Thank you very much for participating today despite your busy schedules. I am Fujiki from the IR office and will be serving as today's facilitator. It is very nice to meet all of you today. I would like to introduce today's attending members. First of all, from NTT, we have Mr.
Sawada, representative member of the Board, President Mr. Shimada, representative member of the Board, Senior Executive Vice President Mr. Nakayama, Executive Officer, Senior Vice President, Head of Finance and Accounting Mr. Taniyama, Executive Officer, Senior Vice President, Head of Corporate Strategy Planning session. And from NTT DOCOMO, we have Mr.
Hiroi, Representative Member of the Board of Directors, Senior Executive Vice President. Today's briefing session will be streamed live on the Internet. Today's presentation materials are posted on our company's IR website under Presentation Materials. On the first page of the presentation materials, points to be considered are stated. So we kindly ask you to please read through them.
After this, Mr. Sawada, the President, will explain the outline of the results and others, followed by opening the floor for questions. Mr. Sawada, please.
Thank you very much. My name is Sawada, the President and CEO. Thank you for joining us at this presentation despite your busy schedule. Before we start with the financial results, allow me to express my heartfelt sympathy to those We will now start the briefing set. We have been affected by the spread of COVID-nineteen.
Also, Iwami, I would like to Regarding the recent occurrence in which members of management dined with Ministry officials,
Allow me to share
with you the current status. On March 9, NTG established a special investigations committee, including external experts to clarify facts. And this has been conducted by this committee. The recent occurrence was a result of lack of awareness on the part of members of the management And NTT deeply regrets that members of management who should set an example to employees have caused such a situation. Going forward, in order to strictly prevent the recurrence of such an incident and to regain the trust of our customers, shareholders and all related parties, NTT will undertake a review of its internal rules and will implement thorough initiatives to prevent any reoccurrence.
Further initiatives will be announced in the future after the Special Investigations Committee presents the results of its investigation. I would now like to go on to talk about the overview of fiscal year 2020 consolidated results. So this shows you the highlights of the consolidated results. Operating revenues, operating income and profits As for operating revenue, there was decline due to a drop in DOCOMO's handset sales, roughly JPY 200,000,000,000. As for operating sales, there was decline due to drop in DOCOMO's handset sales and overseas system integration revenue from impact of COVID-nineteen as well as from the impact of change in accounting at NTT Limited.
But this was offset by increase in DOCOMO Smart Life Business revenue, roughly more than JPY 80,000,000,000 as well as domestic system integration increased. So operating revenue increased by 44,600,000,000 yen year on year. Turning now to operating income. The impact of COVID-nineteen and increase in electricity procurement cost at Enet was offset by increasing revenue as well as cost reduction among group companies. So therefore, operating income increased 100 and 9,200,000,000 yen year on year.
Turning now to profit. There was increase linked to increase in operating income roughly 55,000,000,000 yen as well as 40,000,000,000 yen limited linked rather, 40,000,000,000 yen linked to minority interest as a result of making DOCOMO a wholly owned subsidiary firm. So profit increased by 60,900,000,000 yen year on year. Turning now to overseas sales. There was decline due to change in accounting, roughly JPY 90,000,000,000 as well as the impact from COVID-nineteen, but overseas operating income margin improved due to streamlining at NTT Limited.
Operating revenue, operating income and profit all exceeded our initial projection and guidance. As I mentioned earlier, the impact from COVID-nineteen on financial results is roughly JPY 200,000,000,000 in terms of revenue and JPY 50,000,000,000 in terms of profit. As for initial projected impact, Due to smaller impact related to NTT, the services system integration revenue, DOCOMO's handset sales with the level of impact on revenue shrunk by JPY 150,000,000,000 and impact on profit shrunk by 20,000,000,000 yen. Next page shows you the computing factors by segment. Mobile Communications segment saw increase in both revenue and profit.
Impact from expanded customer revenue and decline in mobile communication revenue due to drop International roaming was there, but this was offset by increase in Smart Life business and improved efficiency of marketing cost. Smart Alert business increased by JPY 44,000,000,000 and also efficiency marketing cost was also there. So therefore, operating income increased in the segment. Segment. Regional Communication segment.
This segment experienced an increase in both revenue and operating income for the first time since 2010. And this was the first time for NTT West to experience increase in operating revenue. Both NTT East and West Tek enjoyed increase in revenue from strong net addition in fiber sales with the system integration as well as cost reduction. Increased system integration was brought on by strong demand for remote work, so both operating revenue and income increased. Turning now to long distance and international communication business.
There's decline in revenue due to change in accounting at NTT Limited, as I talked about earlier, as well as from the impact of COVID-nineteen. But then due to improved profit from structural reform overseas taking place in the previous year, Operating revenue declined, but operating income increased. As for data communication business, This was already announced by NTT DATA in their financial results. They experienced both increase in operating revenue and operating income. Due to increase in revenue in domestic public sector, social infrastructure and finance sector as well as from reduction in unprofitable transaction, there was increase in both revenue and income.
