Thank you very much for waiting. We would like to begin KDDI's briefings on the financial results for the first half of fiscal year ending March 2022. Thank you very much for your attendance despite your busy schedule today. My name is Hongo from Investor Relations Department, and I will be facilitating today's meeting. This session will be held with English and Japanese simultaneous interpretation. Today's briefings will be streamed on demand from our IR website. Let me introduce today's participants. To your left, from the middle, we have Takahashi, President. Next to him is Muramoto, Executive Vice President, Executive Director, Corporate Sector. Now, to the right, from the center, we have Shoji, Executive Vice President and Executive Director of Personal Business. We have Mori, Senior Managing Executive Officer, Executive Director in Solution Business Sector.
To the right, at the back, is Yoshimura, Managing Executive Officer, Executive Director, Technology Sector. Finally, to the left, in the back, we have Nanae Saishoji, Executive Officer, General Manager, Corporate Management Division. Documents related to our earnings results include presentation materials, flash report, and detailed materials, which will be on the IR website as well. Please refer to the disclaimer on each of the documents for all the contents of the material, as well as the financial results and numerical targets disclosed in the Q&A session. Our president, Takahashi, will first brief you on the financial results, followed by Q&A. I hand over to President Takahashi, please.
Hello. Thank you very much. Thank you for taking time out of your busy schedule to attend the financial results briefing of KDDI today. Let me explain the results for the first half, the second quarter of the fiscal year ending March 2022. I will explain the four points on the slide today. First is the highlights of consolidated financial results for the first half. Right side, operating income was JPY 573.1 billion, and the progress against full year forecast was 54.6%. Revenue increased and operating income decreased in the first half. We are making steady progress towards full year forecast. Next is the consolidated operating income factors for change in the first half. Starting from the left, multi-brand communications ARPU revenue declined by JPY 30.4 billion, and lower telecom revenue remains within our expectation.
With the contribution of group MVNO revenue and roaming revenues, mobile communications revenues was up by JPY 11.7 billion. In addition, growth fields, including Life Design Domain and Business Services segment, increased by JPY 11.8 billion. On the other hand, we recorded 3G-related expenses and SG&A as part of our operating operation, looking ahead to the future. In total, operating income decreased by JPY 15.7 billion. Next is multi-brand strategy. We launched 5G in all brands, including UQ Mobile and povo. First is au 5G network. Establishment of area coverage is affected somewhat by COVID-19 and other factors, but we will focus on covering places frequented by customers. Left side, we will connect 5G in train lines and commercial districts.
By the end of March 2022, we aim to cover 21 routes in Kanto, including JR and private railways, and five routes in Kansai. Next is the subscriptions and unit sales. Right side, cumulative 5G unit sales reached 4.7 million at the end of September. Upgrade, including iPhone, centering on au, was strong. We will aim for 8 million units by the end of March 2022. Let me now explain the features of each brand, starting with au on the left side. 5G mobile data traffic per person is more than 2.5x that of 4G. As contents become richer with high-resolution videos, we will offer, as shown on the right side, reliable and unlimited use, enhanced set plans, and purchases of handsets as full lineup of 5G services so that customers can use 5G comfortably. Next is UQ Mobile.
We will offer SIMple and secure price plans with reliable support. Left side, we launched discount with electricity and internet. In addition to discount with electricity, we also have discount with internet, which is highly penetrated among households to offer higher value for money. Right side, reliable support and enhanced services is available with UQ Mobile as well.
Lastly, povo. We will offer new experience value through povo 2.0. Left side, by adding diverse topping to zero yen base plan, our service aims for innovativeness that can tailor to customers' lifestyles. Right side, we will cope with new methods of use in the eSIM and SIM-free era and meet the needs of highly active digital native tier. In addition, by offering new data charge method called Giga Katsu, we will deliver a brand new experience where data is earned in the user's daily life. Next is Metaverse, an experience available only with 5G. We will continue leveraging the cutting-edge technologies and deliver diverse experience value with our partners to enhance this, the appeal of 5G going forward. Next is the business alliance with SpaceX Starlink. Starlink provides high speed, low latency satellite broadband network.
