannel basis. Next, let me talk about the some of the examples of integrated solutions examples. For example, we want to offer integrated security network that can accommodate cloud usage as a telework environment, as well as new work style. I apologize for the small print, but we'll be combining these eight basic functions in a good manner. By offering them in integrated fashion, we are to realize cost reduction as well as the reduction of cost pertaining to customers' introduction efforts.
Also, with regard to customer touchpoint enhanced solution, we'll be using dialogue-based AI, and we'll introduce automated call center response, and also we will analyze and confirm the confirm response at office operations. We're going to be offering services that will support increased quality in customer response. We want to offer solutions in various fields that can provide solutions to customers, and we hope to contribute to improved productivity of the company as well as to enhancement of the business for our company clients.
Now, about Smart Life business and revenue were on a year-over-year basis increase of JPY 10.5 billion and JPY 1,125 billion.
In the previous year, minor point were businesses and there was some one-off impact to increase for the revenue. Well, with the absence of that, the growth is smaller. As for the profit, well the business growth in the priority areas, we are going to see the increase and also we are to take on challenge to achieve inorganic growth through M&A, video, XR, and finances. B2B, it is for the other areas, investment for the future will be conducted and then we are to really well aim for the profit increase of JPY 9.7 billion in Smart Life. Let me, well, talk about, well, two examples of the consumer, well, the businesses.
As shown on the left-hand side, finance and payment services, and the total finance and payment transactions, well, grew to JPY 11 trillion last fiscal year. In continuously, we are to expand this further and also, well, having this with d Pay application, which is used as the hook, to really well provide the various financial services in the area of investment loan and the insurance, fit to the lifestyle of the, well, customers. Also, on the right-hand side, the video distribution, well, media, linear has been launched. Also, we are really aiming at, well, acquiring 20 million MAU as soon as possible. By utilizing this kind of, well, new video media, we are to strengthen, the economic sphere and also to evolve into the new ad business.
Going forward, we are to really well collaborate and enhance the collaboration of the various different services and products at Docomo. Not just limited to Smart Life, we are to really go on a group wide basis. Now, the market issues and, while utilizing marketing platform, as shown on the right-hand side, we are to help solve partner companies' issues using marketing platform and to boost the product LTV and engagement of partners. As shown on the right-hand side, while the single ID, well, the account, which is the Docomo's strength, at the core, we would be really well be starting from the recognition interest, purchase and repeat. Throughout these four cycles, there are various issues associated marketing.
We would be well offering the product and services so that we will be able to provide the full funnel marketing support. Through these, well, we are to really well grow our marketing solutions further and to really aim for over JPY 100 billion revenue. Lastly, about the consumer communications, the revenue forecast for this year is almost flat from the previous year, in JPY 3 trillion and JPY 3,370 billion. By acquiring the more of the junior and younger customers and to maintain the existing customer base, through the offering of the large bucket plan and then to really well stop the decline of ARPU.
As for the mobile communication service revenue, we are aiming at achieving the same level as the previous year. Also, we would like to really well turn around the operating profit and aim at returning to profit with JPY 10 billion. Also, we will be having the network, well, structural reform, such as the infrastructure sharing and energy saving of base stations, and also, well, structural reform of the channel by consolidating sales centers and others and efficiency improvement of sales promotion measures. As for the, well, 5G subscriptions, it has surpassed 20 million and a steady, well, increase has been achieved, and we are aiming at achieving 28.2 million by the end of fiscal year.
As for the, well, mobile pool, we have seen the strong performance. Compared to the, well, annual forecast of 2022, JPY 3,940, it has, well, gone over this and ended with JPY 4,050. As for the, well, 2023, on an annual basis, JPY 4,030 is being aimed at. To really well, achieve the, well, turnaround from the fourth quarter of 2022. Now, in view of the, well, customer segment expansion for the junior, well, we are to really come up with the, well, comotto, which is the brand to nurture the growth of the children, and that has been launched in March.
Well, ahamo has been, well, very, well received, particularly with the younger generation. As for the, well, middle and senior, well, customer segment, in order to really provide the better convenience as docomo Hikari and Smart Life services would be well cross-used in our offering. On the right-hand side, well, we are to really promote the upselling of the, well, increased adoption of the middle and large bucket plan. In April, we started launching the Bakuage Selection, which is well received. Combining the Gigaho and ahamo, and they will be, well, utilizing data communications and also to enjoy the popular video distribution services by utilizing d POINT. As for the services to offer, we would like to respond to the requests from the customers and eventually expand.