Also impact of COVID-nineteen outside Japan was not as much as expected. That was another positive factor. As for others session of other business. There was impact from the spin out of there was impact from spending of this business, roughly 47,000,000,000 yen in terms of impact on revenue and 8,000,000,000 yen impact on operating income. So and there was also increase in procurement cost of EBIT.
Of both revenue and income decline in the sector. Let me now talk about the forecast for fiscal year 2021. Operating revenue and our operating income and profit will all increase across the board. And they're expected to reach record high levels. And profit is expected to exceed 1,000,000,000,000 yen for the first time.
While there is still the impact of COVID-nineteen, There is also a decline in revenue from launch of AHAMO and expanded the impact of customer return program from Gigaho and Premier at DOCOMO. But then, on the other hand, there's also increased system integration due to strong demand for digitalization. And based on strong digital demand and expanded Smart Life business as well as structural reform effect in our overseas business As well as cost reduction at various companies, we believe that operating revenue and operating income will increase year on year. That is the guidance that we have set. As for profit, on top of increase expected linked to increase in operating income, There is also the impact from turning DOCOMO into a wholly owned subsidiary firm.
That's a positive impact of JPY 160,000,000,000. So as a result, the profit is expected to increase by 168,800,000,000 yen. EPS will be 3 100 yen. As As for meeting term financial targets, I will talk about this later on in the course of my presentation. So that is the target which we will aim for.
Now let me now talk about forecast summary by segment. As for Mobile Communications segment, Yes, increase in both operating revenue and operating income. The JPY 60,000,000,000 impact from customer return program expansion, But then increase in Smart Life business is close to 60,000,000,000 yen. So we'll also be exercising cost reduction. So we We believe that we'll be able to see increase in both operating revenue and operating income as a result.
Turning now to regional communication business. Last year, we had significant impact to system integration. So in reaction, operating revenue will be coming down, but then there's also increase in fiber and also there's also cost reduction. So While operating revenue will decline, we'll expect an increase in operating income. Long Distance and International Communication Business increase in both operating revenue and operating income year on year.
This is due to increase in revenue from expanded added value service at NTT Limited as well as structural reform effect. As for data communication business, This is already announced by NTT DATA. They're expecting increase in both operating revenue and income. Thank you. Next, I would like to talk about the overview of the meeting term financial targets.
So let's go on to the following page. Thank you. Thank you. It's on the screen. With regard to the review of the medium term financial targets, we were scheduled to announce them in the month of May.
But as I mentioned at the beginning, because of the incident involving dining with Ministry officials and also the Minister Internal Affairs and Communications. They've set up a study meeting on ideal way of ensuring fair competition. So as a result, we wanted we decided to wait until the report of the study meeting on A deal way of ensuring fair competition is announced. The timetable for the announcement of the report is not yet clear. So until we wait for that report from this study meeting, there could be some implications in terms of the overall society.
So we want to not announce the status of the financial medium term financial targets at this time. Once the report of the study meeting is made clear. We will review medium term management strategy and announce them. Now as far as the status of the medium term financial targets are concerned, This is indicated in this slide. So areas for the strong For their strong progress, as indicated in dark green color.
In white letter, what will be cost reduction targets? In 2021, we were scheduled to have JPY 840,000,000,000 in cost reduction. That is already anticipated. So in 2023, we were anticipating 800,000,000,000 yen So that target has been brought forward by 2 years. It can be achieved 2 years ahead of the original target year.
In terms of CapEx to sales, we are aiming for 13.5% in fiscal year 2021. That was the original target for 2021. So we believe that as scheduled, we'll be able to achieve 13.5% this fiscal year. So the green color And the white colored letter portion. This is achievable targets.
As for 3 other green colored boxes, EPS, for example. In fiscal year 2020, we had JPY 248 and this will increase to JPY 300 in 2021. And the target was 3.20 yen for fiscal year 2023. And we'll make efforts so that this could be achieved 1 year ahead of schedule. As for medium term target is concerned, as I mentioned earlier, we will be studying all these items session separately.
As for overseas operating income margin, in fiscal year 2020, This improved by 0.8%. In fiscal year 2021, NTT DATA and NTT Limited will experience increase in operating income. So that indicates we believe that the overseas operating income margin will double up to 6% in fiscal year 2021. So This will bring us closer to the 7% targets for 2023. As for overseas sales, There is a change in the accounting system.
So that being the case, we are aiming for $19,000,000,000 in fiscal 2021, 25,000,000,000 in fiscal 2023. There seems to be some gap at this time. As for return on operating income, Invested capital is very strong. We are aiming for 7.4% in fiscal 2021. So 8% antibody T3 is now within our sights, I believe.
Regarding the topics, I would like to briefly go over them. First is regarding enhancing the R and D, session. The ION Innovation Center, we would like to newly establish it this July. This is for the photonic discovery computing infrastructure, set utilizing the Photonics and Electronics Convergence Technologies and also Integration Mobile and Fixed and Network and Computing is what we would like to further center, where it will be more of an R and D that will be utilizing NTT's fundamental R and D. And also regarding the midterm management strategy.