We signed a contract to use Starlink for backhaul lines at the au base stations. Next, on growth fields. Performance of growth fields in the first half of the year ending March 2022. We are making steady progress towards a full year forecast. To the left, you have operating income, Life Design Domain, which was JPY 120 billion, up JPY 10 billion year-on-year, driven by an increase of JPY 4.9 billion year-on-year in the financial business. Progress is 48%, but we expect profit increase from the energy business effects in the second half, which is in line with our assumption. In terms of operating income in Business Services, this was JPY 92.3 billion, with increases in both NEXT Core and core businesses. Progress is steady at 50.1% towards the full year forecast.
This year is the final year of our current midterm management plan. In addition to achieving our top line target of JPY 1.5 trillion and JPY 1 trillion in the growth fields, we will strive towards double-digit CAGR growth in profit as well. This is the financial business in the Life Design Domain. To the left, you will have the settlement transaction volume on settlement and loans, which is actually up by 1.3x year-on-year to JPY 5.2 trillion. It's a significant growth. At the same time, operating income of our financial business to the right has also grown remarkably as well, generating JPY 24.6 billion, which is +24.9% year-on-year. We are also strengthening the linkage between financial services.
Currently, in addition to strengthening the linkage between the bank and credit card through AU PAY, we are promoting linkage with other financial services beyond that. By strengthening the linkage between the financial services such as au Jibun Bank, we have executed initiatives that leverage the strength unique to KDDI, such as receiving preferred interest rate of maximum 200 x. The linkage of financial services were effective with substantial growth in core services. From left, AU PAY members increased by 4.3 million year-on-year, AU PAY card increased by 1.2 million year-on-year to 7 million members. The number of accounts at au Jibun Bank was 4.48 million, and loan product balance was JPY 1.7 trillion. We have steadily increased the customer base and assets. Next is the operating revenue of Business Services segment.
Our growth driver, NEXT Core business, grew double-digit at +17% year-on-year. NEXT Core business will generate synergies in and out of Japan, centering on Internet of Things, our top runner. KDDI, with its strength in comprehensive telecommunication and global base, has approximately 20 years of operational track record and experience in IoT. In addition to connected cars deployed on a global basis, KDDI is rapidly increasing IoT connections in social infrastructure, such as smart meters for electricity and gas. In July 2021, we exceeded 20 million in IoT connections. By fiscal year ending in March 2023, we aim to exceed 30 million connections. Along with the advancement of 5G, we will co-create new businesses with customers who have deployed IoT.
Using the IoT connections and ancillary services deployed today as our platform, we will support customers in diverse sectors developing recurring business. To the right, we have began delivering KDDI ID Manager, a service that manages customer ID in order to support the customers realize recurring business. Moreover, we have started communication test in a commercial environment so that use cases can be developed in the age of 5G SA. Lastly, on the initiatives of non-financial activities. On global environmental conservation, in order to be carbon neutral in 2030, we aim to cut CO2 emissions by 50% compared to FY 2019. An action plan is developed based on the power consumption forecast up to 2030. We will run PDCA with a focus on reductions in real terms. To the left is closing 3G this fiscal year, a material element in the reductions.
By closing ahead of peers, we will promote a shift to power efficient network. To the right is the establishment of KDDI Green Partners Fund. Leveraging our strength to create innovation with startups, we will contribute to solving social issues through partnerships. Next is expanding the expert personnel. As we promote transformation to personnel first enterprise, we will strengthen growth fields such as Life Design Domain and Business Services segment, while aiming to solve social issues through these businesses. For this purpose, we will expand the group's expert DX personnel with a target of 4,000 members by March 2024. The speed of this initiative will be accelerated with the view of front-loading the target. Finally, in summary, with regards to our financial results, our first half results show steady progress.