I'd like to talk about the, well, the channel reform. As shown on the left-hand side, well, we are to evolve the docomo Shop into Smart Life Shop that can address what matters of interest and concern of our customers. Also, we started the Docomo Online Counter, and for the customers, it would be, well, more convenient. We would like to really evolve this channel so that the customers can experience, well, higher than expected experience. Now, about the network related initiatives and to, well, realize the high quality and economical network. In 5G standalone and network slicing, and by these, we are to enhance our network and also to respond to the use cases which is more diversified. I think this is the key question we need to really well address.
The higher efficiency and reducing power consumption, also promoting the use of sharing. I am going to explain this on the next page, but to improve the network quality by conducting the various work countermeasures to the failures and to achieve the stable operation. Right-hand side, which shows the generation of revenue from network technologies, and provide overseas operators with Open RAN service and were optimized by Docomo's network technology accumulated over the years under the brand of OREX. We aim to generate, well, JPY 10 billion in revenue at an early date. The quality of the network and improvement thereof, and the initiatives related to that will be explained. December last year, we really caused inconveniences by the major failures to our customers.
We take this situation very seriously and work for quality improvement on both fronts of the system and organizational structure for the operation of the network to be resilient to failures. First of all, about the surveillance system. So far, the monitoring has been conducted on a singular unit basis, but going forward, well, we are to look for the health monitoring of the systems which made up which make up the entire communication services. By having this for overall monitoring, being accelerated, we are to have the identification of suspected problem areas and also to accelerate the measures. We are to combine the development operation and also strengthen the service quality management system, and then we bump our internal organization so that we will be able to offer stable operation.
Also, as shown on the right-hand side, in the increase in traffic and also the changes with the redevelopment and then the lowering of the 4G communication speed locally, we are to really well take measures. In the short term, area tuning will be started in around summer, and by improving them, in the longer term, the lightning speed 5G will be expanded for higher speed and higher capacity, and also to really well provide this capacity of 5G depending on the area characteristics. We will continuously work on this improvement so that the customers will feel comfortable in utilizing our communication services. Now, let me talk about the initiatives to realize the carbon neutrality and also the initiative to reduce the GHG emission.
We're utilizing the sleep function of the base stations within our own network and also the initiative to save energy and also the introduction of the renewable energy has been pursued. In FY2022, GHG emission with 1.24 million ton reduction was achieved. Green 5G, compared to the ratio of the 5G subscribers, 27% of the renewable energy introduction has been achieved. Towards the achievement of the target set out in 2030 to ensure the carbon neutrality, we will further upgrade our initiatives to contribute to the environment together with our customers and partners. Lastly, I'd like to talk about the midterm management targets. There are two indicators shown here in the growth area.
By, well, consolidating or realizing this for the integration synergy, we will be making the steady progress towards the target set out in 2025. Also, we will continuously pursue efficiency in communications businesses. We have reviewed the ROIC target this time. It has been the sort of, well, combined ROIC that we have looked at. In order to further improve the productivity of our communication business, the midterm target will be 11% or more. Going forward, we are to make sure that we will be monitoring communications ROIC. Continuously DOCOMO is going to really well take on the challenge to be, well, engage initiatives to transform society by generating new values and lifestyles of the people. Thank you.
We will now like to take your questions. To begin this session, we'll take questions first from those of you here on site. Afterwards, we'll take questions from those of you who have connected online. Once again, we'll come back to taking questions from those of you in the audience on site. That will be the flow of the Q&A session. Let us now first take questions from those reporters who are here with us on site. I will designate you. Please wait for the microphone. Please state your name and affiliation. Please limit yourself to one question at a time. We would appreciate your kind understanding. Let us now open the floor for questions. Please raise your hand if you have any questions.
Yes, we'd like to turn to the person in the front row for the first question.
Thank you. Miyajima from Nihon Keizai Shimbun newspaper. I hate to ask about other company, but I would like to ask about the mobile through the press conference. They will be returned to having roaming using KDDI's network. After the presentation of KDDI's latest results
They use the word win-win relationship. As a network carrier, the fact that these two carriers are once again becoming closer in nature in their relationship, what are your thoughts as to these two companies become much closer?