We have said that we are going to make an investment of 2,000,000,000,000 yen in 5 years. And this is going to this is progressing as planned that fiscal 2020 1, we are planning to have set to 500,000,000,000 yen in scope. And next We will now start the briefing set. It's aiming for the lab concept of natural growth, and this is to translate and disseminate a new image of society created by the concept into information that can be felt by ordinary people at an individual level of their own. We are going to collaborate
We will now start the briefing session with the INFORCOM Research and Hakuho
Do with an alliance, and we would like to combine the science based knowledge and the humanities based on knowledge. And regarding enhancing the governance structure, We would like to activate the Board of Directors by introducing the outside member of the Board and Executive Officer System to major subsidiaries. And we would like to review the directors' compensation for the holding company's EPS. But session for the major subsidiaries. We are going to set KPI and newly implement the session.
What is currently 30% is linked to the performance and we would like to reflect the midterm and long term results more in the incentive and the compensation for the directors. And aiming for realizing the remote world, we have a cloud type contact center service. And also we have the remote access service that is secured. We have already started to provide it in April. Regarding the remote world due to the COVID-nineteen, which is still a severe situation.
But even post COVID-nineteen, in that environment, the remote work is going to be indispensable is what we think. And as for the progress of the medium term management strategy initiatives, it is summarized in the next slide. It is quite in detail, so I'd just like to point out some key points. First of all, is the B2B2X session project. Originally, the fiscal year 2021 was 100 projects.
But fiscal year 2021 end of March was 104 projects. So we have achieved the target a year ahead. And also for the MEDRI, which is the online medicine and with DOCOMO has live with the smart city MOU with sales new sales to wells with Australia. And also, we have gone into local corporation for Israel for creating new businesses. And regarding the dividend forecast for fiscal year 2021.
We will increase it to 110 yen per share, an increase of We will now start
the briefing session. From fiscal
year 2020, and this was resolved in today's Board of Directors meeting. So this means that the dividends are expected to increase for the 11th consecutive year since fiscal year 2011. That is all from my side.
We will now take your questions. As we have already announced beforehand, We will now start the briefing session. The operator will now explain how we will receive your questions. We will now start the briefing session. Kikuchi san from SMBC Nikko Securities.
Kikuchi is my name. I would like to ask 2 broad questions, if I may. First Relates to DOCOMO. In terms of customer return program, you mentioned that the impact is 60,000,000,000 yen. Is that in Mobile Communication segment service?
But then you expect such The billion decline in mobile communication service in your guidance. So it seems to be an equal amount. Was that what you were talking about when you talked about the impact But then there are a lot of different factors involved here. Monthly support impact, for example. So 1,000,000,000 customer return program, is that due to the how much of that is due to impact on price reduction?
If you can share that, I would appreciate it. And also with regard to Smart Life business, JPY 60,000,000,000 you mentioned. Is that sales or profit? And also, how important factors are involved there? And also, can you talk about the current status of For example, subscriptions for example and the outlook going forward.
I would appreciate all. So that's my first broad question. So with regard to question related to DOCOMO, I would like to invite Mr. Yes. Thank you very much.
I would like to respond to your question, if I may. With regard to Mr. Kyochi's question, you're talking about the guidance for 2021, the decline in mobile communication service revenue for 2021. If I talk about the major trend here, it's as follows. Yes, there Malo Communication Service revenue is expected to decline by this much.
But the ARPU that we disclosed, if you take a look at the ARPU for fiscal 2020, it's negative 30 yen So in terms of the user base, actually the level of decline is not that much among the customer base. So the major contributing factors are different. This is in relation to revenue, decline in revenue in relation to MVNO. Wholesale voice and also connection interconnection charges will be reduced and that will have an impact on the revenue. So that's one effect.
Also, what about the impact in relation to Ahamo, if I were to respond to your question on this point, as far as Ahamo is concerned right now, the subscription It's more than 1,000,000 yen 1,000,000 persons, correction, 1,000,000 persons. And the impact of HOMO is this. In fiscal year 2021, the level of there is impact on declining ARPU, but then why are we promoting OMO? We want to expand the customer base and we want to realize revenue base over the medium term. That is the intention behind the Ahomo program.
So that being the case, It's true that Ahomo's subscription for Ahomo, where we take away customers from competition, is still limited. But still, there There is the impact of taking away customers from others. So mobile number portability for the month of April is now in the positive territory. In terms of the user base, It's not that customers are shifting from Gigaho to a homo. Not all customers are grading down from So we build the customer.
There is a potential for upselling customers because we're promoting something within the 20 giga range. And also in terms of port out, with our home, people will be incentivized to remain. So the port out risk can be reduced. As a result, the user base is now improving as a result of all these efforts. And also, young customers are now beginning to join DOCOM.
People in their 20s, 30s and even 40s are now accounted for 80% of AHAMU's user base. So that being the case, it could be said that in terms of improving the quality of the user base, Although it might be slight or the medium term, we believe that the AHAMU will have a very positive effect down the road. Also with regard to Smart Life, The increase in revenue for Smart Life. For fiscal year 2021 Smart Life will account for large book of the increase in operating revenue. And the most significant factor is in the financial sector, d CARD and d Payment and d POINT.