Lower telecom revenues factored in and already in our forecast, and we operate looking ahead into the future. Growth fields are making steady progress in both Life Design Domain and Business Services segment. Towards sustainable future, we will promote 5G with multi-brand. We deliver new customer experience value by building areas frequented by customers and leverage characteristics of each brand. In Life Design Domain, we will strengthen service collaboration with financial business. In Business Services segment, NEXT Core business will grow fueled by IoT as the top runner. With this, we will capture the environmental changes and promote business strategies. Thank you very much for your kind attention.
We will now take questions. In order to receive as many questions as possible, we would like to limit the number of questions to two per person. If you have two questions, we will answer the first question first before receiving your second question. Please raise your hand if you have any questions. Please.
So UBS Securities, Mr. Takahashi, please.
This is Takahashi from UBS Securities. Thank you very much. I have two questions. First is group ID, number of group ID. In the second quarter, compared to the decline in the first quarter, it seems like a significant improvement in the second quarter, and it seems like net additions, net increase is very close. The number of group ID in the second quarter, how do you analyze this? What is your interpretation? And this improvement trend, what is your outlook of the improvement trend? Thank you very much.
Thank you for the question. The number of group ID is our focus now. As you just mentioned, the first quarter total was compared to the total for first quarter, it is still a net decline of 20,000. We wanted to achieve positive number in the second quarter. Right now, around spring of this year, Rakuten started the zero yen price plan. There was an outflow, and with ahamo. With the UQ Mobile, we were able to regain the momentum. In August, we started having a good prospect of net addition. In September and October, with the launch of povo two point zero, we have not made this public, but a few tens of thousands of net addition will be secured. We have a good prospect of securing that level.
Third and fourth quarter, we will grow our net additions so that we will achieve net additions for the full year. We caused you some concerns about the momentum, but in the second quarter, we wanted to achieve positive, but now we have a good prospect. We focusing on and growing this, going further.
Thank you very much. My second question is also related to that. povo. Including povo two point zero, the entire povo's trend and the number of subscriptions and other numbers will be greatly appreciated. Please enlighten us on that. With povo two point zero, this is a completely different plan from the ones in before. What is the initial user's reaction? Where do you stand? Thank you very much.
Thank you for the question, povo, in the recent press conference, I said that, around 900,000. We just exceeded 1 million, so about 100,000 growth per month. Initially, we caused inconvenience to our users, but now we are off to a good momentum, good start. In November, we want to increase this one more step. As I mentioned earlier, this is effective for the increase in the ID, number of IDs. As of August, UQ Mobile, we used UQ Mobile to gain the momentum, and, we are gaining more momentum with povo. But the key is povo's ARPU. Right now, compared to the average UQ unit average price, we can have higher level with povo. This is specifically whereby. So we can reduce the subscription acquisition cost.
This is something we are very much focusing on. I'm sorry for a long answer. We're working with Circles.Life. They're very agile. It's not that we subscribe in the end. After the subscription, we can approach the customers with topping. It is exactly DX. This is very much DX. Because we have this great partner, we can increase the number of toppings, and this can be data-oriented. We will. It's not a short-term initiative. We want to build the initiative. This will be the weapon, the ammunition for us. We want to increase our internal know-how and build on this. Giga Katsu and povo 2.0 , the ecosystem, I think, is now functioning pretty well, isn't it? Well, not yet. Not yet.
After we started the service in October, there were some things we had to address on the customer side. Giga Katsu is now being done more on a full scale from November. As you know, this is different in customer approach. Customers approach the customers with Giga Katsu. Until now, the telecom companies were working hard to increase the telecom ARPU. Now, partners will promote. And as a result, data will be added. I should not talk too much about it. This can be used as the second SIM, and we have high expectations for it.
Second question, Ando-san from Daiwa Securities.