Thank you for the question. It relates to another company, I think I'm not in a position to offer any comment as this relates to other companies. I understand that this is a decision made by the two companies. Rakuten as a company, they have to expand their facilities and networks, I think that is the case. On top of that, they have decided to elect the roaming method. They've decided to add roaming as one technology. As for KDDI, it has been providing this network from the beginning. I think that type of relationship has simply been resumed. We're very calm as we see the situation.
Thank you. If I could just ask, with regard to Docomo business, let me ask about Docomo business. You mentioned that JPY 2 trillion is now in sight for Docomo business, so you're doing very strong and robust growth. Having said that, when you take a look at the financial results for other companies, I think this has become very intensively competitive, even in this case. How do you intend to differentiate yourself? How do you intend to add value to your services in this market? I would appreciate your elaboration. Thank you.
Well, thank you. In the reorganization, Docomo and Communication will become one, and they'll offer mobile cloud solution. The fact that mobile cloud solution has become possible really represents a tailwind for us. The tailwind has transferred to the actual numbers, as you see. It's important that we combine the management resources of the both companies and be able to deliver proposals to our customers. I think that has become a possibility, which is very good. As for NTT Communications, they really have strength in large scale companies. In the case of Docomo has strength in offering network to SMEs. I think as a combination of these two companies, our market has really expanded.
I think we'll be able to cover all the companies as long as these two companies are together. This represents the strength. Yes, this is a very highly competitive marketplace, I understand. We have to deliver new services and new values. Unless we generate that, we might be falling into the trap of a price-based competition. We want to offer something that for selling. How do we create that? We, for example, can we combine our product with AI technology? Or also co-combine that with IoT technology? It's important that we further consolidate the strength we have in one single product and package. Thank you for that.
Miyajima-san, thank you very much. Any other questions, please? In the third row and the person in black jacket.
freelancer. Earlier in consumer business, the revenue or improvement and lead to a large bucket for plan is increasing, I'm talking about this economy and MVNO were currently and so it's only that you will be just benefiting from the increase in the leasing of the lines. Are there any other ideas that you would like to move forward? Another question, buckets for plan is increasing and ARPU is now increasing, which is good for you. On the other hand, earlier at the end, as for the network-related matters, as the number of people who were consuming all the large bucket of plan and then there is a need for the improvement of network. How are you going to effectively balance both of these factors?
If you could just elaborate on that.
Thank you very much for your question. The first question, exactly, we have to win against the competitors in a competition. That is the very key strategy. I may not be so straightforward in answering to your question. Exactly as you said, most probably for the small bucket plan there is going to be the fierce competition ongoing. It's not just a matter of the price in competition. I cannot go any farther and apology for that. The second question, as you increase for mid to large bucket for our plan, of course our network capacity needs to be larger. The bucket and 4G, we have caused some inconveniences because of the shortage of the capacity.
We are seeing the changes in the sort of the consumption patterns for the users, particularly younger generation in their 20s or in their teens. They are consuming that quite significantly, and that is the finding that we have obtained from the recent survey and others. The video content inclusive news, compared to the past, they are really watching them in town and others, and they are repeating that kind of viewing. With the overall network, if we increase the capacity of the entire network, it would be wasted. How we will be able to effectively micromanage and then to really understand what would be the potential sort of a shortage of the network capacity early on.
At the end of the day, we need to really, well, leverage 5G to absorb that kind of increase. If we cannot really, well, make it in time, then the, well, area tuning and the 4G capacity expansion need to be considered. Exactly as you said, how to balance both of these.
Business strategy and CapEx for strategy, this would be the key instead of the considerations.
Thank you.
Thank you, Kishino-san.
Let us go on to the next question. We'd like to go to the questioner in the blue shirt in the second row from the front. Please go ahead.
Thank you. Asano from, I'm a freelance journalist. Let me ask about the 5G. Can you talk about the area coverage of 5G at this moment? What is the progress to date? Also based on the recent survey, network, your network quality has been overtaken by quality of SoftBank Group. Can you talk about the need to enhance quality and also the coverage of 5G network and facilities on your, can you talk about your strategy for 5G network and expansion?