So finance and payment will be the major driver for increase in operating revenue As far as the contents are concerned, d POINT is expanding the user base. So data analysis is now progressing. So by using this data analysis, we can offer marketing solutions and that will translate into an increase in revenue. And also d POINTs can be leveraged for offering solutions. So therefore, we'll be able to further upsell d POINT sales.
So that's another factor contained in your guidance. So that being the case, overall, d POINT membership will be expanded. Up until now, d CARD and d Payment was the only factor, but now we're able to incorporate the data usage. And we can translate this into a business model and then we have a plan for actually generating revenue here. So there's also quality improvement here.
So our intentions are now beginning to be realized.
Thank you.
Thank you for that response. If I could ask a follow-up question. Earlier, you mentioned that So if the bidding year was for customer return program, is the price reduction impact is JPY 60,000,000,000,000? Is that what you're saying? Well, how can I put it?
Mobile it's equivalent to the overall decline in Mobile Communications Service revenue. So the impact of revenue from ARPU and the related customer base, Customer return in versus all those factors that I just mentioned. I think Maybe difficult for you to compare with your competition, but in the case of SoftBank, for example, yesterday they announced their financial results. There There was impact of JPY 7,000,000,000 in terms of decline in their revenue. That's what they mentioned.
It seems close. It seems close to that number. Maybe I don't know if you have the common definitions, it's probably difficult to compare apple to apple. But the impact of Can you specify the amount of impact from press reduction per se? Would that be very difficult?
Well, As for specific numbers, I'm afraid we'll not be able to comment. But we are disclosing our ARPU. So helpful, you will use those numbers as a point of reference for your calculation. Okay. Thank you very much.
My next question is this. This is in relation to the strategy for the NTT Group as a whole. This time around, you mentioned that you had to wait for the results of the study at the study group. But I believe well, yes, I can understand That you have to wait for the results of the study group in relation to the combination of entity communications, Comware and DOCOMO. But What about the relation to other companies?
For example, MIC Minister, well, you've presented a business plan to the ministry beginning of March, roughly the same with the previous year, but the term common procurement Appear for the first time in the business operation plan submitted to the ministry across the board. So I get the sense that you're very earnest about delivering this. So can you talk about The major selling points for your group, aside from anti communications, DOCOMO and COMWEAR, maybe it's in real Maybe it's in energy, maybe it's overseas. At the NTT DATA presentation yesterday, Well, this was a company that never had NTC really explained cooperation from with other group companies for the first time ever. So maybe there's a maybe it's a sign of new movement.
Can you talk about something that is taking place within the group right now? Well, thank you. Toward the end of your question, you talked about entity data. Well, it's not just global, but It could be said that collaboration with other group companies are now really progressing for entity data, not just in global, but in other areas. In terms of the global business, specific projects are ongoing, especially in North America as well as in Europe.
So in various areas, We're beginning to see progress in such collaboration among NTG and other group companies. So maybe Mr. Homa was He's been very, very proactive in his presentation yesterday. Now let me talk about the overseas business first. System Integration is doing very well right now.
And also on top of that, if we can offer digital solutions capabilities such as consulting, Well, this is I hope that NTT will deliver that. As for NTT Limited, they should further expand their added value services. That will be the basic policy on the sales side. So increasing added value and improving margins, that is the structure we want to aim for. Also structural reform will continue for both NTT Limited and NTT DATA.
They will continue on with their efforts in this area. And hopefully, the group as a whole will be able to improve their cost efficiency further. We want to deepen such efforts. That I believe will be the one focal point. And the second point, yes, this relates to the domestic Yes, many study groups, the meeting Study groups are taking place.
So we cannot change the structure per se. But already discussions about EXO partnership And marketing, there is no constraint there. So already that is ongoing among these relevant companies. So that being the case, Facility effect has not been incorporated in our guidance for 2021. So in actuality, If alliance between DOCOMO Communications and Com were to improve, then further synergy effects could be added as an upside.
Turning to power and electricity. There is a discussion about carbon neutral and this is really progressing and advancing. Yes, last year, we provided vision about the environment. I think one major point would be how we review the vision for environment that we announced last year. The 4th point would, of course, be the following.
Because of the issue involving dining with the Ministry officials, we want to change the model of management. One way to do this will be to promote our own digital transformation and ICT. So it's important that we accelerate digital transformation ever more than ever. We need to further enhance this. And at the end of the day, we need to promote a remote world as well as remote work style and create a corporate style that is suited to that.
We talked about JPY140,000,000,000 cost reduction. This could be achieved 2 years ahead of schedule. As I mentioned earlier, we want to further realize a cost reduction so that we could make Our management more leaner and hopefully we'll be able to create a model, but we'll be able to expand ourselves as a result of such a model. I'm afraid we do not have the data. So we cannot share with you the data for each of these different segments.
So we want to refrain
Mr. Kikuchi, thank you very much. We would like to take the next question now. Next question from Nomura Securities. Mr.