Thank you very much. I have two questions. First question is related to the earlier question. By brand. I guess you have spoken quite a bit about povo, but what about au and UQ Mobile? What is the recent trend for these two other brands a nd also churn rate. In Q2 and currently, how is the churn rate trending? Also, you are implementing different promotions. What sort of promotions have been successful? If you could introduce some of those stories.
I will explain briefly, and then Shoji-san perhaps can follow up. With regards to churn rate, I was hoping it will go down more in Q2 by 0.74%. From my perspective, I think we need to further decline it. Perhaps we still need to make some efforts here. I've initially assumed, I think our subscribers are actually remaining in au more than we had assumed in the beginning.
We thought that more will be migration from au to UQ Mobile or povo, but wasn't as much. Now, maybe this has impact on iPhone, especially last year's version. More than we had expected, subscribers remained with au. Meanwhile, UQ Mobile, we have set with electricity and au Denki and also fixed line. We have a nice lineup. Since au shops can now handle UQ Mobile as well, some people say we're trailing after SoftBank. We are, you know, reflecting on that and taking good lessons from that as well. I think we're running a very nice virtuous cycle on this. Meanwhile, with regards to promotions, au's summer commercial was quite well received. This has contributed to the momentum of au. With regards to UQ, we have changed the frame.
The UQ Kante now speaks all these proverbs and many good sayings. With regards to promotions, it's starting to make a really nice move. I talked a lot, but Shoji-san, please. I really don't have much more to add.
It's exactly as President said. With regards to churn rate, again, as President Takahashi said, we were hoping to reduce this furthermore. If you look at the number of handset sales. Even compared to last year, we have been able to grow handset sales, which means that market is activated. Maybe that's why churn rate is higher as well. We have also new additions as well, new sales. With regards to promotional cost, as I explained earlier, we have, in short term, had to increase the sale channel for UQ Mobile.
I would say most of the au shops and au stores can handle UQ Mobile. This is where we have put a lot of emphasis into engage in different sales promotion activities. That is all from me.
Thank you. My second question, I was looking at that step graph, and you said that the lower revenue was within your assumption. Just a confirmation. For Q2, up until Q2, what sort of impact was there in terms of the mobile service price reductions? I think there was a little bit of hint there. Also full year forecast. Based on the current situation, how would the second half look, if you could explain a little bit on that?
Let me see. With regards to the impact of lower prices, when we started off this year, we were looking at JPY 60 billion-JPY 70 billion per year from the revenue from the price cut. Now, after first half, we are at about JPY 30.4 billion. It is pretty much in line with our expectation. I think we will probably stay within this scope. Now, if you look at the overall structure, we have the price cut impact of about JPY 30.4 billion or so, but we have roaming revenue as well. This is really offsetting it. We have actually a little bit of headroom which will allow us to actually do migration of 3G. We can spend cost on the migration on 3G earlier before the peers.
This is upfront investment, and also, we're depreciating this year, and we're front-loading that process as well. We can also build up for next year's strategic investment, and that's how we can finish it off like this. In Q2, internally, we knew that we were going to decline in terms of profit. We're disclosing JPY 1.5 trillion based on this assumption, so we know that we are able to accomplish this target. That's what we think. It is in line with our forecast, and it's trending steadily. Thank you.
Thank you very much. I have two questions. The step chart on page four. This is more detailed than the first quarter, so I cannot do a simple comparison with the first quarter. The other negative number is a bit large. If you think of something, this JPY 10 billion increase in others than the first quarter. What is included here? Thank you. That's my first question.
Thank you for the question. The largest one, in the second quarter, we had a big upside in the handset sales. The sales cost accounts for the majority, including the upgrade. The 3G migration is progressing well. Compared to the first quarter, that is the large factor.
I see. Another follow-up question. Churn rate did not decline as much as you expected, but the ID, number of ID still declining. It means you are acquiring new users, new subscriptions. The cost associated with that, how are you increasing that? Is that cost or any special measures? If you have any changes, please let me know.