Yes, thank you for the question. We use 5G in the case, we use sub-6 frequency, and that is the type of investment which we have carried out in the last couple of years. Since the end of last year, at last, we're able to use the existing 4G frequency for our services in our 5G. That has at last begun. Compared with the other carriers, I think that the procedure for network building is somewhat different. That means. In the case, the area covered by 5G based on sub-6 offers very high download speed, and that has been appreciation so far. With regard to area coverage, I think it will take at least until the end of this fiscal year until we reach the population coverage of 90%.
Yeah, earlier, we talked about the e-evaluation of the third quarter. If I give concrete numbers, well, we're talking about a very, very level, of a very level, we're talking about 87.0, 87.2. We're talking about comma decimal point percentage. To talk about the competition for this very minute number, is this really meaningful? The Japanese carriers overall are at a very high level. I think that's what these numbers indicate. So I think we're conveniently analyzing and interpreting those numbers in that fashion.
I see. Thank you.
Thank you, Asano-san.
Moving on to the next question, it's the person next to the...
Haria from Nikkan Kogyo. Then the network quality in 4G and the communication speed is, well, becoming lower or there are, well, some difficulties in having disconnections, and that's what we have heard. Also there are some, well, factors behind that and causes in each of the carriers as they, well, are transitioning from 4G to 5G. Then, well, just, your company is quite standing out in those, well, phenomena, and what are the causes behind that?
Actually, when we became aware of that, it's not a direct reporting to us, but on SNS and with the customers' voices on the web were being captured and were, and then a poor connection or, and then, the sort of, well, packet congestion and then, well, resulting in lower speed.
That's what we came to realize. We thought that is, well, something we have to look into. It's not that we would have some minor fixing in the background. We are aware of this fact, and then we are to take, well, appropriate measures. We thought that as a carrier, well, it would be a, well, this sincere attitude for us to really, well, openly say that and on April 26th. It's. That was perceived as the Docomo is the only one who is causing these kind of problems. Depending, well, with the different degrees, I think, well, all these, well, carriers are being experiencing and also the, well, traffic, well, is, well, pattern is being changed.
This, well, the carrier, well, all these carriers are really experiencing. When you have this, well, the sort of the dense congestion or the crowded or younger people gathering around, and then we were not able to effectively, well, respond to such the traffic increase. Probably other carriers have been looked into this and then may have taken the measure in a timely manner. This is the request, reflection we have. Thank you.
Thank you very much. Thank you, Haria-san. We will now like to take questions from the members of the media who are connected to us online. If you have any questions, please use your smartphone and please seem, you, press the raise hand button and please wait. Please be sure to unmute yourself before you ask a question when you're designated. Let's start questions from those of you who connected online. Please push the Raise Hand button if you wish to ask a question. Thank you. From NewsPicks, Hatani-san, the floor is yours. Hatani-san from NewsPicks.
Yes. Thank you. Thank you for unmuting. Thank you. Thank you, Hatani from NewsPicks. I hope you can hear me. Yes, you're coming across very clearly. Thank you. I just have one question, if I may. To Lemino and Makanabe.
It's just 1 month since the beginning. I think there's a related question earlier. Under Mr. Ii, I think you have been expanding into non-telecom business sectors as well very actively. It's just been 1 month. How do you see, how confident are you about the launch of these new initiatives? I would appreciate your thoughts.
Well, thank you. I think it's super mature to talk about whether or not I'm confident. We are not yet at a sector where we're entering a very large activity. Because of dTV, we were offering dTV, and the dTV customers are now smoothly transitioning to Lemino. That has been 1 challenge. Can we do that? I think that part we've been very successful, and we see very smooth migration of customers to the new services.
Also, the new Bakuage, yes, we see g-rich customers migrating to that. It's not that all my many SM programs are shifting overnight. I think those popular programs are the most enjoying the traction at the initial phase. We're not going to lower prices. We want to provide return through the point system. That being the case, the d POINT, we hope that we wanted to encourage customers to use d POINT even more. That is the type of pricing mechanism, pricing menu that we're offering. It's not a price discount. It entails usage of data. It's a combination of data, of a point usage strategy. I think we appreciate your patience a little while longer for this program to enjoy greater success. Okay, thank you very much. Thank you, Hatani-san.