Masuno, please This is Masuno from Nomura Securities. Can you hear my voice? Yes, we can hear you clearly.
Hello.
Yes, we can hear you. Oh, sorry about that. I have two questions. The first question is Synergy between DOCOMO and Holdings. There's 2 perspectives from the organization And the business, for the summer, there will be a consolidated with communications or from next We will now start the briefing session.
It will be one organization. You have just mentioned that you don't have anything to comment at this point. I just wanted to confirm if that is the current situation. And regarding This synergy, to begin with the network backbone integration, it was going to require some time. And because the organization is not clearly stated yet, the sales and marketing part, we don't know.
So I thought that this fiscal year, there's not that much synergy, but you have is there some synergy that is starting to show up? I just wanted to confirm that point first. Well, first of all, regarding the organization side, originally, next spring, We have a target of what are we going to do about the organization. And of course, we have to step up things. However, The start of such effort will be after the results of the committee's review.
So at this point, I will not be able to provide you with a solid schedule in this process. And the second point Regarding synergy, as you have mentioned, regarding integration of the backbone or the alliance between the sales and marketing efforts, The organization capability will be more enhanced. But without The organization part, we have already started the collaboration and alliance and the efforts. And well, apart from if we can call this a synergy, but the effect from that is incorporated in the plans. Okay.
Thank you very much. And also regarding the individual companies with DOCOMO and NTT Communications, I have a question. First of all, regarding NTT DOCOMO, The mobile communications revenue, you had a decline. Well, actually, in March term 2021, DOCOMO, Aside from ARPU that due to MVNO, there will be a decrease in revenue of JPY 60,000,000,000, JPY 70,000,000,000 And the voice the time of that was the difference. So it's into fiscal year 2021 or the Data connection is the timing was delayed to 2021 March.
But Originally, in the first half, this is something that you have already expected. But if you exclude that, the ARPU of JPY 30, It seems that it was a very good landing compared last fiscal year and this fiscal year. The MVNO It's impact decline in revenue. Maybe it's just the timing difference. But if you add the 2 last two years, What is the actual situation?
Let me confirm. Well, first of all, As you have pointed out, there is a difference in the timing. But as Mr. Hiroe mentioned previously, The impact of positive impact of Ahamo is showing. The people who left us stopped leaving us.
And also the net additions situation, we have experienced an increase. So the base part is starting to be pushed up. Therefore, the there is a difference timing difference of the voice sales wholesale, but the ARPU of 30 yen, I myself think that it is a good situation and we are seeing a good impact is my understanding. Mr. Hiroe, do you have additional questions?
Well, I think session. Mr. Hiroe, do you have additional questions? Well, I think that 30 yen is a very good number too. Regarding the MVNO, if I may add, as Mr.
Masuno, you pointed out, At the end of fiscal year, the voice of wholesale from the plan perspective, we were looking at various things, honestly speaking. And that The timing was deferred to fiscal year 2021. But the actual money amount as of end of March, it was decided. So regarding the money amount itself is slightly different. However, as the overall structure, it is as you have pointed out, Mr.
Masuno. So if that is so, this MVNO area, there is a timing difference. So let's put that aside for a second. But in fact, the impact of lowering the rates. But before lowering the rates, the ARPU, the last The second half, it was increasing.
And this fiscal year was going to go up, but due to the decrease in the rates, It is declining. So the majority is due to the impact of declining rates, But the positive impact of other than decreasing the rates with other initiatives such as cost reduction and others that is being observed. But the decline in revenue, Acquiring new subscribers and improving efficiency, you're able to absorb that. Is that correct? There was a question before that there is an impact of a decline in revenue, but you will be able to cover that with the Acquiring new subscribers.
Yes, we understand in that way. The environment that We will now start the briefing set. Docomo is placed on. It is moving towards a good direction. And also the Smart Life business is following a positive trend.
So if we have the Enterprise related business with the collaborations with NTT Communications. It will be another good addition is how we look at it. Thank you very much. And lastly, NTT Communications, Japan Business, Domestic Business. Recently,
We will now start
the briefing centralization, remote from home, cloud, data center. Due to all these aspects, there is a very strong demand that is continuing. So the operating income increased. How much can it continue? If we look at that For NTT Communications, a domestic business, I just think that maybe they can increase their operating income a bit more.
But how do you look at this? Well, honestly speaking, last around the same timing As now of last year or 2 years ago, NTT Limited's Structural Reform Limited was established in 2019, and we thought that the Japan domestic business will face a tough situation. However, due to COVID-nineteen, they were able to provide various solutions. And for us, too, starting April, We have started the 0 Trust remote system was introduced and holding company actually implemented that and this is from NTT Communications. So it is a very comfortable And very well suited to working from home or remote working.
And for the education related matters, a lot of NTT Communications So if the digitalizations becomes stronger and stronger, then the market for NTT Communications is going to further expand, and that is becoming a favorable wind. So the plan is March of 2022 of a profit. The plan seems that it is flat. So it's difficult to see the sense of increase. So what do you think about that?