As I alluded to earlier, and as you just correctly mentioned, compared to last year, we had iPhone in the second quarter, so the number of handset sales had a significant upside. The commission from that and the related cost increased. One more factor is, as Muramoto-san mentioned, 3G. This is the last year, 3G. We are doing the migration at a great speed to promote customers replacement. We're taking various measures and launching various handsets to promote customers replacement. We're accelerating it from last year. That is the cost, additional cost. For churn rate, as I said earlier, and as you correctly mentioned, the market has activated quite significantly.
The churn rate went up, but the new subscription is also seeing a great upside. In the second quarter, we could not turn to net additions, but we're seeing great improvement in the current situation. We are determined to make further improvements.
Thank you. My second question is about ARPU. The first quarter ARPU was 4,280 JPY, and second quarter is JPY 4,270 , JPY 1 0 down. 4,200 I thought will be for the first year, full year, but ARPU decline seems to be suppressed. There are various brands, the ARPU forecast, the makeup is difficult to forecast. AU down a little, and povo and UQ will increase, then the mix will be a decline. You have upsell, I think, and seasonal factors or the voice factor. This change of ARPU, could you analyze the trend of ARPU a nd the JPY 4,200 full-year forecast, do you still have headroom against this JPY 4,200? Thank you.
You exactly explained where we are. The negative factors are the medium-term momentum recovery. UQ Mobile and povo will be promoted further. By further promoting, ARPU will decline, so that's the negative factor. We have 5G for all brands. This is a big thing. iPhone 13 and area expansion is also progressing. We are learning lessons from the past, so we are now focusing on 5G on places frequented by customers. It has 2.5x higher than that of LTE.
The price is appropriate to that. We are also upselling from UQ to au. This is what we have to do in the 5G era, what we wanted to do. There were other reasons. We added rand this year, this is taking shape, and that's a positive factor. Combining all that factors, we are forecasting JPY 4,200 for the full year. We need to steadily incorporate this into our strategy. 5G generates traffic more than we thought, and this is a very important point. Compared to Pitat Plan, this unlimited large volume is increasing, accelerating? Well, various factor. Of course, Pitat Plan traffic, it increases in accordance with that increase. This UQ to au flat, this will be most impactful for the ARPU.
We will offer such services to our users to increase the ARPU. OTT player, Netflix, and other players, we are ahead of them. We are very close with Netflix, working very closely. If we bundle, the churn rate is extremely low. It's less than 1%, extremely low. That is our aim. That is the ideal level. It goes up. We try to prevent the downgrade once they go up. We offer various products so that the customers will stay. That will be the core of our strategy.
Thank you. Next question, Masuno-san from Nomura Securities.
Thank you. This is Masuno from Nomura Securities. Not so much current situation, but I want to ask you about next fiscal year. First question is about market environment next year. What we're learning today is that competition is intense. Whoever wins, the other that lost will come back and overcome. Then the other competitors, other peers will fall, and they come over again, come back again. Because everyone is active, the market will not basically increase, and it will not decrease either, but it will not increase. That's the feeling I have about the market. That's what I'm learning. Now, you said that you will maintain your full year plan. As a result of the competition, because this is market, how do you forecast next year?
You are exactly right. Because of competition and because of demographic, there's no population increase. The way we contact with the customers, whether it be eSIM or SIM-free handsets, the way the touchpoint with customers are changing. I think each company will be creative on that. If you look at history, as a result of this competition, what happened? Services improved, prices have come down, but now the prices are now starting point is zero.
Each company, each player, if there's too much pain felt from that, they will not be able to invest in 5G, and we all understand that. As a result of competition, it's really about how quickly can you deploy 5G service and generate traffic so that we can increase in ARPU on top of increasing customer service. I feel as though we're in that phase. Naturally, in terms of facilities, we lend to Docomo, we share facilities, equipments with SoftBank. With that, we are able to reduce costs so that we can at least grow our telecom revenue. I think that's the picture of us going forward. We'll do our best.