Now, those who have questions, please raise your hand. Ishikawa-san, freelancer, unmute yourself and start asking your question.
Ishikawa, freelancer. Thank you very much. From the end of May, a number portability is going to be made into one-stop solution. What would be the sort of the potential impact, and how are you going to respond to that? Well, it's JPY 1 at the sales of these smartphones. There are some discussions surrounding that. Can you give us your view o n that?
I think, well, that is the direction being pursued, and it's moving in that direction. There were one-stop solution. It will be accepted by those who will be, well, faced with the changes.
It's not going to be necessity for the procedures and for the both sides. In order to really improve liquidity, I think this measure was really well adopted. I think it will be making that kind of procedure more smoother for the customers. For both incoming and outgoing, I think we should take it positively. I hope I have answered to your question.
Ishikawa-san, thank you. Thank you. We'd like to come back to the members of the press who are here in the hall on-site. Please raise your hand if you have any questions. This next question is the person in the back row. Please go ahead. Thank you. Otsubo from Sankei Shimbun Newspaper. Thank you.
I want to ask a question about the quality of telecom services. I hesitate to ask the question once again. Today, Rakuten has mentioned that they will be engaged in co-creation and co-cooperation and competition type of relationship with KDDI. When roaming with other companies when the telecom services is disrupted, is that a typical possibility? Also with regard, you talked about the erosion of quality of your services. There was a hearing by the Ministry of Internal Affairs and Communication. You were, well, not so much scolded, you were not actually given guidance, I think there have been some questions with regard to your quality of services. Can you talk about that, please? Yes. Thank you.
With regard to our measures against quality, are we going to consider partnership with other carriers for the sake of quality? That I don't think will be the case. When it comes to natural disasters or when there are large scale network disruptions, I think helping each other is something that has been in the past and will continue in the future. In times of peace, I think we do this independently. If we are to cooperate, maybe we should cooperate in areas of sharing infrastructure so that we'll be able to reduce our network building costs. That type of cooperation, even in times of peace, is a possibility.
If there are large scale events and out of the blue, when there's a surge in traffic, we use mobile base stations. We use mobile base stations. We set up temporary base stations near the venue when large scale events are taking place. I think in times of peace, I think we can do most of the services independently on our own. With regards to the issue of degrading of the network quality services and what type of responses have been shown by the MIC, as we have product excellence just before and after the actual meeting, and we talked about the measures we're taking for these, for stabilizing network quality. The message of the MIC was simply about the need to maintain quality, stability and quality services. We're not scolded whatsoever.
They actually to the contrary, they talk about the need to expand 5G.
To solve this issue. They actually encouraged us to further expand 5G. That has been the nature of our discussion with them, I think. Thank you, Otsubo-san.
I'm afraid, in the interest of time, we would like to take the very final question, and the person in black shirt in the second row from the front. Sekiguchi Ivo from Keitai Watch.
Related to product, I'd like to really ask question. Just today, there has been a release of the organizational changes, and the product marketing division is going to be newly established. Not just hardware, but software included, I think, it is inclusive applications. What is the aim of this organizational change? Related to that, just yesterday, Google had some conference on the West Coast, and then there has been some product release, and also NTT DOCOMO is going to be used.
Ii-san, do you have any the view that you would like to share with us and the results of that?
As for the handset product, you have this network communications and the handset, and this is considered to be main menu of the consumer business. Going forward in Smart Life business domains, then the headsets used for that, and also there were corporate clients, the headsets being used. In other business segments, the devices which will be required will be produced, and also the software needed, it should be provided. We will have this the sort of the separate set of segment, then to have this the full set of processes starting from the procurement all the way to sales.
That is the sort of the integrated process. For the key product strategies, to enhance and strengthen that, we have decided to establish the independent organization, Pixel. So far, our Spectrum 5G was something specific or special. On this, there was a specific commitment that was not any opportunity. There is an sort of the commitment made for this time, and the Pixel is going to be. We have finally at first been able to realize this long pending sort of the dream. Sekiguchi-san, thank you very much, and thank you very much for many questions. With this, we would like to conclude the NTT DOCOMO's press conference.
Thank you very much for your attendance.
Continuously, we will have the conference of NTT East. If you could just wait for a while. Thank you.