Well, basically, the remaining telephone system areas decline occurs every year. So we need to fulfill that part. So the end result, we cannot help it to look flat. However, the telephone system or the legacy part is going to start to settle down. So in that sense, if they have the appropriate solutions to be provided, then They will probably be able to head towards the structure that they will continue to increase the profit.
And this is my last question. We will now start the briefing session. And increase profit in the new area, so that will be March of 2022 For the midterm March 2024, so around next fiscal year, you will we will be able to see a clear picture of that more, Including the platform type of business, yes, we are proceeding quite a bit with the preparation. So Whether it's going to be 2022, 2023, I feel that NTG Communications have has a bit more longer perspective. But as We will now
start the briefing session. That is correct. Thank you very much.
That is all. Thank you very much, Mr. Masuno. We'll go
on to the next question now. Next question is from Dowo Securities, Mr. Anto. Mr. Anto, the floor is yours.
Thank you. This is Anto. Can you hear me? Yes, we hear you, sir. I would like to ask 2 questions, if I may.
It's somewhat it's elaborate on the Previous questions. Mr. Hiroe talked about 60,000,000,000 yen that was impact from price reduction and didokan in revenue. I would like to confirm that. So price reduction for consumers and also price reduction for MVNO, Is this the amount that combines both two factors?
I would like to confirm that. And also in principle, How can you put it? What moving factors moving variables are there? For example, let me explain what I mean. For example, The percentage of change in the HAMO plan, a question type of assumption as to how much people would change to HAMO.
Can you please elaborate so that we can have a clear image? That's my first question. Thank you. Yes. Thank you.
I would like to respond to your question. This is Hiroe. Mr. Ando, You wanted to confirm the first point. So, price reduction for users and And your price reduction for the MVNOs.
Yes, the number that I mentioned earlier is a combination of both two factors. Now you Address the so called moving factor or moving variable. I don't quite understand the gist of your question, if I may. You're asking a very difficult point. But as I have mentioned since the beginning, to the extent possible, We want to improve the structure of our user base.
So the pricing strategy and the sales strategy that we have in place is really to expand our user base. So therefore, we want to get into the positive territory for M and P. We also want to expand our headset sales and also expand our user base. And also we want to retain high ARPU customers as much as possible. That is what we are aiming for.
So in terms of change in the plan among the existing customers, we want to make sure that they So that is the objective behind our exercise. I hope that answers your question, Andou san. Well, if I may, sorry, if I could follow-up. I would like to ask additional question, if I may. So the percentage of change in the plans, it seems probably larger than your initial expectation.
That was covered in some of the newspaper articles. Going forward, if the percentage of such transition were to change, then the percentage of Customers that have joined from Nando komo competition could actually contribute to the profitability of a hamo. Is that the scenario you have in mind? If you could give us some pointers or some clues as to where you're headed, how you see the situation? Well, let me see.
When we take a look, it's only been a very short period since this Ahamo was launched. The percentage of concourse from non DOCOMO customers is not hasn't really changed Significant just because of a homo. So we have set up the profit plan based on the prevailing situation as our assumption. And actually, we want to acquire non DOCOMO customers as much as possible based on the homo, the larger, the better. And also the competition has been has concluded their promotional campaigns at the month of April.
So we're going to see some effects of various factors. Hopefully, this will translate into positive effect. But we want to continue on with such marketing efforts naturally going forward. We will now start the briefing set. But we're beginning to see some signs, but that's the extent that I'm able to share at this juncture.
Well, in terms of the overall balance, I believe new subscriptions will contribute to the ARPU and also conquest from non DOCOMO customers, right? And also upselling customers. And we also have customers that will be downgrading their plan. Although we have not made this open, but it's a combination of all these factors I would imagine. Yes that is the case.
But right now we're at a very good place right? Yes. The situation we see right now is very much in line with our initial expectation. So as you mentioned, Mr. Ando, so the proportion, if we are able to acquire larger customers Aside from Asado Como, if the percentage were to improve, then that was improved.
But that is the current mixture that we have. Okay. Thank you. I would like to ask the second question. It's about your overseas business.
Margin will be jumping from 3% to 6%. That is your guidance. So can you elaborate on what factors We will now start the briefing session. So contribute in the improvement of the operating margin for overseas. In the past, you talked about increasing the percentage of value added services as part of your overseas portfolio.
Is that the case? Or is it cost reduction? Is it impact from cost reduction? If you could give us a breakdown. I'm sure that there are several factors involved.
So if you could please show concrete numbers, I think it's probably 30,000,000,000 yen for NTT limited and NTT DATA respectively. So The total 60,000,000,000 yen 70% is further from cost reduction. So structural reform and cost reduction, entity data was behind in the past, but they've already completed their structural reform in data in North America and they will do so in Europe. And to the limit, we'll continue on with their efforts. So that effect is included in these numbers.
So 70% from cost reduction efforts, so the remaining 30%. Antitil Limited We'll be transitioning to high added value service. The target was 37%. We want to improve this to 39%. That's We want to improve this by increasing the percentage of added value services.