According to what you said, the market will remain competitive. If the users use maybe two or three times more in traffic, then there'll be greater percentage of unlimited use, and that's a natural result. That's how you will be able to capture organic growth. Is that correct understanding?
Yes, I think so. In principle, whatever that declines in terms of telecom revenue, then it will be offset by value-added service. I think we have to grow our telecom revenue with 5G, 'cause otherwise we'll not be able to really increase our value. If it's generating a traffic by 2.5 x, then if that's you know, it's really about how do we replace the plans with this sort of traffic. I think that's the challenge we face. With increase in activities, the value-added service at the top layer will increase as well.
Obviously, the way we view the movies in the last five, 10 years have really changed drastically. I'm sure you noticed that it has changed dramatically with the pandemic. I think this is an area we need to really seek out opportunities.
There's one more question about cost. You were saying that you will have about JPY 9 billion in 3G closure. That's what you have been saying before, but now you're accelerating that. This year, is it JPY 90 billion, or are you going to spend more and promote closure? In terms of roaming revenue, which is increasing this year, will probably fall next year. If you look at it in a chunk, you have the costs that will decline, and then you will have revenue that will increase or decrease. How are you looking at the balance, and what is your view for next year?
Well, let's see. With regards to JPY 90 billion, it is in progress with the plan. As we have communicated already, with regards to CapEx, it's about JPY 60 billion, and we have about JPY 30 billion in sales related, marketing related. So that's the breakdown. With regards to roaming, I'm not able to say how much this year, but there's a certain amount. Roaming revenue isn't going to be down drastically. Right now, you know, if their area coverage exceeds 70%, we stop the roaming service. But it's not that they're able to do the 70, like, flat. But sometimes, they say that, even if they exceeded 70% in coverage, they want to be able to continue to use our roaming service.
I think this year we can expect a substantial revenue from that. Next year onward, there'll be decline. We have the JPY 60 billion in CapEx. I think we should be able to offset or absorb that within that range of JPY 60 billion that I said earlier. That's the flow for this year and next year. Like I said in the beginning, I think this it will trend in this manner. If that's the case, it's really about how much cost we can spend on recovering the momentum. I think we're beginning to see momentum in 5G, so we will develop growth strategy along with this momentum.
Just a confirmation on the number. You said CapEx, so that's JPY 60 billion. You are saying that it will not go below JPY 60 billion next year for roaming?
I see. Yes. Next question, please.
Mitsubishi UFJ Morgan Stanley Securities. Mr. Tanaka, please.
Yes, this is Mitsubishi UFJ Morgan Stanley Securities, Tanaka speaking. My first question is on Life Design Domain. The operating income for second quarter, three months, is JPY 60 billion, and it's not growing from last year year-on-year. Please explain this part.
Yes. I thought I will receive this question. Second quarter year-over-year comparison is not showing any growth. What's happening here is the power, electricity related factor. The financial and the repair and compensation business profit is growing steadily.
In energy, last year, what happened was, in the first half, procurement costs declined significantly and generated profit. In the second half, the winter was very cold and the supply-demand balance was out of balance. JEPX market was disrupted and we incurred a big loss. This year, from the first half of this year, the procurement price is rising. It's higher this year, and therefore, it is a loss up to the second quarter, and it's offset, and that's why there's no growth. Now, the second half, the electricity, we learned lessons from last year, and JEPX's side is now including safeguard, and we included the bilateral procurement, and so not much volatility risk in the second half. With that, the second quarter is a slight negative, but we can achieve a profit on a full-year basis.
Thank you very much.
Excluding this power, electricity factor, what was the absolute amount and the percentage growth? Financial, JPY 4.9 billion, and repair and compensation is not disclosed. A better growth than financial business. First half was 9.1% profit on a year-on-year basis. That's all I can say. Thank you very much.
Another related question about financial business. You mentioned that the settlement loan transaction of value increased by 1.3x and the o perating income 25%. The margin improved, I think. What happened? Could you elaborate? Oh, I did not pay much attention there.
I did not either, but nothing big happened. I see. The settlement loan, settlement, including au Kantan Kessai, au Financial Holdings, Jibun Bank, home mortgage loan is going very well, growing steadily, but I'm sorry, the margin declined somewhat. I'm sorry, I did not pay full attention to that. Thank you. Next question.
Now, Business Services segment. Second quarter, three months. Last year, operating income was JPY 44.6 billion, and this year is JPY 49.7 billion. It is growing, but I thought that the growth is not big. I wanted to see a double-digit growth, but what is your take on this?
Yes, of course, I know you feel like that. Mori-san, please.
We plan to grow more in the second half. In the first quarter, we had the one-off factors in the previous year. Another factor was handset gross margin difference was a factor.
The difference in the gross margin of handset, this impact lingered until second quarter. The second quarter could not show a double-digit growth. In the second half, we will no longer have that factor. This downside factor will be gone. The DX-related business, which is going well, this is growing at a double digit. Last year, COVID-19 started and the emergency mobile needs surged, but now that has settled. This time around, the full-scale DX and teleworking and office network, hybrid network will spread, expand, so we want to grow well in that sector. Thank you. JPY 1.5 trillion and JPY 1 trillion and second, double-digit growth were mentioned in the presentation, so we want to focus on aiming, achieving that.
Yes. Just for clarification, second quarter, three months, the Business Services segment, core business, the handset portion of the core business was sizable and the profit margin was not so good, so that's why the entire mix deteriorated?
You're right. Yes. That was what happened in the core business. In the second half, we will no longer have that factor. The profit progress rate, we are already 50% progress rate against the full-year forecast. If we can go well in the second half, we will achieve the full-year target. Thank you.
Next is Kinoshita-san from BofA Securities.
I have two questions as well. First question on Business Services segment, confirmation and how I should look at this going forward. In Business Services segment, in Business DX, there's IoT. Would connected be in here or would it be in the conventional? Also, if you look at IoT connections, because of the lack of automobile production, would it be difficult to achieve your target this year? And how would that impact the profit? Would it be possible to impact your profit? That's my first question.
Mori-san, please answer that question.
Y es. Connected car is included in here, both domestic and overseas. Everything is included here. In Business DX, yes, it's included in there.
With regards to the COVID and chips shortage and the decline in production, cut in production of automobile, this is scheduled in October. That portion is actually below the plan. Even then, when you look at the closing after first half, we have been able to achieve our target for first half in the overall IoT business. When with regards to automobile, we're not quite sure how the semiconductor issue will affect the automobile production. It's not easy to predict, but I know they're making different efforts, and it is starting to recover. Also, the demand for automobile itself hasn't really disappeared. I mean, it's there. We, this is something we know it will recover for sure.
In that sense, there's no big concern. Well then, impact on the profit is limited, right? Is that the right understanding? Even if there's a slight delay with regards to semiconductor, maybe, you know, there's a view that it might be difficult to recover this year, this fiscal year.
Yes, there is some impact more or less, but we can offset to cover that with other elements. Thank you.
Second question about not electricity business, but I'm looking at the total business, including telecom. If you look at the rise in the current energy cost, would that impact your profit revenue?
I sometimes get asked these questions.
If you could be as specific as possible, I would appreciate it. Last year, we didn't have enough learnings. No, this is not about Denki business, but actually I'm asking about your telecom business. You have explained in detail about the Denki business, the electricity business. I'm okay with that. With regards to, you know, telecom business, you can't pass that through to the energy, rise in energy cost, you know, telecom cost. Is this something that I should be concerned about or not at all?
Well, let's see. Of course there's cost, but it's a bilateral transaction contract with a power company, so the volatility is not so high, so impact is minimal. And also, because we're increasing base stations, there's more energy concern, but we're actually also implementing energy conservation saving technology. This will not affect the overall telecom business.