This will have an impact on increasing revenue. As for NTT DATA, increasing their digital offering needs to be done. That will improve their operating profit because of increased sales. So that is a macro We will now start the briefing session, a picture that we have envisioned. Okay.
Thank you very much for
that. Mr. Ando, thank you very much. We would like to take the next BOFA Securities. Mr.
Kinoshita, can you hear me? I have two questions also. First question Is something related to the questions that have been concentrated to Jeff's question is the way of thinking of ARPU of NTT DOCOMO. The discount applied amount, I think, is heading towards a declining direction in the last fiscal year. Also, by that largely declining, The image is that it's going to go down to around 300 yen Is that the correct understanding that I'm having?
I just wanted to confirm that first. Mr. Kinoshita, that's quite
of a
deep And tomorrow, I think you can have those questions with DOCOMO tomorrow. Mr. Hiroe, would you like to answer that now? No, I can answer that tomorrow. No problem with me.
I just want to talk to you about the outline of this. As you, Mr. Kinoshita, pointed out, the monthly support discount, the impact amount is probably what you're talking about. Of course, fiscal year 2021, there is still the impact remaining. And towards fiscal year 2022, it is going to start to decline significantly.
And compared to fiscal year 2020, as you have pointed out, there is a declining amount. So the details, I would like to explain tomorrow. Okay. Understood. Thank you very much.
So tomorrow, I look forward to speaking to you. And my second question is related to The dividend this time, when you were thinking about the dividend amount, based on what thinking did you increase it by 5 session. And last fiscal year, as a result, there was a 10 yen increase in total. So you are continuing to increase the dividend. And this time, APS going to increase by 18% and the Dividend increases 5 yen.
How are you thinking about this? And in the interim point of the fiscal year, Is there a possibility that you will be reviewing the dividend payment increase it by 1 notch? Well, as you have mentioned in 2020, The Q3 in February when we had the financial results at that time, we did approve and resolve The increase in dividend, and that is because the fiscal year 2020 results was good. That was the background. And this time for fiscal year 2021 forecast from the revenue to the profit In the 3 accounting items, we were able to we can expect a record high number.
So at this point, as the dividend forecast, we wanted to increase the amount. However, As we execute our plans and if the business situation goes quite positive In the mid term of increase of dividend, we would like to consider that. So I just want to confirm that if you can see that you will be able to achieve the plan, you can consider increasing the dividend? Or Are you saying that unless you will have a profit that is 1 step higher than what you plan, you cannot increase the dividend? Well, I'm talking about Maybe closer to the first part.
Well, of course, my feeling is I would like to increase it. But if I give you a stately comment, maybe it will be the first statement. You said that if we can clearly see that we'll be able to achieve the plan. Thank you.
Tomorrow from 1 p. M. There is going to be a session with entity DOCOMO. So we hope that you'll take part tomorrow as there. Next question is Thank you.
I would like to ask 2 questions as well. My first question relates to the following. It's about the midyear management strategy and its policy. We talked about the cost reduction. In the new fiscal year, JPY 170,000,000,000 was added.
And so for the next period onwards, I suppose that there is room to further increase your cost reduction. So Can you tackle the factors why the cost reduction is being implemented in such a smooth manner? And also what about the next year onwards? Is there a room for upside for cost reduction from next fiscal year as well? Can you share with us your thoughts at this moment?
That's my first question. Thank you for your question. Well, for the last couple of years, as you are aware, in our global business, we created NTT Limited NTT DATA and other companies pursued structural reform very significantly and in a very aggressive manner. We have encouraged them to do so. We talked about this earlier, but among the major subsidiary firms for the officers, we'll be expanding the scope of performance linked performance based compensation.
At Sajiban, that percentage was quite high. So performance linked compensation, Especially, we need to make sure that the recognition IBS penetrates. So it should be linked with the performance and we should also pursue digital transformation in this context. That's the basic principle. So the medium term financial targets are quite lofty, But it's important that operating companies understand this.
And it's important that they pursue improved efficiency, improved productivity as well as streamlining. So As a result of those efforts that we are seeing these numbers, so JPY 840,000,000,000 target was achieved ahead of schedule. This is due to the change in the mentality and awareness of the group companies. We're beginning to see some positive trends there. So these are the factors which have allowed us to achieve the cost reduction targets.
It's important that we maintain this momentum. At the same time, we also need to Pursue digitalization, digital transformation and IC team to pursue further upside in cost reduction. That is very important. Mr. Sawada, you talked about IT promotion, IT and just the transformation.
Are you talking about improved productivity among your own staff, right? What about the KPI? Have you said any KPI? Are you following that? Are you monitoring that?
Also, How confident are you that you're able to make a major transmission transformation rather in your own organization? Well, We are still we've just started various initiatives. So we have not yet been able to confirm the KPI in this effort. But for example, we want to change our internal system to cloud based system. This was already decided at entity holding company.
And in the month of May June, I believe that such decisions will be made by other group operating companies, which means that both domestic and outside Japan in the next 2 years or so, I believe, everything We will transition to cloud based ERP. That is the work which is already in progress. This is already factored in, in our plan. I see. So may I take it that your Prefer structure will be much leaner going forward.