Thank you very much.
Next, SBI Securities. Mr. Moriyuki, please.
I have two questions. One is about traffic. You mentioned earlier the 5G traffic is growing. There is a demand growth from the lower prices, but what is the traffic growth trend, and what is the growth trend, pace of growth? If you could give me an image, I'd appreciate it.
The traffic increase trend is continuing. We've said twice double in three years, and that is the kind of growth we're seeing. Under COVID-19, mobile is growing, so that's one factor. As Takahashi said, this twice double trend in 5G is also existent, so we're seeing this increasing trend.
Doubling every three years is the forecast that we often see, and the mobile traffic is growing at that pace. There was a lower price impact, and you are now accelerating the growth or exceeding that growth pace or not?
You're talking about total ARPU? No, traffic. Once the lower price impact has run its course, the traffic increase will become more impactful, a big factor. The traffic growth is accelerating or growing in line with the plan, in line with our anticipation. Generally, lower price means higher traffic, so you're talking about that correlation, right? Yes, generally true, but this correlation has not been secured yet. Before that, if you switch to 5G, the traffic is 2.5x bigger, so we are focusing on that point now. We have UQ price and povo. The traffic is increasing accordingly. That kind of correlation is not yet seen. We need more time to ascertain that.
Next, about your energy, electricity business. Takai-san, you said a loss in the second quarter. Does that mean operating income decline, or the profit is already generated? The third quarter profit decline and fourth quarter will be a big increase. Is that the right forecast?
I do not have the numbers at hand, so I cannot be very accurate. The energy business year-on-year decline is because of the second quarter. The third quarter will not be a bigger decline, as big a decline on a year-on-year basis as much as second quarter. We do not have the exact numbers.
Since our time is up, this will be the last question. It's someone from Credit Suisse Securities.
This is Seki from Credit Suisse. I have one question about Business Services segment, one confirmation. In first half, this is plus 17% year-on-year. This is growth in NEXT Core business.
Going forward, DX personnel, you said you will for the increase on that. Compared to SoftBank, your DX talent, and of course it matters about definition, you can't do an apple-to-apple comparison. Just in terms of size, it seems as though you fall behind SoftBank. Do you think you may decelerate next year? How are you going to grow this? You do have customer base. If you can, is it your cross-selling that's working well? How are you going to grow in DX, especially on the customer side? How are you going to expand your business? If you could share with us the way you think about this, I appreciate it.
Thank you. DX talent. We are moving in line with this plan. This year, for this fiscal year, we are able to increase our both our core talents and also other personnel as well. Our target, 4,000, we want to accelerate this as much as possible so that we can achieve this earlier. We are confident that we can achieve this to a certain level. It's true, in order to grow Business DX talents or Business DX itself, we need telecom plus alpha technology personnel. That will be key. You have the development talents, but most important is people who do business development or project management. Those core resources there will be key. We have DX University. It's a program we launched, so we can promote that. Let me follow up on that. NTT has internal development team, and they are reinforcing that.
As an industry, I think customers are trying to increase their internal engineers. You said the core talents in development and PM, product management resources. Are you able to hire? Do you see any issues here?
We have the parent and the group entities. In terms of development, first of all, in terms of core personnel, that's mostly in parent. Of course, they need to increase the set of subsidiaries as well. We have a program to increase our core personnel there. In fact, we have been able to foster maybe half of our resources already, so we'll continue with that. Now, if you look at overall personnel, including development, we are promoting agile development so that we can internally develop DX programs ourselves.
We can market this to our external enterprise customers, and also the services we market can be developed with agile development, and we are already proceeding with this. We, in terms of reinforcing the personnel there and development capabilities, I think we're not quite sufficient there yet. We are implementing different measures, and we will continue to strive towards improving that.
Thank you very much.
Time has come, so we will close KDDI Corporation financial results briefing for the first half of the fiscal year ending March 2022. Thank you very much again for your attendance.