Well, I'm talking what entities do was primarily, but We're beginning to see very senior aged employees. On the other hand, are we do we have the capacity to hire There are areas where there is a shortage of people. That's a macrocosm of the Japanese society, but there are areas where there is shortfall of personnel. So So that's why we need to promote automated technology as well as remote work based on digital transformation. Unless we do so, we cannot improve productivity and we cannot operate our business.
So this I think will be a great test bed and hopefully that we will be able to promote our ideas to our customers as well. Thank you very much. My second question, this goes back to the Carbon Neutral 2,030, the environment vision that you talked about earlier, Mr. Sawada. You mentioned that you want to go beyond carbon neutral.
So as I suppose this doesn't represent a major shift in your strategy, but you're also involved in energy business and You also have the telecom infrastructure. Very few companies have bought such assets. So through smart city, How do you intend to contribute to carbon neutral? I really have expectations about the timetable for achieving this. But what are some of the challenges And what are some of the responses you have in mind against such challenges?
And if possible, can you give us Some numbers that you envision in terms of the changes taking place in this segment going forward. Well, thank you for your question. To talk about the big picture, it's We are struggling to come up with firm targets or numbers in this segment. Why? In terms of We do not yet have a structure where renewables can be considered as a stable source of supply.
And also In terms of power supply, striking a balance between the supplier and the demander It's very difficult to do in the current grid system. So as an independent source of power, we have renewables and PVP And electricity storage, that model is already there. But to locally produce and locally use energy and translate that into Summer City and offer this as a solution and also be in a place to use those services ourselves. That is the model which we have envisioned. Right now, we cannot set numbers.
We cannot set numbers for the work. One factor is of course the accuracy and the second is related to equipment development of equipment that can accommodate Direct current. And the 3rd is battery, storage battery, the price of the price and the cost performance of storage. Naturally, in the case of miniature management strategy, we want to offer accumulation based on hydrogen. And also we want to send hydrogen through our infrastructure.
That business model, I think, is also possible. So in the context of smart city, there are a lot of options available for possible solutions. But In terms we are not yet there where we can set up a business plan for the items that you mentioned in the course of your question. Mr. Shimada, do you have any follow-up response?
Well, this is for the BPP and storage battery storage. You talked about these items, but we're still at an R and D phase for these technologies. So what concrete products will be applied? Will be the most efficient product that needs to be tested in various trials. We're still going through the trials At this stage, so it will take some time before we can organize business models.
Maybe we this will take another couple of years before we can come up with concrete business models. In the case of the smart city project, with regard to energy, we have some projects. We'll introduce that naturally. Right now, very smart city programs are ongoing as we speak. In those projects, we will naturally introduce new energy projects.
That is our understanding. Thank you very much for your response.
Mr. Ogashi, thank you very much. We would like to take the next question. Okasan Securities. Mr.
Okumura. I am Okumura from Okasan Securities. Can you hear me? Yes, we can hear you. I have two questions.
The first question It's a qualitative question regarding NTG Limited, the high value added service. The high value added service, It seems that it is quite of a sticky reoccurring business and the businesses related to that is steadily proceeding. But I think the situation is that you're slightly struggling acquiring new business. This high value added service business, If you have a positive trend that you're seeing, for example, in the order received, etcetera. As you have mentioned, the high value added service, meaning the high margin type business, data center or managed service or managed network or security type of businesses.
It acquires experts And acquiring new deals, we were struggling. However, for example, NDT Limited's Maricos, The organization that has the high value services and the sales organization, the collaboration of these two organizations are proceeding and they are listing up the high potential customers. But though this is an ortho dioxide type of method, they have started session implementing this method. And globally, they are picking up the customers that they can target, and the sales side is starting the contacting these customers. So fiscal year 2021 said that 30% session of the profit is going to be generated from the high value added service expansion of the business.
And the sales activities is increasing, so we are becoming more confident to achieve that. Thank you very much. My second is Maybe this is something that I should ask you tomorrow. However, it's related to DOCOMO. The mobile communications business, ARPU, The last fiscal year's 4th quarter ARPU before discount compared to the 3rd quarter, I think it has declined more than 100 yen.
The AHAMO service started March, so I don't think it has impacted to the decline of the ARPU. So I wanted to know briefly, It's fine, but why this decline has occurred? Well, the detail, I would like to explain it tomorrow. However, it is not the essence type of a factor. It has some seasonality factor that has impacted this.
So I would like to explain this tomorrow. Set. Okay, understood. Thank you very much. Mr.
Okumura, thank you very much.
We're now first approaching the time to conclude the session. Any other question? If not, then with this, we would like to conclude the Q and A session. At the risk of repeating myself, tomorrow On May 13 from 1 p. M, we will have an analyst meeting for entity DOCOMO.
Please take part in that meeting as well. That completes the presentation of fiscal year 2020 financial results. Thank you for joining us. Thank you, ladies and gentlemen. That concludes the session.
Thank you.